3,350,000 Units
(each Unit consisting of one share of Common Stock, par
value $.01 per share, and one redeemable warrant to purchase
one share of Common Stock)
THE MARQUEE GROUP, INC.
UNDERWRITING AGREEMENT
Royce Investment Group, Inc. December 5, 1996
As Representative of the Several Underwriters
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
The Marquee Group, Inc., a Delaware corporation ( "Marquee" or the
"Company"), proposes to issue and sell to the several underwriters named in
Schedule A (the "Underwriters") of this Underwriting Agreement (this
"Agreement"), for whom you are acting as representative (the "Representative"),
an aggregate of 3,350,000 Units, each unit being hereinafter referred to as a
"Unit" and consisting of one share of Common Stock, par value $.01 per share
("Shares"), and one redeemable warrant ("Warrants") to purchase one share of
the Company's Common Stock at a price of $7.50 at any time from the Separation
Date (as defined in the Warrant Agreement) until December 5, 2001. The Warrants
are subject to redemption, in certain instances commencing one year from the
date of this Agreement. In addition, Marquee proposes to grant to the
Underwriters the option referred to in Section 2(b) to purchase all or any part
of an aggregate of 502,500 additional Units. Unless the context otherwise
indicates, the term "Units" shall include the 502,500 additional Units referred
to above.
The aggregate of 3,350,000 Units to be sold by Marquee, together with
all or any part of the 502,500 Units which the Underwriters have the option to
purchase, and the Shares and the Warrants comprising such Units, are herein
called the "Units." The Common Stock of Marquee to be outstanding after giving
effect to the sale of the Shares is herein called the "Common Stock." The
Shares and Warrants included in the Units (including the Units which the
Underwriters have the option to purchase) are herein collectively called the
"Securities."
You have advised Marquee that you and the other Underwriters desire to
purchase, severally, the Units, and that you have been authorized by the
Underwriters to execute this Agreement on their behalf. Marquee confirms the
agreements made by it with respect to the purchase of the Units by the several
Underwriters on whose behalf you are signing this Agreement, as follows:
1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the Underwriters that:
(a) A registration statement (File No. 333-11287) on Form
SB-2 relating to the public offering of the Units, including a form of
prospectus subject to completion, copies of which have heretofore been
delivered to you, has been prepared by Marquee in conformity with the
applicable 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 and one or more amendments to such registration
statement may have been so filed. After the execution of this Agreement,
Marquee will file with the Commission either (i) if such registration
statement, as it may have been amended, has been declared by the Commission to
be effective under the Act, either (A) if Marquee relies on Rule 434 under the
Act, a Term Sheet (as hereinafter defined) relating to the Units that shall
identify the Preliminary Prospectus (as hereinafter defined) that it
supplements containing such information as is required or permitted by Rules
434, 430A and 424(b) under the Act or (B) if Marquee does not rely on Rule 434
under the Act, a prospectus in the form most recently included in an amendment
to such registration statement (or, if no such amendment shall have been filed,
in such registration statement), with such changes or insertions as are
required by Rule 430A under the Act or permitted by Rule 424(b) under the Act
and in the case of either clause (i)(A) or (i)(B) of this sentence, as have
been provided to and approved by the Representative prior to the execution of
this Agreement, or (ii) if such registration statement, as it may have been
amended, has not been declared by the Commission to be effective under the Act,
an amendment to such registration statement, including a form of prospectus, a
copy of which amendment has been furnished to and approved by the
Representative prior to the execution of this Agreement.
As used in this Agreement, the term "Registration Statement" means
such registration statement, as amended at the time when it was or is declared
effective, including all financial schedules and exhibits thereto and including
any information omitted therefrom pursuant to Rule 430A under the Act and
included in the Prospectus (as hereinafter defined); the term "Preliminary
Prospectus" means each prospectus subject to completion filed with such
registration statement or any amendment thereto (including the prospectus
subject to completion, if any, included in the Registration Statement or any
amendment thereto at the time it was or is declared effective); the term
"Prospectus" means (A) if Marquee relies on Rule 434 under the Act, the Term
Sheet relating to the Units that is first filed pursuant to Rule 424(b)(7)
under the Act, together with the Preliminary Prospectus identified therein that
such Term Sheet supplements; (B) if Marquee does not rely on Rule 434 under the
Act, the prospectus first filed with the Commission pursuant to Rule 424(b)
under the Act or (C) if Marquee does not rely on Rule 434 under the Act and if
no prospectus is required to be filed pursuant to said Rule 424(b), such term
means the prospectus included in the Registration Statement; except that if
such registration statement or prospectus is amended or such prospectus is
supplemented, after the effective date of such registration statement and prior
to the Option Closing Date (as hereinafter defined), the terms "Registration
Statement" and "Prospectus" shall include such registration statement and
prospectus as so amended, and the term "Prospectus" shall include the
prospectus as so supplemented, or both, as the case may be; and the term "Term
Sheet" means any term sheet that satisfies the requirements
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of Rule 434 under the Act. Any reference to the "date" of a Prospectus that
includes a Term Sheet shall mean the date of such Term Sheet.
(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus. At the time the Registration
Statement becomes effective and at all times subsequent thereto up to and on
the Closing Date (as hereinafter defined) or the Option Closing Date, as the
case may be, (i) the Registration Statement and Prospectus will in all material
respects conform to the requirements of the Act and the Rules and Regulations;
and (ii) neither the Registration Statement nor the Prospectus will include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make statements therein not misleading;
provided, however, that Marquee makes no representations, warranties or
agreements as to information contained in or omitted from the Registration
Statement or Prospectus in reliance upon, and in conformity with, written
information furnished to Marquee by or on behalf of the Underwriters
specifically for use in the preparation thereof. It is understood that the
statements set forth in the Prospectus on page 2 with respect to stabilization,
under "Risk Factors-Possible Restrictions on Market-Making Activities in
Company's Securities," under the heading "Underwriting" and the identity of
counsel to the Underwriters under the heading "Legal Matters" constitute the
only information furnished in writing by or on behalf of the several
Underwriters for inclusion in the Registration Statement and Prospectus, as the
case may be.
(c) Each of Marquee and the Merger Subsidiaries (as herein
defined) has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the jurisdiction of its incorporation, with
full power and authority (corporate and other) to own its properties and
conduct its respective business as described in the Prospectus and is duly
qualified to do business as a foreign corporation and is in good standing in
all other jurisdictions in which the nature of its respective business or the
character or location of its properties requires such qualification, except
where failure to so qualify would not materially affect the business,
properties or financial condition of Marquee and the Merger Subsidiaries, taken
as a whole.
(d) The authorized, issued and outstanding capital stock of
Marquee as of September 30, 1996 is as set forth in the Prospectus under
"Capitalization;" the shares of issued and outstanding capital stock of Marquee
set forth thereunder have been duly authorized, validly issued and are fully
paid and non-assessable; except as set forth in the Prospectus, no options,
warrants, or other rights to purchase, agreements or other obligations to
issue, or agreements or other rights to convert any obligation into, any shares
of capital stock of Marquee have been granted or entered into by Marquee; and
the capital stock conforms to all statements relating thereto contained in the
Registration Statement and Prospectus.
(e) The Units and the Shares are duly authorized, and when
issued and delivered pursuant to this Agreement, will be duly authorized,
validly issued, fully paid and nonassessable and free of preemptive rights of
any security holder of Marquee. Neither the filing of the Registration
Statement nor the offering or sale of the Units as contemplated in this
Agreement gives rise to any rights, other than those which have been waived or
satisfied, for or
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relating to the registration of any shares of Common Stock, except as
described in the Registration Statement and Prospectus.
The Warrants have been duly authorized and, when issued and delivered
pursuant to this Agreement, will have been duly executed, issued and delivered
and will constitute valid and legally binding obligations of Marquee
enforceable in accordance with their terms and entitled to the benefits
provided by the warrant agreement pursuant to which such Warrants are to be
issued (the "Warrant Agreement"), which will be substantially in the form filed
as an exhibit to the Registration Statement. The shares of Common Stock
issuable upon exercise of the Warrants have been reserved for issuance upon the
exercise of the Warrants and when issued in accordance with the terms of the
Warrants and Warrant Agreement, will be duly and validly authorized, validly
issued, fully paid and non-assessable and free of preemptive rights and no
personal liability will attach to the ownership thereof. The Warrant Agreement
has been duly authorized and, when executed and delivered pursuant to this
Agreement, will have been duly executed and delivered and will constitute the
valid and legally binding obligation of Marquee enforceable in accordance with
its terms. The Warrants and the Warrant Agreement conform to the respective
descriptions thereof in the Registration Statement and Prospectus.
The Shares and the Warrants underlying the Unit Purchase Option have
been duly authorized and, when duly issued and delivered, such Warrants will
constitute valid and legally binding obligations of Marquee enforceable in
accordance with their terms and entitled to the benefits provided by the Unit
Purchase Option and the Warrant Agreement. The Shares included in the Unit
Purchase Option (and the shares of Common Stock issuable upon exercise of such
Warrants) when issued and sold in accordance with the terms of the Unit
Purchase Option, will be duly authorized, validly issued, fully paid and
non-assessable and free of preemptive rights and no personal liability will
attach to the ownership thereof.
(f) This Agreement, the Unit Purchase Option and the Warrant
Agreement have been duly and validly authorized, executed and delivered by
Marquee. Marquee has full power and lawful authority to authorize, issue and
sell the Units to be sold by it hereunder on the terms and conditions set forth
herein, and no consent, approval, authorization or other order of any
governmental authority is required in connection with such authorization,
execution and delivery or with the authorization, issue and sale of the Units
or the Unit Purchase Option, except such as may be required for the
registration of the Units under the Act or by the National Association of
Securities Dealers, Inc. (the "NASD") or state securities laws.
(g) Marquee does not own, directly or indirectly, any capital
stock or other equity ownership or proprietary interests in any other
corporation, association, trust, partnership, joint venture or other entity
other than the subsidiaries (the "Merger Subsidiaries") which will merge into
each of Athletes and Artists, Inc., a New York corporation ("A&A") and Sports
Management & Television International, Inc., a Connecticut corporation ("SMTI")
simultaneously on the First Closing Date (as hereinafter defined) and A&A
Acquisition Corp. Each of the Merger Subsidiaries is a corporation duly
organized and validly existing under the
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laws of the state of the jurisdiction
of its incorporation. Marquee owns all of the capital stock of each of the
Merger Subsidiaries free and clear of all liens, security interests and
encumbrances. Marquee has entered into amended and restated acquisition
agreements (the "Acquisition Agreements") with each of A&A and SMTI, among
other parties, pursuant to which, upon completion of financings aggregating
at least $13,800,000 in gross proceeds to Marquee, A&A and SMTI have each agreed
to merge with one of the Merger Subsidiaries. Each of the Acquisition
Agreements is in full force and effect and neither the Company nor the other
parties thereto are in breach of or default under either of such agreements.
(h) Except as described in the Prospectus, neither the
Company nor any of the Merger Subsidiaries is in violation, breach or default
of or under, any indenture, mortgage, deed of trust, loan agreement or other
agreement (including the Acquisition Agreements) or instrument to which the
Company or any of the Merger Subsidiaries is a party or by which the Company or
any of the Merger Subsidiaries may be bound or to which any of the property or
assets of the Company or any of the Merger Subsidiaries is subject, including
the Acquisition Agreements, which violation, breach or default would have a
material adverse effect on either the Company or the Merger Subsidiaries; and
consummation of the transactions herein contemplated and the fulfillment of the
terms of this Agreement will not conflict with, or result in a breach or
violation of, any of the terms or provisions of, or constitute a default under,
or result in the creation or imposition of any lien, charge or encumbrance upon
any of the property or assets of the Company or any of the Merger Subsidiaries
pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company or any Merger Subsidiary
is a party or by which the assets of the Company or any of the Merger
Subsidiaries is subject, nor will such action result in any violation of the
provisions of the certificate of incorporation or the by-laws of the Company or
any of the Merger Subsidiaries, as amended, or any statute or any order, rule
or regulation applicable to the Company or any of the Merger Subsidiaries of
any court or of any regulatory authority or other governmental body having
jurisdiction over the Company or any of the Merger Subsidiaries.
(i) Subject to the qualifications stated in the Prospectus,
each of Marquee and the Merger Subsidiaries has good and marketable title to
all properties and assets described in the Prospectus as owned by it, free and
clear of all liens, charges, encumbrances or restrictions, except such as are
not materially significant or important in relation to its business; all of the
material leases and subleases under which Marquee or any of the Merger
Subsidiaries is the lessor or sublessor of properties or assets or under which
Marquee or any of the Merger Subsidiaries hold properties or assets as lessee
or sublessee as described in the Prospectus are in full force and effect, and,
except as described in the Prospectus, neither Marquee nor any of the Merger
Subsidiaries is in default in any material respect with respect to any of the
terms or provisions of any of such leases or subleases, and no claim has been
asserted by anyone adverse to rights of Marquee or any of the Merger
Subsidiaries as lessor, sublessor, lessee or sublessee under any of the leases
or subleases mentioned above, or affecting or questioning the right of Marquee
or any of the Merger Subsidiaries to continued possession of the leased or
subleased premises or assets under any such lease or sublease except as
described or referred to in the Prospectus; and each of
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Marquee and the Merger Subsidiaries owns or leases all such properties described
in the Prospectus as are necessary to their respective operations as now
conducted and, except as otherwise stated in the Prospectus, as proposed to
be conducted as set forth in the Prospectus.
(j) Each of Ernst & Young LLP and ▇▇▇▇▇ ▇▇▇▇▇▇ CPA, who have
given their respective reports on certain financial statements filed and to be
filed with the Commission as a part of the Registration Statement, which are
incorporated in the Prospectus, are with respect to the Company, independent
public accountants as required by the Act and the Rules and Regulations.
(k) The financial statements, together with related notes,
set forth in the Prospectus (or if the Prospectus is not in existence, the most
recent Preliminary Prospectus) present fairly the financial position and
results of operations and changes in cash flow of Marquee and A&A and SMTI on
the basis stated in the Registration Statement, at the respective dates and for
the respective periods to which they apply (subject in the case of financial
statements for interim periods, to normal and recurring year end adjustments).
Said statements and related notes have been prepared in accordance with
generally accepted accounting principles applied on a basis which is consistent
during the periods involved. No other financial statements or schedules are
required to be included in the Registration Statement. The information set
forth under the captions "Dilution," "Capitalization," and "Selected Financial
Data" in the Prospectus fairly present, on the basis stated in the Prospectus,
the information included therein. The pro forma financial information included
in the Prospectus (or the Preliminary Prospectus) has been prepared in
accordance with the Commission's rules and guidelines with respect to pro forma
financial statements, and, in the opinion of the Company, includes all
adjustments necessary to present fairly the pro forma financial condition and
results of operations at the respective dates and for the respective periods
indicated and, in the opinion of the Company, all assumptions used in preparing
such pro forma financial statements are reasonable.
(l) Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus),
neither Marquee nor any of the Merger Subsidiaries has incurred any liabilities
or obligations, direct or contingent, not in the ordinary course of business,
or entered into any transaction not in the ordinary course of business, in
either case which are material to the business of Marquee or any of the Merger
Subsidiaries, and there has not been any change in the capital stock of, or any
incurrence of short-term or long-term debt by, the Company or any issuance of
options, warrants or other rights to purchase the capital stock of the Company
or any adverse change or any development involving, so far as the Company can
now reasonably foresee, a prospective adverse change in the condition
(financial or other), net worth, results of operations, business, key personnel
or properties of it which would be material to the business or financial
condition of Marquee or any of the Merger Subsidiaries and neither Marquee nor
any of the Merger Subsidiaries has become a party to, and neither the business
nor the property of Marquee or any of the Merger Subsidiaries has become the
subject of, any material litigation whether or not in the ordinary course of
business.
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(m) Except as set forth in the Prospectus, there is not now
pending or, to the knowledge of the Company, threatened, any action, suit or
proceeding to which Marquee or any of the Merger Subsidiaries is a party before
or by any court or governmental agency or body, nor are there any actions,
suits or proceedings related to environmental matters or related to
discrimination on the basis of age, sex, religion or race, in either case which
might result in any material adverse change in the condition (financial or
other), business prospects, net worth, or properties of Marquee or any the
Merger Subsidiaries, and no labor disputes involving the employees of Marquee
or any of the Merger Subsidiaries exist or are imminent which might be expected
to materially adversely affect the conduct of the business, property or
operations or the financial condition or results of operations of Marquee or
any of the Merger Subsidiaries.
(n) Except as disclosed in the Prospectus, Marquee and each
of the Merger Subsidiaries have filed, or have duly obtained extension for the
time for filing of, all necessary federal, state and foreign income and
franchise tax returns and has paid all taxes shown as due thereon; and there is
no tax deficiency which has been or to the knowledge of the Company might be
asserted against Marquee or any of the Merger Subsidiaries.
(o) Marquee and each of the Merger Subsidiaries have
sufficient licenses, permits and other governmental authorizations currently
required for the conduct of their business or the ownership of their properties
as described in the Prospectus and are in all material respects complying
therewith and own or possess adequate rights to use all material trademarks,
service marks, trade-names, trademark registrations, service ▇▇▇▇
registrations, copyrights and licenses necessary for the conduct of such
business and have not received any notice of conflict with the asserted rights
of others in respect thereof. To the best knowledge of the Company, none of the
activities or business of Marquee or any of the Merger Subsidiaries are in
violation of, or cause Marquee or any of the Merger Subsidiaries to violate,
any law, rule, regulation or order of the United States, any state, county or
locality, or of any agency or body of the United States or of any state, county
or locality, the violation of which would have a material adverse impact upon
the condition (financial or otherwise), business, property, prospective results
of operations, or net worth of Marquee and the Merger Subsidiaries, taken as a
whole.
(p) Neither Marquee nor any of the Merger Subsidiaries has,
directly or indirectly, at any time (i) made any contributions to any candidate
for political office, or failed to disclose fully any such contribution in
violation of law or (ii) made any payment to any state, federal or foreign
governmental officer or official, or other person charged with similar public
or quasi-public duties, other than payments or contributions required or
allowed by applicable law. The Company's internal accounting controls and
procedures are sufficient to cause the Company to comply in all material
respects with the Foreign Corrupt Practices Act of 1977, as amended.
(q) On the Closing Dates (hereinafter defined), all transfer
or other taxes, (including franchise, capital stock or other tax, other than
income taxes, imposed by any jurisdiction) if any, which are required to be
paid in connection with the sale and transfer of the
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Units to the several Underwriters hereunder will have been fully paid or
provided for by Marquee and all laws imposing such taxes will have been
fully complied with.
(r) All contracts and other documents of Marquee or any of
the Merger Subsidiaries which are, under the Rules and Regulations, required to
be filed as exhibits to the Registration Statement have been so filed.
(s) Neither Marquee nor any of the Merger Subsidiaries has
taken nor will take, directly or indirectly, any action designed to cause or
result in, or which has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of the shares of
Common Stock to facilitate the sale or resale of the Units hereby.
(t) Neither Marquee nor any of the Merger Subsidiaries has
entered into any agreement pursuant to which any person is entitled either
directly or indirectly to compensation from Marquee for services as a finder in
connection with the proposed public offering.
(u) Except as previously disclosed in writing by Marquee to
the Representative, no officer, director or 5% stockholder of Marquee or any of
the Merger Subsidiaries has any affiliation or association with any member of
the NASD.
(v) Neither Marquee nor any of the Merger Subsidiaries is,
nor upon receipt of the proceeds from the sale of the Units will be, an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, and the rules and regulations thereunder.
(w) Neither Marquee nor any of the Merger Subsidiaries has
distributed, nor will it distribute prior to the First Closing Date, any
offering material in connection with the offering and sale of the Units other
than the Preliminary Prospectus, the Prospectus, the Registration Statement or
the other materials permitted by the Act, if any.
(x) Marquee and each of the Merger Subsidiaries have complied
with all provisions of Section 517.075 Florida Statutes relating to doing
business with the government of Cuba or with any person or affiliate located in
Cuba.
2. Purchase, Delivery and Sale of the Units.
(a) Subject to the terms and conditions of this Agreement,
and upon the basis of the representations, warranties, and agreements herein
contained, Marquee agrees to issue and sell to the Underwriters, and each such
Underwriter agrees, severally and not jointly, to buy from Marquee at $5.00 per
Unit, at the place and time hereinafter specified, the respective number of
Units set forth opposite the names of the Underwriters in Schedule A attached
hereto (the "First Units") plus any additional Units which such Underwriters
may become obligated to purchase pursuant to the provisions of Section 9
hereof. The First Units shall consist of 3,350,000 Units to be purchased from
Marquee.
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Delivery of the First Units against payment therefor shall
take place at the offices of Royce Investment Group, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇ (or at such other place as may be designated by
agreement between you and Marquee) at 10:00 a.m., New York time, on, December
11, 1996, or at such later time and date as you may designate, such time and
date of payment and delivery for the First Units being herein called the
"First Closing Date."
(b) In addition, subject to the terms and conditions of this
Agreement, and upon the basis of the representations, warranties and agreements
herein contained, Marquee hereby grants an option to the several Underwriters
to purchase all or any part of an aggregate of an additional 502,500 Units at
the same price per Unit as the Underwriters shall pay for the First Units being
sold pursuant to the provisions of subsection (a) of this Section 2 (such
additional Units being referred to herein as the "Option Units"). This option
may be exercised within 45 days after the effective date of the Registration
Statement upon notice by the Representative to Marquee advising as to the
amount of Option Units as to which the option is being exercised, the names and
denominations in which the certificates for such Option Units are to be
registered and the time and date when such certificates are to be delivered.
Such time and date shall be determined by the Representative but shall not be
earlier than four nor later than ten full business days after the exercise of
said option, nor in any event prior to the First Closing Date, and such time
and date is referred to herein as the "Option Closing Date." Delivery of the
Option Units against payment therefor shall take place at the offices of Royce
Investment Group, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇ (or at
such other place as may be designated by agreement between you and Marquee).
The number of Option Units to be purchased by each Underwriter, if any, shall
bear the same percentage to the total number of Option Units being purchased by
the several Underwriters pursuant to this subsection (b) as the number of Units
such Underwriter is purchasing bears to the total number of the First Units
being purchased pursuant to subsection (a) of this Section 2, as adjusted, in
each case by the Representative in such manner as the Representative may deem
appropriate. The option granted hereunder may be exercised only to cover
overallotments in the sale by the Underwriters of First Units referred to in
subsection (a) above. In the event Marquee declares or pays a dividend or
distribution on its Common Stock, whether in the form of cash, shares of Common
Stock or any other consideration, prior to the Option Closing Date, such
dividend or distribution shall also be paid on the Option Units on the Option
Closing Date.
(c) Marquee will make the certificates for the securities
comprising the Units to be purchased by the Underwriters hereunder available to
you for checking at least two full business days prior to the First Closing
Date or the Option Closing Date (which are collectively referred to herein as
the "Closing Dates"). The certificates shall be in such names and denominations
as you may request, at least two full business days prior to the Closing Dates.
Time shall be of the essence and delivery at the time and place specified in
this Agreement is a further condition to the obligations of each Underwriter.
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Definitive certificates in negotiable form for the Units to
be purchased by the Underwriters hereunder will be delivered by Marquee to you
for the accounts of the several Underwriters against payment of the respective
purchase prices by the several Underwriters, by certified or bank cashier's
checks in New York Clearing House funds, payable to the order of Marquee.
In addition, in the event the Underwriters exercise the
option to purchase from Marquee all or any portion of the Option Units pursuant
to the provisions of subsection (b) above, payment for such Units shall be made
to or upon the order of Marquee by certified or bank cashier's checks payable
in New York Clearing House funds at the offices of Royce Investment Group,
Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇ (or at such other place as
may be designated by agreement between you and Marquee) at the time and date of
delivery of such Units as required by the provisions of subsection (b) above,
against receipt of the certificates for such Units by the Representative for
the respective accounts of the several Underwriters registered in such names
and in such denominations as the Representative may request.
It is understood that you, individually and not as
Representative of the several Underwriters, may (but shall not be obligated to)
make any and all payments required pursuant to this Section 2 on behalf of any
Underwriters whose check or checks shall not have been received by the
Representative at the time of delivery of the Units to be purchased by such
Underwriter or Underwriters. Any such payment by you shall not relieve any such
Underwriter or underwriters of any of its or their obligations hereunder. It is
also understood that you individually, rather than all of the Underwriters, may
(but shall not be obligated to) purchase the Option Units referred to in
subsection (b) of this Section 2, but only to cover overallotments.
It is understood that the several Underwriters propose to
offer the Units to be purchased hereunder to the public upon the terms and
conditions set forth in the Registration Statement, after the Registration
Statement becomes effective.
3. Covenants of the Company. The Company covenants and agrees with the
several Underwriters that:
(a) Marquee will use its best efforts to cause the
Registration Statement to become effective as promptly as possible. If
required, Marquee will file the Prospectus or any Term Sheet that constitutes a
part thereof and any amendment or supplement thereto with the Commission in the
manner and within the time period required by Rules 434 and 424(b) under the
Act. Upon notification from the Commission that the Registration Statement has
become effective, Marquee will so advise you and will not at any time, whether
before or after the effective date, file the Prospectus, Term Sheet or any
amendment to the Registration Statement or supplement to the Prospectus of
which you shall not previously have been advised and furnished with a copy or
to which you or your counsel shall have objected in writing or which is not in
compliance with the Act and the Rules and Regulations. At any time prior to the
later of (A) the completion by all of the Underwriters of the distribution of
the Units contemplated hereby (but in
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no event more than nine months after the date on which the Registration
Statement shall have become or been declared effective) and (B) 25 days after
the date on which the Registration Statement shall have become or been declared
effective, Marquee will prepare and file with the Commission, promptly upon
your request, any amendments or supplements to the Registration Statement or
Prospectus which, in your opinion, may be necessary or advisable in connection
with the distribution of the Units.
As soon as Marquee is advised thereof, Marquee will advise
you, and confirm the advice in writing, of the receipt of any comments of the
Commission, of the effectiveness of any post-effective amendment to the
Registration Statement, of the filing of any supplement to the Prospectus or
any amended Prospectus, of any request made by the Commission for amendment of
the Registration Statement or for supplementing of the Prospectus or for
additional information with respect thereto, of the issuance by the Commission
or any state or regulatory body of any stop order or other order or threat
thereof suspending the effectiveness of the Registration Statement or any order
preventing or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Units for offering in any jurisdiction,
or of the institution of any proceedings for any of such purposes, and will use
its best efforts to prevent the issuance of any such order, and, if issued, to
obtain as soon as possible the lifting thereof.
Marquee has caused to be delivered to you copies of each
Preliminary Prospectus, and Marquee has consented and hereby consents to the
use of such copies for the purposes permitted by the Act. Marquee authorizes
the Underwriters and dealers to use the Prospectus in connection with the sale
of the Units for such period as in the opinion of counsel to the several
Underwriters the use thereof is required to comply with the applicable
provisions of the Act and the Rules and Regulations. In case of the happening,
at any time within such period as a Prospectus is required under the Act to be
delivered in connection with sales by an underwriter or dealer of any event of
which Marquee has knowledge and which materially affects the Company or the
securities of Marquee, or which in the opinion of counsel for the Company or
counsel for the Underwriters should be set forth in an amendment to the
Registration Statement or a supplement to the Prospectus in order to make the
statements therein not then misleading, in light of the circumstances existing
at the time the Prospectus is required to be delivered to a purchaser of the
Units or in case it shall be necessary to amend or supplement the Prospectus to
comply with law or with the Rules and Regulations, the Company will notify you
promptly and forthwith prepare and furnish to you copies of such amended
Prospectus or of such supplement to be attached to the Prospectus, in such
quantities as you may reasonably request, in order that the Prospectus, as so
amended or supplemented, will not contain any untrue statement of a material
fact or omit to state any material facts necessary in order to make the
statements in the Prospectus, in light of the circumstances under which they
are made, not misleading. The preparation and furnishing of any such amendment
or supplement to the Registration Statement or amended Prospectus or supplement
to be attached to the Prospectus shall be without expense to the Underwriters,
except that in case any Underwriter is required, in connection with the sale of
the Units to deliver a Prospectus nine months or more after the effective date
of the Registration Statement, Marquee will upon request of and at the expense
of the Underwriter, amend or
-11-
supplement the Registration Statement and Prospectus and furnish the Underwriter
with reasonable quantities of prospectuses complying with Section 10(a)(3) of
the Act.
The Company will comply with the Act, the Rules and
Regulations and the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations thereunder in connection with the offering
and issuance of the Units.
(b) Marquee will use its best efforts to qualify to register
the Units for sale under the securities or "blue sky" laws of such
jurisdictions as the Representative may designate and will make such
applications and furnish such information as may be required for that purpose
and to comply with such laws, provided Marquee shall not be required to qualify
as a foreign corporation or a dealer in securities or to execute a general
consent of service of process in any jurisdiction in any action other than one
arising out of the offering or sale of the Units. Marquee will, from time to
time, prepare and file such statements and reports as are or may be required to
continue such qualification in effect for so long a period as the Underwriters
may reasonably request.
(c) If the sale of the Units provided for herein is not
consummated for any reason caused by the Company, Marquee shall pay all costs
and expenses incident to the performance of Marquee's obligations hereunder,
including but not limited to, all of the expenses itemized in Section 8,
including the accountable out-of-pocket expenses of the Representative.
(d) Marquee will use its best efforts to (i) cause a
registration statement under the Exchange Act to be declared effective
concurrently with the completion of this offering and will notify the
Representative in writing immediately upon the effectiveness of such
registration statement, and (ii) if requested by the Representative, to obtain
a listing on the Pacific Stock Exchange and to obtain and keep current a
listing in the Standard & Poors or ▇▇▇▇▇'▇ Industrial OTC Manual.
(e) For so long as Marquee is a reporting company under
either Section 12(g) or 15(d) of the Exchange Act, Marquee, at its expense,
will furnish to its stockholders an annual report (including financial
statements audited by independent public accountants), in reasonable detail and
at its expense, will furnish to you during the period ending five (5) years
from the date hereof, (i) as soon as practicable after the end of each fiscal
year, a balance sheet of Marquee and any of its subsidiaries as at the end of
such fiscal year, together with statements of income, surplus and cash flow of
Marquee and any subsidiaries for such fiscal year, all in reasonable detail and
accompanied by a copy of the certificate or report thereon of independent
accountants; (ii) as soon as practicable after the end of each of the first
three fiscal quarters of each fiscal year, consolidated summary financial
information of Marquee for such quarter in reasonable detail; (iii) as soon as
they are available, a copy of all reports (financial or other) mailed to
security holders; (iv) as soon as they are available, a copy of all
non-confidential reports and financial statements furnished to or filed with
the Commission or any securities exchange or automated quotation
-12-
system on which any class of securities of Marquee is listed; and (v) such
other information as you may from time to time reasonably request.
(f) In the event Marquee has an active subsidiary or
subsidiaries, such financial statements referred to in subsection (e) above
will be on a consolidated basis to the extent the accounts of Marquee and its
subsidiary or subsidiaries are consolidated in reports furnished to its
stockholders generally.
(g) Marquee will deliver to you at or before the First
Closing Date two signed copies of the Registration Statement including all
financial statements and exhibits filed therewith, and of all amendments
thereto, and will deliver to the several Underwriters such number of conformed
copies of the Registration Statement, including such financial statements but
without exhibits, and of all amendments thereto, as the several Underwriters
may reasonably request. Marquee will deliver to or upon the order of the
several Underwriters, from time to time until the effective date of the
Registration Statement, as many copies of any Preliminary Prospectus filed with
the Commission prior to the effective date of the Registration Statement as the
Underwriters may reasonably request. Marquee will deliver to the Underwriters
on the effective date of the Registration Statement and thereafter for so long
as a Prospectus is required to be delivered under the Act, from time to time,
as many copies of the Prospectus, in final form, or as thereafter amended or
supplemented, as the Underwriters may from time to time reasonably request.
Marquee, not later than (i) 5:00 p.m., New York City time, on the date of
determination of the public offering price, if such determination occurred at
or prior to 12:00 noon, New York City time, on such date or (ii) 6:00 p.m., New
York City time, on the business day following the date of determination of the
public offering price, if such determination occurred after 12:00 noon, New
York City time, on such date, will deliver to the Underwriters, without charge,
as many copies of the Prospectus and any amendment or supplement thereto as the
Underwriters may reasonably request for purposes of confirming orders that are
expected to settle on the First Closing Date.
(h) Marquee will make generally available to its security
holders and to the registered holders of its Warrants and deliver to you as
soon as it is practicable to do so but in no event later than 90 days after the
end of twelve months after its current fiscal quarter, an earnings statement
(which need not be audited) covering a period of at least 12 consecutive months
beginning after the effective date of the Registration Statement, which shall
satisfy the requirements of Section 11(a) of the Act.
(i) Marquee will apply the net proceeds from the sale of the
Units for the purposes set forth under "Use of Proceeds" in the Prospectus, and
will file such reports with the Commission with respect to the sale of the
Units and the application of the proceeds therefrom as may be required pursuant
to Rule 463 under the Act.
(j) Marquee will, promptly upon your request, prepare and
file with the Commission any amendments or supplements to the Registration
Statement, Preliminary
-13-
Prospectus or Prospectus and take any other action, which in the reasonable
opinion of Bachner, Tally, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel to the several
Underwriters, may be reasonably necessary or advisable in connection with the
distribution of the Units, and will use its best efforts to cause the same
to become effective as promptly as possible.
(k) Marquee will reserve and keep available that maximum
number of its authorized but unissued securities which are issuable upon
exercise of the Warrants and the Unit Purchase Option outstanding from time to
time.
(l) The Company will deliver to the Representative agreements
to the effect that for a period of 24 months from the First Closing Date, no
officer, director or stockholder of Marquee (other than "Outside Stockholders"
(as herein defined)) (such officers, directors and stockholders being herein
referred to as the "Principal Stockholders"), will directly or indirectly,
offer, sell (including any short sale), grant any option for the sale of,
acquire any option to dispose of, or otherwise dispose of any securities of
Marquee provided, however, that (i) the restrictions shall only apply to those
securities owned by the Principal Stockholders at the effective date of the
Prospectus, those securities to be received by the Principal Stockholders in
connection with the conversion of debentures issued in the Private Placement
(as such term is defined in the Prospectus) and those securities to be received
by the Principal Stockholders in connection with the Acquisitions (as such is
defined in the Prospectus), and (ii) with respect to any securities which were
not acquired or issued upon conversion of securities acquired in connection
with the Private Placement, the restrictions shall not apply to transfers to
affiliates of the Principal Stockholders after receipt of the written consent
of the Representative on behalf of the Underwriters (which consent shall not be
unreasonably withheld). In order to enforce this covenant, Marquee shall impose
stop-transfer instructions with respect to the securities owned by the
Principal Stockholders until the end of such period. And for a period of twelve
months from the First Closing Date, stockholders of Marquee who were not
designees of Marquee in the private placement in which the Representative acted
as placement agent (the "Outside Stockholders") will not directly or
indirectly, offer, sell (including any short sale), grant any option for the
sale of, acquire any option to dispose of, or otherwise dispose of any
securities of Marquee. In order to enforce this covenant, Marquee shall impose
stop-transfer instructions with respect to the securities owned by the Outside
Stockholders until the end of such period.
(m) Prior to completion of this offering, Marquee will make
all filings required, including registration under the Exchange Act, to obtain
the listing of the Units, Common Stock, and Warrants on the Nasdaq Small Cap
Market (or a listing on such other market or exchange as the Underwriters
consent to), and will effect and maintain such listing for at least five years
from the date of this Agreement.
(n) Each of Marquee and the Principal Stockholders represents
that it or he has not taken and agrees that it or he will not take, directly or
indirectly, any action designed to or which has constituted or which might
reasonably be expected to cause or result in the stabilization
-14-
or manipulation of the price of the Units, Shares or the Warrants or to
facilitate the sale or resale of the Securities.
(o) On the Closing Date and simultaneously with the delivery
of the Units, Marquee shall execute and deliver to you, individually and not as
Representative of the Underwriters, the Unit Purchase Option. The Unit Purchase
Option will be substantially in the form of the Representative's Unit Purchase
Option filed as an Exhibit to the Registration Statement.
(p) During the 18 month period commencing on the date of this
Agreement, Marquee will not, without the prior written consent of the
Representative, grant options to purchase shares of Common Stock at an exercise
price less than the greater of (i) the initial public offering price of the
Units (without allocating any value to the Warrants) or (ii) the fair market
value of the Common Stock on the date of grant. During the six month period
commencing on the date of this Agreement, Marquee will not grant options to
any current officer of Marquee, or to any individual who will become an
officer of Marquee upon the First Closing Date. During the three year period
from the First Closing Date, Marquee will not offer or sell any of its
securities pursuant to Regulation S under the Act, without the prior written
consent of the Representative, which consent shall not be unreasonably
withheld.
(q) Marquee will not, without the prior written consent of
the Representative, grant registration rights to any person which are
exercisable sooner than 13 months from the First Closing Date.
(r) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ shall be President of Marquee on the
Closing Dates. Marquee has obtained key person life insurance in an amount of
not less than $2 million on the life of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, and will use its
best efforts to maintain such insurance during the three year period commencing
with the First Closing Date. In the event that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇'▇ employment
with Marquee is terminated prior to three years following the First Closing
Date, Marquee will use its best efforts to obtain a comparable policy on the
life of his successor for the balance of the three year period. For a period of
thirteen months from the First Closing Date, the compensation of the executive
officers of Marquee shall not be increased from the compensation levels
disclosed in the Prospectus.
(s) So long as any Warrants are outstanding, Marquee shall
use its best efforts to cause post-effective amendments to the Registration
Statement to become effective in compliance with the Act and without any lapse
of time between the effectiveness of any such post-effective amendments and
cause a copy of each Prospectus, as then amended, to be delivered to each
holder of record of a Warrant and to furnish to each Underwriter and dealer as
many copies of each such Prospectus as such Underwriter or dealer may
reasonably request. Marquee shall not call for redemption any of the Warrants
unless a registration statement covering the securities underlying the Warrants
has been declared effective by the Commission and remains current at least
until the date fixed for redemption.
-15-
(t) Upon the exercise of any Warrant or Warrants after
December 5, 1997, Marquee will pay to Royce Investment Group, Inc., in its
individual capacity and not as Representative of the Underwriters, a fee (the
"Solicitation Fee") of 5% of the aggregate exercise price of the Warrants, of
which % may be reallowed to the dealer who solicited the exercise (which may
also be Royce Investment Group, Inc.) if (i) the market price of Marquee's
Common Stock is greater than the exercise price of the Warrants on the date of
exercise; (ii) the exercise of the Warrant was solicited by a member ("Member")
of the NASD, (iii) the Warrant is not held in a discretionary account; (iv) the
disclosure of compensation arrangements has been made in documents provided to
customers, both as part of the original offering and at the time of exercise,
and (v) the solicitation of the Warrant was not in violation of Rule 10b-6
promulgated under the Exchange Act. Marquee agrees not to solicit the exercise
of any Warrants other than through Royce Investment Group, Inc., without the
prior written consent of Royce, and will not authorize any other dealer to
engage in such solicitation, without the prior written consent of Royce
Investment Group, Inc. The Solicitation Fee shall only be payable to the extent
that the Representative (or Member) who solicited the exercise of any warrant
is designated in writing by the holder of the warrant as having solicited the
exercise of such warrant.
(u) For a period of five (5) years from the Effective Date
Marquee (i) at its expense, shall cause its regularly engaged independent
certified public accountants to review (but not audit) Marquee's financial
statements for each of the first three (3) fiscal quarters prior to the
announcement of quarterly financial information, the filing of Marquee's 10-Q
quarterly report and the mailing of quarterly financial information to
stockholders and (ii) shall not change its accounting firm without the prior
written consent of the Chairman or the President of the Representative, which
consent shall not be unreasonably withheld.
(v) As promptly as practicable after the Closing Date,
Marquee will prepare, at its own expense, hard cover "bound volumes" relating
to the offering, and will distribute at least four of such volumes to the
individuals designated by the Representative or counsel to the Underwriters.
(w) For a period of five years from the First Closing Date
(i) the Representative shall have the right, but not the obligation, to
designate an advisor to the Board of Directors of Marquee and (ii) Marquee
shall engage a public relations firm acceptable to the Representative.
(x) Marquee shall, for a period of six years after the date
of this Agreement, submit such reports to the Secretary of the Treasury and to
stockholders, as the Secretary may require, pursuant to Section 1202 of the
Internal Revenue Code, as amended, or regulations promulgated thereunder, in
order for Marquee to qualify as a "small business" so that stockholders may
realize special tax treatment with respect to their investment in Marquee.
(y) On the Closing Date, Marquee shall cause and take no
action to prevent each of the merger of A&A and a Merger Subsidiary of Marquee
and the merger of SMTI and a Merger Subsidiary of Marquee, substantially on the
terms and conditions set forth in the
-16-
Acquisition Agreements and the Prospectus, subject to such changes therein as
are not material and are agreed to by the Representative.
4. Conditions of Underwriters' Obligations. The obligations of the
several Underwriters to purchase and pay for the Units which they have
respectively agreed to purchase hereunder, are subject to the accuracy (as of
the date hereof, and as of the Closing Dates) of and compliance with the
representations and warranties of the Company herein, to the performance by the
Company of its obligations hereunder, and to the following conditions:
(a) The Registration Statement shall have become effective
and you shall have received notice thereof not later than 10:00 A.M., New York
time, on the date on which the amendment to the registration statement
originally filed with respect to the Units or to the Registration Statement, as
the case may be, containing information regarding the initial public offering
price of the Units has been filed with the Commission, or at such later time
and date as shall have been agreed to by the Representative; if required, the
Prospectus or any Term Sheet that constitutes a part thereof and any amendment
or supplement thereto shall have been filed with the Commission in the manner
and within the time period required by Rule 434 and 424(b) under the Act; on or
prior to the Closing Dates no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that or a
similar purpose shall have been instituted or shall be pending or, to your
knowledge or to the knowledge of Marquee, shall be contemplated by the
Commission; any request on the part of the Commission for additional information
shall have been complied with to the reasonable satisfaction of Bachner, Tally,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel to the several Underwriters;
(b) At the First Closing Date, you shall have received the
opinion, addressed to the Underwriters, dated as of the First Closing Date, of
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Company, in form and substance satisfactory
to counsel for the Underwriters, to the effect that:
(i) Each of Marquee and the Merger Subsidiaries has been
duly incorporated and is validly existing as a corporation in good standing
under the laws of the state of jurisdiction of its incorporation, with full
corporate power and authority to own its respective properties and conduct its
respective business as described in the Registration Statement and Prospectus
and is duly qualified or licensed to do business as a foreign corporation and
is in good standing in each jurisdiction in which the ownership or leasing of
its respective properties or conduct of its respective requires such
qualification except where the failure to so qualify, or be so licensed would
not have a material adverse affect on the business, properties or financial
condition of the Company and each of the Merger Subsidiaries;
(ii) to the best knowledge of such counsel, (a) Marquee and
each of the Merger Subsidiaries have obtained, or are in the process of
obtaining, all licenses, permits and other governmental authorizations
necessary to the conduct of their respective businesses as described in the
Prospectus, (b) such licenses, permits and other governmental authorizations
-17-
obtained are in full force and effect, and (c) Marquee and each of the Merger
Subsidiaries are in all material respects complying therewith;
(iii) the authorized capitalization of Marquee as of
September 30,1996 is as set forth under "Capitalization" in the Prospectus; all
shares of Marquee's outstanding stock requiring authorization for issuance by
Marquee's board of directors have been duly authorized and are non-assessable
and conform to the description thereof contained in the Prospectus and, to the
best of such counsel's knowledge, after due inquiry, such shares were validly
issued and are fully paid; the outstanding shares of Common Stock of Marquee
have not been issued in violation of any statutory preemptive rights or, to the
best knowledge of such counsel, any other preemptive rights, of any shareholder
and the shareholders of Marquee do not have any preemptive rights or other
rights to subscribe for or to purchase, nor are there any restrictions upon the
voting or transfer of any of the Common Stock (except as described in the
Registration Statement and Prospectus), the Warrants, the Unit Purchase Option
and the Warrant Agreement conform to the respective descriptions thereof
contained in the Prospectus; the Shares have been, and the shares of Common
Stock to be issued upon exercise of the Warrants and the Unit Purchase Option,
upon issuance in accordance with the terms of such Warrants, the Warrant
Agreement and Unit Purchase Option have been duly authorized and, when issued
and delivered, will be duly and validly issued, fully paid, non-assessable,
free of any statutory preemptive rights and no personal liability will attach
to the ownership thereof; to the best of such counsel's knowledge, after due
inquiry, all prior sales by Marquee of Marquee's securities have been made in
compliance with or under an exemption from registration under the Act and
applicable state securities laws and no shareholders of Marquee have any
rescission rights with respect to the Company's securities; a sufficient
number of shares of Common Stock has been reserved for issuance upon exercise
of the Warrants and Unit Purchase Option; and to the best of such counsel's
knowledge, neither the filing of the Registration Statement nor the offering or
sale of the Units as contemplated by this Agreement gives rise to any
registration rights or other rights, other than those which have been waived or
satisfied for or relating to the registration of any shares of Common Stock;
(iv) this Agreement, the Unit Purchase Option and the
Warrant Agreement have been duly and validly authorized, executed and delivered
by Marquee and, assuming due execution by each other party hereto or thereto,
each constitutes a legal, valid and binding obligation of Marquee enforceable
against Marquee in accordance with its respective terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
affecting enforcement of creditors' rights and the application of equitable
principles in any action, legal or equitable, and except as rights to indemnity
or contribution may be limited by applicable law);
(v) the certificates evidencing the shares of Common Stock
are in valid and proper legal form; the Warrants will be exercisable for shares
of Common Stock of Marquee in accordance with the terms of the Warrants and at
the prices therein provided for; as of the date hereof the shares of Common
Stock of Marquee issuable upon exercise of the Warrants have been
-18-
duly authorized and reserved for issuance upon such exercise and such shares,
when issued upon such exercise in accordance with the terms of the Warrants and
at the price provided for, will be duly and validly issued, fully paid and
non-assessable;
(vi) such counsel knows of no pending or threatened legal
or governmental proceedings to which either Marquee or any of the Merger
Subsidiaries is a party which could materially adversely affect the business,
property, financial condition or operations of Marquee and the Merger
Subsidiaries taken as a whole; or which question the validity of the
Securities, this Agreement, the Warrant Agreement, the Unit Purchase Option or
the Acquisition Agreements, or of any action taken or to be taken by either
Marquee or any of the Merger Subsidiaries pursuant to this Agreement, the
Warrant Agreement, the Unit Purchase Option or the Acquisition Agreements; and
no such proceedings are known to such counsel to be contemplated against either
Marquee or any of the Merger Subsidiaries; there are no governmental
proceedings or regulations required to be described or referred to in the
Registration Statement which are not so described or referred to;
(vii) to the best of such counsel's knowledge, neither the
Company nor any of the Merger Subsidiaries is in violation of or default under
any indenture, mortgage, deed of trust, loan agreement or other agreement
(including the Acquisition Agreements) or instrument to which the Company or
any of the Merger Subsidiaries is a party or by which the Company or any of the
Merger Subsidiaries may be bound or to which any of the property or assets of
the Company or any of the Merger Subsidiaries is subject, which violation,
breach or default would have a material adverse effect on either the Company or
the Merger Subsidiaries; nor will the execution and delivery of this Agreement,
the Unit Purchase Option, the Warrant Agreement, or the Acquisition Agreements,
and the incurrence of the obligations herein and therein set forth and the
consummation of the transactions herein or therein contemplated, with or
without the giving of notice or the lapse of time, or both, result in a breach
or violation of, or constitute a default under the certificate of incorporation
or by-laws, in the performance or observance of any material obligation,
agreement, covenant or condition contained in any bond, debenture, note or
other evidence of indebtedness or in any contract, indenture, mortgage, loan
agreement, lease, joint venture or other agreement or instrument to which the
Company or any of the Merger Subsidiaries is a party or by which it or any of
their respective properties may be bound or in violation of any material order,
rule, regulation, writ, injunction, or decree of any government, governmental
instrumentality or court, domestic or foreign, in each case which breach,
violation or default would have a material adverse effect on either the Company
or the Merger Subsidiaries;
(viii) the Registration Statement has become effective
under the Act, and to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement is in effect, and no
proceedings for that purpose have been instituted or are pending before, or
threatened by, the Commission; the Registration Statement and the Prospectus
(except for the financial statements, notes thereto and other financial,
numerical, statistical and accounting data contained therein, or omitted
therefrom, as to which such counsel
-19-
need express no opinion) comply as to form in all material respects with the
applicable requirements of the Act and the Rules and Regulations;
(ix) such counsel has participated in conferences with
officers and other representatives of the Company, representatives of the
independent public accountants for the Company, the representatives of the
Underwriters and counsel to the Underwriters at which the contents of the
Registration Statement and Prospectus and related matters were discussed and,
although 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 (except as otherwise expressly set forth
in its opinion), on the basis of the foregoing no facts have come to the
attention of such counsel that caused it to believe that the Registration
Statement (other than the financial statements and notes thereto and other
financial, numerical, statistical and accounting data included therein, or
omitted therefrom, as to which it expresses no opinion), as amended or
supplemented, at the time such Registration Statement became effective and as
of the Closing Dates, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or that the Prospectus (other than
the financial statements and notes thereto and other financial, numerical,
statistical and accounting data included therein, or omitted therefrom as to
which it expresses no opinion), as amended or supplemented, as of its date and
the Closing Dates, contained an untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading;
(x) all descriptions in the Registration Statement and the
Prospectus, and any amendment or supplement thereto, of contracts and other
documents are accurate in all material respects and fairly present the
information required to be shown, and such counsel is familiar with all
contracts and other documents referred to in the Registration Statement and the
Prospectus and any such amendment or supplement or filed as exhibits to the
Registration Statement, and such counsel does not know of any contracts or
documents of a character required to be summarized or described therein or to
be filed as exhibits thereto which are not so summarized, described or filed;
(xi) no authorization, approval, consent, or license of any
governmental or regulatory authority or agency is necessary in connection with
the authorization, issuance, transfer, sale or delivery of the Units by
Marquee, in connection with the execution, delivery and performance of this
Agreement by Marquee or in connection with the taking of any action
contemplated herein, or the issuance of the Unit Purchase Option or the
Securities underlying the Unit Purchase Option, other than registrations or
qualifications of the Units under applicable state or foreign securities or
Blue Sky laws and registration under the Act; and
(xii) based upon a letter received by the Company from the
Nasdaq Stock Market, the Units, the Common Stock and the Warrants have been
duly authorized for quotation on the Nasdaq SmallCap Market.
-20-
Such opinions shall also cover such matters incident to the
transactions contemplated hereby as the Representative or counsel for the
Underwriters shall reasonably request. In rendering such opinion, such counsel
may rely upon certificates of any officer of the Company or public officials as
to matters of fact; and may rely as to all matters of law other than the law of
the United States or of the State of New York upon opinions of counsel
satisfactory to you, in which case the opinion shall state that they have no
reason to believe that you and they are not entitled to so rely.
(b) All corporate proceedings and other legal matters
relating to this Agreement, the Registration Statement, the Prospectus and
other related matters shall be reasonably satisfactory to or approved by
Bachner, Tally, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel to the several Underwriters, and
you shall have received from such counsel a signed opinion, dated as of the
First Closing Date, together with copies thereof for each of the other
Underwriters, with respect to the validity of the issuance of the Units, the
form of the Registration Statement and Prospectus (other than the financial
statements and other financial data contained therein), the execution of this
Agreement and other related matters as you may reasonably require. Marquee
and each of the Merger Subsidiaries shall have furnished to counsel for the
several Underwriters such documents as it may reasonably request for the
purpose of enabling it to render such opinion.
(c) You shall have received a letter prior to the effective
date of the Registration Statement and again on and as of the First Closing
Date from Ernst & Young LLP, independent public accountants for the Company,
substantially in the form approved by you, and including estimates of the
Company's revenues and results of operations for the period ending October 31,
1996 and results of the comparable period during the prior fiscal year.
(d) At the Closing Dates, (i) the representations and
warranties of the Company contained in this Agreement shall be true and correct
with the same effect as if made on and as of the Closing Dates and Marquee
shall have performed all of its obligations hereunder and satisfied all the
conditions on its part to be satisfied at or prior to such Closing Date; (ii)
the Registration Statement and the Prospectus and any amendments or supplements
thereto shall contain all statements which are required to be stated therein in
accordance with the Act and the Rules and Regulations, and shall in all
material respects conform to the requirements thereof, and neither the
Registration Statement nor the Prospectus nor any amendment or supplement
thereto shall contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading; (iii) there shall have been, since the
respective dates as of which information is given, no material adverse change,
or any development involving a prospective material adverse change, in the
business, properties, condition (financial or otherwise), results of
operations, capital stock, long-term or short-term debt or general affairs of
Marquee and the Merger Subsidiaries taken as a whole from that set forth in the
Registration Statement and the Prospectus, except changes which the
Registration Statement and Prospectus indicate might occur after the effective
date of the Registration Statement, and Marquee and each of the Merger
Subsidiaries shall not have incurred any material liabilities or entered into
any agreement not in the ordinary course of business other than as
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referred to in the Registration Statement and Prospectus; and (iv) except as set
forth in the Prospectus, no action, suit or proceeding at law or in equity shall
be pending or threatened against Marquee or any of the Merger Subsidiaries which
would be required to be set forth in the Registration Statement, and no
proceedings shall be pending or threatened against Marquee or any of the Merger
Subsidiaries before or by any commission, board or administrative agency in the
United States or elsewhere, wherein an unfavorable decision, ruling or finding
would materially and adversely affect the business, property, condition
(financial or otherwise), results of operations or general affairs of Marquee
and the Merger Subsidiaries taken as a whole, and (v) you shall have received,
at the First Closing Date, a certificate signed by each of the Chairman of the
Board or the President and the principal financial or accounting officer of
Marquee, dated as of the First Closing Date, evidencing compliance with the
provisions of this subsection (e).
(e) Upon exercise of the option provided for in Section
2(b) hereof, the obligations of the several Underwriters (or, at its option,
the Representative, individually) to purchase and pay for the Option Units
referred to therein will be subject (as of the date hereof and as of the Option
Closing Date) to the following additional conditions: (i) the Registration
Statement shall remain effective at the Option Closing Date, and no stop order
suspending the effectiveness thereof shall have been issued and no proceedings
for that purpose shall have been instituted or shall be pending, or, to your
knowledge or the knowledge of Marquee, shall be contemplated by the Commission,
and any reasonable request on the part of the Commission for additional
information shall have been complied with to the satisfaction of Bachner, Tally,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel to the several Underwriters.
(i) At the Option Closing Date there shall have been
delivered to you as Representative the signed opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
counsel for the Company, dated as of the Option Closing Date, in form and
substance satisfactory to Bachner, Tally, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel to the
several Underwriters, together with copies of such opinion for each of the
other several Underwriters, which opinion shall be substantially the same in
scope and substance as the opinion furnished to you at the First Closing Date
pursuant to Section 4(b) hereof, except that such opinion, where appropriate,
shall cover the Option Units.
(ii) At the Option Closing Date there shall have been
delivered to you a letter in form and substance satisfactory to you from Ernst
& Young LLP, dated the Option Closing Date and addressed to the Underwriters
confirming the information in their letter referred to in Section 4(d) hereof
and stating that nothing has come to their attention during the period from the
ending date of their review referred to in said letter to a date not more than
five business days prior to the Option Closing Date, which would require any
change in said letter if it were required to be dated the Option Closing Date.
(iii) At the Option Closing Date there shall have been
delivered to you a certificate of the Chairman of the Board or the President
and the principal financial or accounting officer of Marquee, dated the Option
Closing Date, in form and substance satisfactory to Bachner, Tally, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLP, counsel to the several Underwriters, substantially the same in
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scope and substance as the certificate furnished to you at the First Closing
Date pursuant to Section 4(e) hereof.
(iv) All proceedings taken at or prior to the Option
Closing Date in connection with the sale and issuance of the Option Units shall
be satisfactory in form and substance to you, and you and Bachner, Tally,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel to the several Underwriters, shall have been
furnished with all such documents, certificates, and opinions as you may
reasonably request in connection with this transaction in order to evidence the
accuracy and completeness of any of the representations, warranties or
statements of Marquee or its compliance with any of the covenants or conditions
contained herein.
(f) No action shall have been taken by the Commission or the
NASD, the effect of which would make it improper, at any time prior to the
Closing Date, for members of the NASD to execute transactions (as principal or
agent) in the Units, Common Stock or the Warrants and no proceedings for the
taking of such action shall have been instituted or shall be pending, or, to the
knowledge of the Representative or Marquee, shall be contemplated by the
Commission or the NASD. Marquee represents that at the date hereof it has no
knowledge that any such action is in fact contemplated by the Commission or
the NASD.
(g) Marquee shall have caused and taken no action to prevent
each of the merger of A&A and a Merger Subsidiary of Marquee and the merger of
SMTI and a Merger Subsidiary of Marquee, substantially on the terms and
conditions set forth in the Acquisition Agreements and the Prospectus, subject
to such changes therein as are not material and are agreed to by the
Representative.
(h) If any of the conditions herein provided for in this
Section shall not have been fulfilled as of the date indicated, this Agreement
and all obligations of the several Underwriters under this Agreement may be
cancelled at, or at any time prior to, each Closing Date by the Representative
notifying the Company of such cancellation in writing or by telegram at or
prior to the applicable Closing Date. Any such cancellation shall be without
liability of the Underwriters to the Company.
5. Conditions of the Obligations of Marquee. The obligation of Marquee
to sell and deliver the Units is subject to the following conditions:
(a) The Registration Statement shall have become effective
not later than 10:00 A.M. New York time, on the day following the date of this
Agreement, or on such later date as the Company and the Representative may
agree in writing; and
(b) At the Closing Dates, no stop orders suspending the
effectiveness of the Registration Statement shall have been issued under the
Act or any proceedings therefor initiated or threatened by the Commission.
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If the conditions to the obligations of Marquee provided for in this
Section have been fulfilled on the First Closing Date but are not fulfilled
after the First Closing Date and prior to the Option Closing Date, then only
the obligation of Marquee to sell and deliver the Units on exercise of the
option provided for in Section 2(b) hereof shall be affected.
6. Indemnification.
(a) Marquee agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of the Act against any losses, claims, damages or liabilities, joint or
several (which shall, for all purposes of this Agreement, include, but not be
limited to, all reasonable costs of defense and investigation and all
attorneys' fees), to which such Underwriter or such controlling person may
become subject, under the Act or otherwise, and will reimburse, as incurred,
such Underwriters and such controlling persons for any legal or other expenses
reasonably incurred in connection with investigating, defending against or
appearing as a third party witness in connection with any losses, claims,
damages or liabilities, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in (A) the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, (B) any blue sky application or other document
executed by the Company specifically for that purpose or based upon written
information furnished by the Company filed in any state or other jurisdiction
in order to qualify any or all of the Units under the securities laws thereof
(any such application, document or information being hereinafter called a "Blue
Sky Application"), or arise out of or are based upon the omission or alleged
omission to state in the Registration Statement, any Preliminary Prospectus,
Prospectus, or any amendment or supplement thereto, or in any Blue Sky
Application, a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that Marquee will not
be liable in any such case to the extent, but only to the extent, that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Underwriters specifically for use in the
preparation of the Registration Statement or any such amendment or supplement
thereof or any such Blue Sky Application or any such Preliminary Prospectus or
the Prospectus or any such amendment or supplement thereto. This indemnity will
be in addition to any liability which Marquee may otherwise have.
(b) Each Underwriter severally, but not jointly, will
indemnify and hold harmless Marquee, each of its directors, each nominee (if
any) for director named in the Prospectus, each of its officers who have signed
the Registration Statement, and each person, if any, who controls Marquee
within the meaning of the Act, against any losses, claims, damages or
liabilities (which shall, for all purposes of this Agreement, include, but not
be limited to, all costs of defense and investigation and all attorneys' fees)
to which Marquee or any such director, nominee, officer or controlling person
may become subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
-24-
upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, or arise out of or are
based upon the omission or the 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 written information furnished to Marquee by you or by any
Underwriter through you specifically for use in the preparation thereof.
(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 the indemnifying
party under this Section, notify in writing the indemnifying party 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
otherwise than under this Section. In case any such action is brought against
any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate in,
and, to the extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, subject to the provisions
herein stated, with counsel reasonably satisfactory to such indemnified party,
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, 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 other than reasonable costs of investigation. The indemnified
party shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall not be at the expense of the indemnifying party if the indemnifying party
has assumed the defense of the action with counsel reasonably satisfactory to
the indemnified party; provided that if the indemnified party is an Underwriter
or a person who controls such Underwriter within the meaning of the Act, the
fees and expenses of such counsel shall be at the expense of the indemnifying
party if (i) the employment of such counsel has been specifically authorized in
writing by the indemnifying party or (ii) the named parties to any such action
(including any impleaded parties) include both such Underwriter or such
controlling person and the indemnifying party and in the judgment of the
Representative, it is advisable for the Representative or such Underwriters
or controlling persons to be represented by separate counsel (in which case the
indemnifying party shall not have the right to assume the defense of such
action on behalf of such Underwriter or such controlling person, it being
understood, however, that the indemnifying party shall not, in connection with
any one such action or separate but substantially similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys for all such Underwriters and controlling persons,
which firm shall be designated in writing by you). No settlement of any action
against an indemnified party shall be made without the consent of the
indemnifying party, which shall not be unreasonably withheld in light of all
factors of importance to such indemnifying party.
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7. Contribution.
In order to provide for just and equitable contribution under the Act
in any case in which (i) any Underwriter makes claim for indemnification
pursuant to Section 6 hereof but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case, notwithstanding the fact
that the express provisions of Section 6 provide for indemnification in such
case, or (ii) contribution under the Act may be required on the part of any
Underwriter, then Marquee and each person who controls Marquee, in the
aggregate, and any such Underwriter shall contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (which shall, for
all purposes of this Agreement, include, but not be limited to, all reasonable
costs of defense and investigation and all reasonable attorneys' fees) in
either such case (after contribution from others) in such proportions that all
such Underwriters are responsible in the aggregate for that portion of such
losses, claims, damages or liabilities represented by the percentage that the
underwriting discount per Unit appearing on the cover page of the Prospectus
bears to the public offering price appearing thereon, and Marquee shall be
responsible for the remaining portion, provided, however, that (a) if such
allocation is not permitted by applicable law then the relative fault of
Marquee and the Underwriters and controlling persons, in the aggregate, in
connection with the statements or omissions which resulted in such damages and
other relevant equitable considerations shall also be considered. The relative
fault shall be determined by reference to, among other things, whether in the
case of an untrue statement of a material fact or the omission to state a
material fact, such statement or omission relates to information supplied by
the Company or any of the Merger Subsidiaries, or the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission. Marquee and the
Underwriters agree that it would not be just and equitable if the respective
obligations of Marquee and the Underwriters to contribute pursuant to this
Section 7 were to be determined by pro rata or per capita allocation of the
aggregate damages (even if the Underwriters in the aggregate were treated as
one entity for such purpose) or by any other method of allocation that does
not take account of the equitable considerations referred to in the first
sentence of this Section 7 and (b) that the contribution of each contributing
Underwriter shall not be in excess of its proportionate share (based on the
ratio of the number of Units purchased by such Underwriter to the number of
Units purchased by all contributing Underwriters) of the portion of such
losses, claims, damages or liabilities for which the Underwriters are
responsible. No person guilty of a fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who is not guilty of such fraudulent misrepresentation. As used in this
paragraph, the word "Company" includes any officer, director, or person who
controls Marquee within the meaning of Section 15 of the Act. If the full
amount of the contribution specified in this paragraph is not permitted by law,
then any Underwriter and each person who controls any Underwriter shall be
entitled to contribution from Marquee, its officers, directors and controlling
persons to the full extent permitted by law. The foregoing contribution
agreement shall in no way affect the contribution liabilities of any persons
having liability under Section 11 of the Act other
-26-
than Marquee and the Underwriters. No contribution shall be requested with
regard to the settlement of any matter from any party who did not consent to
the settlement; provided, however, that such consent shall not be unreasonably
withheld in light of all factors of importance to such party.
8. Costs and Expenses.
(a) Whether or not this Agreement becomes effective or the
sale of the Units to the Underwriters is consummated, Marquee will pay all
costs and expenses incident to the performance of this Agreement by the Company
including, but not limited to, the fees and expenses of counsel to the Company
and of the Company's accountants; the costs and expenses incident to the
preparation, printing, filing and distribution under the Act of the
Registration Statement (including the financial statements therein and all
amendments and exhibits thereto), Preliminary Prospectus and the Prospectus, as
amended or supplemented, or the Term Sheet, the fee of the NASD in connection
with the filing required by the NASD relating to the offering of the Units
contemplated hereby; all expenses, including reasonable fees and disbursements
of counsel to the Underwriters, in connection with the qualification of the
Units under the state securities or blue sky laws which the Representative
shall designate; the cost of printing and furnishing to the several Underwriters
copies of the Registration Statement, each Preliminary Prospectus, the
Prospectus, this Agreement, the Agreement Among Underwriters, Selling
Agreement, Underwriters' Questionnaire, Underwriters' Power of Attorney and
the Blue Sky Memorandum, any fees relating to the listing of the Units, Common
Stock and Warrants on the Nasdaq SmallCap Market or any other securities
exchange, the cost of printing the certificates representing the securities
comprising the Units, the fees of the transfer agent and warrant agent the cost
of publication of at least three "tombstones" of the offering (at least one of
which shall be in national business newspaper and one of which shall be in a
major New York newspaper) and the cost of preparing at least four hard cover
"bound volumes" relating to the offering, in accordance with the Underwriters'
request; provided that the Company shall only be required to pay for the
tombstones and bound volumes in the event that the Offering is consummated.
Marquee shall pay any and all taxes (including any transfer, franchise, capital
stock or other tax imposed by any jurisdiction) on sales to the Underwriters
hereunder. Marquee will also pay all costs and expenses incident to the
furnishing of any amended Prospectus or of any supplement to be attached to the
Prospectus as called for in Section 3(a) of this Agreement except as otherwise
set forth in said Section.
(b) In addition to the foregoing expenses Marquee shall at
the First Closing Date pay to The Underwriters a non-accountable expense
allowance of $376,875, of which $50,000 has been paid. In the event the
overallotment option is exercised, Marquee shall pay to The Underwriters at the
Option Closing Date an additional amount equal to 2.25% of the gross proceeds
received upon exercise of the overallotment option. In the event the
transactions contemplated hereby are not consummated by reason of any action by
the Underwriters (except if such prevention is based upon a breach by the
Company of any covenant, representation or warranty contained herein or because
any other condition to the Underwriters' obligations
-27-
hereunder required to be fulfilled by the Company or any of the Merger
Subsidiaries is not fulfilled) Marquee shall be liable for the accountable
out-of-pocket expenses of the Underwriters, including legal fees up to a
maximum of $50,000. In the event the transactions contemplated hereby are not
consummated by reason of any action of the Company or because of a breach
by the Company of any covenant, representation or warranty herein, Marquee
shall be liable for the accountable expenses of the Underwriters, including
legal fees, up to a maximum of $150,000.
(c) No person is entitled either directly or indirectly to
compensation from the Company, from the Representative or from any other person
for services as a finder in connection with the proposed offering, and Marquee
agrees to indemnify and hold harmless the Representative and the other
Underwriters, against any losses, claims, damages or liabilities, joint or
several (which shall, for all purposes of this Agreement, include, but not be
limited to, all costs of defense and investigation and all attorneys' fees), to
which the Representative or such other Underwriter or person may become subject
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon the claim of any person (other than an
employee of the party claiming indemnity) or entity that he or it is entitled
to a finder's fee in connection with the proposed offering by reason of such
person's or entity's influence or prior contact with the indemnifying party.
9. Substitution of Underwriters.
If any Underwriter or Underwriters shall for any reason not permitted
hereunder cancel their obligations to purchase the First Units hereunder, or
shall fail to take up and pay for the number of First Units set forth opposite
their respective names in Schedule A hereto upon tender of such First Units in
accordance with the terms hereof, then:
(a) If the aggregate number of First Units which such
Underwriter or Underwriters agreed but failed to purchase does not exceed 10%
of the total number of First Units, the other Underwriters shall be obligated
severally, in proportion to their respective commitments hereunder, to purchase
the First Units which such defaulting Underwriter or Underwriters agreed but
failed to purchase. In the event the Offering is not consummated for any
reason, any portion of the non-accountable expense allowance previously paid to
the Underwriter which is not accounted for shall be returned to the Company.
(b) If any Underwriter or Underwriters so default and the
agreed number of First Units with respect to which such default or defaults
occurs is more than 10% of the total number of First Units, the remaining
Underwriters shall have the right to take up and pay for (in such proportion as
may be agreed upon among them) the First Units which the defaulting Underwriter
or Underwriters agreed but failed to purchase. If such remaining Underwriters
do not, at the First Closing Date, take up and pay for the First Units which
the defaulting Underwriter or Underwriters agreed but failed to purchase, the
time for delivery of the First Units shall be extended to the next business day
to allow such remaining Underwriters the privilege of substituting within
twenty-four hours (including nonbusiness hours) another underwriter or
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underwriters satisfactory to Marquee. If no such underwriter or underwriters
shall have been substituted as aforesaid, within such twenty-four hour period,
the time of delivery of the First Units may, at the option of Marquee, be again
extended to the next following business day, if necessary, to allow Marquee the
privilege of finding within twenty-four hours (including nonbusiness hours)
another underwriter or underwriters to purchase the First Units which the
defaulting Underwriter or Underwriters agreed but failed to purchase. If it
shall be arranged for the remaining Underwriters or substituted Underwriters to
take up the First Units of the defaulting Underwriter or Underwriters as
provided in this Section, (i) Marquee or the Representative shall have the
right to postpone the time of delivery for a period of not more than seven
business days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and Marquee agrees promptly to file any amendments
to the Registration Statement or supplements to the Prospectus which may
thereby be made necessary, and (ii) the respective numbers of First Units to be
purchased by the remaining Underwriters or substituted Underwriters shall be
taken at the basis of the underwriting obligation for all purposes of this
Agreement.
If in the event of a default by one or more Underwriters and the
remaining Underwriters shall not take up and pay for all the First Units agreed
to be purchased by the defaulting Underwriters or substitute another
underwriter or underwriters as aforesaid, Marquee shall not find or shall not
elect to seek another underwriter or underwriters for such First Units as
aforesaid, then this Agreement shall terminate.
If, following exercise of the option provided in Section 2(b) hereof,
any Underwriter or Underwriters shall for any reason not permitted hereunder
cancel their obligations to purchase Option Units at the Option Closing Date,
or shall fail to take up and pay for the number of Option Units, which they
become obligated to purchase at the Option Closing Date upon tender of such
Option Units in accordance with the terms hereof, then the remaining
Underwriters or substituted Underwriters may take up and pay for the Option
Units of the defaulting Underwriter or Underwriters in the manner provided in
Section 9(b) hereof. If the remaining Underwriters or substituted Underwriters
shall not take up and pay for all such Option Units, the Underwriters shall be
entitled to purchase the number of Option Units for which there is no default
or, at their election, the option shall terminate, and the exercise thereof
shall be of no effect.
As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section. In the event of termination,
there shall be no liability on the part of any nondefaulting Underwriter to
Marquee, provided that the provisions of this Section 9 shall not in any event
affect the liability of any defaulting Underwriter to Marquee arising out of
such default.
10. Effective Date.
The Agreement shall become effective upon its execution except that
you may, at your option, delay its effectiveness until 11:00 A.M., New York
time on the first full business day
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following the effective date of the Registration Statement, or at such earlier
time after the effective date of the Registration Statement as you in your
discretion shall first commence the initial public offering by the Underwriters
of any of the Units. The time of the initial public offering shall mean the time
of release by you of the first newspaper advertisement with respect to the
Units, or the time when the Units are first generally offered by you to dealers
by letter or telegram, whichever shall first occur. This Agreement may be
terminated by you at any time before it becomes effective as provided above,
except that Sections 3(c), 6, 7, 8, 13, 14, 15 and 16 shall remain in effect
notwithstanding such termination.
11. Termination.
(a) This Agreement, except for Sections 3(c), 6, 7, 8, 13,
14, 15 and 16 hereof, may be terminated at any time prior to the First Closing
Date, and the option referred to in Section 2(b) hereof, if exercised, may be
cancelled at any time prior to the Option Closing Date, by you if in your
judgment it is impracticable to offer for sale or to enforce contracts made by
the Underwriters for the resale of the Units agreed to be purchased hereunder
by reason of (i) the Company having sustained a material loss, whether or not
insured, by reason of fire, earthquake, flood, accident or other calamity, or
from any labor dispute or court or government action, order or decree; (ii)
trading in securities on the New York Stock Exchange, the American Stock
Exchange, the Nasdaq SmallCap Market or the Nasdaq National Market having been
suspended or limited; (iii) material governmental restrictions having been
imposed on trading in securities generally (not in force and effect on the date
hereof); (iv) a banking moratorium having been declared by federal or New York
state authorities; (v) an outbreak of international hostilities or other
national or international calamity or crisis or change in economic or political
conditions having occurred; (vi) a pending or threatened legal or governmental
proceeding or action relating generally to Marquee's or any of the Merger
Subsidiaries' business, or a notification having been received by either
Marquee or any of the Merger Subsidiaries of the threat of any such proceeding
or action, which could materially adversely affect Marquee and the Merger
Subsidiaries taken as a whole; (vii) except as contemplated by the Prospectus,
Marquee is merged or consolidated into or acquired by another company or group
or there exists a binding legal commitment for the foregoing or any other
material change of ownership or control occurs; (viii) the passage by the
Congress of the United States or by any state legislative body or federal or
state agency or other authority of any act, rule or regulation, measure, or the
adoption of any orders, rules or regulations by any governmental body or any
authoritative accounting institute or board, or any governmental executive,
which is reasonably believed likely by the Representative to have a material
impact on the business, financial condition or financial statements of the
Company or the market for the securities offered pursuant to the Prospectus;
(ix) any adverse change in the financial or securities markets beyond normal
market fluctuations having occurred since the date of this Agreement, or (x)
any material adverse change having occurred, since the respective dates of
which information is given in the Registration Statement and Prospectus, in the
earnings, business prospects or general condition of Marquee and the Merger
Subsidiaries taken as a whole, financial or otherwise, whether or not arising
in the ordinary course of business.
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(b) If you elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section 11 or in
Section 10, Marquee shall be promptly notified by you, by telephone or
telegram, confirmed by letter.
12. Unit Purchase Option.
At or before the First Closing Date, Marquee will sell to The
Underwriters or their designees, as permitted by the NASD, for a consideration
of $335, and upon the terms and conditions set forth in the form of Unit
Purchase Option annexed as an exhibit to the Registration Statement, a Unit
Purchase Option to purchase an aggregate of 335,000 Units. In the event of
conflict in the terms of this Agreement and the Unit Purchase Option, the
language of the Unit Purchase Option shall control.
13. Representations, Warranties and Agreements to Survive Delivery.
The respective indemnities, agreements, representations, warranties
and other statements of the Company or its Principal Stockholders, where
appropriate, and the undertakings 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 the Underwriters, the Company or any of its officers or
directors or any controlling person and will survive delivery of and payment of
the Units and the termination of this Agreement.
14. Notice.
Any communications specifically required hereunder to be in writing,
if sent to the Underwriters, will be mailed, delivered and confirmed to them at
Royce Investment Group, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, with a copy sent to Bachner, Tally, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, attention: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq., or if sent to
Marquee, will be mailed, delivered and confirmed to it at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, with a copy sent to ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
15. Parties in Interest.
The Agreement herein set forth is made solely for the benefit of the
several Underwriters, the Company and, to the extent expressed, the Principal
Stockholders, any person controlling the Company or any of the several
Underwriters, and directors of Marquee, nominees for directors (if any) named
in the Prospectus, its officers who have signed the Registration Statement, and
their respective executors, administrators, successors, assigns and no other
person shall acquire or have any right under or by virtue of this Agreement.
The term "successors and assigns" shall not include any purchaser, as such
purchaser, from any of the several Underwriters of the Units. All of the
obligations of the Underwriters hereunder are several and not joint.
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16. Applicable Law.
This Agreement will be governed by, and construed in accordance with,
the laws of the State of New York applicable to agreements made and to be
entirely performed within New York.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return this agreement, whereupon it will become a
binding agreement between Marquee and the several Underwriters in accordance
with its terms.
Very truly yours,
THE MARQUEE GROUP, INC.
By:____________________________________
The foregoing Underwriting Agreement is hereby confirmed and accepted
as of the date first above written.
ROYCE INVESTMENT GROUP, INC.
By:____________________________________
For itself and as Representative of
the several Underwriters
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SCHEDULE A
Underwriter Number of Units to be Purchased
--------------------------- ---------------------------------
Royce Investment Group, Inc.
Continental Broker-Dealer Corporation
Total Units:_____________________
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