5,500,000 SHARES
HA-LO INDUSTRIES, INC.
COMMON STOCK
NO PAR VALUE
UNDERWRITING AGREEMENT
_____________________, 1998
CREDIT SUISSE FIRST BOSTON CORPORATION
ABN AMRO Incorporated
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce,
▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
As Representatives of the Several Underwriters,
c/o Credit Suisse First Boston Corporation,
Eleven Madison Avenue,
New York, N.Y. 10010-3629
Dear Sirs:
1. INTRODUCTORY. HA-LO Industries, Inc., an Illinois corporation
("Company") proposes to issue and sell 3,750,000 shares of its common stock, no
par value ("Securities"), and the stockholders listed in Schedule A hereto
("Selling Stockholders") propose severally to sell an aggregate of 1,750,000
shares of the Securities (such 5,500,000 shares of Securities being hereinafter
referred to as the "Firm Securities"). The Company also proposes to issue and
sell, and ▇▇▇ ▇▇▇▇▇▇▇▇ also proposes to sell, to the Underwriters, at the option
of the Underwriters, not more than 625,000 and 200,000 additional shares of
Securities, respectively, as set forth below (such 825,000 additional shares
being hereinafter referred to as the "Optional Securities"). Of the 1,750,000
shares of the Securities to be sold by the Selling Stockholders, 1,605,000
shares are currently outstanding and 145,000 shares are subject to stock options
held by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ (45,000 and 100,000 shares,
respectively). Such stock options will be exercised on the Closing Date by the
holders thereof pursuant to irrevocable exercise notices delivered to ▇▇▇▇▇▇
Trust and Savings Bank, as Custodian, and the Securities issued upon exercise
thereof will be included as part of the offering by the Underwriters to the
public as set forth in the Prospectus. The Securities issuable upon the
exercise of such stock options, together with those Firm Securities and Optional
Securities represented by shares, are herein collectively called the "Offered
Securities." The Company and the Selling Stockholders hereby agree with the
several Underwriters named in Schedule B hereto ("Underwriters") as follows:
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING
STOCKHOLDERS. (a) The Company represents and warrants to, and agrees with, the
several Underwriters that:
(i) A registration statement (No. 333-49667) relating to the Offered
Securities, including a form of prospectus, has been filed with the
Securities and Exchange Commission ("Commission") and either (A) has been
declared effective under the Securities Act of 1933, as amended ("Act") and
is not proposed to be amended or (B) is proposed to be amended by amendment
or post-effective amendment. If such registration statement (the "initial
registration statement") has been declared effective, either (A) an
additional registration statement (the "additional registration statement")
relating to the Offered Securities may have been filed with the Commission
pursuant to Rule 462(b) ("Rule 462(b)") under the Act and, if so filed, has
become effective upon filing pursuant to such Rule and the Offered
Securities all have been duly registered under the Act pursuant to the
initial registration statement and, if applicable, the additional
registration statement or (B) such an additional registration statement is
proposed to be filed with the Commission pursuant to Rule 462(b) and will
become effective upon filing pursuant to such Rule and upon such filing the
Offered Securities will all have been duly registered under the Act
pursuant to the initial registration statement and such additional
registration statement. If the Company does not propose to amend the
initial registration statement or if an additional registration statement
has been filed and the Company does not propose to amend it, and if any
post-effective amendment to either such registration statement has been
filed with the Commission prior to the execution and delivery of this
Agreement, the most recent amendment (if any) to each such registration
statement has been declared effective by the Commission or has become
effective upon filing pursuant to Rule 462(c) ("Rule 462(c)") under the Act
or, in the case of the additional registration statement, Rule 462(b). For
purposes of this Agreement, "Effective Time" with respect to the initial
registration statement or, if filed prior to the execution and delivery of
this Agreement, the additional registration statement means (A) if the
Company has advised the Representatives that it does not propose to amend
such registration statement, the date and time as of which such
registration statement, or the most recent post-effective amendment thereto
(if any) filed prior to the execution and delivery of this Agreement, was
declared effective by the Commission or has become effective upon filing
pursuant to Rule 462(c), or (B) if the Company has advised the
Representatives that it proposes to file an amendment or post-effective
amendment to such registration statement, the date and time as of which
such registration statement, as amended by such amendment or post-effective
amendment, as the case may be, is declared effective by the Commission. If
an additional registration statement has not been filed prior to the
execution and delivery of this Agreement but the Company has advised the
Representatives that it proposes to file one, "Effective Time" with respect
to such additional registration statement means the date and time as of
which such registration statement is filed and becomes effective pursuant
to Rule 462(b). "Effective Date" with respect to the initial registration
statement or the additional registration statement (if any) means the date
of the Effective Time thereof. The initial registration statement, as
amended at its Effective Time, including all material incorporated by
reference therein, including all information contained in the additional
registration statement (if any) and deemed to be a part of the initial
registration statement as of the Effective Time of the additional
registration statement pursuant to the General Instructions of the Form on
which it is filed and including all information (if any) deemed to be a
part of the initial registration statement as of its Effective Time
pursuant to Rule 430A(b) ("Rule 430A(b)") under the Act, is hereinafter
referred to as the "Initial Registration Statement." The additional
registration statement, as amended at its Effective Time, including the
contents of the initial registration statement incorporated by reference
therein and including all information (if any) deemed to be a part of the
additional registration statement as of its Effective Time pursuant to Rule
430A(b), is hereinafter referred to as the "Additional Registration
Statement." The Initial Registration Statement and the Additional
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Registration are hereinafter referred to collectively as the "Registration
Statements" and individually as a "Registration Statement." The form of
prospectus relating to the Offered Securities, as first filed with the
Commission pursuant to and in accordance with Rule 424(b) ("Rule 424(b)")
under the Act or (if no such filing is required) as included in a
Registration Statement, including all material incorporated by reference in
such prospectus, is hereinafter referred to as the "Prospectus." No
document has been or will be prepared or distributed in reliance on Rule
434 under the Act.
(ii) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement: (A) on the Effective
Date of the Initial Registration Statement, the Initial Registration
Statement conformed in all material respects to the requirements of the Act
and the rules and regulations of the Commission ("Rules and Regulations")
and did not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading, (B) on the Effective Date of the
Additional Registration Statement (if any), each Registration Statement
conformed or will conform, in all material respects to the requirements of
the Act and the Rules and Regulations and did not include, or will not
include, any untrue statement of a material fact and did not omit, or will
not omit, to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and (C) on the
date of this Agreement, the Initial Registration Statement and, if the
Effective Time of the Additional Registration Statement is prior to the
execution and delivery of this Agreement, the Additional Registration
Statement each conforms, and at the time of filing of the Prospectus
pursuant to Rule 424(b) or (if no such filing is required) at the Effective
Date of the Additional Registration Statement in which the Prospectus is
included, each Registration Statement and the Prospectus will conform, in
all material respects to the requirements of the Act and the Rules and
Regulations, and neither of such documents includes, or will include, any
untrue statement of a material fact or omits, or will omit, to state any
material fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading. If the Effective
Time of the Initial Registration Statement is subsequent to the execution
and delivery of this Agreement: on the Effective Date of the Initial
Registration Statement, the Initial Registration Statement and the
Prospectus will conform in all material respects to the requirements of the
Act and the Rules and Regulations, neither of such documents will include
any untrue statement of a material fact or will omit to state any material
fact required to be stated therein or necessary to make the statements
therein (in the case of the Prospectus, in light of the circumstances under
which they were made) not misleading, and no Additional Registration
Statement has been or will be filed. The two preceding sentences do not
apply to statements in or omissions from a Registration Statement or the
Prospectus based upon written information furnished to the Company by any
Underwriter through the Representatives specifically for use therein, it
being understood and agreed that the only such information is that
described as such in Section 7(c) hereof.
(iii) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Illinois, with
power and authority (corporate and other) to own its properties and conduct
its business as described in the Prospectus; and the Company is duly
qualified to do business as a foreign corporation in good standing in all
other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification.
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(iv) Each Subsidiary of the Company (as defined herein) has been duly
incorporated and is an existing corporation in good standing under the laws
of the jurisdiction of its incorporation, with power and authority
(corporate and other) to own its properties and conduct its business as
described in the Prospectus; and each Subsidiary of the Company is duly
qualified to do business as a foreign corporation in good standing in all
other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification; all of the issued and
outstanding capital stock of each Subsidiary of the Company has been duly
authorized and validly issued, is fully paid and nonassessable and is owned
by the Company, directly or through subsidiaries, free from liens,
encumbrances, restrictions upon voting or transfer, and defects. The
Company does not own or control, directly or indirectly, any shares of
stock or other equity interest or long-term debt securities of any
corporation, association, partnership, joint venture or other entity other
than ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & White, Inc.; Market U.S.A., Inc.; ▇▇▇▇▇▇
Marketing, Ltd.; ▇▇▇▇▇▇ Financial; HA-LO Sports, Inc.; Creative Concepts in
Advertising, Inc.; Creadis Group, Inc.; 1132832 Ontario Corp.; 1132831
Ontario Corp.; Flow Plastics, Inc; ▇▇▇▇▇ Marketing Group, Inc., Joking Spa;
Lees Keystone, Inc.; HMK International Holdings, Inc., HA-LO Belgium, N.V.
and Bavelco, B.V.B.A. (collectively sometimes referred to herein as the
"Subsidiaries" or singly as a "Subsidiary").
(v) All outstanding shares of capital stock of the Company have been
duly authorized and validly issued, fully paid and nonassessable, have been
issued in compliance with applicable Federal and state securities law and
conform to the description thereof contained or incorporated by reference
in the Prospectus; the Offered Securities to be issued and sold by the
Company have been duly authorized and will be, when issued and paid for in
accordance with this Agreement, validly issued, fully paid and
nonassessable; the stock options of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
representing Offered Securities have been duly authorized, and when shares
of Securities are issued upon exercise thereof and payment of the exercise
price, such shares will be validly issued, fully paid and nonassessable;
and the stockholders of the Company have no preemptive or similar rights
with respect to the Offered Securities or any other securities of the
Company and no further approval or authority of the shareholders or Board
of Directors of the Company will be required for the issuance and sale of
the Offered Securities as contemplated by this Agreement.
(vi) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus under "Capitalization," and
except as set forth in or contemplated by the Prospectus, no options,
warrants or other rights to purchase or otherwise acquire any authorized
but unissued shares of Securities or other equity interests of the Company
or any security convertible into or exchangeable for shares of Securities
or other equity interests of the Company are outstanding or contemplated.
The descriptions of the outstanding options, warrants or other similar
rights granted by the Company as set forth in the Prospectus are true and
correct.
(vii) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the
Company to file a registration statement under the Act with respect to any
securities of the Company owned or to be owned by such person or to require
the Company to include such securities in the securities registered
pursuant to a Registration Statement or in any securities being registered
pursuant to any other registration statement filed by the Company under the
Act, except for the Securities and as referred to or as described in the
Prospectus.
4
(viii ) The Securities are listed, and the Offered Securities have
been approved for listing subject to notice of issuance, on The New York
Stock Exchange.
(ix ) No consent, approval, authorization, or order of, or filing
with, any third party or any governmental agency or body or any court is
required for the consummation of the transactions contemplated by this
Agreement in connection with the sale of the Offered Securities, except
such as have been obtained and made under the Act and such as may be
required under state securities laws or pursuant to the rules and
regulations of the National Association of Securities Dealers, Inc.
("NASD").
(x) The execution, delivery and performance of this Agreement, and
the consummation of the transactions herein contemplated will not result
in a breach or violation of any of the terms and provisions of, or
constitute a default under, any statute, rule, regulation or order of
any governmental agency or body or court, domestic or foreign, having
jurisdiction over the Company or any Subsidiary of the Company or any of
their properties, or any agreement or instrument to which the Company or
any such Subsidiary is a party or by which the Company or any such
Subsidiary is bound or to which any of the properties of the Company or
any such Subsidiary is subject, or the charter or by-laws or other
organizational documents of the Company or any such Subsidiary.
(xi) This Agreement has been duly authorized, executed and delivered
by the Company, and constitutes the legal, valid and binding obligation of
the Company enforceable against the Company in accordance with its terms,
except to the extent that (A) enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
creditors' rights generally and by general principles of equity and (B)
rights to indemnity and contribution may be limited by Federal or state
securities laws or policies underlying such laws.
(xii) Except as disclosed in the Prospectus, the Company and its
Subsidiaries have good and marketable title to all real properties and all
other properties and assets owned by them, in each case free from liens,
encumbrances and defects that would materially affect the value thereof or
materially interfere with the use made or to be made thereof by them; and
except as disclosed in the Prospectus, the Company and its Subsidiaries
hold any leased real or personal property under valid and enforceable
leases with no exceptions that would materially interfere with the use made
or to be made thereof by them.
(xiii) The Company and each of its Subsidiaries are in compliance in
all respects with applicable domestic or foreign, federal, state, local,
and provincial laws and regulations, including, without limitation, those
applicable to the telemarketing activities of the Company and any of its
Subsidiaries, and have not received any notice from any governmental agency
or body, domestic or foreign, that the conduct of their business is not in
such compliance, except where the failure to be in such compliance would
not individually or in the aggregate have a material adverse effect on the
condition (financial or other), business, properties, results of operations
or prospects of the Company and its Subsidiaries taken as a whole (a
"Material Adverse Effect"). The Company and its Subsidiaries and, where
required, any of their employees, independent contractors and agents,
possess all licenses, certificates, authorities or permits ("Licenses")
issued by appropriate governmental agencies or bodies, domestic or foreign,
necessary to conduct the business now operated by them, such Licenses are
valid and in full force and effect, no event has
5
occurred that allows, or after notice or lapse of time would allow,
revocation or termination of such Licenses or violation of such laws or
regulations, except where revocation, termination or violation would not
have a Material Adverse Effect, and none of the Company nor any of its
subsidiaries have received any notice of proceedings relating to the
revocation or modification of any such License that, if determined
adversely to the Company or any of its subsidiaries, would individually
or in the aggregate have a Material Adverse Effect.
(xiv) No labor dispute with the employees of the Company or any
Subsidiary exists or, to the knowledge of the Company, is threatened, and
the Company is not aware of any existing or imminent labor disturbance by
the employees of its principal suppliers, manufacturers or customers that
could, singly or in the aggregate, have a Material Adverse Effect.
(xv) The Company and its Subsidiaries own or have valid licenses for
all trademarks, trade names and other rights to inventions, know-how,
patents, copyrights, confidential information and other intellectual
property (collectively, "intellectual property rights") necessary to
conduct the business now operated by them, or presently employed by them.
Neither the Company nor any of its Subsidiaries have received any notice of
infringement of or conflict with asserted rights of others with respect to
any intellectual property rights that, if determined adversely to the
Company or any of its Subsidiaries, would individually or in the aggregate
have a Material Adverse Effect.
(xvi) Neither the Company nor any of its Subsidiaries is in violation
of any statute, any rule, regulation, decision or order of any domestic or
foreign governmental agency or body or court, relating to the use, disposal
or release of hazardous or toxic substances or relating to the protection
or restoration of the environment or human exposure to hazardous or toxic
substances (collectively, "environmental laws"), owns or operates any real
property contaminated with any substance that is subject to any
environmental laws, is liable for any off-site disposal or contamination
pursuant to any environmental laws, or is subject to any claim relating to
any environmental laws, which violation, contamination, liability or claim
would individually or in the aggregate have a Material Adverse Effect; and
the Company is not aware of any pending investigation which might lead to
such a claim.
(xvii) There are no pending actions, suits or proceedings against or
affecting the Company, any of its Subsidiaries or any of their respective
properties or assets that, if determined adversely to the Company or any of
its Subsidiaries, would individually or in the aggregate have a Material
Adverse Effect or would materially and adversely affect the ability of the
Company to perform its obligations under this Agreement, or which are
otherwise material in the context of the sale of the Offered Securities;
and no such actions, suits or proceedings are threatened or, to the
Company's knowledge, contemplated.
(xviii) The financial statements together with related notes included
in each Registration Statement and the Prospectus present fairly the
financial position of the Company and its consolidated subsidiaries as of
the dates shown and their results of operations and cash flows for the
periods shown, and such financial statements and notes have been prepared
in conformity with the generally accepted accounting principles in the
United States consistently applied throughout the periods represented
thereby and the schedules included in each Registration Statement present
fairly the information required to be stated therein. The other financial
and statistical information
6
and data set forth in each Registration Statement and the Prospectus is,
in all material respects, accurately presented and prepared on a basis
consistent with such financial statements and the books and records of
the Company. No other financial statements or schedules are required by
the Act or the Rules and Regulations thereunder to be included in the
Registration Statements or Prospectus. The financial information set
forth in the Prospectus under "Prospectus Summary" and "Selected
Financial Data" presents fairly on the basis stated in the Prospectus,
the information set forth therein.
(xix) Except as disclosed in the Prospectus, since the date of the
latest audited financial statements included in the Prospectus there has
been no material adverse change, nor any development or event involving a
prospective material adverse change, in the condition (financial or other),
business, properties, prospects or results of operations of the Company and
its Subsidiaries taken as a whole. Since the dates as of which information
is given in the Registration Statements and the Prospectus, neither the
Company nor any of its Subsidiaries has incurred any material liability or
obligation (indirect, direct or contingent) or entered into any material
oral or written agreement or other material transaction that is not in the
ordinary course of business or that could reasonably be expected to result
in a material reduction in the future earnings of the Company or its
Subsidiaries and, except as disclosed in or contemplated by the Prospectus,
there has been no material change in the indebtedness of the Company, no
change in the capital stock and no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock.
(xx) The Company is not and, after giving effect to the offering and
sale of the Offered Securities to be sold by the Company and the
application of the net proceeds thereof as described in the Prospectus,
will not be an "investment company" as defined in the Investment Company
Act of 1940.
(xxi) Neither the Company nor any of its affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida Statutes and the Company
agrees to comply with such Section if prior to the completion of the
distribution of the Offered Securities it commences doing such business.
(xxii) Neither the Company nor any of its subsidiaries is in violation
of its respective charter or in default under any consent decree, or in
default with respect to any material provision of any lease, loan
agreement, franchise, license, permit or other contract obligation to which
it is a party; and there does not exist any state of facts which
constitutes an event of default as defined in such documents or which, with
notice or lapse of time or both, would constitute such an event of default,
in each case, except for defaults which neither singly nor in the aggregate
would have a Material Adverse Effect.
(xxiii) Neither the Company nor any of its directors, officers or
controlling persons has taken and none of such persons will take, directly
or indirectly, any action designed to or which might reasonably be expected
to cause or result, under the Securities Exchange Act of 1934 or otherwise,
in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Offered Securities, and the
Company has not distributed and will not distribute any offering material
in connection with the offering and sale of the Offered Securities
7
other than any preliminary prospectus filed with the Commission or the
Prospectus or other materials, if any, permitted by the Act or the Rules
and Regulations.
(xxiv) There are no statutes or regulations, and there is no material
document of a character required to be described in the Registration
Statements or the Prospectus or to be filed as an exhibit to the
Registration Statements which are not described or filed as required. All
such contracts to which the Company or any of its Subsidiaries is a party
are in full force and effect and neither the Company nor any of its
Subsidiaries nor, to the Company's knowledge, any other party is in breach
of or default under any such contracts.
(xxv) All offers and sales of the Company's capital stock prior to the
date hereof were at all relevant times exempt from the registration
requirements of the Act or such shares were registered thereunder and were
duly registered with or the subject of an available exemption from the
registration requirements of the applicable state securities or blue sky
laws.
(xxvi) The Company and its Subsidiaries have filed all federal, state,
local and foreign tax returns of any kind required to be filed, including
those relating to income, franchise, payroll, sales, use or other taxes and
has paid all taxes shown as due thereon and, except as disclosed in the
Prospectus and except for any such taxes (or taxes claimed to be due) that
are being contested by the Company in good faith and by appropriate
proceedings, there is no tax deficiency that has been, or to the knowledge
of the Company might be, asserted against the Company or any of its
Subsidiaries or any of their properties or assets that would or could,
singly or in the aggregate, be expected to have a Material Adverse Effect.
The charges, accruals and reserves on the books of the Company and its
Subsidiaries, together with contractual indemnification obligations of
third parties for the benefit of the Company, in respect of any tax
liability for any year not finally determined are adequate to meet any
assessments or reassessments for additional taxes.
(xxvii) Each of the Company and its Subsidiaries maintains insurance
of the types and in such amounts as are generally maintained by companies
engaged in the same or similar businesses, and all of such insurance is in
full force and effect.
(xxviii) Neither the Company nor any of its Subsidiaries has at any
time during the last five years made any payment to any federal, state or
foreign governmental officer or official, or person charged with similar
public or quasi-public duties, other than payments required or permitted by
the laws of the United States or any jurisdiction thereof.
(xxix) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, who are reporting upon the audited
financial statements and schedules included or incorporated by reference in
the Registration Statements and the Prospectus are independent public
accountants as required by the Act and the Rules and Regulations
thereunder.
(xxx) The Company and its Subsidiaries maintain a system of
internal accounting controls sufficient for purposes of the prevention or
detection of errors or irregularities in amounts that could be expected to
be material to the Company's consolidated financial statements and the
recording of transactions so as to permit the preparation of such
consolidated financial statements in conformity with generally accepted
accounting principles.
8
(xxxi) Except as disclosed in the Prospectus and as contemplated in
this Agreement, there are no contracts, agreements or understandings
between the Company and any person that would give rise to a valid claim
against the Company or any Underwriter for a brokerage commission, finder's
fee or other like payment in connection with the transactions contemplated
by this Agreement.
(b) Each Selling Stockholder severally represents and warrants to,
and agrees with, the several Underwriters that:
(i) Such Selling Stockholder has and on each Closing Date
hereinafter mentioned will have valid and unencumbered title to, or
currently exercisable options to purchase Securities representing, the
Offered Securities to be delivered by such Selling Stockholder on such
Closing Date and full right, power and authority to enter into this
Agreement, the Custody Agreement and the Irrevocable Power of Attorney
entered into by such Selling Stockholder in connection with the
transactions contemplated hereby (the "Custody Agreement" and "Power of
Attorney") and to sell, assign, transfer and deliver the Offered
Securities to be delivered by such Selling Stockholder on such Closing
Date hereunder; and upon the delivery of and payment for the Offered
Securities on each Closing Date hereunder the several Underwriters will
acquire valid and unencumbered title to the Offered Securities to be
delivered by such Selling Stockholder on such Closing Date.
(ii) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement: (A) on the
Effective Date of the Initial Registration Statement, the Initial
Registration Statement conformed in all material respects to the
requirements of the Act and the Rules and Regulations and did not include
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading, (B) on the Effective Date of the Additional Registration
Statement (if any), each Registration Statement conformed, or will conform,
in all material respects to the requirements of the Act and the Rules and
Regulations, did not include, or will not include, any untrue statement of
a material fact and did not omit, or will not omit, to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading, and (C) on the date of this Agreement, the Initial
Registration Statement and, if the Effective Time of the Additional
Registration Statement is prior to the execution and delivery of this
Agreement, the Additional Registration Statement each conforms, and at the
time of filing of the Prospectus pursuant to Rule 424(b) or (if no such
filing is required) at the Effective Date of the Additional Registration
Statement in which the Prospectus is included, each Registration Statement
and the Prospectus will conform, in all material respects, to the
requirements of the Act and the Rules and Regulations, and neither of such
documents includes, or will include, any untrue statement of a material
fact or omits, or will omit, to state any material fact required to be
stated therein or necessary to make the statements therein (in the case of
the Prospectus, in light of the circumstances under which they were made)
not misleading. If the Effective Time of the Initial Registration
Statement is subsequent to the execution and delivery of this Agreement:
on the Effective Date of the Initial Registration Statement, the Initial
Registration Statement and the Prospectus will conform in all material
respects to the requirements of the Act and the Rules and Regulations,
neither of such documents will include any untrue statement of a material
fact or will omit to state any material fact required to be stated therein
or necessary to make the statements therein (in the case of the Prospectus,
in light of the circumstances under which they were made)
9
not misleading. The two preceding sentences apply only to the extent
that any statements in or omissions from a Registration Statement or the
Prospectus are based on written information furnished to the Company by
such Selling Stockholder specifically for use therein.
(iii) This Agreement, the Custody Agreement and the Power of Attorney
have each been duly authorized, executed and delivered by or in behalf of
each Selling Stockholder, and this Agreement, the Custody Agreement and the
Power of Attorney each constitutes the legal, valid and binding obligation
of such Selling Stockholder enforceable against such Selling Stockholder in
accordance with its terms, except to the extent that: (A) enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to creditors' rights generally and by general
principles of equity, and (B) rights to indemnity and contribution may be
limited by Federal or state securities laws or policies underlying such
laws.
(iv) No consent, approval, authorization, order, registration or
qualification of or with any third party (whether acting in an individual,
fiduciary or other capacity) or any court or government agency or body is
required to be obtained or made by such Selling Stockholder for the sale of
the Offered Securities or for the consummation of the other transactions
contemplated by this Agreement, the Custody Agreement and the Power of
Attorney in connection with the sale of the Offered Securities, except such
as have been obtained and made under the Act and such as may be required
under state securities laws in connection with the offer and sale of the
Offered Securities or pursuant to the rules and regulations of the NASD.
(v) The execution, delivery and performance of this Agreement, the
Custody Agreement and the Power of Attorney by such Selling Stockholder and
the sale of the Offered Securities being sold by such Selling Stockholder
and the consummation by such Selling Stockholder of the other transactions
contemplated hereby will not contravene, if applicable, any provisions of
the charter, by-laws, trust agreement or other organizational documents of
such Selling Stockholder, or conflict with or result in a breach or
violation of the terms and provisions of or constitute a default under, or
result in the creation or imposition of a lien, charge or encumbrance upon
the Offered Securities to be sold by such Selling Stockholder under any
statute, rule, regulation, order or decree of any governmental agency or
body, domestic or foreign, having jurisdiction over such Selling
Stockholder or any properties, assets or operations of such Selling
Stockholder or any indenture, mortgage, loan agreement, note or other
agreement for borrowed money, any guarantee of any such agreement or any
lease, permit, license or other agreement or instrument to which such
Selling Stockholder is a party or by which such Selling Stockholder is
bound or to which any of the properties, assets or operations of such
Selling Stockholder is subject, and such Selling Stockholder has full power
and authority to sell the Offered Securities to be sold by such Selling
Stockholder as contemplated by this Agreement.
(vi) Such Selling Stockholder has not taken or will not take, directly
or indirectly, any action designed to or that could reasonably be expected
to cause or result in stabilization or manipulation of the price of the
Offered Securities, and such Selling Stockholder has not distributed and
will not distribute any offering material in connection with the offer and
sale of the Offered Securities other than any preliminary prospectus filed
with the Commission or the Prospectus or other materials, if any, permitted
by the Act or the Rules and Regulations.
10
(vii) There are no contracts, agreements or understandings between
such Selling Stockholder and any person that would give rise to a valid
claim against such Selling Stockholder or any Underwriter for a brokerage
commission, finder's fee or other like payment in connection with this
offering.
3. PURCHASE, SALE AND DELIVERY OF OFFERED SECURITIES. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company and each Selling Stockholder
agree, severally and not jointly, to sell to each Underwriter, and each
Underwriter agrees, severally and not jointly, to purchase from the Company and
each Selling Stockholder, at a purchase price of $ per share, that
number of Firm Securities (rounded up or down, as determined by Credit Suisse
First Boston Corporation ("CSFBC") in its discretion, in order to avoid
fractions) obtained by multiplying 3,750,000 Firm Securities in the case of the
Company and the number of Firm Securities set forth opposite the name of such
Selling Stockholder in Schedule A hereto, in the case of a Selling Stockholder,
in each case by a fraction the numerator of which is the number of Firm
Securities set forth opposite the name of such Underwriter in Schedule B hereto
and the denominator of which is the total number of Firm Securities.
Certificates in negotiable form for the Offered Securities to be sold by
the Selling Stockholders hereunder (and in the case of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, fully completed exercise forms and checks representing the
exercise price of such options) have been placed in custody, for delivery under
this Agreement, under Custody Agreements made with ▇▇▇▇▇▇ Trust and Savings
Bank, as custodian ("Custodian"). Each Selling Stockholder agrees that the
shares represented by the certificates (or option certificates) held in custody
for the Selling Stockholders under such Custody Agreements are subject to the
interests of the Underwriters hereunder, that the arrangements made by the
Selling Stockholders for such custody are to that extent irrevocable, and that
the obligations of the Selling Stockholders hereunder shall not be terminated by
operation of law, whether by the death of any individual Selling Stockholder or
the occurrence of any other event, or in the case of a trust, by the death of
any trustee or trustees or the termination of such trust. If any individual
Selling Stockholder or any such trustee or trustees should die, or if any other
such event should occur, or if any of such trusts should terminate, before the
delivery of the Offered Securities hereunder, certificates for such Offered
Securities shall be delivered by the Custodian in accordance with the terms and
conditions of this Agreement as if such death or other event or termination had
not occurred, regardless of whether or not the Custodian shall have received
notice of such death or other event or termination.
The Company and the Custodian will deliver the Firm Securities to the
Representatives for the accounts of the Underwriters, against payment of the
purchase price in Federal (same day) funds by official bank check or checks or
wire transfer to an account at a bank acceptable to CSFBC drawn to the order of
the Company in the case of 3,750,000 shares of Firm Securities and to the
order of the Custodian in the case of 1,750,000 shares of Firm Securities, at
the office of Lord, Bissell & Brook, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇, at 9:00 A.M., Chicago time, on , or at
such other time not later than seven full business days thereafter as CSFBC and
the Company determine, such time being herein referred to as the "First Closing
Date." Notwithstanding the foregoing, for purposes of Rule 15c6-1 under the
Securities Exchange Act of 1934, the First Closing Date (if later than the
otherwise applicable settlement date) shall be the settlement date for payment
of funds and delivery of securities for all the Offered Securities sold pursuant
to the Offering.
11
In addition, upon written notice from CSFBC given to the Company and ▇▇▇
▇▇▇▇▇▇▇▇ from time to time not more than 30 days subsequent to the date of the
Prospectus, the Underwriters may purchase all or less than all of the Optional
Securities at the purchase price per Security to be paid for the Firm
Securities. The Company and ▇▇▇ ▇▇▇▇▇▇▇▇ agree, severally and not jointly, to
sell to the Underwriters the number of Optional Securities specified in such
notice in the same proportion that each of their committed Optional Securities
bears to the total number of Optional Securities, and the Underwriters agree,
severally and not jointly, to purchase such Optional Securities. Such Optional
Securities shall be purchased from the Company and ▇▇. ▇▇▇▇▇▇▇▇ for the account
of each Underwriter in the same proportion as the number of Firm Securities set
forth opposite such Underwriter's name bears to the total number of Firm
Securities (subject to adjustment by CSFBC to eliminate fractions) and may be
purchased by the Underwriters only for the purpose of covering over-allotments
made in connection with the sale of the Firm Securities. No Optional Securities
shall be sold or delivered unless the Firm Securities previously have been, or
simultaneously are, sold and delivered. The right to purchase the Optional
Securities or any portion thereof may be exercised from time to time and to the
extent not previously exercised may be surrendered and terminated at any time
upon notice by CSFBC to the Company and ▇▇. ▇▇▇▇▇▇▇▇.
Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "Optional Closing Date," which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "Closing Date"), shall be determined by CSFBC
but shall be not later than five full business days after written notice of
election to purchase Optional Securities is given. The Company and ▇▇. ▇▇▇▇▇▇▇▇,
as the case may be, will deliver the Optional Securities being purchased on each
Optional Closing Date to the Representatives for the accounts of the several
Underwriters, against payment of the purchase price therefor in Federal (same
day) funds by official bank check or checks or wire transfer to an account at a
bank acceptable to CSFBC drawn to the order of the Company and to ▇▇. ▇▇▇▇▇▇▇▇,
as the case may be, at the office of Lord, Bissell & Brook, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇. The form in which such Optional Securities
shall be delivered shall be the same form in which the Firm Securities shall
have been delivered on the First Closing Date, as applicable.
4. OFFERING BY UNDERWRITERS. It is understood that the several
Underwriters propose to offer the Offered Securities for sale to the public as
set forth in the Prospectus.
5. CERTAIN AGREEMENTS OF THE COMPANY AND THE SELLING STOCKHOLDERS. The
Company agrees with the several Underwriters and the Selling Stockholders and,
with respect to clauses (j), (k) and (l) below, the Selling Stockholders agree
with the Company and the several Underwriters:
(a) If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement, the Company will
file the Prospectus with the Commission pursuant to and in accordance with
subparagraph (1) (or, if applicable and if consented to by CSFBC,
subparagraph (4)) of Rule 424(b) not later than the earlier of (A) the
second business day following the execution and delivery of this Agreement
or (B) the fifteenth business day after the Effective Date of the Initial
Registration Statement. The Company will advise CSFBC promptly of any such
filing pursuant to Rule 424(b). If the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this
Agreement and an additional registration statement is necessary to register
a portion of the Offered Securities under the Act but the Effective Time
thereof has not occurred as of such execution and delivery, the Company
will file
12
the additional registration statement or, if filed, will file a
post-effective amendment thereto with the Commission pursuant to and in
accordance with Rule 462(b) on or prior to 10:00 P.M., New York time, on
the date of this Agreement or, if earlier, on or prior to the time the
Prospectus is printed and distributed to any Underwriter, or will make such
filing at such later date as shall have been consented to by CSFBC.
(b) The Company will advise CSFBC promptly of any proposal to amend
or supplement the initial or any additional registration statement as filed
or the related prospectus or the Initial Registration Statement, the
Additional Registration Statement (if any) or the Prospectus and will not
effect such amendment or supplementation without CSFBC's consent; and the
Company will also advise CSFBC promptly of the effectiveness of each
Registration Statement (if its Effective Time is subsequent to the
execution and delivery of this Agreement) and of any amendment or
supplementation of a Registration Statement or the Prospectus and of the
institution by the Commission of any stop order proceedings in respect of a
Registration Statement and will use its best efforts to prevent the
issuance of any such stop order and to obtain as soon as possible its
lifting, if issued.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with
sales by any Underwriter or dealer, any event occurs as a result of which
the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary at any time to
amend the Prospectus to comply with the Act, the Company will promptly
notify CSFBC of such event and will promptly prepare and file with the
Commission, at its own expense, an amendment or supplement which will
correct such statement or omission or an amendment which will effect such
compliance. Neither CSFBC's consent to, nor the Underwriters' delivery of,
any such amendment or supplement shall constitute a waiver of any of the
conditions set forth in Section 6.
(d) As soon as practicable, but not later than the Availability Date
(as defined below), the Company will make generally available to its
security holders an earnings statement covering a period of at least 12
months beginning after the Effective Date of the Initial Registration
Statement (or, if later, the Effective Date of the Additional Registration
Statement) which will satisfy the provisions of Section 11(a) of the Act.
For the purpose of the preceding sentence, "Availability Date" means the
45th day after the end of the fourth fiscal quarter following the fiscal
quarter that includes such Effective Date, except that, if such fourth
fiscal quarter is the last quarter of the Company's fiscal year,
"Availability Date" means the 90th day after the end of such fourth fiscal
quarter.
(e) The Company will furnish to the Representatives copies of each
Registration Statement (four of which will be signed and will include all
exhibits), each related preliminary prospectus, and, so long as a
prospectus relating to the Offered Securities is required to be delivered
under the Act in connection with sales by any Underwriter or dealer, the
Prospectus and all amendments and supplements to such documents, in each
case in such quantities as CSFBC reasonably requests. The Prospectus shall
be so furnished on or prior to 3:00 P.M., New York time, on the business
day following the later of the execution and delivery of this Agreement or
the Effective Time of the Initial Registration Statement. All other such
documents shall be so
13
furnished as soon as available. The Company will pay the expenses of
printing and distributing to the Underwriters all such documents.
(f) The Company will arrange for the qualification of the Offered
Securities for sale under the laws of such jurisdictions as CSFBC
designates and will continue such qualifications in effect so long as
required for the distribution.
(g) During the period of five years hereafter, the Company will
furnish to the Representatives and, upon request, to each of the other
Underwriters, as soon as practicable after the end of each fiscal year, a
copy of its annual report to stockholders for such year; and the Company
will furnish to the Representatives (i) as soon as available, a copy of
each report and any definitive proxy statement of the Company filed with
the Commission under the Securities Exchange Act of 1934 or mailed to
stockholders, and (ii) from time to time, such other information concerning
the Company as CSFBC may reasonably request.
(h) For a period of 90 days after the date of the Prospectus, the
Company will not offer, sell, contract to sell, pledge or otherwise dispose
of, directly or indirectly, or file with the Commission a registration
statement under the Act (other than on Form S-8) relating to, any
additional shares of its Securities or securities convertible into or
exchangeable or exercisable for any shares of its Securities, or publicly
disclose the intention to make any such offer, sale, pledge, disposition or
filing, without the prior written consent of CSFBC; except (i) issuances of
Securities pursuant to the conversion or exchange of convertible or
exchangeable securities or the exercise of warrants or options, in each
case outstanding on the date hereof, (ii) grants of employee stock options
pursuant to the terms of a plan in effect on the date hereof, or issuances
of Securities pursuant to the exercise of such options; (iii) registrations
on Form S-3 to enable the resale of up to 300,000 shares of Securities
previously issued by the Company in connection with acquisitions, which
registrations are required to be made by the Company during such 90-day
period, and (iv) the issuance of Securities as partial consideration for
the Company's acquisition of a European-based distributor of promotional
products for an estimated purchase price of approximately $60.0 million, as
described in the Prospectus.
(i) The Company will apply its portion of the net proceeds of the
offering and sale of the Offered Securities contemplated hereunder in the
manner set forth in the Prospectus under the caption "Use of Proceeds."
(j) The Company and each Selling Stockholder agrees with the several
Underwriters that the Company will pay all expenses incident to the
performance of the obligations of the Company and the Selling Stockholders
under this Agreement, including fees and disbursements of the accountants
and counsel for the Company, and will reimburse the Underwriters for any
filing fees and other expenses (including reasonable fees and disbursements
of counsel) incurred by them in connection with qualification of the
Offered Securities for sale under the laws of such jurisdictions as CSFBC
designates and the printing of memoranda relating thereto, for the filing
fee incident to, and the reasonable fees and disbursements of counsel to
the Underwriters in connection with, the review by the National Association
of Securities Dealers, Inc. of the Offered Securities, for any travel
expenses of the Company's officers and employees and any other expenses of
the Company in connection with attending or hosting meetings with
prospective purchasers of the Offered Securities, and for expenses
incurred in distributing preliminary prospectuses and the Prospectus
14
(including any amendments and supplements thereto) to the Underwriters;
provided, however, that the Selling Stockholders will pay the underwriting
discounts and commissions relating to the Offered Securities sold by the
Selling Stockholders, and any transfer taxes on the sale by the Selling
Stockholders of the Offered Securities to the Underwriters.
(k) Each Selling Stockholder agrees to deliver to CSFBC, attention:
Transactions Advisory Group, on or prior to the First Closing Date a
properly completed and executed United States Treasury Department Form W-9
(or other applicable form or statement specified by Treasury Department
regulations in lieu thereof).
(l) Each Selling Stockholder agrees, for a period of 90 days after
the date of the Prospectus, not to offer, sell, contract to sell, pledge or
otherwise dispose of, directly or indirectly, any additional shares of the
Securities of the Company or securities convertible into or exchangeable or
exercisable for any shares of Securities, or publicly disclose the
intention to make any such offer, sale, pledge or disposal, without the
prior written consent of CSFBC, other than bona fide gifts of Securities
made by any Selling Shareholder to a donee who agrees in writing prior to
receipt of any such gifts to be subject to the foregoing restrictions for
such 90-day period.
6. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The obligations of
the several Underwriters to purchase and pay for the Firm Securities on the
First Closing Date and the Optional Securities to be purchased on each Optional
Closing Date will be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Stockholders herein, to
the accuracy of the statements of Company officers made pursuant to the
provisions hereof, to the performance by the Company and the Selling
Stockholders of their obligations hereunder and to the following additional
conditions precedent:
(a) The Representatives shall have received a letter, dated the date
of delivery thereof (which, if the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this
Agreement, shall be on or prior to the date of this Agreement or, if the
Effective Time of the Initial Registration Statement is subsequent to the
execution and delivery of this Agreement, shall be prior to the filing of
the amendment or post-effective amendment to the registration statement to
be filed shortly prior to such Effective Time), of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
confirming that they are independent public accountants within the meaning
of the Act and the applicable published Rules and Regulations thereunder
and stating to the effect that:
(i) in their opinion the financial statements and schedules
examined by them and included or incorporated by reference into the
Registration Statements comply as to form in all material respects
with the applicable accounting requirements of the Act and the related
published Rules and Regulations;
(ii) they have performed the procedures specified by the American
Institute of Certified Public Accountants for a review of interim
financial information as described in Statement of Auditing Standards
No. 71, Interim Financial Information, on the unaudited financial
statements, if any, included in the Registration Statements;
(iii) on the basis of the review referred to in clause (ii)
above, a reading of the latest available interim financial statements
of the Company, a reading of the minutes of
15
all meetings of the shareholders and directors (including each
committee thereof) of the Company and its subsidiaries, inquiries
of officials of the Company who have responsibility for financial
and accounting matters and other specified procedures, nothing came
to their attention that caused them to believe that:
(A) the unaudited financial statements, if any, included in
the Registration Statements do not comply as to form in all
material respects with the applicable accounting requirements of
the Act and the related published Rules and Regulations or any
material modifications should be made to such unaudited financial
statements for them to be in conformity with generally accepted
accounting principles;
(B) the unaudited consolidated net sales, net income and net
income per share amounts for the three-month period ended March
31, 1998 included in the Prospectus do not agree with the amounts
set forth in the unaudited consolidated financial statements for
those same periods or were not determined on a basis
substantially consistent with that of the corresponding amounts
in the audited statements of income;
(C) at the date of the latest available balance sheet read
by such accountants, or at a subsequent specified date not more
than three business days prior to the date of this Agreement,
there was any change in the capital stock or any increase in
short-term indebtedness or long-term debt of the Company and its
consolidated subsidiaries or, at the date of the latest available
balance sheet read by such accountants, there was any decrease in
consolidated net current assets or net assets, as compared with
amounts shown on the latest balance sheet included in the
Prospectus; or
(D) for the period from the closing date of the latest
income statement included in the Prospectus to the closing date
of the latest available income statement read by such accountants
there were any decreases, as compared with the corresponding
period of the previous year and with the period of corresponding
length ended the date of the latest income statement included in
the Prospectus, in consolidated net sales or operating income, or
in the total or per share amounts of consolidated income from
operations or net income;
except in all cases set forth in clauses (C) and (D) above for
changes, increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
(iv) they have compared specified dollar amounts (or percentages
derived from such dollar amounts), numerical data and other financial
information contained in the Registration Statements and the
Prospectus (in each case to the extent that such dollar amounts,
percentages and other financial information are derived from the
general accounting records of the Company and its subsidiaries subject
to the internal controls of the Company's accounting system or are
derived directly from such records by analysis or computation) with
the results obtained from inquiries, a reading of such general
16
accounting records and other procedures specified in such letter and
have found such dollar amounts, percentages and other financial
information to be in agreement with such results, except as otherwise
specified in such letter.
For purposes of this subsection, (i) if the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of this
Agreement, "Registration Statements" shall mean the initial registration
statement as proposed to be amended by the amendment or post-effective
amendment to be filed shortly prior to its Effective Time, (ii) if the
Effective Time of the Initial Registration Statement is prior to the
execution and delivery of this Agreement but the Effective Time of the
Additional Registration Statement is subsequent to such execution and
delivery, "Registration Statements" shall mean the Initial Registration
Statement and the additional registration statement as proposed to be filed
or as proposed to be amended by the post-effective amendment to be filed
shortly prior to its Effective Time, and (iii) "Prospectus" shall mean the
prospectus included in the Registration Statements. All financial
statements and schedules included in material incorporated by reference
into the Prospectus shall be deemed included in the Registration Statements
for purposes of this subsection.
(b) If the Effective Time of the Initial Registration Statement is
not prior to the execution and delivery of this Agreement, such Effective
Time shall have occurred not later than 10:00 P.M., New York time, on the
date of this Agreement or such later date as shall have been consented to
by CSFBC. If the Effective Time of the Additional Registration Statement
(if any) is not prior to the execution and delivery of this Agreement, such
Effective Time shall have occurred not later than 10:00 P.M., New York
time, on the date of this Agreement or, if earlier, the time the Prospectus
is printed and distributed to any Underwriter, or shall have occurred at
such later date as shall have been consented to by CSFBC. If the Effective
Time of the Initial Registration Statement is prior to the execution and
delivery of this Agreement, the Prospectus shall have been filed with the
Commission in accordance with the Rules and Regulations and Section 5(a) of
this Agreement. Prior to such Closing Date, no stop order suspending the
effectiveness of a Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or, to the
knowledge of any Selling Stockholder, the Company or the Representatives,
shall be contemplated by the Commission.
(c) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development or event
involving a prospective change, in the condition (financial or other),
business, properties or results of operations of the Company or its
subsidiaries which, in the judgment of a majority in interest of the
Underwriters including the Representatives, is material and adverse and
makes it impractical or inadvisable to proceed with completion of the
public offering or the sale of and payment for the Offered Securities; (ii)
any suspension or limitation of trading in securities generally on the New
York Stock Exchange or any setting of minimum prices for trading on such
exchange, or any suspension of trading of any securities of the Company on
any exchange or in the over-the-counter market; (iii) any banking
moratorium declared by U.S. Federal or New York authorities; or (iv) any
outbreak or escalation of major hostilities in which the United States is
involved, any declaration of war by Congress or any other substantial
national or international calamity or emergency if, in the judgment of a
majority in interest of the Underwriters including the Representatives, the
effect of any such outbreak, escalation, declaration, calamity or emergency
makes it impractical or inadvisable to
17
proceed with completion of the public offering or the sale of and
payment for the Offered Securities.
(d) The Representatives shall have received an opinion, dated such
Closing Date, of ▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, counsel for the Company, to the
effect that:
(i) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Illinois,
with corporate power and authority to own its properties and conduct
its business as described in the Prospectus; and the Company is duly
qualified to do business as a foreign corporation in good standing in
all other jurisdictions in which its ownership or lease of property or
the conduct of its business requires such qualification, except where
the failure to be so qualified or to be in such good standing would
not have a Material Adverse Effect; each of the subsidiaries of the
Company has been duly incorporated or organized and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation or organization, and each such
subsidiary has full corporate power and authority to conduct its
business as described in the Registration Statement and the
Prospectus, except where the failure to be so qualified or to be in
such good standing would not have a Material Adverse Effect;
(ii) All outstanding shares of the Common Stock of the Company
(including the 45,000 and 100,000 shares that were issued upon
exercise of stock options held by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇, respectively, and included in the Offered Securities) have been
duly authorized and validly issued, are fully paid and nonassessable
and, to the best knowledge of such counsel, have not been issued in
violation of the registration requirements of applicable Federal and
state securities laws; the Offered Securities delivered by the Company
on such Closing Date have been duly authorized and, upon issuance of
such Securities upon payment of the consideration as provided in this
Agreement, will be validly issued, fully paid and nonassessable; the
authorized shares of capital stock of the Company, including the
Offered Securities, are as set forth in the Prospectus under the
caption "Capitalization" and conform as to legal matters to the
description thereof contained or incorporated by reference in the
Prospectus; the issuance of the Securities to be delivered by the
Company is not subject to pre-emptive or other similar rights arising
by operation of law, under the Articles of Incorporation or By-Laws of
the Company or, to the knowledge of such counsel, under any agreement
to which the Company is a party or to which it is subject; and no
further approval or authority of the shareholders or the Board of
Directors of the Company will be required for the issuance and sale of
the Offered Securities to be delivered by the Company as contemplated
by this Agreement;
(iii) All of the issued and outstanding shares of capital
stock of each of the Subsidiaries has been duly and validly authorized
and issued, are fully paid and nonassessable and (except for
directors' qualifying shares) all such shares are owned of record by
the Company and/or a Subsidiary, free and clear of all liens,
encumbrances, equities or claims;
18
(iv) To the knowledge of such counsel, except as set forth in the
Prospectus, there are no outstanding (A) securities or obligations of
the Company convertible into or exchangeable for any capital stock of
the Company, (B) warrants, rights or options to subscribe for or
purchase from the Company any such capital stock or any such
convertible or exchangeable securities or obligations or (C)
obligations of the Company to issue any such shares, any such
convertible or exchangeable securities or obligations or any such
warrants, rights or obligations;
(v) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the legal, valid and binding
obligation of the Company enforceable against the Company in
accordance with its terms, except to the extent that (A)
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to
creditors' rights generally and by general principles of equity
(regardless of whether enforceability is considered in a proceeding at
law or in equity) and (B) rights to indemnity and contribution may be
limited by federal or state securities laws or policies underlying
such laws;
(vi) The execution, delivery and performance of this Agreement by
the Company and the consummation of the transactions herein
contemplated have been duly authorized by all necessary corporate
action on the part of the Company and will not contravene any
provision of the Articles of Incorporation or By-Laws of the Company
or any of its subsidiaries or, to the knowledge of such counsel,
conflict with or result in a breach or violation of any of the terms
and provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
assets or properties of the Company or any of its subsidiaries under,
any statute, any rule, regulation, order or decree of any governmental
agency or body or any court having jurisdiction over the Company or
any of their respective properties, assets or operations, or any
indenture, mortgage, loan agreement, note or other agreement or
instrument for borrowed money, any guarantee of any agreement or
instrument for borrowed money or lease, permit, license or other
agreement or instrument to which the Company or any such subsidiary is
a party or by which the Company or any such subsidiary is bound or to
which any of their respective properties, assets or operations is
subject; and the Company has full power and authority to authorize,
issue and sell the Offered Securities as contemplated by this
Agreement;
(vii) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body or,
to the knowledge of such counsel, any third party (whether acting in
an individual, fiduciary or other capacity) is required for the
issuance and sale of the Offered Securities by the Company or for the
consummation of the other transactions contemplated by this agreement,
except such as have been obtained and made under the Act and such as
may be required under state securities laws in connection with the
offer and sale of the Offered Securities or as may be required by the
rules and regulations of the NASD;
(viii) To the knowledge of such counsel, neither the Company nor
any of its subsidiaries are (A) in violation of (i) their respective
charters or by-laws or other organizational documents, (ii) any
applicable law, ordinance, administrative or
19
governmental rule or regulation, domestic or foreign, except, with
respect to this clause (ii), for such violations that would not,
singly or in the aggregate, have a Material Adverse Effect, or
(iii) any order, decree or judgment of any court or governmental
agency or body, domestic or foreign, having jurisdiction over the
Company, or (B) in default in the performance or observance of any
material obligation, agreement or condition in any indenture,
mortgage, loan agreement, note or other agreement or instrument for
borrowed money, any guarantee of any agreement or instrument for
borrowed money or any lease, permit, license or other agreement or
instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound
or to which any of the properties, assets or operations of the
Company or any of its subsidiaries is subject;
(ix) There are no pending or, to the knowledge of such counsel,
threatened actions, suits, proceedings or investigations against or
affecting the Company or any of its subsidiaries or any of their
respective properties, assets or operations that could, singly or in
the aggregate, have a Material Adverse Effect;
(x) To the best knowledge of such counsel after due inquiry,
except as described or referred to in the Prospectus, there are no
contracts, agreements or understandings between the Company or any of
its subsidiaries and any third party (whether acting in an individual,
fiduciary or other capacity) granting such third party the right to
require the Company to file a registration statement under the Act
with respect to any securities of the Company owned or to be owned by
such third party or to require the Company to include such securities
in the securities registered pursuant to the Registration Statements
or in any securities being registered pursuant to any other
registration statement filed by the Company under the Act;
(xi) The descriptions in the Registration Statements and the
Prospectus of statutes, regulations, legal and governmental
proceedings or investigations and contracts and other documents fairly
present in all material respects the information required to be shown;
and, to the knowledge of such counsel, there are no statutes,
regulations or legal or governmental proceedings or investigations
required to be described in the Registration Statements or the
Prospectus that are not described as required or that could have a
material adverse effect on the ability of the Company to perform its
obligations under this Agreement or of any contracts or documents of a
character required to be described in the Registration Statements or
the Prospectus or to be filed as exhibits to the Registration
Statements that are not described and filed as required; it being
understood that such counsel need express no opinion as to the
financial statement and schedules or other financial data included in
or omitted from the Registration Statements and the Prospectus;
(xii) The Company is not and, after giving effect to the
offering and sale of the Offered Securities and the application of the
proceeds thereof as described in the Prospectus, will not be an
"investment company" as defined in the Investment Company Act of 1940;
(xiii) The Initial Registration Statement was declared effective
under the Act as of the date and time specified in such opinion, the
Additional Registration Statement (if
20
any) was filed and became effective under the Act as of the date
and time (if determinable) specified in such opinion, the
Prospectus either was filed with the Commission pursuant to the
subparagraph of Rule 424(b) specified in such opinion on the date
specified therein or was included in the Initial Registration
Statement or the Additional Registration Statement (as the case may
be), and, to the knowledge of such counsel, no stop order
suspending the effectiveness of a Registration Statement or any
part thereof has been issued and no proceedings for that purpose
have been instituted or are pending or contemplated under the Act;
(xiv) Each Registration Statement and the Prospectus, and each
amendment or supplement thereto, as of their respective effective or
issue dates, complied as to form in all material respects with the
requirements of the Act and the Rules and Regulations; in connection
with the preparation of the Registration Statements and the Prospectus
such counsel have participated in conferences with representatives and
counsel for the underwriters and with certain officers and employees
of, and counsel and independent certified public accountants for, the
Company at which conferences the contents of the Registration
Statements and the Prospectus and related matters were discussed, and,
although such counsel has not undertaken to determine independently
and is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the contents of the Registration
Statements or the Prospectus, no facts have come to such counsel's
attention that lead such counsel to believe that any part of a
Registration Statement or any amendment thereto, as of its effective
date or as of such Closing Date, contained any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading; or that the Prospectus or any amendment or supplement
thereto, as of its issue date or as of such Closing Date, contained
any untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading;
(xv) To the best knowledge of such counsel after due inquiry,
each Selling Stockholder is the record and beneficial owner of the
Offered Securities to be delivered by such Selling Stockholder on such
Closing Date and has full right, power and authority to enter into
this Agreement, the Custody Agreement and the Power of Attorney and to
sell, assign, transfer and deliver the Offered Securities delivered by
such Selling Stockholder on such Closing Date hereunder; and to the
best knowledge of such counsel after due inquiry, upon the delivery of
and payment for such Offered Securities, the several Underwriters will
have acquired valid and unencumbered title to the Offered Securities
purchased by them from the Selling Stockholders on such Closing Date
hereunder.
(xvi) This Agreement, the Custody Agreement and the Power of
Attorney have each been duly authorized, executed and delivered by
each Selling Stockholder and each constitutes the legal, valid and
binding obligation of each Selling Stockholder enforceable against
such Selling Stockholder in accordance with its terms, except to the
extent that (A) enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating
to creditors' rights generally and by general principles of
21
equity and (B) rights to indemnity and contribution may be limited
by Federal or state securities laws or policies underlying such
laws;
(xvii) To the knowledge of such counsel, no consent, approval,
authorization or order of, or filing with, any governmental agency or
body or any court, domestic or foreign, is required to be obtained or
made by any Selling Stockholder for the consummation of the
transactions contemplated by this Agreement, the Custody Agreement and
the Power of Attorney in connection with the sale of the Offered
Securities sold by the Selling Stockholders, except such as have been
obtained and made under the Act and such as may be required under
state securities laws;
(xviii) The execution, delivery and performance of this
Agreement, the Custody Agreement and the Power of Attorney and the
consummation of the transactions therein and herein contemplated will
not, to the knowledge of such counsel, result in a breach or violation
of any of the terms and provisions of, or constitute a default under,
any statute, any rule, regulation or order of any governmental agency
or body or any court, domestic or foreign, having jurisdiction over
any Selling Stockholder or any of their properties or any agreement or
instrument to which any Selling Stockholder is a party or by which any
Selling Stockholder is bound or to which any of the properties of any
Selling Stockholder is subject, or the charter or by-laws, trust
agreement or other governing instrument of any Selling Stockholder
which is a corporation, trust or other entity, or result in the
creation or imposition of any lien, charge, or encumbrance upon the
Offered Securities to be sold by such Selling Stockholder;
Such opinion shall be to such further effect with respect to other
legal matters relating to this Agreement and the transactions contemplated
hereby as the Representatives and counsel to the Underwriters may
reasonably request. In rendering such opinion, such counsel may rely as to
matters governed by the laws of jurisdictions other than the laws of
Illinois and the Federal laws of the United States upon an opinion or
opinions of local or foreign counsel, provided that (a) each such local or
foreign counsel is reasonably satisfactory to the Representatives, (b) a
copy of each opinion so relied upon is delivered to you and is in form and
substance reasonably satisfactory to your counsel, and (c) ▇▇▇▇, Gerber &
▇▇▇▇▇▇▇▇▇ shall state in their opinion that they believe they are justified
in relying on each such counsel's opinion.
(e) The Representatives shall have received from Lord, Bissell &
Brook, counsel for the Underwriters, such opinion or opinions, dated such
Closing Date, with respect to the corporate existence of the Company, the
validity of the Offered Securities delivered on such Closing Date, the
Registration Statements, the Prospectus and other related matters as the
Representatives may require, and the Selling Stockholders and the Company
shall have furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
(f) The Representatives shall have received a certificate, dated such
Closing Date, of the President or Chief Operating Officer and a principal
financial or accounting officer of the Company in which such officers, to
the best of their knowledge after reasonable investigation, shall state
that: the representations and warranties of the Company in this Agreement
are true and correct; the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder
at or prior to such Closing Date; no stop order suspending the
22
effectiveness of any Registration Statement has been issued and no
proceedings for that purpose have been instituted or are contemplated by
the Commission; the Additional Registration Statement (if any) satisfying
the requirements of subparagraphs (1) and (3) of Rule 462(b) was filed
pursuant to Rule 462(b), including payment of the applicable filing fee in
accordance with Rule 111(a) or (b) under the Act, prior to the time the
Prospectus was printed and distributed to any Underwriter; and, subsequent
to the respective dates of the most recent financial statements in the
Prospectus, there has been no material adverse change, nor any development
or event involving a prospective material adverse change, in the condition
(financial or other), business, properties or results of operations of the
Company and its Subsidiaries taken as a whole except as set forth in or
contemplated by the Prospectus or as described in such certificate.
(g) The Representatives shall have received a letter, dated such
Closing Date, of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP which meets the requirements of
subsection (a) of this Section, except that the specified date referred to
in such subsection will be a date not more than three business days prior
to such Closing Date for the purposes of this subsection.
The Selling Stockholders and the Company will furnish the Representatives with
such conformed copies of such opinions, certificates, letters and documents as
the Representatives reasonably request. CSFBC may in its sole discretion waive
on behalf of the Underwriters compliance with any conditions to the obligations
of the Underwriters hereunder, whether in respect of an Optional Closing Date or
otherwise.
7. INDEMNIFICATION AND CONTRIBUTION. (a) The Company will indemnify and
hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter 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 upon any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein (in the case of
the Prospectus, any amendment or supplement thereto or any related preliminary
prospectus, in the light of the circumstances under which such statements were
made) not misleading, and will reimburse each Underwriter for any legal or other
expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that the Company will not be
liable in any such case 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 in or omission or alleged omission from any of such documents in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter through the Representatives specifically for use
therein, it being understood and agreed that the only such information furnished
by any Underwriter consists of the information described as such in subsection
(c) below; and provided, further, that with respect to any untrue statement or
alleged untrue statement in or omission or alleged omission from any preliminary
prospectus, the indemnity agreement contained in this subsection (a) shall not
inure to the benefit of any Underwriter from whom the person asserting any such
losses, claims, damages or liabilities purchased the Offered Securities
concerned, to the extent that a prospectus relating to such Offered Securities
was required to be delivered by such Underwriter under the Act in connection
with such purchase and any such loss, claim, damage or liability of such
Underwriter results from the fact that there was not sent or given to such
person, at or prior to the written confirmation of the sale of such Offered
Securities to such person, a copy of the Prospectus (exclusive of material
incorporated by reference) if the Company had previously furnished copies
thereof to such Underwriter.
23
(b) The Selling Stockholders, severally and not jointly, will indemnify and
hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter 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 upon any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein (in the case of
the Prospectus, any amendment or supplement thereto or any related preliminary
prospectus, in the light of the circumstances under which such statements were
made) not misleading, and will reimburse each Underwriter for any legal or other
expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that the Selling Stockholders
will be liable in any such case only in the event that any such Selling
Stockholder shall have breached any of the representations and warranties
contained in Section 2(b) herein and no Selling Stockholder will be liable 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 in or omission or
alleged omission from any of such documents in reliance upon and in conformity
with written information furnished to the Company by an Underwriter through the
Representatives specifically for use therein, it being understood and agreed
that the only such information furnished by any Underwriter consists of the
information described as such in subsection (c) below; and provided, further,
that the liability under this Section of each Selling Stockholder shall be
limited to an amount equal to the gross proceeds to such Selling Stockholder
from the sale of Offered Securities sold by such Selling Stockholder; and
provided, further, that with respect to any untrue statement or alleged untrue
statement in or omission or alleged omission from any preliminary prospectus,
the indemnity agreement contained in this subsection (b) shall not inure to the
benefit of any Underwriter from whom the person asserting any such losses,
claims, damages or liabilities purchased the Offered Securities concerned, to
the extent that a prospectus relating to such Offered Securities was required to
be delivered by such Underwriter under the Act in connection with such purchase
and any such loss, claim, damage or liability of such Underwriter results from
the fact that there was not sent or given to such person, at or prior to the
written confirmation of the sale of such Offered Securities to such person, a
copy of the Prospectus (exclusive of material incorporated by reference) if the
Company had previously furnished copies thereof to such Underwriter.
(c) Each Underwriter will severally and not jointly indemnify and hold
harmless the Company and each Selling Stockholder against any losses, claims,
damages or liabilities to which the Company or such Selling Stockholder 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
upon any untrue statement or alleged untrue statement of any material fact
contained in any Registration Statement, the Prospectus, or any amendment or
supplement thereto, or any related preliminary prospectus, 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
(in the case of the Prospectus, any amendment or supplement thereto or any
related preliminary prospectus, in the light of the circumstances under which
such statements were made) not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by such Underwriter through the
Representative specifically for use therein, and will reimburse any legal or
other expenses reasonably incurred by the Company and each Selling Stockholder
in connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred, it being understood and
agreed
24
that the only such information furnished by any Underwriter consists of the
following information in the Prospectus furnished on behalf of each
Underwriter: the last paragraph at the bottom of the cover page concerning
the terms of the offering by the Underwriters; the legend concerning
over-allotments, stabilizing and similar transactions contained on the inside
front cover page; the concession and reallowance figures appearing in the
fourth paragraph under the caption "Underwriting;" the information contained
in the eighth paragraph under the caption "Underwriting;" and the information
contained under the caption "Notice to Canadian Residents."
(d) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under
subsection (a), (b) or (c) above, notify 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 subsection (a), (b) or (c) above, except to the extent that
the indemnifying party is materially prejudiced by reason of such omission to
notify. In case any such action is brought against any indemnified party and it
notifies an indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying 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. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action.
(e) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a), (b) or
(c) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a), (b) or (c) above (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Stockholder on the one hand and the Underwriters on the
other from the offering of the Offered Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company and the
Selling Stockholder on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages
26
or liabilities as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Selling Stockholder on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company and the Selling Stockholders bear to the
total underwriting discounts and commissions received by the Underwriters.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company, the Selling Stockholder or the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (e) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim which
is the subject of this subsection (e). Notwithstanding the provisions of this
subsection (e), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Offered Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this
subsection (e) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(f) The obligations of the Company and the Selling Stockholders under this
Section shall be in addition to any liability which the Company and the Selling
Stockholder may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act; and the obligations of the Underwriters under this Section
shall be in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
director of the Company, to each officer of the Company who has signed a
Registration Statement and to each person, if any, who controls the Company
within the meaning of the Act.
8. DEFAULT OF UNDERWRITERS. If any Underwriter or Underwriters default
in their obligations to purchase Offered Securities hereunder on either the
First or any Optional Closing Date and the aggregate number of shares of
Offered Securities that such defaulting Underwriter or Underwriters agreed
but failed to purchase does not exceed 10% of the total number of shares of
Offered Securities that the Underwriters are obligated to purchase on such
Closing Date, CSFBC may make arrangements satisfactory to the Company and the
Selling Stockholders for the purchase of such Offered Securities by other
persons, including any of the Underwriters, but if no such arrangements are
made by such Closing Date, the non-defaulting Underwriters shall be obligated
severally, in proportion to their respective commitments hereunder, to
purchase the Offered Securities that such defaulting Underwriters agreed but
failed to purchase on such Closing Date. If any Underwriter or Underwriters
so default and the aggregate number of shares of Offered Securities with
respect to which such default or defaults occur exceeds 10% of the total
number of shares of Offered Securities that the Underwriters are obligated to
purchase on such Closing Date and arrangements satisfactory to CSFBC, the
Company and the Selling Stockholders for the purchase of such Offered
Securities by other persons are not made within 36 hours after such default,
this Agreement will terminate without liability on the part of any
non-defaulting Underwriter, the Company or the Selling Stockholders, except
as provided in Section 9 (provided that if such default occurs with respect
to Optional Securities after the First Closing Date, this Agreement will not
terminate as to the Firm Securities or any Optional Securities purchased
prior to such termination). As used in this Agreement, the term "Underwriter"
includes any person substituted for an Underwriter under this Section.
Nothing herein will relieve a defaulting Underwriter from liability for its
default.
9. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The respective
indemnities, agreements, representations, warranties and other statements of the
Selling Stockholders, of the Company or its officers and of the several
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation, or statement as to the
results thereof, made by or on behalf of any Underwriter, any Selling
Stockholder, the Company or any of their respective
26
representatives, officers or directors or any controlling person, and will
survive delivery of and payment for the Offered Securities. If this Agreement
is terminated pursuant to Section 8 or if for any reason the purchase of the
Offered Securities by the Underwriters is not consummated, the Company and
the Selling Stockholders shall remain responsible for the expenses to be paid
or reimbursed by them pursuant to Section 5 and the respective obligations of
the Company, the Selling Stockholders, and the Underwriters pursuant to
Section 7 shall remain in effect, and if any Offered Securities have been
purchased hereunder the representations and warranties in Section 2 and all
obligations under Section 5 shall also remain in effect. If the purchase of
the Offered Securities by the Underwriters is not consummated for any reason
other than solely because of the termination of this Agreement pursuant to
Section 8 or the occurrence of any event specified in clause (iii), (iv) or
(v) of Section 6(c), the Company and the Selling Stockholders will,
severally, reimburse the Underwriters for all out-of-pocket expenses
(including fees and disbursements of counsel) reasonably incurred by them in
connection with the offering of the Offered Securities.
10. NOTICES. All communications hereunder will be in writing and, if sent
to the Underwriters, will be mailed, delivered or telegraphed and confirmed to
the Representatives, c/o Credit Suisse First Boston Corporation, Eleven Madison
Avenue, New York, N.Y. 10010-3629, Attention: Investment Banking Department -
Transactions Advisory Group, or, if sent to the Company, will be mailed,
delivered or telegraphed and confirmed to it c/o HA-LO Industries, Inc., ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇ ▇▇▇▇▇▇▇▇, with a copy
to ▇▇▇▇, Gerber & ▇▇▇▇▇▇▇▇▇, ▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq, or, if sent to the Selling Stockholders or any
of them, will be mailed, delivered or telegraphed and confirmed to the address
previously supplied to the Company; provided, however, that any notice to an
Underwriter pursuant to Section 7 will be mailed, delivered or telegraphed and
confirmed to such Underwriter.
11. SUCCESSORS. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective personal representatives and
successors and the officers and directors and controlling persons referred to in
Section 7, and no other person will have any right or obligation hereunder.
12. REPRESENTATION. The Representatives will act for the several
Underwriters in connection with the transactions contemplated by this Agreement,
and any action under this Agreement taken by the Representatives jointly or by
CSFBC will be binding upon all the Underwriters. The Custodian will act for the
Selling Stockholders in connection with such transactions, and any action under
or in respect of this Agreement taken by the Custodian will be binding upon all
the Selling Stockholders.
13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.
The Company and the Selling Stockholders hereby submit to the non-exclusive
jurisdiction of the Federal and state courts in the Borough of Manhattan in The
City of New York in any suit or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby.
27
If the foregoing is in accordance with the Representatives' understanding
of our agreement, kindly sign and return to the Company one of the counterparts
hereof, whereupon it will become a binding agreement among the Selling
Stockholders, the Company and the several Underwriters in accordance with its
terms.
Very truly yours,
HA-LO INDUSTRIES, INC.
By______________________________________
President and Chief Executive Officer
*_____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
_____________________________________
▇▇▇ ▇▇▇▇▇▇▇▇
*_____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
_____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
*_____________________________________
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
*_____________________________________
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
*_____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
*_____________________________________
▇▇▇▇ ▇. ▇▇▇▇
*_____________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
*_____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇
28
▇▇▇▇ ▇. ▇▇▇▇▇ Family Trust
By: *________________________________
Trustee
▇▇▇▇▇ ▇▇▇▇▇▇▇ Family Trust
By: *________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Trust
By: *________________________________
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Trust
By: *________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Foundation
By: *________________________________
_____________
* By ________________________ as Attorney-In-Fact
The foregoing Underwriting Agreement is hereby
confirmed and accepted as of the date first
above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
ABN AMRO INCORPORATED
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
Acting on behalf of themselves and as the
Representatives of the several Underwriters.
By CREDIT SUISSE FIRST BOSTON CORPORATION
By __________________________________
Title:______________________________
29
SCHEDULE A
Number of
Number of Optional
Firm Securities Securities to
Selling Stockholder to be Sold be Sold
------------------- --------------- --------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 250,000 --
▇▇▇ ▇▇▇▇▇▇▇▇ 200,000 200,000
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 338,000 --
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 45,000 --
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇ 100,000 --
▇▇▇▇▇ Foundation 150,000 --
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 50,000 --
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 50,000 --
▇▇▇▇ ▇. ▇▇▇▇ 30,000 --
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 20,000 --
▇▇▇▇▇▇ ▇. ▇▇▇▇ 10,000 --
▇▇▇▇ ▇. ▇▇▇▇▇ Family Trust 120,000 --
▇▇▇▇▇ ▇▇▇▇▇▇▇ Family Trust 250,000 --
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Trust 50,000 --
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Trust 50,000 --
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Foundation 37,000 --
_________ _________
Total 1,750,000 200,000
========= ========
30
SCHEDULE B
Underwriter
------------ NUMBER OF
FIRM SECURITIES
TO BE PURCHASED
---------------
Credit Suisse First Boston Corporation. . . . . . . . . .
ABN AMRO Incorporated . . . . . . . . . . . . . . . . . .
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated. . . .
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated . . . . . . . . . . . .
--------------
Total 5,500,000
--------------
--------------
31