<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 11, 1997
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ZEBRA TECHNOLOGIES CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 36-6966580
(State or other jurisdiction (I.R.S. Employer
of
incorporation or organization) Identification No.)
</TABLE>
333 CORPORATE WOODS PARKWAY, VERNON HILLS, ILLINOIS 60061-3109, (847) 634-6700
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
EDWARD KAPLAN
333 CORPORATE WOODS PARKWAY, VERNON HILLS, ILLINOIS 60061-3109, (847) 634-6700
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
------------------------
COPIES TO:
MATTHEW S. BROWN, ESQ. ROBERT F. WALL, ESQ.
MARGUERITE M. ELIAS, ESQ. R. CABELL MORRIS, JR., ESQ.
Katten Muchin & Zavis Winston & Strawn
525 West Monroe Street, Suite 1600 35 West Wacker Drive
Chicago, Illinois 60661 Chicago, Illinois 60601
(312) 902-5200 (312) 558-5600
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
------------------------
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: / /
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER SHARE OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Class A Common Stock, $.01 par 2,364,795
value.............................. shares(1) $31.125(2) $73,604,244 $22,305
</TABLE>
(1) Includes 308,451 shares to be offered upon exercise of the Underwriters'
over-allotment option.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) under the Securities Act of 1933 on the basis of the average
of the high and low prices of the Class A Common Stock on the Nasdaq
National Market on August 5, 1997.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED AUGUST 11, 1997
PROSPECTUS
2,056,344 SHARES
[LOGO]
CLASS A COMMON STOCK
All of the 2,056,344 shares of Class A Common Stock offered hereby are being
sold by the Selling Stockholders. See "Selling Stockholders." The Company will
not receive any of the proceeds from the sale of the shares offered hereby.
The Class A Common Stock is traded in the over-the-counter market and quoted
on the Nasdaq National Market under the symbol "ZBRA." On August 8, 1997, the
closing price of the Class A Common Stock as reported by Nasdaq was $31.25 per
share. See "Price Range of Common Stock and Dividends."
All of the shares being sold by the Selling Stockholders are shares of Class
B Common Stock, which will automatically convert into shares of Class A Common
Stock upon their sale in this offering. The holders of Class A Common Stock are
entitled to one vote per share while holders of Class B Common Stock are
entitled to ten votes per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR FACTORS THAT SHOULD BE CONSIDERED
BY PROSPECTIVE PURCHASERS OF THE SHARES OF CLASS A COMMON STOCK OFFERED HEREBY.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PROCEEDS TO
PRICE TO UNDERWRITING SELLING
PUBLIC DISCOUNT(1) STOCKHOLDERS(2)
<S> <C> <C> <C>
Per Share........................................ $ $ $
Total(3)......................................... $ $ $
</TABLE>
(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting expenses, payable by the Selling Stockholders, estimated at
$200,000.
(3) Certain of the Selling Stockholders have granted to the Underwriters a
30-day option to purchase up to 308,451 additional shares of Class A Common
Stock, solely to cover over-allotments, if any. See "Underwriting." If all
such shares are purchased, the total Price to Public, Underwriting Discount
and Proceeds to Selling Stockholders will be $ , $ and
$ , respectively.
The Class A Common Stock is offered by the several Underwriters when, as and
if delivered to and accepted by them and subject to their right to reject orders
in whole or in part. It is expected that delivery of certificates representing
the shares will be made on or about August , 1997.
WILLIAM BLAIR & COMPANY
THE ROBINSON-HUMPHREY COMPANY, INC.
MONTGOMERY SECURITIES
THE DATE OF THIS PROSPECTUS IS AUGUST , 1997
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information concerning the Company may be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
Regional Offices at Seven World Trade Center, Suite 1300, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can also be obtained upon written
request addressed to the Commission, Public Reference Section, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. Reports, proxy statements and
other information concerning the Company can also be inspected at the offices of
The Nasdaq Stock Market, 1735 K Street, N.W., Washington, D.C. 20006. Copies of
reports, proxy and information statements and other information regarding
registrants that file electronically (including the Company) are available on
the Commission's website at http://www.sec.gov.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is hereby made to the Registration Statement which may be
inspected and copied in the manner and at the sources described above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant to
the Exchange Act are incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996;
(2) the Company's quarterly reports on Form 10-Q for the fiscal quarters
ended March 29, 1997 and June 28, 1997; and
(3) the description of the Company's Class A Common Stock contained in the
registration statement on Form 8-A filed by the Company with the Commission on
July 15, 1991.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering made hereby shall be deemed to be incorporated
by reference in this Prospectus and to be a part hereof from the date of filing
of such documents. Any statement contained herein or in a document incorporated
or deemed to be incorporated herein by reference shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained in any subsequently filed document which is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide, without charge, to each person to whom a copy of
this Prospectus is delivered, on the written or oral request of such person, a
copy of any or all of the documents incorporated herein by reference (other than
exhibits thereto, unless such exhibits are specifically incorporated by
reference into the information that this Prospectus incorporates). Written or
telephone requests for such copies should be directed to the Company's principal
office: Zebra Technologies Corporation, 333 Corporate Woods Parkway, Vernon
Hills, Illinois 60061, Attention: Secretary (telephone: (847) 634-6700).
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK OF
THE COMPANY, INCLUDING SYNDICATE COVERING TRANSACTIONS OR THE IMPOSITION OF
PENALTY BIDS. FOR A DISCUSSION OF THESE ACTIVITIES, SEE "UNDERWRITING."
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND OTHER SELLING
GROUP MEMBERS OR THEIR AFFILIATES MAY ENGAGE IN PASSIVE MARKET MAKING
TRANSACTIONS IN THE COMMON STOCK OF THE COMPANY ON THE NASDAQ NATIONAL MARKET IN
ACCORDANCE WITH RULE 103 OF REGULATION M UNDER THE SECURITIES EXCHANGE ACT OF
1934. SEE "UNDERWRITING."
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED
INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO APPEARING
ELSEWHERE AND INCORPORATED BY REFERENCE IN THIS PROSPECTUS. EXCEPT AS OTHERWISE
NOTED, ALL INFORMATION IN THIS PROSPECTUS ASSUMES THE UNDERWRITERS'
OVER-ALLOTMENT OPTION IS NOT EXERCISED. SEE "UNDERWRITING."
THE COMPANY
Zebra Technologies Corporation ("Zebra" or the "Company") provides bar code
labeling solutions, principally to manufacturing and service entities worldwide,
for use in automatic identification and data collection systems. The Company
designs, manufactures, sells and supports a broad line of computerized
label/ticket printing systems and related specialty supplies. The Company's
equipment is designed to operate at the user's location to produce and dispense
high quality bar coded labels in extremely time-sensitive and physically
demanding environments. Zebra's solutions approach integrates its applications
expertise, computerized printing systems, specialty supplies and software.
Applications for the Company's systems include inventory control, automated
warehousing, JIT (Just-In-Time) manufacturing, CIM (Computer Integrated
Manufacturing), employee time and attendance records, weighing systems, tool
room control, shop floor control, library systems, prescription labeling and
scientific experimentation.
The Company's net sales from continuing operations have grown from $58.7
million in 1992 to $164.0 million in 1996, a compound annual growth rate of
29.3%, while net income from continuing operations in the same period has grown
from $11.8 million to $30.9 million, a compound annual growth rate of 27.1%.
Management believes that Zebra's success results from its reputation for
reliable and durable products and its focus on providing bar code labeling
solutions for its customers. The Company estimates that over 250,000 Zebra bar
code printing systems are presently installed at approximately 25,000 user sites
around the world. Approximately 47.2% of the Company's net sales from continuing
operations for the six months ended June 28, 1997 was generated from sales to
international customers, as compared to 45.4% for the six months ended June 29,
1996. The Company expects this percentage to continue to increase in the future.
Zebra anticipates that its future growth will be enhanced by two continuing
trends: bar code label standardization programs and the focus of businesses
worldwide on improving quality and productivity. Industry mandated
standardization has been a major catalyst in the rapid development of bar
coding, and management believes that the mandate of standards will continue to
proliferate. Zebra also believes that increasing demands for improvements in
productivity and quality in commercial and service organizations will lead to
increased use of automatic identification systems.
THE OFFERING
<TABLE>
<S> <C>
Class A Common Stock offered by the Selling
Stockholders................................... 2,056,344 shares
Common Stock to be outstanding after the
offering(1).................................... 19,058,686 shares of Class A Common Stock
5,199,060 shares of Class B Common Stock
24,257,746 total shares
Nasdaq National Market Symbol................... ZBRA
</TABLE>
- ------------------------
(1) Does not include 497,000 shares of Class A Common Stock reserved for
issuance upon the exercise of certain options, at a weighted average
exercise price of $23.03 per share, and 452,000 shares available for future
grant under the Company's stock option and stock purchase plans.
3
<PAGE>
The Company was founded in 1969 and its principal executive office is
located at 333 Corporate Woods Parkway, Vernon Hills, Illinois 60061, telephone
(847) 634-6700. The Company's website address is http://www.ZEBRA.COM. The
Company's website is not and shall not be deemed to be a part of this
Prospectus. The Company is a Delaware corporation.
IBM is a registered trademark of International Business Machines
Corporation, UNIX is a registered trademark of Novell, Inc., MS/DOS and Windows
are registered trademarks of Microsoft Corporation and MAC is a registered
trademark of Apple Computer. The Company, through its subsidiary Zebra Domestic
Intangibles, Inc., currently holds U.S. trademarks on the words "STRETCH,"
"Value-Line," "Performance Line," "170Xi," "140Xi" and "90Xi," and holds U.S.
registered trademarks on the Company's Zebra head logo and the words or marks
"Zebra," "ZPL," "ZPL II," "STRIPE," "Element Energy Equalizer," "E3," and "Z
Ultimate." The Company, through its subsidiary Zebra International Intangibles,
Inc., holds trademarks on the word "Zebra" and the Company's Zebra head logo in
France, Canada, Germany, the United Kingdom, Sweden and China.
4
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, POTENTIAL
PURCHASERS SHOULD CONSIDER CAREFULLY THE FOLLOWING FACTORS IN EVALUATING THE
COMPANY, ITS BUSINESS AND THE SHARES OF CLASS A COMMON STOCK OFFERED HEREBY:
RISK OF PRODUCT INTRODUCTIONS AND NEW TECHNOLOGY. While the Company
believes that thermal transfer printing will be the method of choice in its
target markets for the foreseeable future, development of a new technology which
better serves customers in these target markets and in which the Company does
not participate could have a material adverse effect on the Company's operations
and growth. See
"-- Competition" and "Business -- Products." Furthermore, the Company's markets
have frequent new product introductions and increasing customer expectations
concerning product performance and price. As a result of these factors the
Company believes that its future growth and financial performance will depend
upon the Company's ability to develop and market new products that achieve
market acceptance, while enhancing existing products to accommodate the latest
technological advances and customer preferences. Failure by the Company to
anticipate or respond adequately to change in technology or customer preferences
or any significant delays in product development or introduction could adversely
affect the Company's business, financial condition or results of operations. In
addition, there can be no assurance that new product introductions will not
result in a decrease in revenues from the Company's existing products or
otherwise adversely affect the Company's business, financial condition or
results of operations.
COMPETITION. Many companies are engaged in the design, manufacture and
marketing of automatic identification equipment. The Company considers its
direct competition to be the providers of thermal transfer and direct thermal
printing systems and supplies to the demand printing environment. Several of
these providers have substantially greater resources than the Company.
Competition in the Company's market depends on a number of factors, including
reliability, quality and reputation of the manufacturer and its products,
hardware innovations and specifications, price, level of technical support,
supplies and applications support offered by the manufacturer and available
distribution channels. In addition, various other methods of bar code printing
exist, although the Company believes that thermal transfer printing offers clear
advantages over such other methods for the Company's target markets.
INTERNATIONAL OPERATIONS. Sales to international customers generated 47.2%
of Zebra's net sales from continuing operations in the six months ended June 28,
1997 and 45.4% of its net sales from continuing operations in the six months
ended June 29, 1996, and the Company expects this percentage to continue to
increase in the future. In connection with international sales, fluctuations in
currency conversion rates can expose the Company's products to price competition
from products produced at lower costs in foreign countries and can otherwise
affect the Company's results of operations and financial position. In addition,
some of the Company's vendors are located in foreign countries and therefore
base their pricing, in part, on currency exchange rates. The Company has
engaged, and may engage in the future, in currency-hedging transactions intended
to reduce the effect of fluctuations in foreign currency exchange rates on the
Company's results of operations and financial position. However, there can be no
assurance that any such hedging transactions will materially reduce the effect
of foreign currency exchange rates on such results. The Company is also subject
to certain other risks inherent in international business generally, including
risks of trade embargoes, political instability and the possibility of war or
other hostility.
ACQUISITIONS. The Company regularly reviews acquisition opportunities which
if pursued would be material to the Company, including one previously
contemplated merger which was publicly disclosed but not consummated. To date,
the Company's management has had limited experience in making acquisitions.
Acquisitions involve a number of special risks and challenges, including the
diversion of management's attention, assimilation of the operations and
personnel of acquired companies, incorporation of acquired products into
existing product lines, adverse short-term effects on reported operating
results, amortization of acquired intangible assets, assumption of the
liabilities of acquired companies, possible loss of key employees and difficulty
of presenting a unified corporate image. No assurance can be given that any
potential acquisition by the Company will or will not occur, or that, if an
acquisition does occur, it will not ultimately have a material adverse effect on
the Company or that any such acquisition will succeed in
5
<PAGE>
enhancing the Company's business. For example, the Company recently discontinued
the operations of its subsidiary, Zebra Technologies VTI ("VTI"), which was
acquired in 1995 and which did not achieve management's expectations.
RISK OF LIMITED SUPPLY SOURCES. The Company purchases certain parts and
supplies from a limited number of vendors and in some instances from a single
vendor. The Company currently relies on a primary source of supply, Kyocera
Corporation, a publicly held Japanese corporation, for the majority of its
thermal and thermal transfer printheads. Although management has taken what it
believes are adequate precautions to limit the risk of short supplies, including
maintaining adequate safety stocks, the Company could be vulnerable to limits in
availability and changes in pricing and could experience delays in manufacturing
and shipping in the event the Company is required to find new suppliers for any
of these parts. Such delays could adversely affect the Company's business,
financial condition or results of operations. See "Business -- Manufacturing."
DEPENDENCE ON KEY PERSONNEL. The Company's success is largely dependent on
the skills, experience and efforts of its senior management and certain other
key personnel. If, for any reason, one or more key personnel were not to remain
active in the Company, the Company's business, financial condition or results of
operations could be adversely affected. Mr. Edward Kaplan assumed the
responsibilities of President of the Company in April, 1997 on an interim basis.
The Company is currently conducting an executive search for President of the
Company and for a Vice President of Engineering to succeed Mr. Gerhard Cless,
who currently serves as Executive Vice President of Engineering. The Company's
future success will depend upon its ability to attract and retain additional
qualified management, technical and marketing personnel. There is competition in
the market for the services of such qualified personnel and there can be no
assurance that the Company will be able to attract and retain such personnel. A
failure to attract and retain such personnel could adversely affect the
Company's business, financial condition or results of operations.
CONTROL BY EXISTING STOCKHOLDERS. The Company's executive officers,
directors, and their families and family trusts, will in the aggregate
beneficially own substantially all of the outstanding Class B Common Stock,
which will represent approximately 21.4% of the Company's outstanding shares,
and approximately 73.2% of the voting power, of Common Stock after this
offering. Holders of the Class B Common Stock are entitled to 10 votes per
share, while holders of the Class A Common Stock are entitled to only one vote
per share. As a result, the stockholders of the Class B Common Stock, if acting
together, would be able effectively to control most matters requiring approval
by the stockholders of the Company, including the election of all of the
directors. If at any time the number of outstanding shares of Class B Common
Stock represents less than 10% of the total number of outstanding shares of both
classes of Common Stock, then such outstanding shares of Class B Common Stock
will automatically convert into an equal number of shares of Class A Common
Stock. Certain provisions of the Company's by-laws and certificate of
incorporation could have the effect of delaying, deferring or preventing a
change in control of the Company. Such ownership could result in conflicts of
interest for such directors, officers and stockholders in situations where the
Company's interests and those of such other companies are not identical.
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
Forward looking statements contained in this Prospectus are subject to the
safe harbor created by the Private Securities Litigation Reform Act of 1995 and
are highly dependent upon a variety of important factors which could cause
actual results to differ materially from those reflected in such forward looking
statements. The factors include those indicated in "Risk Factors" above. Also,
profit will be affected by the Company's ability to control manufacturing and
operating costs. Due to the Company's large investment portfolio, interest rate
conditions will also have an impact on results, as will foreign exchange rates
due to the large percentage of the Company's sales in international markets.
When used in this document and documents referenced, the words "intend,"
"anticipate," "believe," "estimate," and "expect" and similar expressions as
they relate to the Company or its management are included to identify such
forward looking statements.
6
<PAGE>
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the Common
Stock offered hereby. See "Selling Stockholders."
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Company's Class A Common Stock is quoted on the Nasdaq National Market
under the symbol ZBRA. The following table sets forth, for the quarters
indicated, the high and low closing prices as reported by Nasdaq.
<TABLE>
<CAPTION>
MARKET PRICE
---------------------
HIGH LOW
---------- ---------
<S> <C> <C>
1995
First Quarter............................................................................ $ 21.38 $ 18.13
Second Quarter........................................................................... 27.13 19.50
Third Quarter............................................................................ 32.00 26.63
Fourth Quarter........................................................................... 34.50 23.38
1996
First Quarter............................................................................ 35.25 25.25
Second Quarter........................................................................... 27.88 17.75
Third Quarter............................................................................ 26.25 15.50
Fourth Quarter........................................................................... 31.50 23.13
1997
First Quarter............................................................................ 27.25 21.38
Second Quarter........................................................................... 32.00 21.50
Third Quarter (through August 8, 1997)................................................... 33.13 27.44
</TABLE>
On August 8, 1997, the last reported sales price of the Class A Common Stock
was $31.25 and there were 534 and 14 holders of record of the Company's Class A
Common Stock and Class B Common Stock, respectively.
Since the Company's initial public offering in August 1991, the Company has
not declared any cash dividends or distributions on its capital stock. The
Company currently intends to retain its earnings to finance future growth and
therefore does not anticipate paying any cash dividends in the foreseeable
future.
7
<PAGE>
SELECTED FINANCIAL DATA
The following table presents selected consolidated financial information for
the Company's five most recent fiscal years and for the six-month periods ended
June 29, 1996 and June 28, 1997. In addition, the table presents the unaudited
pro forma results of operations for the fiscal years ended December 31, 1995 and
1996 giving effect to the discontinuance of the Company's VTI subsidiary, which
was acquired in July 1995. The Company made the decision to discontinue the
operations of VTI in June 1997. The unaudited consolidated financial information
for the six-month periods ended June 29, 1996 and June 28, 1997 include the
effects of the discontinuance. The selected data presented below under the
"Statement of Earnings Data" and "Balance Sheet Data" for, and as of the end of,
each of the years in the five-year period ended December 31, 1996, are derived
from the consolidated financial statements of Zebra Technologies Corporation,
which statements have been audited by KPMG Peat Marwick LLP, independent
certified public accountants. The financial statements as of December 31, 1995
and 1996 and for each of the years in the three-year period ended December 31,
1996 are included in the Company's Annual Report on Form 10-K and are
incorporated by reference to this Prospectus, together with the report of KPMG
Peat Marwick LLP thereon. In the opinion of the Company, the information for the
interim periods ended June 29, 1996 and June 28, 1997, which is derived from
unaudited consolidated financial statements, reflects all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of the financial position of the Company at such dates and the
results of operations for such periods. Results from the interim periods are not
necessarily indicative of the results for the entire year.
<TABLE>
<CAPTION>
YEARS ENDED YEARS
--------------------------------------------------------- SIX MONTHS ENDED ENDED
PRO FORMA PRO FORMA -------------------- ---------
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, JUNE 29, JUNE 28, DEC. 31,
1992 1993 1994 1995(1) 1996(1) 1996 1997 1995
----------- ----------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Net sales..................... $ 58,711 $ 87,456 $ 107,103 $ 145,348 $ 163,980 $ 75,446 $ 88,853 $ 148,593
Cost of sales................. 29,719 43,889 55,080 76,241 85,302 39,429 44,124 77,606
----------- ----------- --------- --------- --------- --------- --------- ---------
Gross profit................ 28,992 43,567 52,023 69,107 78,678 36,017 44,729 70,987
Operating expenses:
Sales and marketing......... 6,632 9,204 9,011 12,421 15,445 7,370 8,945 14,527
Research and development.... 3,385 4,619 5,835 7,771 9,615 5,864 5,167 8,185
General and
administrative............ 3,568 4,847 6,834 8,934 11,155 5,647 6,917 9,722
Merger costs................ -- -- -- -- 315 -- -- --
Acquired in-process
technology (2)............ -- -- -- -- 1,117 1,114 -- 6,028
----------- ----------- --------- --------- --------- --------- --------- ---------
Total operating expenses...... 13,585 18,670 21,680 29,126 37,647 19,995 21,029 38,462
----------- ----------- --------- --------- --------- --------- --------- ---------
Income from operations........ 15,407 24,897 30,343 39,981 41,031 16,022 23,700 32,525
Total other income (3)........ 2,426 3,571 2,533 5,444 6,358 2,811 9,358 5,448
----------- ----------- --------- --------- --------- --------- --------- ---------
Income before income taxes.... 17,833 28,468 32,876 45,425 47,389 18,833 33,058 37,973
Income taxes.................. 5,990 10,213 11,803 15,851 16,536 6,343 11,887 15,409
----------- ----------- --------- --------- --------- --------- --------- ---------
Net income.................... $ 11,843 $ 18,255 $ 21,073 $ 22,564
----------- ----------- --------- ---------
----------- ----------- --------- ---------
Net income from continuing
operations.................. 29,574 30,853 12,490 21,171
Discontinued operations:
Loss from discontinued
operations (4)............ (7,010) (1,938) (981) (1,692)
Loss on disposal of
discontinued operations
(5)....................... -- -- -- (963)
--------- --------- --------- ---------
Net income.................... $ 22,564 $ 28,915 $ 11,509 $ 18,516
--------- --------- --------- ---------
--------- --------- --------- ---------
Net income per share.......... $.49 $.76 $.88 $.94
Net income per share from
continuing operations....... $1.23 $1.27 $.52 $.87
Weighted average shares
outstanding................... 23,958 23,982 24,034 24,113 24,203 24,194 24,242 24,113
BALANCE SHEET DATA (AT PERIOD
END):
Working capital............... $ 39,390 $ 55,972 $ 76,241 $ 111,981 $ 145,218 $ 99,833
Total assets.................. 54,845 76,697 95,043 139,364 180,904 131,071
Long-term obligations......... 347 293 236 2,147 295 2,177
Total stockholders' equity.... 42,177 60,635 82,032 121,855 157,385 108,206
<CAPTION>
DEC. 31,
1996
---------
<S> <C>
STATEMENT OF EARNINGS DATA:
Net sales..................... $ 169,715
Cost of sales................. 87,796
---------
Gross profit................ 81,919
Operating expenses:
Sales and marketing......... 18,429
Research and development.... 10,452
General and
administrative............ 13,388
Merger costs................ 315
Acquired in-process
technology (2)............ 1,117
---------
Total operating expenses...... 43,701
---------
Income from operations........ 38,218
Total other income (3)........ 6,418
---------
Income before income taxes.... 44,636
Income taxes.................. 15,721
---------
Net income.................... $ 28,915
---------
---------
Net income from continuing
operations..................
Discontinued operations:
Loss from discontinued
operations (4)............
Loss on disposal of
discontinued operations
(5).......................
Net income....................
Net income per share.......... $1.19
Net income per share from
continuing operations.......
Weighted average shares
outstanding................... 24,203
BALANCE SHEET DATA (AT PERIOD
END):
Working capital............... $ 128,803
Total assets.................. 163,283
Long-term obligations......... 2,326
Total stockholders' equity.... 140,456
</TABLE>
FOOTNOTES ON FOLLOWING PAGE
8
<PAGE>
FOOTNOTES FOR PRECEDING PAGE
- ------------------------------
(1) As of June 28, 1997, the Company made the decision to discontinue the
operations of its VTI subsidiary. VTI was acquired in July 1995.
(2) In conjunction with the acquisition of VTI in July 1995, acquired in-process
technology valued at $6,028,000 was expensed immediately. In conjunction
with the purchase of Fenestra Computer Services in February 1996, acquired
in-process technology valued at $1,114,000 was expensed immediately.
(3) Other income includes a one-time gain of $5,458,000 during the first quarter
of 1997 from the sale of the Company's investment in Norand Corporation
common stock.
(4) Loss from discontinued operations is net of an income tax benefit of
$564,000, $1,075,000, $579,000, and $1,213,000, respectively.
(5) Loss on disposal of discontinued operations includes a provision of
$1,819,000 for operating losses during the phase-out period (net of an
income tax benefit of $615,000).
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF CONTINUING OPERATIONS FOR SIX MONTHS ENDED JUNE 28, 1997 COMPARED TO
SIX MONTHS ENDED JUNE 29, 1996
REVENUES. Net sales for the six months ended June 28, 1997 increased by
17.8% to $88,853,000 versus net sales of $75,446,000 for the six months ended
June 29, 1996. This sales increase for the period is attributed to unit growth
in all product categories, as the average unit price of printer products has
decreased due to product mix changes. Printer sales increased by 20.2% and
supplies sales by 10.6% over the six months ended June 29, 1996, bringing
printer sales to 74.4% and supplies sales to 23.2% of consolidated net sales,
respectively, for the six months ended June 28, 1997 versus 72.9% and 24.8% for
the comparable period of 1996. Approximately 47.2% of net sales during the six
months ended June 28, 1997 were derived from international sources as compared
to 45.4% during the comparable period in 1996.
GROSS PROFIT. Gross profit increased to $44,729,000 for the six months
ended June 28, 1997, a 24.2% gain over the gross profit of $36,017,000 for the
six months ended June 29, 1996. As a percentage of net sales, gross profit
increased 2.6% to 50.3% during the six months ended June 28, 1997 from 47.7% in
the six months ended June 29, 1996. This increase for the period is principally
due to decreased costs of materials used in high volume printer parts plus a
favorable product mix within the Company's printer products and a lower
percentage of supplies sales.
SALES AND MARKETING EXPENSES. Sales and marketing expenses of $8,945,000
were up 21.4% in the six month ended June 28, 1997 compared to $7,370,000 in the
comparable period in 1996. As a percentage of net sales, sales and marketing
expenses increased slightly during the six months ended June 28, 1997 to 10.1%
from 9.8% for the same period last year. Increased spending is principally due
to increased staffing, advertising, public relations, and outside consulting
services. These expense increases were offset in part by reductions in warranty
and travel.
RESEARCH AND DEVELOPMENT. Research and development expenses for the six
months ended June 28, 1997 decreased by 11.9% to $5,167,000 versus $5,864,000
for the six months ended June 29, 1996. As a percentage of net sales, research
and development expenses decreased 2.0% to 5.8% for the six months ended June
28, 1997 from 7.8% for the six months ended June 29, 1996. Decreases resulted
from reductions in unusually high development costs in prior periods to more
normal levels in the current period.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
for the six months ended June 28, 1997 increased by 22.5% to $6,917,000 as
compared to $5,647,000 during the six months ended June 29, 1996. As a
percentage of net sales, general and administrative expenses increased slightly
to 7.8% for the six months ended June 28, 1997 from 7.5% for the comparable
prior period. The increase in general and administrative expenses on both a
dollar and percentage basis was primarily the result of increases in staffing,
depreciation, and building expenses. The increases were offset in part by
reductions in mainframe computer expenses. Both periods include the amortization
of intangible assets and goodwill for the acquisition of the assets of Fenestra
Computer Services, as described in the Liquidity and Capital Resources section
below.
INCOME FROM OPERATIONS. Income from operations for the six months ended
June 28, 1997 increased by $7,678,000 or 47.9% to $23,700,000 compared to
$16,022,000 for the six months ended June 29, 1996. As a percentage of net
sales, income from operations increased to 26.7% for the six months ended June
28, 1997, as compared to 21.2% for the period ended June 29, 1996. These
increases were due to higher gross profits and to the $1,114,000 non-recurring
write-off of acquired in-process technology in the six months ended June 29,
1996 which resulted from the Company's acquisition of Fenestra Computer
Services.
10
<PAGE>
OTHER INCOME. Other income, which consists of investment income and gains
on the sales of securities (net of interest expense), increased by 232.9% in the
six months ended June 28, 1997 to $9,358,000, from $2,811,000 in the six months
ended June 29, 1996. The substantial increase in investment income was largely
the result of a one-time gain of $5,458,000 from the sale of 350,000 shares of
Norand Corporation common stock, which was purchased in October of 1995 when
management briefly considered Norand a possible acquisition candidate, and to a
lesser extent, was the result of the Company's larger cash and marketable
securities balances invested and its higher rate of return on such investments.
INCOME BEFORE INCOME TAXES. Income before income taxes was $33,058,000 for
the six months ended June 28, 1997 compared to $18,833,000 for the comparable
period during 1996, an increase of $14,225,000 or 75.5%.
PROVISION FOR INCOME TAXES. The provision for income taxes for the six
months ended June 28, 1997 was $11,887,000 or 36.0% of income before income
taxes. The provision for income taxes for the six months ended June 29, 1996 was
$6,343,000, or 33.7% of income before income taxes. The increase in the
effective rate in 1997 from 1996 was due to a decrease in tax-exempt income in
the 1997 period compared with the 1996 period.
NET INCOME. Net income for the six months ended June 28, 1997 was
$21,171,000, or 23.8% of net sales, resulting in earnings per share of $.87 on
24,242,000 weighted average shares outstanding. Net income for the six months
ended June 29, 1996 was $12,490,000, or 16.6% of net sales, resulting in
earnings per share of $.52 on 24,194,000 weighted average shares outstanding.
SETTLEMENT. As of June 28, 1997, the Company settled litigation between
Zebra and Messrs. Carter and Flury, the former officers and principals of VTI.
The legal actions initiated in March 1996 have been settled out of court. Terms
are confidential and all payments have been completed. The Company acquired VTI
in July 1995. At the time of the acquisition an accrual for future payments due
to the officers and management of VTI was established. The amounts originally
accrued for Messrs. Carter and Flury were adequate to cover the settlement
amounts. In connection with the settlement of the litigation, the Company
reduced long-term liabilities by $1,999,000 and paid-in capital by $1,372,000.
DISCONTINUANCE OF OPERATIONS. As of June 28, 1997, the Company made the
decision to discontinue the operations of its VTI subsidiary. The discontinuance
of VTI and the related PC retail channel will be completed during the third
quarter of 1997. Net of income tax benefits, a one-time charge of $2,655,000,
was recorded in the six months ended June 28, 1997 related to the discontinuance
of VTI and the Company's presence in the PC retail channel. The one-time charge
includes a provision for expected product returns from present retail channel
partners, a provision for slow moving/obsolete product, and provisions for
estimated contingent liabilities. As part of recording the provisions and
charges, the related remaining goodwill and intangible assets were written off
as part of the discontinued operation charge. The transition of remaining
salable products and the business records and duties will be made during the
third quarter of 1997 to appropriate personnel at the Company's Vernon Hills
facility.
RESULTS OF OPERATIONS FOR 1996 COMPARED TO 1995 AND 1995 COMPARED TO 1994.
The following paragraphs reflect the Company's historical results of
operations, excluding the effects of the discontinuance of VTI. The impact of
the discontinuance is discussed below in the paragraph titled "Adjustments for
discontinued operations."
REVENUES. During 1996, Zebra's net sales were $169,715,000, increasing by
14.2% from net sales of $148,593,000 in 1995. Net sales in 1994 were
$107,103,000. Net sales growth in both 1995 and 1996 is attributed to unit
growth, as the average unit price of the Company's printer products declined due
to the product mix changes and price reductions on certain products.
11
<PAGE>
PRINTERS VS. SUPPLIES. Zebra sells printer products, software and related
supplies, which consist of self-adhesive labels and thermal transfer ribbons. In
1996, printer sales were $122,127,000 (72.0% of net sales), supplies sales were
$39,561,100 (23.3% of net sales), and software and service revenues accounted
for $8,027,000 (4.7% of net sales). In 1995, printer sales were $106,782,000
(71.9% of net sales), supplies sales were $36,033,000 (24.2% of net sales), and
software and service revenues were $5,778,000 (3.9% of net sales). In 1994,
printer sales were $74,686,000 (69.7% of net sales) and supplies sales were
$30,140,000 (28.1% of net sales). The remaining 1994 sales consisted of service
and other revenue sources.
INTERNATIONAL SALES. Zebra products are sold through an international
network of resellers in over 70 countries. International sales in 1996 were
$75,055,000, an increase of 14.2% over 1995 international sales of $65,720,000.
International sales comprised 44.2% of net sales in both years. In 1994,
international sales were 39.8% of net sales, or $42,631,000. Management believes
that international sales will continue to grow faster than domestic sales due to
the lower penetration of bar code systems outside the United States.
GROSS MARGINS. Gross margins increased slightly in 1996 to 48.3% of net
sales, compared to 47.8% of net sales in 1995. Margins were 48.6% in 1994. The
increase in gross margins in 1996 is attributed to the Company's increased sales
in higher margin printers and software. Supplies sales, which is a lower portion
of total sales in 1996, provide a lower gross margin than the other product
lines.
SALES AND MARKETING EXPENSES. Total sales and marketing expenses increased
by $3,901,000 in 1996, to reach $18,429,000 or 10.8% of net sales, compared to
1995 expenses of $14,527,000 or 9.8% of net sales. In 1994, the Company incurred
$9,011,000 of sales and marketing costs, or 8.4% of net sales. The increasing
trend in sales and marketing expenses as a percentage of net sales over the past
three years is principally the result of expenses related to development of the
PC retail channel and expansion of the Company's sales infrastructure needed to
support international sales, particularly with respect to Europe. The Company's
acquisition of VTI in July of 1995, resulted in a significant expansion of sales
and marketing expenses directly related to establishing and maintaining a
position in the PC retail channel. In addition, the Company expanded its High
Wycombe-based sales and marketing organization in order to support the growth of
its distribution channels in Europe. These expenses included additional funds to
promote the Zebra brand in specific national markets within Europe.
RESEARCH AND DEVELOPMENT. Research and development expenses increased by
27.7% in 1996, to $10,452,000 from $8,185,000 in 1995, and $5,835,000 in 1994.
As a percentage of net sales, these expenses increased to 6.2% in 1996 compared
to 5.5% in 1995, and 5.4% in 1994. The increase in research and development
expenses as a percentage of sales was primarily the result of increased staffing
to support new product development as the Company introduced a significant
number of new products in 1996.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased by 37.7% to $13,388,000 or 7.9% of net sales in 1996, compared to
$9,722,000, or 6.5% of net sales in 1995. Included among the 1996 expenses are
$739,000 of amortization of intangible assets and goodwill resulting from the
acquisitions of VTI and Fenestra Computer Services. In 1994, general and
administrative expenses were $6,834,000, or 6.4% of net sales. The increased
level of general and administrative expenses in 1996 and 1995 was caused
principally by higher staffing levels plus increased usage of professional
services. In addition, 1996 expenses include increased information systems costs
related to the Company's enterprise-wide software implementation project.
ACQUIRED IN-PROCESS TECHNOLOGY. The charge for acquired in-process
technology in 1996 relates to the Company's acquisition of software technologies
as part of the acquisition of Fenestra Computer Services in the first quarter of
1996. This acquisition was accounted for under the purchase method, which
requires that the purchase price be allocated to the fair market value of the
assets acquired. Among these assets was in-process technology (projects that had
not reached technological feasibility and had no alternative future use) that
was valued at $1,117,000. Accounting rules require that this asset be
immediately expensed.
12
<PAGE>
Intangible assets and goodwill resulting from the acquisition are being
amortized over periods of between three and ten years.
OTHER INCOME. Other income, which consists of investment income and gains
on the sales of securities (net of interest expense), increased by 17.8% in 1996
to $6,418,000, from $5,448,000 in 1995. The substantial increase in investment
income is the result of larger investment balances as well as the recognition of
gains resulting from the liquidation of certain security positions in 1996.
Other income in 1995 was up 115.1% from $2,533,000 in 1994, again, principally
due to gains on the Company's investment portfolio.
INCOME BEFORE INCOME TAXES. Income before income taxes for 1996 was
$44,636,000, or 26.3% of net sales, an increase of 17.5% from $37,973,000, or
25.6% of net sales, in the previous year. In 1994, income before income taxes
was $32,876,000, or 30.7% of net sales.
PROVISION FOR INCOME TAXES. The provision for income taxes in 1996 was
$15,721,000, or 35.2% of income before income taxes. The provision for income
taxes in 1995 was $15,409,000, or 40.6% of income before income taxes. The
decrease in the effective tax rate in 1996 from 1995 was due to the 1995 non-
deductibility for tax purposes of the acquired in-process technology charge and
goodwill amortization related to the acquisition of Vertical Technologies, Inc.
Excluding these amounts, the Company's provision for taxes in 1995, would have
been 34.8% of pre-tax income.
NET INCOME. Net income in 1996 was $28,915,000, or $1.19 per share, based
on 24,203,000 average shares outstanding. In 1995, net income was $22,564,000,
or $0.94 per share, based on 24,113,000 average shares outstanding during the
year. In 1994, net income was $21,073,000, or $0.88 per share, based on
24,034,000 average shares outstanding. Outstanding shares have all been adjusted
for the two-for-one stock split effective December 28, 1995. As a percentage of
net sales, net income increased for 1996 to 17.0% of net sales compared to 15.2%
in 1995, and 19.7% in 1994. The decrease in net income as a percentage of sales
in 1995 compared to 1994 was due to the increased operating expenses and
write-off of acquired in-process technology related to the acquisition of
Vertical Technologies, Inc., as previously described. Similar expenses and
write-offs incurred in 1996 related to the acquisition of Fenestra Computer
Services were considerably lower, and consequently, had less of an impact on net
income.
ADJUSTMENTS FOR DISCONTINUED OPERATIONS. As of June 28, 1997, the Company
made the decision to discontinue the operations of VTI. The discussions above
regarding the Company's 1995 and 1996 results are before adjustments relating to
the discontinued operations of VTI. After giving effect to the reclassification
of the VTI operations as discontinued operations, net income from continuing
operations was $30,853,000 in 1996 and $29,574,000 in 1995; earnings per share
from continuing operations were $1.27 in 1996 and $1.23 in 1995; net sales from
continuing operations were $163,980,000 in 1996 and $145,348,000 in 1995; and
45.8% of such net sales was derived from international sales in 1996 as compared
to 45.2% in 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal source of liquidity continues to be cash generated
from operations and its cash and marketable securities balances. At June 28,
1997, the Company had $111,752,000 in cash and marketable securities versus
$94,540,000 at the end of 1996. The Company has a $6,000,000 unsecured line of
credit plus an additional $4,000,000 unsecured revocable line of credit with its
bank. These credit facilities are priced at either the prime rate or 150 basis
points over the London Inter-bank Offer Rate (LIBOR), at the Company's
discretion. As of June 28, 1997, the Company had no outstanding borrowings under
its lines of credit. Capital expenditures in the six months ended June 28, 1997
and the fiscal year ended December 31, 1996 were $2,700,000 and $5,994,000,
respectively, compared to $4,333,000 in 1995, and $2,116,000 in 1994.
13
<PAGE>
Effective February 16, 1996, the Company purchased the assets of Fenestra
Computer Services, a UK partnership, in exchange for $1,314,000 paid with a
combination of cash and Zebra Class A Common Stock. The transaction has been
accounted for under the purchase method of accounting. Assets and liabilities,
including software and hardware technology, and trade names were recorded at
their respective fair market values with $1,117,000 assigned to acquired
in-process technology based on an independent third-party appraisal. The entire
amount of the acquired in-process technology was expensed in 1996.
The Company has no commitments or agreements with respect to acquisitions or
other significant capital expenditures.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Effective February 1997, the Financial Accounting Standards Board issued
SFAS No. 128, "Earnings per Share" ("EPS"). Implementation of SFAS No. 128 is
required for the periods ending after December 15, 1997. The standard
establishes new methods for computing and presenting EPS and replaces the
presentation of primary and fully-diluted EPS with basic and diluted EPS. The
new methods under this standard are not expected to have a significant impact on
the Company's EPS amounts.
SIGNIFICANT CUSTOMER
Sales to The Peak Technologies Group, Inc. ("Peak") accounted for more than
20.0% of the Company's total net sales in the fiscal year ended December 31,
1996 and 16.8% in the six months ended June 28, 1997. Peak was recently acquired
by Moore Corporation. The Company believes it has an excellent long-term
relationship with Peak. However, the effect which the acquisition will have on
the Company's relationship with this customer--positive or negative--is
currently unknown.
14
<PAGE>
BUSINESS
SUMMARY
The Company provides bar code labeling solutions, principally to
manufacturing and service entities worldwide, for use in automatic
identification and data collection systems. The Company designs, manufactures,
sells and supports a broad line of computerized label/ticket printing systems
and related specialty supplies. The Company's equipment is designed to operate
at the user's location to produce and dispense high quality bar coded labels in
extremely time-sensitive and physically demanding environments. Zebra's
solutions approach integrates its applications expertise, computerized printing
systems, specialty supplies and software. Applications for the Company's systems
include inventory control, automated warehousing, JIT (Just-In-Time)
manufacturing, CIM (Computer Integrated Manufacturing), employee time and
attendance records, weighing systems, tool room control, shop floor control,
library systems, prescription labeling and scientific experimentation.
The Company's net sales from continuing operations have grown from $58.7
million in 1992 to $164.0 million in 1996, a compound annual growth rate of
29.3%, while net income from continuing operations in the same period has grown
from $11.8 million to $30.9 million, a compound annual growth rate of 27.1%.
Management believes that Zebra's success results from its reputation for
reliable and durable products and its focus on providing bar code labeling
solutions for its customers. The Company estimates that over 250,000 Zebra bar
code printing systems are presently installed at approximately 25,000 user sites
around the world. Approximately 47.2% of the Company's net sales from continuing
operations for the six months ended June 28, 1997 was generated from sales to
international customers, as compared to 45.4% for the six months ended June 29,
1996. The Company expects this percentage to continue to increase in the future.
Zebra anticipates that its future growth will be enhanced by two continuing
trends: bar code label standardization programs and the focus of businesses
worldwide on improving quality and productivity. Industry mandated
standardization has been a major catalyst in the rapid development of bar
coding, and management believes that the mandate of standards will continue to
proliferate. Zebra also believes that increasing demands for improvements in
productivity and quality in commercial and service organizations will lead to
increased use of automatic identification systems.
PRODUCTS
The Company's products consist of a broad line of computerized demand bar
code label printers and print engines, specialty bar code labeling/ticketing
materials, ink ribbons and PC-based bar code software. These products are
integrated to provide automatic identification labeling solutions for
manufacturing, business and industrial applications. The Company's equipment and
supplies are designed for operating at the user's location to produce bar coded
labels in extremely time-sensitive and physically demanding environments. The
Company works closely with its distributors, other resellers and the end users
of its products to fashion labeling solutions which meet the technical demands
of the end user. To achieve this, the Company provides its customers with the
ability to configure printing systems with various options available on the
Company's systems. Additionally, the Company will select and, if necessary,
create appropriate labeling stock, ink ribbons and adhesives to suit the
particular intended use. In-house engineering personnel with years of experience
in the disciplines of software, mechanical, electronic and chemical engineering
all participate in the creation and realization of bar code solutions for
particular applications.
LABEL PRINTING SYSTEMS. The Company produces a broad range of "on demand"
thermal transfer and direct thermal bar code label printers with, the Company
believes, more models, options and features than any of its competitors. Zebra
manufactures 8 thermal transfer label printing systems, which range in list
price from $1,395 to $7,495, direct thermal printers which range in list price
from $595 to $895, and a high performance print engine for label applicator
systems. The Company's products include hundreds of
15
<PAGE>
optional configurations which can be selected as necessary to meet particular
customer needs. Zebra's printing systems, and their prices, vary based upon
performance criteria including label width, speed, image density and optional
features. Zebra's thermal transfer product line is split into two parts: the
Performance Line-TM- and the Value-Line-TM-. The Performance Line-TM- consists
of four basic models targeted at applications that require continuous operation
in high output, mission critical operations. These units provide a wide variety
of option configurations, features, print widths, dot densities and speeds. The
four units comprising the Value Line-TM- are targeted at distributed printing
applications where heavy duty cycles are less important. These units have fewer
option configurations and features, but are offered at a significantly lower
price. The A-100 and A-300 direct thermal, and the T-300 thermal transfer
Personal Printers, the Company's new offerings in the sub-$1,000 market, are
targeted at applications where convenience, ease of use, small size and price
are important to the user. The Company's 170PAX print engine is targeted at
manufacturers of high speed automatic label applicator systems. This product
contains options and performance characteristics not available on competitive
products.
In addition to use in demand printing situations, the Company's products can
also be used to meet customers' needs for continuous duty production of small or
large quantities of custom bar code labels and other graphics, permitting
on-site label production with less lead time and more efficient use of supplies
than off-site printing can provide. Management believes that of the major
on-site printing technologies, thermal transfer is best suited for most
industrial applications. Thermal transfer printing produces dark and solid
blacks and sharply defined lines which are important for printing readily
scannable bar codes. In addition, thermal transfer printing creates the image
very near the edge of the printer so that no blank areas must be fed out before
the label exits the printer. Finally, this technology permits the use of many
different label materials, adhesives and inks and produces durable images.
The Company's printing systems incorporate Company-designed computer
hardware, electro-mechanisms and software which operate the printing functions
of the system and communicate with the host computer. All Zebra printing
systems, except the A-100 personal printer, operate using Zebra Programming
Language ("ZPL-Registered Trademark-") and Zebra Programming Language II ("ZPL
II-Registered Trademark-"), proprietary printer driver languages which were
designed by the Company and are compatible with virtually all computer operating
systems, including UNIX, MS/DOS and Windows. ZPL-Registered Trademark- and ZPL
II-Registered Trademark- allow users of the Company's systems to replace older
Zebra printers with newer equipment, which is plug and software compatible and
therefore requires no reprogramming, to operate different Zebra equipment for
different applications using standardized programs and to integrate printers
into a network using additional software available from the Company. Management
believes ZPL-Registered Trademark- and ZPL II-Registered Trademark- give the
Company a competitive strength by ensuring compatibility across the full family
of the Company's present and future printer products and by facilitating system
upgrades and customer loyalty to Zebra products. Certain independent software
vendors have written label preparation programs with ZPL-Registered Trademark-
and ZPL II-Registered Trademark- drivers specifically for Zebra printers.
ZPL-Registered Trademark- and ZPL II-Registered Trademark- label format programs
can be run on a personal computer with ordinary word processing programs, making
ZPL-Registered Trademark- and ZPL II-Registered Trademark- particularly
adaptable to PC based systems.
In 1996, the Company upgraded the Zebra 105S printer to include 300 dpi
capability. The Zebra 105S and 160S printers, both feature a rugged metal case
and full roll internal rewind at a Value-Line-TM- price. The Company's
STRIPE-Registered Trademark- printer product line rounds out the Value-Line-TM-
family of products. The Model S-500 at a list price of $1,795 and S-300 at a
list price of $1,395 are the lowest priced printers in the Value-Line-TM-. These
units employ design concepts that have allowed the Company to offer these
products at a lower price point in the market but with performance, quality,
reliability and durability equal to more expensive models.
In 1996, the Company began shipping the 220XiII-TM- and the 170PAX print and
apply engine from its Performance Line-TM- products. The Zebra 220XiII-TM-
printer is a wide-web printer that rounds out the Performance Line-TM- family of
printers which includes the 170XiII-TM-, 140XiII-TM-, and 90XiII-TM-. These
printers are based on an advanced electronics package that includes dual
microprocessors based on RISC technology. As a result, these printers offer
greatly increased print speed, dramatically reduced formatting
16
<PAGE>
time, improved throughput and image resolution. The 170PAX print and apply
engine, also based on XiII electronics, is the Company's first product offering
in the component sector of the automatic identification market. The print and
apply engine is designed to increase print speeds, reduce formatting times, and
improve image resolution in comparison to competitive products.
Sales of the Company's printer line accounted for $66,143,000 in the six
months ended June 28, 1997, $120,889,000 in the fiscal year ended December 31,
1996, $106,778,000 in 1995, and $74,666,000 in 1994. These sales amounted to
74.4%, 73.7%, 73.5%, and 69.7% of the Company's total net sales in the six
months ended June 28, 1997 and in each of the last three fiscal years,
respectively.
SUPPLIES. The Company sells label/ticketing stock, custom labels and tags,
and thermal transfer ribbons worldwide, to support its printing systems and
systems users. Zebra supplies are selected for a particular user's needs based
on the specific application and environment in which the labeling system must
operate. Critical criteria include levels of abrasion, possible exposure to
chemicals and liquids, variations in both the environment (such as temperature
or humidity) in which the labels will be used and the surfaces to which the
labels will be affixed. These factors are all taken into account in selecting
the type of ribbon, the type of labeling material and the adhesive to be used.
Zebra supplies include proprietary ribbon formulations developed according to
Company specifications. Zebra develops its printers and supplies
contemporaneously, as if they were a single unit, to optimize performance of
Zebra printers and genuine Zebra supplies. Performance is typically measured as
a function of both print speed and print quality and both these factors can be
adversely affected by the use of supplies that are not suited to particular
printers. Because of the close relationship between the printing system, the
supplies and the specific applications, the Company sells supplies together with
printing systems. In addition, the Company sells supplies to existing users of
its printing systems. Zebra promotes the use of Zebra supplies with Zebra
equipment. Management believes that owners of Zebra's printing systems purchase
Zebra supplies to attain peak performance and optimum print quality and to
minimize costly downtime and malfunctions in their automatic identification
systems. Supplies sales in the six months ended June 28, 1997 and the fiscal
years ended December 31, 1996, 1995, and 1994 were $20,683,000, $39,538,000,
$36,033,000, and $30,140,000, respectively, comprising 23.3%, 24.1%, 24.8%, and
28.1%, of total net sales, respectively
MAINTENANCE SERVICES. The Company provides service for its printing systems
with depot repair at its Vernon Hills, Illinois facility and its distributors'
locations in addition to on-site service, which is provided by distributors and
Wang Laboratories, Inc. ("Wang"). Under a service support agreement, Wang and
the Company share the revenue for on-site service contracts sold by Wang for
Zebra printing systems installed in the United States. The Company in turn
provides maintenance parts as needed to repair units under contract. IBM also
provides service for the Company's products. This technical support is available
to end users and to the Company's distributors and resellers. International
maintenance service is handled by the Company's distributors in each country,
either directly or through service agents. Zebra provides service and technical
support assistance from in-house support personnel located both in the United
States and the United Kingdom who are available by telephone hotline five days a
week during regular business hours.
SALES, MARKETING AND CUSTOMERS
SALES. The Company sells its products in the United States and
internationally through a multi-channel distribution system including
distributors, VARs, OEMs, and international accounts. Software is sold
principally through PC software catalogs in addition to the Company's
traditional channels. This multi-channel distribution system purchases,
warehouses, and sells a variety of automatic identification components including
printers, supplies, scanners, and application software, and brings system
integration expertise to the end users. Two of the Company's distributors are
classified as National Distributors because of their broad territorial
representation within the United States. Other distributors have qualified for
Zebra Solution Center (ZSC) status. ZSCs carry the full range of Zebra printers
and supplies, and
17
<PAGE>
focus on providing a Zebra bar code solution to their customers. VARs, OEMs and
systems integrators provide customers with a variety of automatic identification
components including scanners, accessories, applications software and systems
integration expertise, and, in the case of some OEMs, then resell the products
under their own logos.
The Company utilizes 72 U.S. and approximately 100 international resellers.
The resellers typically cover specific geographic areas of the United States and
70 other countries around the world. The Company has a subsidiary in the United
Kingdom that serves as a sales office, product distribution warehouse and
service center. For the six months ended June 28, 1997 and the fiscal years
ended December 31, 1996, 1995, and 1994, sales to international customers
comprised 47.2%, 45.8%, 45.2% and 39.8%, respectively, of total net sales for
the Company.
Because of the wide variety of end users and applications for the Company's
products and because the Company's products are frequently integrated with
products from other manufacturers to form a complete automatic identification
system, management believes that it is more effective to sell printing systems
principally through multiple distributors and resellers with defined market
niche expertise and presence rather than directly to end users. By forming
relationships with distributors who serve various submarkets and types of end
users and who have existing customers and in-place sales and distribution
networks which identify new customers and sales opportunities, the Company is
able to reach end users throughout the world in a variety of industries. The
Company may designate a customer as a key account when purchases of Company
products reach certain levels. Zebra sales personnel, together with the
Company's distribution partners, manage these accounts to ensure their complete
needs are met, including consistent support for projects and applications around
the world.
MARKETING. The Company's marketing operations include product management,
marketing communications, technical services, training, market research and
market development functions. The product management group specifies new
products and product enhancements that create customer value, and manages
product positioning and introductions. The marketing services group operates as
an internal advertising and public relations resource. This group, working with
advertising agencies and contractors, creates advertising, brochures and
documentation, manages trade show exhibits and places articles highlighting
applications of Zebra products in trade and industry publications. The technical
services group offers technical support to the Company's distribution channels
and end users of the Company's products. These services include, among other
things, a hotline staffed by experienced technical personnel and, when
necessary, trips to customer sites. The Company's market research group is a
strategic planning, research oriented group, which focuses on market definition
and analysis of Company and competitor strengths. This group identifies and
analyzes market opportunities for current, planned and potential products, and
gathers and analyzes competitive and market intelligence. The market development
group is responsible for the development of new market opportunities and
relationships with key customers, vendors and government regulatory and industry
standards committees. This group also prepares speeches, application training
and seminars which are presented around the world to industry and customer
groups.
CUSTOMERS. The Company estimates that it presently has over 250,000 bar
code printing systems installed at approximately 25,000 user sites around the
world. Sales to The Peak Technologies Group, Inc., one of the Company's National
Distributors, accounted for more than 20.0% of the Company's total net sales in
the fiscal year ended December 31, 1996 and 16.8% in the six months ended June
28, 1997.
MANUFACTURING
The Company's strategy is to create and produce production designs which
optimize product performance, quality, reliability, durability and versatility.
These designs facilitate cost-efficient materials sourcing and assembly methods
with high standards of workmanship. The Company has aggressively pursued a
manufacturing strategy of increasing control over the manufacture of its
hardware products by developing in-house capability to produce all mechanical
and electronic assemblies, and it has designed many of its
18
<PAGE>
own tools, fixtures and test equipment. The Company's manufacturing engineering
staff is dedicated to co-engineering new products with Zebra's new products
engineers and with vendors, thereby creating products that are highly
manufacturable, and to specifying and designing manufacturing processes and
facilities simultaneously with product design.
RESEARCH AND DEVELOPMENT
The Company devotes significant resources to developing new products to
serve the needs of targeted markets, providing bar code solutions to users of
the Company's printing systems and developing new and reliable products that
have a high degree of manufacturability. The Company spent $5,167,000,
$9,850,000, $7,771,000, and $5,835,000, in the six months ended June 28, 1997
and the fiscal years ended December 31, 1996, 1995, and 1994, respectively, on
research and development.
19
<PAGE>
SELLING STOCKHOLDERS
The Selling Stockholders are as follows:
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED PRIOR TO OFFERING SHARES BENEFICIALLY
OWNED AFTER OFFERING
------------------------------------------- ------------------------
% OF COMBINED NUMBER OF
VOTING SHARES
NAME CLASS NUMBER PERCENT(1) POWER(1)(2) OFFERED(3) NUMBER PERCENT(4)
- ------------------------------- ----- --------- ------------- ----------------- ----------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Edward L. Kaplan(5)............ A -- -- -- 0 -- --
B 2,736,504(6) 11.3% 30.6% 1,153,710 1,582,794 6.5%
Carol K. Kaplan................ A -- -- -- 0 -- --
B 563,800(7) 2.3% 6.3% 237,698 326,102 1.3%
Gerhard Cless(8)............... A 140,000(9) * * 0 140,000 *
B 2,812,052 10) 11.6% 31.4% 344,000 2,468,052 10.2%
Ruth I. Cless.................. A -- 11) -- -- 0 -- --
B 1,104,740 12) 4.6% 12.3% 320,936 783,804 3.2%
<CAPTION>
% OF COMBINED
VOTING
NAME POWER(2)(4)
- ------------------------------- -----------------
<S> <C>
Edward L. Kaplan(5)............ --
22.3%
Carol K. Kaplan................ --
4.6%
Gerhard Cless(8)............... *
34.7%
Ruth I. Cless.................. --
11.0%
</TABLE>
- ------------------------------
* Less than one percent.
(1) Percentages based upon 17,002,342 shares of Class A Common Stock and
7,255,404 shares of Class B Common Stock outstanding on August 8, 1997.
(2) Each share of Class A Common Stock has one vote and each share of Class B
Common Stock has ten votes.
(3) Assumes no exercise of the Underwriters' over-allotment option. If such
option is exercised, Mr. Kaplan, Mrs. Kaplan and Mr. Cless will sell up to
an additional 173,057, 35,654 and 99,740 shares, respectively. Following
such sale, Mr. Kaplan, Mrs. Kaplan and Mr. Cless would own 5.8%, 1.2% and
9.8%, respectively, of the combined outstanding Class A and Class B Common
Stock (with 20.6%, 4.3% and 34.7%, respectively, of the combined voting
power).
(4) Percentages based upon the number of shares of Class A Common Stock and
Class B Common Stock outstanding on August 8, 1997, after giving effect to
the offering of the shares hereby.
(5) Mr. Kaplan is the Chairman and Chief Executive Officer of the Company and
has also served as President of the Company since April 1997 on an interim
basis.
(6) Excludes 563,800 shares which may be deemed held of record or beneficially
by Mr. Kaplan's wife, Carol, which may be deemed to be beneficially owned by
Mr. Kaplan.
(7) Excludes 2,736,504 shares which may be deemed held of record or beneficially
by Mr. Kaplan, which may be deemed to be beneficially owned by Mrs. Kaplan.
(8) Mr. Cless is the Company's Executive Vice President for Engineering and
Technology and Secretary and a member of the Board of Directors.
(9) Includes 140,000 shares held by a foundation of which Mr. Cless is a
director.
(10) Includes 344,000 shares held by Jerry I. Rudman, as Trustee under the
Gerhard Cless 1990 Income Trust, which shares are being sold in the
offering. Excludes 1,104,740 shares held of record or beneficially by Mr.
Cless' wife, Ruth, which may be deemed to be beneficially owned by Mr.
Cless.
(11) Excludes 140,000 shares held of record or beneficially by Mr. Cless which
may be deemed to be beneficially owned by Mrs. Cless.
(12) Includes 320,936 shares held by Jerry I. Rudman, as Trustee under the Ruth
I. Cless 1990 Income Trust, which shares are being sold in the offering.
Excludes 2,812,052 shares held of record or beneficially by Mr. Cless, which
may be deemed to be beneficially owned by Mrs. Cless.
20
<PAGE>
Upon its sale in this offering, each share of Class B Common Stock sold by
the Selling Stockholders automatically converts into a share of Class A Common
Stock.
The Company's executive officers, directors, and their families and family
trusts, will in the aggregate beneficially own substantially all of the
outstanding Class B Common Stock, which will represent approximately 21.4% of
the Company's outstanding shares, and approximately 73.2% of the voting power,
of Common Stock after this offering. Holders of the Class B Common Stock are
entitled to 10 votes per share, while holders of the Class A Common Stock are
entitled to only one vote per share. As a result, the holders of the Class B
Common Stock, if acting together, would be able effectively to control most
matters requiring approval by the stockholders of the Company, including the
election of all of the directors. If at any time the number of outstanding
shares of Class B Common Stock represents less than 10% of the total number of
outstanding shares of both classes of Common Stock, then such outstanding shares
of Class B Common Stock will automatically convert into an equal number of
shares of Class A Common Stock. Certain provisions of the Company's Bylaws and
Certificate of Incorporation could have the effect of delaying, deferring or
preventing a change in control of the Company.
Certain of the Company's directors, officers and stockholders own Unique
Building Corporation, which transacts business with the Company. Such ownership
could result in conflicts of interest for such directors, officers and
stockholders in situations where the Company's interests and those of such other
companies are not identical.
21
<PAGE>
UNDERWRITING
William Blair & Company, L.L.C., The Robinson-Humphrey Company, Inc. and
Montgomery Securities (collectively, the "Underwriters") have severally agreed,
subject to the terms and conditions set forth in the Underwriting Agreement by
and among the Company, the Selling Stockholders and the Underwriters, to
purchase from the Selling Stockholders the aggregate number of shares of Common
Stock (excluding the over-allotment shares) set forth opposite each
Underwriter's name below:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
- ---------------------------------------------------------------------------------- -----------
<S> <C>
William Blair & Company, L.L.C....................................................
The Robinson-Humphrey Company, Inc................................................
Montgomery Securities.............................................................
-----------
Total.........................................................................
-----------
-----------
</TABLE>
The nature of the Underwriters' obligations under the Underwriting Agreement
is such that all shares of the Common Stock offered hereby, excluding shares
covered by the over-allotment option granted to the Underwriters, must be
purchased if any are purchased. In the event of a default by any Underwriters,
the Underwriting Agreement provides, in certain circumstances, that purchase
commitments of the nondefaulting Underwriters may be increased or such
Underwriting Agreement may be terminated.
The Underwriters have advised the Company and the Selling Stockholders that
they propose to offer the Common Stock directly to the public initially at the
public offering price set forth on the cover page of this Prospectus and to
certain dealers at such price less a concession of not more than $ per
share. Additionally, the Underwriters may allow, and such dealers may reallow, a
concession not in excess of $ per share to certain other dealers. After the
shares are released for sale to the public, the public offering price and other
selling terms may be changed by the Underwriters.
Certain Selling Stockholders have granted to the Underwriters an option,
exercisable within 30 days after the date of this Prospectus, to purchase up to
an additional 308,451 shares of Common Stock at the same price per share to be
paid by the Underwriters for the other shares offered hereby. The Underwriters
may exercise the option only for the purpose of covering over-allotments, if
any, made in connection with the distribution of the Common Stock offered
hereby.
The Company, the Selling Stockholders and the Company's directors and
executive officers have agreed, subject to certain gifting exceptions, that they
will not sell, offer to sell, issue, distribute or otherwise dispose of any
shares of Common Stock or any options, rights or warrants with respect to any
shares of Common Stock or register any shares of Common Stock for sale under the
Securities Act, for a period of 90 days after the effective date of the
Registration Statement of which this Prospectus is a part without the prior
written consent of William Blair & Company, L.L.C., except that the Selling
Stockholders may sell shares pursuant to the over-allotment option. The
Underwriters have provided services to the Company in the past and received
customary compensation.
The Representatives have advised the Company that, pursuant to Regulation M
under the Exchange Act, certain persons participating in the offering may engage
in transactions that may stabilize, maintain or otherwise affect the market
price of the Common Stock, including stabilizing bids, syndicate covering
transactions or the imposition of penalty bids. A "stabilizing bid" is a bid
for, or the purchase of, the Common Stock on behalf of the Underwriters for the
purposes of fixing or maintaining the price of the Common Stock. A "syndicate
covering transaction" is a bid for, or the purchase of, the Common Stock on
behalf of the Underwriters to reduce a short position incurred by the
Underwriters in connection with the offering. A "penalty bid" is an arrangement
permitting a managing underwriter to reclaim the selling concession otherwise
accruing to an Underwriter or syndicate member in connection with the offering
if the Common Stock originally sold by such Underwriter or syndicate member is
purchased by the
22
<PAGE>
Underwriters in a syndicate covering transaction and has therefore not been
effectively placed by such Underwriter or syndicate member. The Underwriters
have advised the Company that such transactions may be effected on the Nasdaq
National Market or otherwise and, if commenced, may be discontinued at any time.
One or more of the Underwriters currently act as market makers for the
Common Stock and may engage in "passive market making" in such securities on the
Nasdaq National Market in accordance with Rule 103 of Regulation M under the
Exchange Act. Rule 103 permits, upon the satisfaction of certain conditions,
underwriters participating in a distribution that are also Nasdaq market makers
in the security being distributed to engage in limited market making
transactions during the period when Rule 103 would otherwise prohibit such
activity. Rule 103 prohibits underwriters engaged in passive market making
generally from entering a bid or effecting a purchase price that exceeds the
highest bid for those securities displayed on the Nasdaq National Market by a
market maker that is not participating in the distribution. Under Rule 103, each
underwriter engaged in passive market making is subject to a daily net purchase
limitation equal to the greater of (i) 30% of such entity's average daily
trading volume during the two full calendar months immediately preceding, or any
60 consecutive calendar days ending within the ten calendar days preceding, the
date of the filing of the registration statement under the Securities Act
pertaining to the security to be distributed or (ii) 200 shares of common stock.
The Company and the Selling Stockholders have agreed to indemnify the
Underwriters and their controlling persons against certain liabilities,
including liabilities under the Securities Act, or to contribute to payments the
Underwriters may be required to make in respect thereof. William Blair &
Company, L.L.C. from time to time provides and in the past has provided
investment banking services to the Company and is serving as the lead manager in
this offering.
LEGAL MATTERS
The legality of the shares of Class A Common Stock offered hereby will be
passed upon for the Company and the Selling Stockholders by Katten Muchin &
Zavis, a partnership including professional corporations, Chicago, Illinois.
Winston & Strawn, Chicago, Illinois, is acting as counsel for the Underwriters
in connection with certain legal matters relating to the Class A Common Stock
offered hereby.
EXPERTS
The consolidated financial statements and schedule of the Company as of
December 31, 1995 and 1996, and for each of the years in the three-year period
ended December 31, 1996, have been incorporated by reference in the Registration
Statement in reliance upon the reports of KPMG Peat Marwick LLP, independent
certified public accountants, appearing elsewhere and incorporated by reference
in the Registration Statement, and upon the authority of said firm as experts in
accounting and auditing.
With respect to the unaudited interim consolidated financial information for
the periods ended March 29, 1997 and June 28, 1997, incorporated by reference
herein, the independent certified public accountants have reported that they
applied limited procedures in accordance with professional standards for a
review of such information. However, their separate reports included in the
Company's quarterly reports on Form 10-Q for the quarters ended March 29, 1997
and June 28, 1997 and incorporated by reference herein, state that they did not
audit and they do not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their reports on such information should
be restricted in light of the limited nature of the review procedures applied.
The accountants are not subject to the liability provisions of section 11 of the
Securities Act for their reports on the unaudited interim financial information
because those reports are not a "report" or a "part" of the registration
statement prepared or certified by the accountants within the meaning of
sections 7 and 11 of the Securities Act.
23
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, ANY SELLING STOCKHOLDER OR ANY
UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE ANY SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
SUCH DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 5
Safe Harbor for Forward-Looking Statements................................ 6
Use of Proceeds........................................................... 7
Price Range of Common Stock and Dividends................................. 7
Selected Financial Data................................................... 8
Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 10
Business.................................................................. 15
Selling Stockholders...................................................... 20
Underwriting.............................................................. 22
Legal Matters............................................................. 23
Experts................................................................... 23
</TABLE>
2,056,344 SHARES
[LOGO]
CLASS A COMMON STOCK
-------------------
PROSPECTUS
AUGUST , 1997
-------------------
WILLIAM BLAIR & COMPANY
THE ROBINSON-HUMPHREY
COMPANY, INC.
MONTGOMERY SECURITIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Set forth below is an estimate of the approximate amount of fees and
expenses (other than underwriting commissions and discounts) payable by the
Selling Stockholders in connection with the issuance and distribution of the
Class A Common Stock pursuant to the Prospectus contained in this Registration
Statement.
<TABLE>
<CAPTION>
TO BE PAID
BY
THE SELLING
STOCKHOLDERS
------------
<S> <C>
Securities and Exchange Commission registration fee....................................... $ 22,305
Nasdaq filing fee......................................................................... 7,860
Nasdaq listing fee........................................................................ --
Accountants' fees and expenses............................................................ 25,000
Blue Sky fees and expenses................................................................ 3,000
Legal fees and expenses................................................................... 50,000
Transfer Agent and Registrar fees and expenses............................................ 5,000
Printing and Engraving.................................................................... 40,000
Miscellaneous expenses.................................................................... 46,835
------------
Total................................................................................... $ 200,000
------------
------------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article Ninth of the Registrant's Certificate of Incorporation provides that
the Registrant shall indemnify its directors to the full extent permitted by the
Delaware General Corporation Law and may indemnify its officers to such extent,
except that the Company shall not be obligated to indemnify any such person (i)
with respect to proceedings, claims or actions initiated or brought voluntarily
by any such person and not by way of defense, or (ii) for any amounts paid in
settlement of an action indemnified against by the Company without the prior
written consent of the Company. With the approval of its stockholders, the
Company has entered into indemnity agreements with each of its directors and
certain of its officers. These agreements may require the Company, among other
things, to indemnify such officers and directors against certain liabilities
that may arise by reason of their status or service as directors or officers, to
advance expenses to them as they are incurred, provided that they undertake to
repay the amount advanced if it is ultimately determined by a court that they
are not entitled to indemnification, and to obtain directors' and officers'
liability insurance if available on reasonable terms.
In addition, Article Eighth of the Registrant's Certificate of Incorporation
provides that a director of the Registrant shall not be personally liable to the
Registrant or its stockholders for monetary damages for breach of his or her
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Registrant or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the General Corporation Law
of the State of Delaware, or (iv) for any transaction from which the director
derives an improper personal benefit.
Reference is made to Section 145 of the General Corporation Law of the State
of Delaware which provides for indemnification of directors and officers in
certain circumstances.
The Company has an insurance policy which entitles the Company to be
reimbursed for certain indemnity payments it is required or permitted to make to
its directors and officers.
II-1
<PAGE>
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
<C> <S>
1 Form of Underwriting Agreement.
3.1 Certificate of Incorporation of the Registrant, as amended.
3.2* Bylaws of the Registrant.
3.3** Amendment to Bylaws of the Registrant.
3.4* Specimen stock certificate representing Class A Common Stock.
5 Opinion of Katten Muchin & Zavis as to the legality of the securities
being registered (including consent).
24.1 Consent of KPMG Peat Marwick LLP.
24.2 Acknowledgement Letter of KPMG Peat Marwick LLP regarding unaudited
interim financial information.
24.3 Consent of Katten Muchin & Zavis (contained in their opinion filed as
Exhibit 5 hereto).
25 Power of Attorney (contained on the signature page hereto).
</TABLE>
- ------------------------
* Filed with the Securities and Exchange Commission as an Exhibit to the
Registrant's Registration Statement on Form S-1, File No. 33-41576, and
incorporated herein by reference.
** Filed with the Securities and Exchange Commission as an Exhibit to the
Registrant's 1992 Annual Report on Form 10-K and incorporated herein by
reference.
ITEM 17. UNDERTAKINGS.
The Registrant hereby undertakes:
(1) For purposes of determining any liability under the Securities Act
of 1933 (the "Securities Act"), each filing of the Company's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 (the "Exchange Act") that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(2) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
(3) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(4) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chicago, State of Illinois, on August 8, 1997.
<TABLE>
<S> <C> <C>
ZEBRA TECHNOLOGIES CORPORATION
By: /S/ EDWARD L. KAPLAN
-----------------------------------------
Edward L. Kaplan
CHIEF EXECUTIVE OFFICER AND CHAIRMAN
</TABLE>
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
Edward L. Kaplan, Charles R. Whitchurch and Matthew S. Brown, and each of them,
his true and lawful attorney-in-fact and agent, with full power of substitution,
to sign on his behalf, individually and in each capacity stated below, all
amendments and post-effective amendments to this Registration Statement on Form
S-3 (including any registration statement filed pursuant to Rule 462(b) under
the Securities Act of 1933 and all amendments thereto) and to file the same,
with all exhibits thereto and any other documents in connection therewith, with
the Securities and Exchange Commission under the Securities Act of 1933,
granting unto said attorneys-in-fact and agents full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully and to all intents and purposes as each might
or could do in person, hereby ratifying and confirming each act that said
attorneys-in-fact and agents may lawfully do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Chief Executive Officer
/s/ EDWARD L. KAPLAN (Principal Executive
- ------------------------------ Officer), Chairman and August 8, 1997
Edward L. Kaplan Director
/s/ GERHARD CLESS
- ------------------------------ Executive Vice President, August 8, 1997
Gerhard Cless Secretary and Director
Chief Financial Officer
/s/ CHARLES R. WHITCHURCH and Treasurer (Principal
- ------------------------------ Financial and Accounting August 8, 1997
Charles R. Whitchurch Officer)
/s/ CHRISTOPHER G. KNOWLES
- ------------------------------ Director August 8, 1997
Christopher G. Knowles
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
NAME TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ DAVID P. RILEY
- ------------------------------ Director August 8, 1997
David P. Riley
/s/ MICHAEL A. SMITH
- ------------------------------ Director August 8, 1997
Michael A. Smith
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBITS DESCRIPTION PAGE NO.
- ----------- -------------------------------------------------------------------------------------------- -----------
<C> <S> <C>
1 Form of Underwriting Agreement.
3.1 Certificate of Incorporation of the Registrant, as amended.
3.2* Bylaws of the Registrant.
3.3** Amendment to Bylaws of the Registrant.
3.4* Specimen stock certificate representing Class A Common Stock.
5 Opinion of Katten Muchin & Zavis as to the legality of the securities being registered
(including consent).
24.1 Consent of KPMG Peat Marwick LLP.
24.2 Acknowledgement Letter of KPMG Peat Marwick LLP regarding unaudited interim financial
information.
24.3 Consent of Katten Muchin & Zavis (contained in their opinion filed as Exhibit 5 hereto).
25 Power of Attorney (contained on the signature page hereto).
</TABLE>
- ------------------------
* Filed with the Securities and Exchange Commission as an Exhibit to the
Registrant's Registration Statement on Form S-1, File No. 33-41576, and
incorporated herein by reference.
** Filed with the Securities and Exchange Commission as an Exhibit to the
Registrant's 1992 Annual Report on Form 10-K and incorporated herein by
reference.
<PAGE>
ZEBRA TECHNOLOGIES CORPORATION
2,056,344 SHARES CLASS A COMMON STOCK
UNDERWRITING AGREEMENT
August [___], 1997
William Blair & Company
The Robinson-Humphrey Company, Inc.
Montgomery Securities
As Underwriters Named in
Schedule A
c/o William Blair & Company
222 West Adams Street
Chicago, Illinois 60606
Ladies and Gentlemen:
SECTION 1. INTRODUCTORY. Zebra Technologies Corporation, a
Delaware corporation (the "Company"), has an authorized capital stock consisting
of [10,000,000] shares of Preferred Stock, $.01 par value, of which [_________]
shares have been issued as of August [___], 1997, [35,000,000] shares of Class A
Common Stock, $.01 par value (the "Class A Common Stock"), of which
[___________] shares were outstanding as of August [___], 1997 and [35,000,000]
shares of Class B Common Stock, $.01 par value (the "Class B Common Stock"; the
Class B Common Stock and the Class A Common Stock are hereinafter collectively
referred to as the "Common Stock"), of which [__________] shares were
outstanding as of August [___], 1997. Certain stockholders of the Company
(collectively referred to as the "Selling Stockholders" and named in Schedule B)
propose to sell 2,056,344 shares of the Company's issued and outstanding Class B
Common Stock, which shares of Class B Common Stock, pursuant to their terms,
shall automatically be converted into an equal number of shares of Class A
Common Stock upon such sale, to you as the underwriters named in Schedule A
hereto as it may be amended by the Pricing Agreement hereinafter defined (the
"Underwriters"), who are acting severally and not jointly. Collectively, such
total of 2,056,344 shares of Class A Common Stock proposed to be sold by the
Selling Stockholders are hereinafter referred to as the "Firm Shares." In
addition, certain Selling Stockholders propose to grant to the Underwriters an
option to purchase up to 308,451 additional shares of Class A Common Stock (the
"Option Shares") as provided in Section 5 hereof. The Firm Shares and, to the
extent such option is exercised, the Option
- ---------------
* Plus an option to acquire up to 308,451 additional shares from the
Selling Stockholders to cover overallotment.
<PAGE>
Shares, are hereinafter collectively referred to as the "Shares."
You have advised the Company and the Selling Stockholders that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon as you deem advisable after the registration statement
hereinafter referred to becomes effective, if it has not yet become effective,
and the Pricing Agreement hereinafter defined has been executed and delivered.
Prior to the purchase and public offering of the Shares by the several
Underwriters, the Company, the Selling Stockholders and the Underwriters shall
enter into an agreement substantially in the form of Exhibit A hereto (the
"Pricing Agreement"). The Pricing Agreement may take the form of an exchange of
any standard form of written telecommunication between the Company, the Selling
Stockholders and the Underwriters and shall specify such applicable information
as is indicated in Exhibit A hereto. The offering of the Shares will be
governed by this Agreement, as supplemented by the Pricing Agreement. From and
after the date of the execution and delivery of the Pricing Agreement, this
Agreement shall be deemed to incorporate the Pricing Agreement.
The Company and each of the Selling Stockholders hereby confirm their
agreements with the Underwriters as follows:
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to the several Underwriters that:
(a) A registration statement on Form S-3 (File No. 333-[________])
and a related preliminary prospectus with respect to the Shares have been
prepared and filed with the Securities and Exchange Commission (the
"Commission") by the Company in conformity with the requirements of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "1933 Act;" all references herein
to specific rules are rules promulgated under the 1933 Act); and the
Company has so prepared and has filed such amendments thereto, if any, and
such amended preliminary prospectuses as may have been required to the date
hereof and will file such additional amendments thereto and such amended
prospectuses as may hereafter be required. There have been or will
promptly be delivered to you three signed copies of such registration
statement and amendments, three copies of each exhibit filed therewith, and
conformed copies of such registration statement and amendments (but without
exhibits) and of the related preliminary prospectus or prospectuses and
final forms of prospectus for each of the Underwriters.
Such registration statement (as amended, if applicable) at the time it
becomes effective and the prospectus
-2-
<PAGE>
constituting a part thereof (including the information, if any, deemed to
be part thereof pursuant to Rule 430A(b) and/or Rule 434), as from time to
time amended or supplemented, are hereinafter referred to as the
"Registration Statement," and the "Prospectus," respectively, except that
if any revised prospectus shall be provided to the Underwriters by the
Company for use in connection with the offering of the Shares which differs
from the Prospectus on file at the Commission at the time the Registration
Statement became or becomes effective (whether or not such revised
prospectus is required to be filed by the Company pursuant to Rule 424(b)),
the term Prospectus shall refer to such revised prospectus from and after
the time it was provided to the Underwriters for such use. If the Company
elects to rely on Rule 434 of the 1933 Act, all references to "Prospectus"
shall be deemed to include, without limitation, the form of prospectus and
the term sheet, taken together, provided to the Underwriters by the Company
in accordance with Rule 434 of the 1933 Act (the "Rule 434 Prospectus").
Any registration statement (including any amendment or supplement thereto
or information which is deemed part thereof) filed by the Company under
Rule 462(b) (the "Rule 462(b) Registration Statement") shall be deemed to
be part of the "Registration Statement" as defined herein, and any
prospectus (including any amendment or supplement thereto or information
which is deemed part thereof) included in such registration statement shall
be deemed to be part of the "Prospectus," as defined herein, as
appropriate. The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission thereunder are hereinafter
collectively referred to as the "Exchange Act." Any reference herein to
any preliminary prospectus or the Prospectus shall be deemed to refer to
and include the documents incorporated by reference therein pursuant to
Form S-3 under the 1933 Act ("Incorporated Documents"), as of the date of
such preliminary prospectus or Prospectus, as the case may be. Any
document filed by the Company under the Exchange Act after the effective
date of the Registration Statement or the date of the Prospectus and
incorporated by reference in the Prospectus shall be deemed to be included
in that Registration Statement and the Prospectus as of the date of such
filing.
The Incorporated Documents, when filed with the Commission, conformed
or will conform in all material respects to the requirements of the
Exchange Act and none of such documents contained or will contain an untrue
statement of a material fact or omitted or will omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading.
(b) The Commission has not issued any order preventing or suspending
the use of any preliminary prospectus, and each preliminary prospectus has
conformed in all material respects with the requirements of the 1933 Act
and, as of its date, has
-3-
<PAGE>
not included any untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein not misleading; and
when the Registration Statement became or becomes effective, and at all
times subsequent thereto, up to the First Closing Date or the Second
Closing Date hereinafter defined, as the case may be, the Registration
Statement, including the information deemed to be part of the Registration
Statement at the time of effectiveness pursuant to Rule 430A(b), if
applicable, and the Prospectus and any amendments or supplements thereto,
contained or will contain all statements that are required to be stated
therein in accordance with the 1933 Act and in all material respects
conformed or will in all material respects conform to the requirements of
the 1933 Act, and neither the Registration Statement nor the Prospectus,
nor any amendment or supplement thereto, included or will include any
untrue statement of a material fact or omitted or will omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the Company
makes no representation or warranty as to information contained in or
omitted from any preliminary prospectus, the Registration Statement, the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by or on
behalf of any Underwriter specifically for use in the preparation thereof.
(c) The Company and each of its subsidiaries has been duly
incorporated and are existing as corporations in good standing under the
laws of their respective places of incorporation, with corporate power and
authority to own their properties and conduct their business as described
in the Prospectus; the Company and each of its subsidiaries are duly
qualified to do business as foreign corporations under the corporation law
of, and are in good standing as such in, each jurisdiction in which they
own or lease properties, have an office, or in which business is conducted
and such qualification is required except in any such case where the
failure to so qualify or be in good standing would not have a material
adverse effect upon the Company as a whole; and no proceeding of which the
Company has knowledge has been instituted in any such jurisdiction,
revoking, limiting or curtailing, or seeking to revoke, limit or curtail,
such power and authority or qualification.
(d) Except as disclosed in the Registration Statement, the Company
owns directly 100 percent of the issued and outstanding capital stock of
each of its subsidiaries, free and clear of any claims, liens, encumbrances
or security interests and all of such capital stock has been duly
authorized and validly issued and is fully paid and nonassessable.
-4-
<PAGE>
(e) The issued and outstanding shares of capital stock of the Company
as set forth in the Prospectus have been duly authorized and validly
issued, are fully paid and nonassessable; and there is no commitment, plan
or arrangement to issue, and no outstanding option, warrant, or other right
calling for the issuance of, any share of capital stock of the Company or
any of its subsidiaries, or any security or other instrument which by its
terms is convertible into or exchangeable for capital stock of the Company
or any of its subsidiaries, except as described in the Prospectus. Except
as described in the Prospectus, there is outstanding no security or other
instrument which by its terms is convertible into or exchangeable for
capital stock of the Company or any of its subsidiaries.
(f) The making and performance by the Company of this Agreement and
the Pricing Agreement have been duly authorized by all necessary corporate
action and will not violate any provision of the Company's charter or
bylaws and will not result in the breach, or be in contravention, of any
provision of any agreement, franchise, license, indenture, mortgage, deed
of trust, or other instrument to which the Company or any of its
subsidiaries is a party or by which the Company, any of its subsidiaries or
the respective property of any of them may be bound or affected, or any
order, rule or regulation applicable to the Company or any of its
subsidiaries of any court or regulatory body, administrative agency or
other governmental body having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties, or any order of any
court or governmental agency or authority entered in any proceeding to
which the Company or any of its subsidiaries was or is now a party or by
which it is bound. No consent, approval, authorization or other order of
any court, regulatory body, administrative agency or other governmental
body is required for the execution and delivery of this Agreement or the
Pricing Agreement or the consummation of the transactions contemplated
herein or therein, except for compliance with the 1933 Act and blue sky
laws applicable to the public offering of the Shares by the several
Underwriters and clearance of such offering with the National Association
of Securities Dealers, Inc. (the "NASD"). This Agreement has been duly
executed and delivered by the Company.
(g) KPMG Peat Marwick, who have expressed their opinions with respect
to certain of the financial statements included or incorporated by
reference in the Registration Statement are independent accountants as
required by the 1933 Act.
(h) The consolidated financial statements of the Company included or
incorporated by reference in the Registration Statement present fairly the
consolidated financial position of the Company as of the respective dates
of such financial statements, and the consolidated results of operations
and
-5-
<PAGE>
cash flows of the Company for the respective periods covered thereby, all
in conformity with generally accepted accounting principles consistently
applied throughout the periods involved, except as disclosed in the
Prospectus. The financial information set forth in the Prospectus under
"Summary Financial Data" presents fairly on the basis stated in the
Prospectus, the information set forth therein; and the pro forma
information included in the Prospectus presents fairly the information
shown therein, has been prepared in accordance with the Commission's rules
and guidelines with respect to pro forma information, has been properly
compiled on the pro forma basis described therein, and, in the opinion of
the Company, the assumptions used in the preparation thereof are reasonable
and the adjustments used therein are appropriate under the circumstances.
(i) Neither the Company nor any of its subsidiaries is in violation
of its 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 are material to the
Company and its subsidiaries taken as a whole.
(j) There are no material legal or governmental proceedings pending,
or to the Company's knowledge, threatened to which the Company or any of
its subsidiaries is or may be a party or of which material property owned
or leased by the Company or any of its subsidiaries is or may be the
subject, or related to environmental or discrimination matters which are
not disclosed in the Prospectus, or which question the validity of this
Agreement or the Pricing Agreement or any action taken or to be taken
pursuant hereto or thereto.
(k) There are no holders of securities of the Company having rights
to registration thereof or preemptive rights to purchase Common Stock
except as disclosed in the Prospectus.
(l) The Company and its subsidiaries have good and marketable title
to all the properties and assets reflected as owned in the financial
statements hereinabove described (or elsewhere in the Prospectus), subject
to no lien, mortgage, pledge, charge or encumbrance of any kind except
those, if any, reflected in such financial statements (or elsewhere in the
Prospectus) or which are not material to the Company and its subsidiaries
taken as a whole. Except for the approximately 154,300 square foot
expanded facility in Vernon Hills, Illinois which the Company expects to
lease from Unique Building Corporation (as described in the Prospectus),
the
-6-
<PAGE>
Company and its subsidiaries hold their respective leased properties which
are material to the Company and its subsidiaries taken as a whole under
valid and binding leases.
(m) The Company has not taken and will not take, directly or
indirectly, any action designed to or which has constituted or which might
reasonably be expected to cause or result, under the Exchange Act or
otherwise, in stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Shares.
(n) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, and except as set forth
or contemplated by the Prospectus, the Company and its subsidiaries, taken
as a whole, have not incurred any material liabilities or obligations,
direct or contingent, nor entered into any material transactions not in the
ordinary course of business and there has not been any material adverse
change in their condition (financial or otherwise), business, assets,
operations or prospects, nor any change in their capital stock, short-term
debt or long-term debt.
(o) The Company agrees not to sell, contract to sell or otherwise
dispose of any Class A Common Stock or securities convertible into Class A
Common Stock (except Common Stock issued pursuant to currently outstanding
options, warrants or convertible securities) for a period of 90 days after
this Agreement becomes effective without the prior written consent of the
Underwriters.
(p) There is no material document of a character required to be
described in the Registration Statement or the Prospectus or to be filed as
an exhibit to the Registration Statement which is not described or filed as
required.
(q) The Company or its subsidiaries own and possess all right, title
and interest in and to, or has duly licensed from third parties, all
trademarks, copyrights and other proprietary rights ("Trade Rights")
material to the business of the Company and its subsidiaries taken as a
whole and neither the Company nor any of its subsidiaries has granted any
lien or encumbrance on, or granted any right of license (other than in the
ordinary course of its business) with respect to, any such Trade Rights.
Neither the Company nor any of its subsidiaries has received any notice of
infringement, misappropriation or conflict from any third party as to such
material Trade Rights that has not been resolved or disposed of and neither
the Company nor any of its subsidiaries has infringed, misappropriated or
otherwise conflicted with material Trade Rights of any third parties, which
infringement, misappropriation or conflict would have a material adverse
effect upon the condition (financial or
-7-
<PAGE>
otherwise), business, assets, operations or prospects of the Company and
its subsidiaries taken as a whole.
(r) The conduct of the business of the Company and its subsidiaries
is in compliance in all respects with applicable federal, state, local and
foreign laws and regulations, except where the failure to be in compliance
would not have a material adverse effect upon the condition (financial or
otherwise), business, assets, operations or prospects of the Company and
its subsidiaries taken as a whole.
(s) The Company and its subsidiaries have filed all necessary federal
and state income and franchise tax returns and have paid all taxes shown as
due thereon, and 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 respective properties or assets that would
or could be expected to adversely affect the financial condition, assets,
operations or prospects of the Company and its subsidiaries taken as a
whole.
(t) The Shares have been authorized for trading over-the-counter on
the Nasdaq National Market System.
(u) The Company is not, and does not intend to conduct its business
in a manner in which it would become, an "investment company" as defined in
Section 3(a) of the Investment Company Act of 1940, as amended.
SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
SELLING STOCKHOLDERS.
(a) Each Selling Stockholder severally represents and warrants to,
and agrees with, the Company and the Underwriters that:
(i) Such Selling Stockholder has, and on the First Closing Date
or the Second Closing Date hereinafter defined, as the case may be,
will have, valid marketable title to the Shares proposed to be sold by
such Selling Stockholder hereunder on such date and full right, power
and authority to enter into this Agreement and the Pricing Agreement
and to sell, assign, transfer and deliver such Shares hereunder, free
and clear of all voting trust arrangements, liens, encumbrances,
equities, claims and community property rights; and upon delivery of
and payment for such Shares hereunder, the Underwriters will acquire
valid marketable title thereto, free and clear of all voting trust
arrangements, liens, encumbrances, equities, claims and community
property rights.
-8-
<PAGE>
(ii) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action designed to or which might be
reasonably expected to cause or result, under the Exchange Act or
otherwise, in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Shares.
(iii) Such Selling Stockholder, other than the trusts named in
Section 3(a)(iv) below, has executed and delivered a Power of Attorney
(the "Power of Attorney") among the Selling Stockholder, [____________
and ___________] (the "Agents"), naming the Agents as such Selling
Stockholder's attorneys-in-fact (and, by the execution by any Agent of
this Agreement, such Agent hereby represents and warrants that he has
been duly appointed as attorney-in-fact by the Selling Stockholders
pursuant to the Power of Attorney) for the purpose of entering into
and carrying out this Agreement and the Pricing Agreement, and the
Power of Attorney has been duly executed by such Selling Stockholder
and a copy thereof has been delivered to you.
(iv) Each of The Ruth Cless Income Trust and The Gerhard Cless
Income Trust (together the "Trusts") has executed and delivered a
Power of Attorney (the "Trust Power of Attorney") among the Trusts,
[________ and ________] (the "Trust Agents"), naming the Trust Agents
as each of the Trust's attorneys-in-fact (and, by the execution by any
Trust Agent of this Agreement, such Trust Agent hereby represents and
warrants that he has been duly appointed as attorney-in-fact by the
Trusts pursuant to the Trust Power of Attorney) for the purpose of
entering into and carrying out this Agreement and the Pricing
Agreement, and the Trust Power of Attorney has been duly executed by
each Trust and a copy thereof has been delivered to you.
(v) Such Selling Stockholder further represents, warrants and
agrees that such Selling Stockholder has deposited in custody, under a
Custody Agreement (the "Custody Agreement") with [__________], as
custodian (the "Custodian"), certificates in negotiable form for the
Shares to be sold hereunder by such Selling Stockholder, for the
purpose of further delivery pursuant to this Agreement. Such Selling
Stockholder agrees that the Shares to be sold by such Selling
Stockholder on deposit with the Custodian are subject to the interests
of the Company, the Underwriters and the other Selling Stockholders,
that the arrangements made for such custody, and the appointment of
the Agents pursuant to the Power of Attorney and the Trust Agents
pursuant to the Trust Power of Attorney, as the case may be, are to
-9-
<PAGE>
that extent irrevocable, and that the obligations of such Selling
Stockholder hereunder and under the Power of Attorney and the Trust
Power of Attorney, as the case may be, and the Custody Agreement shall
not be terminated except as provided in this Agreement, the Power of
Attorney, the Trust Power of Attorney or the Custody Agreement by any
act of such Selling Stockholder, by operation of law, whether, in the
case of an individual Selling Stockholder, by the death or incapacity
of such Selling Stockholder or, in the case of a trust or estate, by
the death of the trustee or trustees or the executor or executors or
the termination of such trust or estate, or, in the case of a
partnership or corporation, by the dissolution, winding-up or other
event affecting the legal life of such entity, or by the occurrence of
any other event. If any individual Selling Stockholder, trustee or
executor should die or become incapacitated, or any such trust,
estate, partnership or corporation should be terminated, or if any
other event should occur before the delivery of the Shares hereunder,
the documents evidencing Shares then on deposit with the Custodian
shall be delivered by the Custodian in accordance with the terms and
conditions of this Agreement as if such death, incapacity, termination
or other event had not occurred, regardless of whether or not the
Custodian shall have received notice thereof. Each Agent has been
authorized by such Selling Stockholder to execute and deliver this
Agreement and the Pricing Agreement and the Custodian has been
authorized to receive and acknowledge receipt of the proceeds of sale
of the Shares to be sold by such Selling Stockholder against delivery
thereof and otherwise act on behalf of such Selling Stockholder. The
Custody Agreement has been duly executed by such Selling Stockholder
and a copy thereof has been delivered to you.
(vi) Each preliminary prospectus, insofar as it has related to
such Selling Stockholder and, to the knowledge of such Selling
Stockholder in all other respects, as of its date, has conformed in
all material respects with the requirements of the 1933 Act and, as of
its date, has not included any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements
therein not misleading; and when the Registration Statement becomes
effective, and at all times subsequent thereto, up to the First
Closing Date or the Second Closing Date hereinafter defined, as the
case may be, (1) such parts of the Registration Statement and the
Prospectus and any amendments or supplements thereto as relate to such
Selling Stockholder, and the Registration Statement and the Prospectus
and any amendments or supplements thereto, to the knowledge of such
Selling Stockholder in all other respects, contained
-10-
<PAGE>
or will contain all statements that are required to be stated therein
in accordance with the 1933 Act and in all material respects conformed
or will in all material respects conform to the requirements of the
1933 Act, and (2) neither the Registration Statement nor the
Prospectus, nor any amendment or supplement thereto, as it relates to
such Selling Stockholder, and, to the knowledge of such Selling
Stockholder in all other respects, included or will include any untrue
statement of a material fact or omitted or will omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided that neither clause (1)
nor (2) shall have any effect if information has been given by such
Selling Stockholder to the Company and the Underwriters in writing
which would eliminate or remedy any such untrue statement or omission.
(vii) Such Selling Stockholder agrees with the Company and
the Underwriters not to sell, contract to sell or otherwise dispose of
any Common Stock for a period of 90 days after this Agreement becomes
effective without the prior written consent of the Underwriters.
(b) Neither Edward L. Kaplan nor Gerhard Cless has reason to believe
that the representations and warranties of the Company set forth in Section
2 of this Agreement are not true and correct in all material respects.
In order to document the Underwriters' compliance with the reporting and
withholding provisions of the Code with respect to the transactions herein
contemplated, each of the Selling Stockholders agrees to deliver to you prior to
or on the First Closing Date, as hereinafter defined, a properly completed and
executed United States Treasury Department Form W-8 or W-9 (or other applicable
form of statement specified by Treasury Department regulations in lieu thereof).
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE UNDERWRITERS.
The Underwriters represent and warrant to the Company and the Selling
Stockholders that the information set forth (a) on the cover page of the
Prospectus with respect to price, underwriting discount and terms of the
offering and (b) under "Underwriting" in the Prospectus was furnished to the
Company by and on behalf of the Underwriters for use in connection with the
preparation of the Registration Statement and is correct and complete in all
material respects.
SECTION 5. PURCHASE, SALE AND DELIVERY OF SHARES. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Selling Stockholders, severally
and not jointly, agree
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<PAGE>
to sell to the Underwriters named in Schedule A hereto, and the Underwriters
agree, severally and not jointly, to purchase from the Selling Stockholders the
respective number of Firm Shares set forth opposite the names of the Selling
Stockholders in Schedule B hereto at the price per share set forth in the
Pricing Agreement. The obligation of each Underwriter to each Selling
Stockholder shall be to purchase from such Selling Stockholder the number of
full shares which (as nearly as practicable, as determined by you) bears to that
number of Firm Shares set forth opposite the name of such Selling Stockholder in
Schedule B hereto, the same proportion as the number of Shares set forth
opposite the name of such Underwriter in Schedule A hereto bears to the total
number of Firm Shares to be purchased by all Underwriters under this Agreement.
The public offering price and the purchase price shall be set forth in the
Pricing Agreement.
At 9:00 A.M., Chicago time, on the fourth business day, if permitted
under Rule 15c6-1 under the Exchange Act (or the third business day if required
under Rule 15c6-1 under the Exchange Act or unless postponed in accordance with
the provisions of Section 12), following the date the Registration Statement
becomes effective (or, if the Company has elected to rely upon Rule 430A, the
fourth business day, if permitted under Rule 15c6-1 under the Exchange Act (or
the third business day if required under Rule 15c6-1 under the Exchange Act)
after execution of the Pricing Agreement), or such other time not later than ten
business days after such date as shall be agreed upon by you, the Company and
the Custodian, the Selling Stockholders will deliver to you at the offices of
Katten Muchin & Zavis, 525 West Monroe Street, Chicago, Illinois, or through the
facilities of The Depository Trust Company for the accounts of the several
Underwriters, certificates representing the Firm Shares to be sold by them,
against payment of the purchase price therefor by Federal or other funds
immediately available to an account or accounts designated by the Selling
Stockholders. Such time of delivery and payment is herein referred to as the
"First Closing Date." The certificates for the Firm Shares so to be delivered
will be in such denominations and registered in such names as you request by
notice to the Custodian prior to 10:00 A.M., Chicago time, on the second full
business day preceding the First Closing Date, and will be made available at the
Company's expense for checking and packaging by the Underwriters at 10:00 A.M.,
Chicago time, on the first full business day preceding the First Closing Date.
Payment for the Firm Shares so to be delivered shall be made at the time and in
the manner described above at the offices of Katten Muchin & Zavis.
In addition, on the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Selling Stockholders hereby grant an option to the several
Underwriters to purchase, severally and not jointly, up to an aggregate of
[___________] Option Shares, at the same purchase price per share to be paid for
the Firm Shares, for use solely in covering any overallotments made
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by the Underwriters in the sale and distribution of the Firm Shares. The option
granted hereunder may be exercised at any time (but not more than once) within
30 days after the date of this Agreement upon notice by you to the Company and
the Agents setting forth the aggregate number of Option Shares as to which the
Underwriters are exercising the option, the names and denominations in which the
certificates for such shares are to be registered and the time and place at
which such certificates will be delivered. Such time of delivery (which may not
be earlier than the First Closing Date), being herein referred to as the "Second
Closing Date," shall be determined by you, but if at any time other than the
First Closing Date, shall not be earlier than three nor later than 10 full
business days after delivery of such notice of exercise. The maximum number of
Option Shares to be purchased from each such Selling Stockholder is set forth in
Schedule B hereto. If less than the maximum number of Option Shares are to be
purchased hereunder each such Selling Stockholder agrees to sell the number of
Option Shares purchased by the Underwriters pursuant to this paragraph times a
fraction the numerator of which is the maximum number of Option Shares to be
purchased from such Selling Stockholder as set forth on Schedule B hereto and
the denominator of which is the maximum number of Option Shares to be purchased
from all Selling Stockholders as set forth on Schedule B hereto (subject to such
adjustments to eliminate any fractional share purchases as you in your absolute
discretion may make). The number of Option Shares to be purchased by each
Underwriter shall be determined by multiplying the number of Option Shares to be
sold by the Selling Stockholders pursuant to such notice of exercise by a
fraction, the numerator of which is the number of Firm Shares to be purchased by
such Underwriter as set forth opposite its name in Schedule A and the
denominator of which is the total number of Firm Shares (subject to such
adjustments to eliminate any fractional share purchases as you in your absolute
discretion may make). Certificates for the Option Shares will be made available
at the Company's expense for checking and packaging at 10:00 A.M., Chicago time,
on the first full business day preceding the Second Closing Date. The manner of
payment for and delivery of the Option Shares shall be the same as for the Firm
Shares as specified in the preceding paragraph.
You have advised the Selling Stockholders that each Underwriter has
authorized you to accept delivery of its Shares, to make payment and to give
receipt therefore. Each of you individually may make payment for any Shares to
be purchased by any Underwriter whose funds shall not have been received by you
by the First Closing Date or the Second Closing Date, as the case may be, for
the account of such Underwriter, but any such payment shall not relieve such
Underwriter from any obligation hereunder.
SECTION 6. COVENANTS OF THE COMPANY. The Company covenants and
agrees that:
(a) The Company will advise you and the Selling
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Stockholders promptly of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or of the
institution of any proceedings for that purpose, or of any notification of
the suspension of qualification of the Shares for sale in any jurisdiction
or the initiation or threatening of any proceedings for that purpose, and
will also advise you and the Selling Stockholders promptly of any request
of the Commission for amendment or supplement of the Registration
Statement, of any preliminary prospectus or of the Prospectus, or for
additional information, and will not file any amendment or supplement to
the Registration Statement, to any preliminary prospectus or to the
Prospectus of which you and the Selling Stockholders have not been
furnished with a copy prior to such filing or to which you reasonably
object.
(b) The Company will give you and the Selling Stockholders notice of
its intention to file or prepare any amendment to the Registration
Statement (including any post-effective amendment) or any Rule 462(b)
Registration Statement or any amendment or supplement to the Prospectus
(including any revised prospectus which the Company proposes for use by the
Underwriters in connection with the offering of the Shares which differs
from the prospectus on file at the Commission at the time the Registration
Statement became or becomes effective, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) and any term
sheet as contemplated by Rule 434) and will furnish you and the Selling
Stockholders with copies of any such amendment or supplement a reasonable
amount of time prior to such proposed filing or use, as the case may be,
and will not file any such amendment or supplement or use any such
prospectus to which you or counsel for the Underwriters shall reasonably
object in writing.
(c) If the Company elects to rely on Rule 434 of the 1933 Act, the
Company will prepare a term sheet that complies with the requirements of
Rule 434. If the Company elects not to rely on Rule 434, the Company will
provide the Underwriters with copies of the form of prospectus, in such
numbers as the Underwriters may reasonably request, and file with the
Commission such prospectus in accordance with Rule 424(b) of the 1933 Act
by the close of business in New York City on the second business day
immediately succeeding the date of the Pricing Agreement. If the Company
elects to rely on Rule 434, the Company will provide the Underwriters with
copies of the form of Rule 434 Prospectus, in such numbers as the
Underwriters may reasonably request, by the close of business in New York
City on the business day immediately succeeding the date of the Pricing
Agreement.
(d) If at any time when a prospectus relating to the Shares is
required to be delivered under the 1933 Act any
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event occurs as a result of which the Prospectus, including any amendments
or supplements, would include an untrue statement of a material fact, or
omit to state any material fact required to be stated therein or necessary
to make the statements therein, 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, including any amendments or supplements thereto and
including any revised prospectus which the Company proposes for use by the
Underwriters in connection with the offering of the Shares which differs
from the prospectus on file with the Commission at the time of
effectiveness of the Registration Statement, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) to comply with
the 1933 Act, the Company promptly will advise you thereof and will
promptly prepare and file, if required pursuant to Rule 424(b), with the
Commission an amendment or supplement which will correct such statement or
omission or an amendment which will effect such compliance; and, in case
any Underwriter is required to deliver a prospectus nine months or more
after the effective date of the Registration Statement, the Company upon
request, but at the expense of such Underwriter, will prepare promptly such
prospectus or prospectuses as may be necessary to permit compliance with
the requirements of Section 10(a)(3) of the 1933 Act.
(e) Neither the Company nor any of its subsidiaries will, prior to
the earlier of the Second Closing Date or termination or expiration of the
related option, incur any liability or obligation, direct or contingent, or
enter into any material transaction, other than in the ordinary course of
business, except as contemplated by the Prospectus.
(f) Neither the Company nor any of its subsidiaries will acquire any
capital stock of the Company prior to the earlier of the Second Closing
Date or termination or expiration of the option related to the Additional
Shares nor will the Company declare or pay any dividend or make any other
distribution upon the Common Stock payable to stockholders of record on a
date prior to the earlier of the Second Closing Date or termination or
expiration of the option related to the Additional Shares, except in either
case as contemplated by the Prospectus.
(g) As soon as practicable, but in any event not later than November
15, 1998 the Company will make generally available to its security holders
and the Underwriters an earnings statement (which need not be audited)
covering a period of at least 12 months beginning after the effective date
of the Registration Statement, which will satisfy the provisions of the
last paragraph of Section 11(a) of the 1933 Act and Rule 158 under the 1933
Act.
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(h) During such period as a prospectus is required by law to be
delivered in connection with offers and sales of the Shares by an
Underwriter or dealer, the Company will furnish to the Underwriters and
counsel for the Underwriters, at its expense, subject to the provisions of
subsection (d) hereof, signed copies of the Registration Statement
(including exhibits thereto), and to each Underwriter copies of the
Registration Statement (without exhibits thereto) and the Prospectus, each
preliminary prospectus, the Incorporated Documents and all amendments and
supplements to any such documents in each case as soon as available and in
such quantities as you may reasonably request, for the purposes
contemplated by the 1933 Act.
(i) The Company will cooperate with the Underwriters in qualifying or
registering the Shares for sale under the blue sky laws of such
jurisdictions as you designate, and will continue such qualifications in
effect so long as reasonably required for the distribution of the Shares.
The Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any such jurisdiction where
it is not currently qualified or where it would be subject to taxation as a
foreign corporation.
(j) During the period of five years hereafter, the Company will
furnish you and each of the other Underwriters with a copy (i) as soon as
practicable after the filing thereof, of each report filed by the Company
with the Commission; and (ii) as soon as available, of each report of the
Company mailed to its stockholders.
(k) If, at the time of effectiveness of the Registration Statement,
any information shall have been omitted therefrom in reliance upon Rule
430A and/or Rule 434, then immediately following the execution and delivery
of the Pricing Agreement, the Company will prepare, and file or transmit
for filing with the Commission in accordance with such Rule 430A, Rule
424(b) and/or Rule 434, copies of an amended prospectus or Term Sheet, or,
if required by such Rule 430A and/or Rule 434, a post-effective amendment
to the Registration Statement (including an amended prospectus), containing
all information so omitted. If required, the Company will prepare and
file, or transmit for filing, a Rule 462(b) Registration Statement not
later than the date of the execution of the Pricing Agreement. If a Rule
462(b) Registration Statement is filed, the Company shall make payment of,
or arrange for payment of, the additional registration fee owing to the
Commission required by Rule 111.
(l) The Company will use its best efforts to maintain the designation
of the Shares to be sold hereunder on the Nasdaq National Market System,
unless the Company's board of directors determines otherwise. The Company
will pay the fee
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of the NASD in connection with the review of the offering.
(m) The Company will promptly deliver to the Underwriters copies of
all correspondence to and from, and all documents issued to and by, the
Commission in connection with the registration of the Shares under the Act.
(n) Prior to the First Closing Date, the Company will issue no press
release or other communication directly or indirectly and hold no press
conference with respect to the Company or any of its subsidiaries or with
respect to the financial condition, results of operations, business,
properties, assets or liabilities of any of them, or the offering of the
Shares, without your prior written consent, which consent shall not be
unreasonably withheld.
SECTION 7. PAYMENT OF EXPENSES. Whether or not the transactions
contemplated hereunder are consummated or this Agreement becomes effective as to
all of its provisions or is terminated, the Company and the Selling Stockholders
agree to pay (i) all costs, fees and expenses (other than legal fees and
disbursements of counsel for the Underwriters and the expenses incurred by the
Underwriters) incurred in connection with the performance of the Company's
obligations hereunder, including without limiting the generality of the
foregoing, all fees and expenses of legal counsel for the Company and of the
Company's independent accountants, all costs and expenses incurred in connection
with the preparation, printing, filing and distribution of the Registration
Statement, each preliminary prospectus and the Prospectus (including all
Incorporated Documents, exhibits and financial statements) and all amendments
and supplements provided for herein, this Agreement, the Pricing Agreement and
the Blue Sky Memorandum, (ii) all costs, fees and expenses (including legal fees
and disbursements of counsel for the Underwriters not to exceed $5,000) incurred
by the Underwriters in connection with qualifying all or any part of the Shares
for offer and sale under blue sky laws, including the preparation of a blue sky
memorandum relating to the Shares and clearance of such offering with the NASD;
and (iii) all fees and expenses of the Company's transfer agent, printing of the
certificates for the Shares and all transfer taxes, if any, with respect to the
sale and delivery of the Shares to the several Underwriters.
The provisions of this Section shall not affect any agreement which
the Company and the Selling Stockholders may make for the allocation or sharing
of such expenses and costs.
SECTION 8. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the Firm Shares
on the First Closing Date and the Option Shares on the Second Closing Date shall
be subject to the accuracy of the representations and warranties on the part of
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the Company and the Selling Stockholders herein set forth as of the date hereof
and as of the First Closing Date or the Second Closing Date, as the case may be,
to the accuracy of the statements of officers of the Company made pursuant to
the provisions hereof, to the performance by the Company and the Selling
Stockholders of their respective obligations hereunder, and to the following
additional conditions:
(a) The Registration Statement shall have become effective either
prior to the execution of this Agreement or not later than 1:00 P.M.,
Chicago time, on the first full business day after the date of this
Agreement, or such later time as shall have been consented to by you but in
no event later than 1:00 P.M., Chicago time, on the third full business day
following the date hereof; and prior to the First Closing Date or the
Second Closing Date, as the case may be, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or shall be pending
or, to the knowledge of the Company, the Selling Stockholders or you, shall
be contemplated by the Commission. If the Company has elected to rely upon
Rule 430A and/or Rule 434, the information concerning the public offering
price of the Shares and price-related information shall have been
transmitted to the Commission for filing pursuant to Rule 424(b) within the
prescribed period and the Company will provide evidence satisfactory to the
Underwriters of such timely filing (or a post-effective amendment providing
such information shall have been filed and declared effective in accordance
with the requirements of Rules 430A and 424(b)). If a Rule 462(b)
Registration Statement is required, such Registration Statement shall have
been transmitted to the Commission for filing and become effective within
the prescribed time period and, prior to the First Closing Date, the
Company shall have provided evidence of such filing and effectiveness in
accordance with Rule 462(b).
(b) The Shares shall have been qualified for sale under the blue sky
laws of such states as shall have been specified by the Underwriters.
(c) The legality and sufficiency of the authorization, issuance and
sale or transfer and sale of the Shares hereunder, the validity and form of
the certificates representing the Shares, the execution and delivery of
this Agreement and the Pricing Agreement, and all corporate proceedings and
other legal matters incident thereto, and the form of the Registration
Statement and the Prospectus (except financial statements) shall have been
approved by counsel for the Underwriters exercising reasonable judgment.
(d) You shall not have advised the Company that the Registration
Statement or the Prospectus or any amendment or
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supplement thereto, contains an untrue statement of fact, which, in the
opinion of counsel for the Underwriters, is material or omits to state a
fact which, in the opinion of such counsel, is material and is required to
be stated therein or necessary to make the statements therein not
misleading.
(e) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred any change, or any development involving a
prospective change, in or affecting particularly the business or properties
of the Company or any of its subsidiaries, whether or not arising in the
ordinary course of business, which, in the judgment of the Underwriters,
makes it impractical or inadvisable to proceed with the public offering or
purchase of the Shares as contemplated hereby.
(f) There shall have been furnished to you, on the First Closing Date
or the Second Closing Date, as the case may be, except as otherwise
expressly provided below:
(i) An opinion of Katten Muchin & Zavis, counsel for the Company
and for the Selling Stockholders, addressed to the Underwriters and
dated the First Closing Date or the Second Closing Date, as the case
may be, to the effect that:
(1) the Company has been duly incorporated and is existing
as a corporation in good standing under the laws of the State of
Delaware with corporate power and authority to own its properties
and conduct its business as described in the Prospectus; and the
Company has been duly qualified to do business as a foreign
corporation under the corporation law of, and is in good standing
as such in Illinois;
(2) an opinion to the same general effect as clause (1) of
this subparagraph (i) in respect of each of Company's
subsidiaries;
(3) all of the issued and outstanding capital stock of each
of the Company's subsidiaries has been duly authorized, validly
issued and is fully paid and nonassessable, and, except as
disclosed in the Registration Statement, the Company is the sole
registered owner of 100 percent of the outstanding capital stock
of each of its subsidiaries, and such counsel knows, with respect
to such capital stock, of (i) no claims, liens, encumbrances or
security interests and (ii) no outstanding rights, subscriptions,
warrants, calls, preemptive rights, options or other agreements
of any kind;
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(4) the issued and outstanding capital stock of the Company
has been duly authorized and validly issued and is fully paid and
nonassessable and free of preemptive rights;
(5) the Shares to be sold hereunder have been duly and
validly authorized and qualified for trading over-the-counter on
the Nasdaq National Market System, subject to notice of listing
of additional shares;
(6) the Registration Statement has become effective under
the 1933 Act, and, to the knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have been
instituted or are pending or contemplated under the 1933 Act, and
the Registration Statement (including the information deemed to
be part of the Registration Statement at the time of
effectiveness pursuant to Rule 430A(b) and/or Rule 434, if
applicable), the Prospectus and each amendment or supplement
thereto (except for the financial statements and other
statistical or financial data included therein as to which such
counsel need express no opinion) comply as to form in all
material respects with the requirements of the 1933 Act.
In addition such counsel shall state that they have no
reason to believe that either the Registration Statement
(including the information deemed to be part of the Registration
Statement at the time of effectiveness pursuant to Rule 430A(b)
and/or Rule 434, if applicable) or the Prospectus, or the
Registration Statement or the Prospectus as amended or
supplemented (except as aforesaid), as of their respective
effective or issue dates, contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading or that the Prospectus as amended or supplemented, if
applicable, as of the First Closing Date or the Second Closing
Date, as the case may be, contained any untrue statement of a
material fact or omitted to state any material fact necessary to
make the statements therein not misleading in light of the
circumstances under which they were made; and such counsel does
not know of any legal or governmental proceedings pending or
threatened required to be described in the Prospectus which are
not described as required, nor of any contracts or documents of a
character
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required to be described in the Registration Statement or
Prospectus or to be filed as exhibits to the Registration
Statement which are not described or filed, as required;
(7) this Agreement and the Pricing Agreement and the
performance of the Company's obligations hereunder have been duly
authorized by all necessary corporate action and this Agreement
and the Pricing Agreement have been duly executed and delivered
by and on behalf of the Company, and are legal, valid and binding
agreements of the Company, except insofar as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforceability of
creditors' rights generally and subject to general principles of
equity and except insofar as indemnification and contribution
provisions may be limited by applicable law; and, to such
counsel's knowledge, no approval, order, authorization or consent
of any public board, agency, or instrumentality of the United
States or of any state or other jurisdiction is necessary in
connection with the consummation by the Company of any
transactions contemplated by this Agreement (other than the 1933
Act, applicable blue sky laws and the rules of the NASD);
(8) to such counsel's knowledge, neither the Company nor
any of its subsidiaries is in breach of, or in default under (nor
has any event occurred which with notice, lapse of time, or both
would constitute a breach of, or default under), any indenture,
mortgage, deed of trust, credit agreement or other agreement or
instrument to which the Company or any of its subsidiaries is a
party or by which any of them or their respective properties may
be bound or affected where such breach or default could have a
material adverse effect on the condition (financial or
otherwise), business, assets, operations or prospects of the
Company and its subsidiaries, taken as a whole;
(9) the execution and performance of this Agreement will
not contravene any of the provisions of, or result in a default
under, any agreement, franchise, license, indenture, mortgage,
deed of trust, or other instrument known to such counsel, of the
Company or any of its subsidiaries or by which the property of
any of them is bound and which contravention or default would be
material to the Company and its subsidiaries taken as a whole; or
violate any of the provisions of the charter or
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bylaws of the Company or any of its subsidiaries or, so far as is
known to such counsel, violate any order, rule or regulation of
any regulatory or governmental body having jurisdiction over the
Company or any of its subsidiaries;
(10) all documents incorporated by reference in the
Prospectus, when they were filed with the Commission, complied as
to form in all material respects with the requirements of the
Exchange Act; and such counsel has no reason to believe that any
of such documents, when they were so filed, contained an untrue
statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light
of the circumstances under which they were made when such
documents were so filed, not misleading; such counsel need
express no opinion as to the financial statements or other
financial or statistical data contained in any such document;
(11) except as disclosed in the Prospectus, to such
counsel's knowledge, no person has the right, contractual or
otherwise, to cause the Company to register pursuant to the Act,
any shares of capital stock of the Company, upon the issue and
sale of the Shares to be sold by the Selling Stockholders to the
Underwriters pursuant to this Agreement;
(12) neither the Company nor any of its subsidiaries is an
"investment company" or a person "controlled by" an "investment
company" within the meaning of the Investment Company Act;
(13) with respect to each Selling Stockholder, this
Agreement and the Pricing Agreement have been duly authorized,
executed and delivered by or on behalf of each such Selling
Stockholder; the Agents and the Custodian for each such Selling
Stockholder have been duly and validly authorized to carry out
all transactions contemplated herein on behalf of each such
Selling Stockholder; and the performance of this Agreement and
the Pricing Agreement and the consummation of the transactions
herein contemplated by such Selling Stockholders will not result
in a breach or violation of any of the terms and provisions of,
or constitute a default under, any indenture, mortgage, deed of
trust, note agreement or other agreement or instrument known to
such counsel to which any of such Selling Stockholders is a party
or by which any are bound or to which any of the property of such
Selling Stockholders is subject, or any order known to such
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counsel of any court or governmental agency or body having
jurisdiction over any of such Selling Stockholders or any of
their properties; and to such counsel's knowledge, no consent,
approval, authorization or order of any court or governmental
agency or body is required for the consummation of the
transactions contemplated by this Agreement and the Pricing
Agreement in connection with the sale of Shares to be sold by
such Selling Stockholders hereunder, except such as have been
obtained under the 1933 Act and such as may be required under
applicable blue sky laws in connection with the purchase and
distribution of such Shares by the Underwriters and the clearance
of such offering with the NASD;
(14) each Selling Stockholder has full right, power and
authority to enter into this Agreement and the Pricing Agreement
and is the sole record holder of the Shares to be sold by such
Selling Stockholder under this Agreement and, to such counsel's
knowledge, possesses full right, power and authority to sell,
assign, transfer and deliver such Shares hereunder. Immediately
prior to the consummation of the transactions described in this
Agreement, each Selling Stockholder was the sole registered owner
of the Shares to be sold hereunder by such Selling Stockholder.
Upon registration of such Shares in the Underwriters' name(s) in
the stock records of the Company and assuming the Underwriters
have purchased such Shares in good faith and without notice of
any adverse claim, the Underwriters will have acquired all of
such Selling Stockholder's rights in such Shares free of any
adverse claim, any lien in favor of the Company and any
restrictions on transfer imposed by the Company. Such counsel is
not aware of any such adverse claim, lien in favor of the Company
or restrictions on transfer imposed by the Company; and
(15) this Agreement and the Pricing Agreement are legal,
valid and binding agreements of each Selling Stockholder except
insofar as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforceability of creditors' rights generally
and subject to general principles of equity and except insofar as
indemnification and contribution provisions may be limited by
applicable law.
In rendering such opinion, such counsel may state
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that they are relying upon the certificate of Harris Trust and Savings
Bank, the transfer agent for the Common Stock, as to the number of
shares of Common Stock at any time or times outstanding, and that
insofar as their opinion under clause (6) above relates to the
accuracy and completeness of the Prospectus and Registration
Statement, it is based upon a general review with the Company's
representatives and independent accountants of the information
contained therein, without independent verification by such counsel of
the accuracy or completeness of such information. Such counsel may
also rely upon the opinions of other competent counsel and, as to
factual matters, on certificates of the Selling Stockholders and of
officers of the Company and of state officials, in which case their
opinion is to state that they are so doing and copies of said opinions
or certificates are to be attached to the opinion unless said opinions
or certificates (or, in the case of certificates, the information
therein) have been furnished to the Underwriters in other form.
(ii) Such opinion or opinions of Winston & Strawn, counsel for
the Underwriters, dated the First Closing Date or the Second Closing
Date, as the case may be, with respect to the incorporation of the
Company, the Registration Statement and the Prospectus and other
related matters as you may reasonably require, and the Company shall
have furnished to such counsel such documents and shall have exhibited
to them such papers and records as they request for the purpose of
enabling them to pass upon such matters.
(iii) A certificate of the chief executive officer and the
principal financial officer of the Company, dated the First Closing
Date or the Second Closing Date, as the case may be, to the effect
that:
(1) the representations and warranties of the Company set
forth in Section 2 of this Agreement are true and correct as of
the date of this Agreement and as of the First Closing Date or
the Second Closing Date, as the case may be, and the Company has
complied with all the agreements and satisfied all the conditions
on its part to be performed or satisfied at or prior to such
Closing Date;
(2) the Commission has not issued an order preventing or
suspending the use of the Prospectus or any preliminary
prospectus filed as a part of the Registration Statement or any
amendment thereto; no stop order suspending the effectiveness of
the Registration Statement has been issued; and
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to the best knowledge of the respective signers, no proceedings
for that purpose have been instituted or are pending or
contemplated under the 1933 Act; and
(3) subsequent to the date of the most recent financial
statements included in the Registration Statement and the
Prospectus (exclusive of any supplement thereto), and except as
set forth or contemplated in the Prospectus (exclusive of any
supplement thereto), (A) neither the Company nor any of its
subsidiaries has incurred any material liabilities or
obligations, direct or contingent, nor entered into any material
transactions not in the ordinary course of business, and (B)
there has not been any material adverse change in their condition
(financial or otherwise), business, assets, operations or
prospects, or any change in their capital stock or short-term
debt or long-term debt.
The delivery of the certificate provided for in this subparagraph
shall be and constitute a representation and warranty of the Company
as to the facts required in the immediately foregoing clauses (1) and
(2) of this subparagraph to be set forth in said certificate.
(iv) A certificate of each Selling Stockholder dated the First
Closing Date or the Second Closing Date, as the case may be, to the
effect that the representations and warranties of such Selling
Stockholder set forth in Section 3 of this Agreement are true and
correct as of such date and the Selling Stockholder has complied with
all the agreements and satisfied all the conditions on the part of
such Selling Stockholder to be performed or satisfied at or prior to
such date.
(v) At the time the Pricing Agreement is executed and also on
the First Closing Date or the Second Closing Date, as the case may be,
there shall be delivered to you a letter addressed to you from KPMG
Peat Marwick, independent accountants, the first one to be dated the
date of the Pricing Agreement, the second one to be dated the First
Closing Date and the third one (in the event of a second closing) to
be dated the Second Closing Date, to the effect set forth in Schedule
C. The letter shall not disclose any material change, or any
development involving a prospective material change, in or affecting
the business or properties of the Company which, in your reasonable
judgment, makes it impractical or inadvisable to proceed with the
public offering of the Shares or the purchase of the Option Shares as
contemplated by the Prospectus.
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<PAGE>
(vi) Such further information, certificates and documents as you
may reasonably request.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to you and
to counsel for the Underwriters, which approval shall not be unreasonably
withheld. The Company shall furnish you with such manually signed or conformed
copies of such opinions, certificates, letters and documents as you request.
If any condition to the Underwriters' obligations hereunder to be satisfied
prior to or at the First Closing Date is not so satisfied, this Agreement at
your election will terminate upon notification to the Company and the Selling
Stockholders without liability on the part of any Underwriter or the Company or
any Selling Stockholder, except for the expenses to be paid or reimbursed by the
Company pursuant to Sections 7 and 9 hereof and except to the extent provided in
Section 11 hereof.
SECTION 9. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the sale
to the Underwriters of the Shares on the First Closing Date is not consummated
because any condition of the Underwriters' obligations hereunder is not
satisfied or because of any refusal, inability or failure on the part of the
Company or the Selling Stockholders to perform any agreement herein or to comply
with any provision hereof, unless such failure to satisfy such condition or to
comply with any provision hereof is due to the default or omission of any
Underwriter, the Company agrees to reimburse you and the other Underwriters upon
demand for all out-of-pocket expenses (including reasonable fees and
disbursements of counsel) that shall have been reasonably incurred by you and
them in connection with the proposed purchase and the sale of the Shares. Any
such termination shall be without liability of any party to any other party
except that the provisions of this Section, Section 7 and Section 11 shall at
all times be effective and shall apply.
SECTION 10. EFFECTIVENESS OF REGISTRATION STATEMENT. You, the
Company and the Selling Stockholders will use your, its and their best efforts
to cause the Registration Statement to become effective, if it has not yet
become effective, and to prevent the issuance of any stop order suspending the
effectiveness of the Registration Statement and, if such stop order be issued,
to obtain as soon as possible the lifting thereof.
SECTION 11. INDEMNIFICATION. (a) The Company and each Selling
Stockholder (other than the Trusts), jointly and severally, and each of the
Trusts severally but not jointly, agree to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of the 1933 Act or the Exchange Act against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter or such controlling
person may become subject under the 1933 Act, the
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<PAGE>
Exchange Act or other federal or state statutory law or regulation, at common
law or otherwise (including in settlement of any litigation if such settlement
is effected with the written consent of the Company and/or such Selling
Stockholders, as the case may be), 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
the Registration Statement, including the information deemed to be part of the
Registration Statement at the time of effectiveness pursuant to Rule 430A and/or
Rule 434, if applicable, any preliminary prospectus, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading; and will
reimburse each Underwriter and each such controlling person for any legal or
other expenses reasonably incurred by such Underwriter or such controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that neither the Company nor any
Selling Stockholder will be liable in any such case to the extent that (i) any
such loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, any preliminary prospectus, the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with written
information furnished to the Company by any Underwriter specifically for use
therein; or (ii) if such statement or omission was contained or made in any
preliminary prospectus and corrected in the Prospectus and (1) any such loss,
claim, damage or liability suffered or incurred by any Underwriter (or any
person who controls any Underwriter) resulted from an action, claim or suit by
any person who purchased Shares that are the subject thereof from such
Underwriter in the offering and (2) such Underwriter failed to deliver or
provide a copy of the Prospectus to such person at or prior to the confirmation
of the sale of such Shares in any case where such delivery is required by the
1933 Act. This indemnity agreement will be in addition to any liability which
the Company and the Selling Stockholders may otherwise have.
Without limiting the full extent of the Company's agreement to indemnify
each Underwriter, as herein provided, (i) each Selling Stockholder, other than
Edward L. Kaplan and Gerhard Cless, shall be liable under the indemnity
agreements contained in paragraph (a) of this Section only for an amount not
exceeding the proceeds received by such Selling Stockholder from the sale of
Shares hereunder, and (ii) Gerhard Cless shall be liable under the indemnity
agreements contained in paragraph (a) of this Section only for an amount not
exceeding the aggregate of the proceeds received by Gerhard Cless, The Gerhard
Cless Income Trust and The Ruth Cless Income Trust from the sale of Shares
hereunder. The Company and the Selling Stockholders may agree, as among
themselves and without limiting the rights of the Underwriters under this
Agreement, as to the respective amounts of such liability for which
-27-
<PAGE>
each of them shall be responsible.
(b) Each Underwriter will severally indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the Registration
Statement, and each Selling Stockholder and each person, if any, who controls
the Company within the meaning of the 1933 Act or the Exchange Act, against any
losses, claims, damages or liabilities to which the Company, or any such
director, officer, Selling Stockholder or controlling person may become subject
under the 1933 Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Underwriter), insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue or alleged untrue
statement of any material fact contained in the Registration Statement, any
preliminary prospectus, the Prospectus, or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, any preliminary
prospectus, the Prospectus, or any amendment or supplement thereto in reliance
upon and in conformity with Section 4 of this Agreement or any other written
information furnished to the Company by such Underwriter specifically for use in
the preparation thereof; and will reimburse any legal or other expenses
reasonably incurred by the Company, or any such director, officer, Selling
Stockholder or controlling person in connection with investigating or defending
any such loss, claim, damage, liability or action. This indemnity agreement
will be in addition to any liability which such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section, notify the indemnifying party of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party except to the extent that
the indemnifying party was prejudiced by such failure 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 in, and, to the extent that it may wish, jointly with
all other indemnifying parties similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party; provided, however,
if the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
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<PAGE>
parties that are different from or additional to those available to the
indemnifying party, or the indemnified and indemnifying parties may have
conflicting interests that would make it inappropriate for the same counsel to
represent both of them, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defense and otherwise to
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed such counsel in
connection with the assumption of legal defense in accordance with the proviso
to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel, approved by the Underwriters in the case of paragraph (a)
representing all indemnified parties not having different or additional defenses
or potential conflicting interest among themselves who are parties to such
action), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding 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 arising out
of such proceeding.
(d) If the indemnification provided for in this Section is unavailable to
an indemnified party under paragraph (a) or (b) hereof in respect of any losses,
claims, damages or liabilities referred to therein, then each applicable
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company, the
Selling Stockholders and the Underwriters from the offering of the Shares (such
relative benefits to be determined in accordance with the next succeeding
sentence) or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company, the Selling Stockholders and the Underwriters in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The respective
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<PAGE>
relative benefits received by the Company, the Selling Stockholders and the
Underwriters shall be deemed to be in the same proportion in the case of the
Company and the Selling Stockholders, as the total price paid to the Selling
Stockholders for the Shares by the Underwriters (net of underwriting discount
but before deducting expenses), and in the case of the Underwriters as the
underwriting discount received by them bears to the total of such amounts paid
to the Selling Stockholders and received by the Underwriters as underwriting
discount in each case as contemplated by the Prospectus. The relative fault of
the Company and the Selling Stockholders and the Underwriters shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the Company or by the Selling Stockholders or
by the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims, damages
and liabilities referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim.
The Company, the Selling Stockholders and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section were
determined by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provisions of this Section, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Shares 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 to omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section are several in proportion to their respective
underwriting commitments and not joint.
(e) The provisions of this Section shall survive any termination of this
Agreement.
SECTION 12. DEFAULT OF UNDERWRITERS. It shall be a condition to
the agreement and obligation of the Selling Stockholders to sell and deliver the
Shares hereunder, and of each Underwriter to purchase the Shares hereunder,
that, except as hereinafter in this paragraph provided, each of the Underwriters
shall purchase and pay for all Shares agreed to be purchased by such Underwriter
hereunder upon tender to the Underwriters of all such Shares in accordance with
the terms hereof. If any Underwriter or Underwriters default in their
obligations to
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<PAGE>
purchase Shares hereunder on the First Closing Date and the aggregate number of
Shares which such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed 10 percent of the total number of Shares which the
Underwriters are obligated to purchase on the First Closing Date, the
Underwriters may make arrangements satisfactory to the Selling Stockholders for
the purchase of such Shares by other persons, including any of the Underwriters,
but if no such arrangements are made by such date the nondefaulting Underwriters
shall be obligated severally, in proportion to their respective commitments
hereunder, to purchase the Shares which such defaulting Underwriters agreed but
failed to purchase on such date. If any Underwriter or Underwriters so default
and the aggregate number of Shares with respect to which such default or
defaults occur is more than the above percentage and arrangements satisfactory
to the Underwriters and the Selling Stockholders for the purchase of such Shares
by other persons are not made within 36 hours after such default, this Agreement
will terminate without liability on the part of any nondefaulting Underwriter or
the Selling Stockholders, except for the expenses to be paid by the Company
pursuant to Section 7 hereof and except to the extent provided in Section 11
hereof.
In the event that Shares to which a default relates are to be
purchased by the nondefaulting Underwriters or by another party or parties, the
Underwriters, the Selling Stockholders or the Company shall have the right to
postpone the First Closing Date for not more than seven business days in order
that the necessary changes in the Registration Statement, Prospectus and any
other documents, as well as any other arrangements, may be effected. As used in
this Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
SECTION 13. EFFECTIVE DATE. This Agreement shall become effective
immediately as to Sections 7, 9, 11 and 14 and as to all other provisions at
8:30 A.M., Chicago time, on the day following the date upon which the Pricing
Agreement is executed and delivered, unless such a day is a Saturday, Sunday or
holiday (and in that event this Agreement shall become effective at such hour on
the business day next succeeding such Saturday, Sunday or holiday); but this
Agreement shall nevertheless become effective at such earlier time after the
Pricing Agreement is executed and delivered as you may determine on and by
notice to the Company and the Selling Stockholders or by release of any Shares
for sale to the public. For the purposes of this Section, the Shares shall be
deemed to have been so released upon the release for publication of any
newspaper advertisement relating to the Shares or upon the release by you of
telegrams (i) advising Underwriters that the Shares are released for public
offering, or (ii) offering the Shares for sale to securities dealers, whichever
may occur first.
SECTION 14. TERMINATION. Without limiting the right
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<PAGE>
to terminate this Agreement pursuant to any other provision hereof:
(a) This Agreement may be terminated by the Company by notice to you
and the Selling Stockholders or by you by notice to the Company and the
Selling Stockholders at any time prior to the time this Agreement shall
become effective as to all its provisions, and any such termination shall
be without liability on the part of the Company or the Selling Stockholders
to any Underwriter (except for the expenses to be paid or reimbursed
pursuant to Section 7 hereof and except to the extent provided in Section
11 hereof) or of any Underwriter to the Company or the Selling
Stockholders.
(b) This Agreement may also be terminated by you prior to the First
Closing Date, and the option referred to in Section 5, if exercised, may be
canceled at any time prior to the Second Closing Date, if (i) trading in
securities on the New York Stock Exchange shall have been suspended or
minimum prices shall have been established on such exchange, or (ii) a
banking moratorium shall have been declared by Illinois, New York, or
United States authorities, or (iii) there shall have been an outbreak of
major armed hostilities between the United States and any foreign power
which in the opinion of the Underwriters makes it impractical or
inadvisable to offer or sell the Shares. Any termination pursuant to this
paragraph (b) shall be without liability on the part of any Underwriter to
the Company or the Selling Stockholders or on the part of the Company to
any Underwriter or the Selling Stockholders (except for expenses to be paid
or reimbursed pursuant to Section 7 hereof and except to the extent
provided in Section 11 hereof).
SECTION 15. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY.
The respective indemnities, agreements, representations, warranties and other
statements of the Company, of its officers, of the Selling Stockholders and of
the several Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter or the Company or any of its or their partners,
officers or directors or any controlling person, or the Selling Stockholders as
the case may be, and will survive delivery of and payment for the Shares sold
hereunder.
SECTION 16. NOTICES. All communications hereunder will be in
writing and, if sent to the Underwriters will be mailed, delivered or telecopied
and confirmed to you c/o William Blair & Company, 222 West Adams Street,
Chicago, Illinois 60606, Fax (312) 368-9418, with a copy to Robert F. Wall,
Esq., Winston & Strawn, 35 West Wacker Drive, Chicago, Illinois 60601, Fax (312)
558-5700; if sent to the Company will be mailed, delivered or telecopied and
confirmed to Zebra Technologies Corporation, 333 Corporate Woods Parkway, Vernon
Hills, Illinois 60061-3109, Fax (708) 634-1830 with a copy to Matthew S. Brown,
Esq., Katten Muchin & Zavis, 525 West Monroe Street, Suite 1600, Chicago,
Illinois 60661, Fax (312)
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<PAGE>
902-1061; and if sent to the Selling Stockholders will be mailed, delivered or
telegraphed and confirmed to the Agents at the addresses they have previously
furnished to the Company and the Underwriters.
SECTION 17. SUCCESSORS. This Agreement and the Pricing Agreement
will inure to the benefit of and be binding upon the parties hereto and their
respective successors, personal representatives and assigns, and to the benefit
of the officers and directors and controlling persons referred to in Section 11,
and no other person will have any right or obligation hereunder. The term
"successors" shall not include any purchaser of the Shares as such from any of
the Underwriters merely by reason of such purchase.
SECTION 18. PARTIAL UNENFORCEABILITY. If any section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, such determination shall not affect the validity or
enforceability of any other section, paragraph or provision hereof.
SECTION 19. APPLICABLE LAW. This Agreement and the Pricing
Agreement shall be governed by and construed in accordance with the laws of the
State of Illinois, without giving effect to principles of conflicts of laws.
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<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company, the Selling
Stockholders and the several Underwriters, including you, all in accordance with
its terms.
Very truly yours,
ZEBRA TECHNOLOGIES CORPORATION
By
--------------------------------
Edward L. Kaplan, President and
Chief Executive Officer
SELLING STOCKHOLDERS
By
--------------------------------
Agent and Attorney-in-Fact for
the Selling Stockholders listed
in Schedule B other than the
Trusts
By
--------------------------------
Agent and Attorney-in-Fact for
the Trusts
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written:
WILLIAM BLAIR & COMPANY
THE ROBINSON-HUMPHREY COMPANY, INC.
MONTGOMERY SECURITIES
As Underwriters named in
Schedule A
By William Blair & Company
By
---------------------------
Title
------------------------
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<PAGE>
EXHIBIT A
ZEBRA TECHNOLOGIES CORPORATION
[___________] Shares Class A Common Stock
PRICING AGREEMENT
August [___], 1997
William Blair & Company
Montgomery Securities
The Robinson-Humphrey Company, Inc.
As Underwriters
c/o William Blair & Company
222 West Adams Street
Chicago, Illinois 60606
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement dated, August [___],
1997 (the "Underwriting Agreement") relating to the sale by the Selling
Stockholders named therein and the purchase by William Blair & Company, The
Robinson-Humphrey Company, Inc. and Montgomery Securities(the "Underwriters") of
the above Shares. All terms herein shall have the definitions contained in the
Underwriting Agreement except as otherwise defined herein.
Pursuant to Section 5 of the Underwriting Agreement, the Company and
each of the Selling Stockholders agree with the Underwriters as follows:
1. The public offering price per share for the Shares shall be
$[_____].
2. The purchase price per share for the Shares to be paid by the
several Underwriters shall be $[_____], being an amount equal to the public
offering price set forth above less $[_____] per share.
- ---------------
* Plus an option to acquire up to [________] additional shares from the
Selling Stockholders to cover overallotments.
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company, the Selling
Stockholders and the several Underwriters, including you, all in accordance with
its terms.
Very truly yours,
ZEBRA TECHNOLOGIES CORPORATION
By
--------------------------------
Edward L. Kaplan, President,
Chief Executive Officer
SELLING STOCKHOLDERS
By
--------------------------------
Agent and Attorney-in-Fact for
the Selling Stockholders listed
in Schedule B other than the
Trusts
By
--------------------------------
Agent and Attorney-in-Fact for
the Trusts
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
WILLIAM BLAIR & COMPANY
THE ROBINSON-HUMPHREY COMPANY, INC.
MONTGOMERY SECURITIES
As Underwriters
By William Blair & Company
By
---------------------------
Title
------------------------
<PAGE>
SCHEDULE A
Number of
Firm Shares
to be
Underwriter Purchased
- ----------- ---------
William Blair & Company . . . . . . . . .
The Robinson-Humphrey Company, Inc. . . .
Montgomery Securities . . . . . . . . . .
---------
Total . . . . . . . . . . . . . . . . . .
---------
---------
<PAGE>
SCHEDULE B
Maximum
Number of Number of
Firm Option
Shares Shares
Selling Stockholders: to be Sold to be Sold
- -------------------- ---------- ----------
Edward L. Kaplan. . . . . . . . . 1,153,710 173,057
Carol Kaplan . . . . . . . . . . 237,698 35,654
Gerhard Cless . . . . . . . . . . 99,740
The Gerhard Cless Income Trust. . 344,000
The Ruth Cless Income Trust . . . 320,936
---------- ----------
Total . . . . . . . . . . . . . . 2,056,344 308,451
---------- ----------
---------- ----------
<PAGE>
SCHEDULE C
Comfort Letter of KPMG Peat Marwick
(1) They are independent public accountants with respect to the
Company and each of its subsidiaries within the meaning of the 1933 Act and the
answer to Item 10 of the Registration Statement, as it relates to them, is
correct.
(2) In their opinion the consolidated financial statements and
schedules of the Company and its subsidiaries included in the Registration
Statement and the consolidated financial statements of the Company from which
the information presented under the captions "Summary Financial Data" and
"Selected Financial Data" has been derived which are stated therein to have been
examined by them comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act.
(3) On the basis of specified procedures (but not an examination in
accordance with generally accepted auditing standards), including inquiries of
certain officers of the Company and its subsidiaries responsible for financial
and accounting matters as to transactions and events subsequent to December 31,
1996, a reading of minutes of meetings of the stockholders and directors of the
Company and its subsidiaries since December 31, 1996, a reading of the latest
available interim unaudited consolidated financial statements of the Company and
its subsidiaries (with an indication of the date hereof and other procedures as
specified in such letter, nothing came to their attention which caused them to
believe that (i) the unaudited financial statements of the Company included in
the Registration Statement do not comply as to form in all material respects
with the applicable accounting requirements of the 1933 Act or that such
unaudited financial statements are not fairly presented in accordance with
generally accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements included in the
Registration Statement, and (ii) at a specified date not more than five days
prior to the date thereof in the case of the first letter and not more than two
business days prior to the date thereof in the case of the second and third
letters, there was any change in the capital stock or long-term debt or
short-term debt (other than normal payments) of the Company and its subsidiaries
on a consolidated basis or any decrease in consolidated net current assets or
consolidated stockholders' equity as compared with amounts shown on the latest
consolidated balance sheet of the Company included in the Registration Statement
or for the period from the date of such consolidated balance sheet to a date not
more than five days prior to the date thereof in the case of the first letter
and not more than two business days prior to the date thereof in the case of the
second and third letters, there were any decreases, as compared with the
corresponding period of the prior
<PAGE>
year, in consolidated net sales, consolidated income before income taxes or in
the total or per share amounts of consolidated net income except, in all
instances, for changes or decreases which the Prospectus discloses have occurred
or may occur or which are set forth in such letter.
(4) On the basis of reading the unaudited pro forma financial
statement data included in the Registration Statement and the Prospectus,
carrying out specified procedures, inquiries of certain officials of the Company
who have responsibility for financial and accounting matters, and proving the
arithmetic accuracy of the application of the pro forma adjustments to the
historical amounts in the pro forma financial statement data, nothing came to
their attention that caused them to believe that the pro forma financial
statement data does not comply in form in all material respects with the
applicable accounting requirements of Rule 11-02 of Regulation S-X of or that
the pro forma adjustments have not been properly applied to the historical
amounts in the compilation of such statements.
(5) They have carried out specified procedures, which have been
agreed to by the Underwriters, with respect to certain information in the
Prospectus specified by the Underwriters, and on the basis of such procedures,
they have found such information to be in agreement with the general accounting
records of the Company and its subsidiaries.
<PAGE>
CERTIFICATE OF INCORPORATION
OF
ZEBRA TECHNOLOGIES CORPORATION
FIRST: The name of the Corporation is Zebra Technologies corporation.
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 1209 Orange Street, City of Wilmington, County of New
Castle. The name of the registered agent of the Corporation at such address is
The Corporation Trust Company.
THIRD: The nature of the business or purposes to be conducted or promoted
is to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware.
FOURTH: The total number of shares of capital stock of all classes which
the Corporation shall have authority to issue is 80,000,000 shares, which shall
be divided as follows: (i) 35,000,000 shares of Class A common stock, par
value $.01 per share (the "Class A Common Stock"), (ii) 35,000,000 shares of
Class B common stock, par value $.01 per share (the "Class B Common Stock"), and
(iii) 10,000,000 shares of preferred stock, par value $.01 per share (the
"Preferred Stock"). "Common Stock", when used herein, shall mean the Class A
Common Stock and the Class B Common Stock together.
The designations and the powers, preferences and relative, participating,
optional or other rights of the capital stock and the qualifications,
limitations or restrictions thereof are as follows:
4.A. COMMON STOCK PROVISIONS.
4.A.1. VOTING RIGHTS. Except as otherwise required by law or
expressly provided herein, the holder of each share of Class A Common Stock
shall have one vote per share on each matter submitted to a vote of the
stockholders of the Corporation and the holder of each share of Class B Common
Stock shall have ten votes per share on each matter submitted to a vote of the
stockholders of the Corporation.
4.A.2. DIVIDEND RIGHTS. Subject to all of the rights of any Series
of Preferred Stock authorized after the date hereof, the holders of the Common
Stock shall be entitled to receive dividends at such times and in such amounts
as may be determined by the Board of Directors of the Corporation. Dividends
shall be declared and paid to holders of either Class A Common Stock or Class B
Common Stock only if such dividends are declared and paid to holders of both
classes on an equal per share basis.
If at any time a distribution of Class A Common Stock, Class B Common Stock
or any other securities of the Corporation is to be made to holders of either
Class A Common Stock or Class B Common Stock (hereinafter sometimes referred to
as a "share distribution"), such share distribution may be declared and paid
only as follows:
<PAGE>
(a) A share distribution consisting of shares of Class A Common Stock
to holders of Class A Common Stock; provided, there shall also be a simultaneous
share distribution consisting of shares of Class B Common Stock to holders of
Class B Common Stock on an equal per share basis; or
(b) A share distribution consisting of shares of Class B Common Stock
to holders of Class B Common Stock; provided, there shall also be a simultaneous
share distribution consisting of shares of Class A Common Stock to holders of
Class A Common Stock on an equal per share basis; or
(c) A share distribution consisting of any other class of securities
of the Corporation to the holders of Class A Common Stock and Class B Common
Stock on an equal per share basis.
4.A.3. LIQUIDATION RIGHTS. In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
after payment or provision for payment of the debts and other liabilities of the
Corporation and the preferential amounts to which the holders of any outstanding
shares of Preferred Stock shall be entitled upon dissolution, liquidation or
winding up, each holder of shares of Class A Common Stock and Class B Common
Stock shall receive whatever kind of assets are available for distribution on an
equal per share basis.
4.A.4. MERGER OR CONSOLIDATION RIGHTS. In the event of a merger or
consolidation of the Corporation with or into another entity (whether or not the
Corporation is the surviving entity), each holder of shares of Class A Common
Stock and Class B Common Stock shall receive whatever kind of assets are
available for distribution to such holders, or stock into which such shares of
the Corporation are converted, on an equal per share basis; provided, however,
in any merger or consolidation in which shares of capital stock are distributed,
such shares distributed to the holders of shares of Class A Common Stock and
Class B Common Stock may differ to the extent and only to the extent that the
voting rights of the Class A Common Stock and Class B Common Stock differ as
provided herein.
4.A.5. CONVERSION. In the event that at any time the number of
issued and outstanding shares of Class B Common Stock is less than 10% of the
aggregate number of issued and outstanding shares of Class A Common Stock and
Class B Common Stock together, each authorized share of Class B Common Stock
(whether or not then issued) shall automatically be converted into one share of
Class A Common Stock. Upon such conversion, the total number of shares of Class
A Common Stock the Corporation shall have authority to issue shall be 70,000,000
and the total number of shares of Class B Common Stock the Corporation shall
have authority to issue shall be zero. Such conversion ratio as set forth
herein shall in all events be accurately preserved in the event of any
recapitalization of the Corporation by means of a stock dividend on, or split or
combination of, outstanding shares of Class A Common Stock or Class B Common
Stock, or in the event of any merger, consolidation or other reorganization of
the Corporation. Upon the occurrence of such conversion, the shares of Class B
Common Stock shall be deemed
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<PAGE>
without further action to be immediately and automatically converted into shares
of Class A Common Stock, and stock certificates formerly representing Class B
Common Stock shall thereupon and thereafter be deemed to represent alike number
of shares of Class A Common Stock.
Shares of Class B Common Stock shall be convertible into shares of Class A
Common Stock of the Corporation at the option of the holder thereof at any time
on a share for share basis. Such conversion ratio shall in all events be
accurately preserved in the event of any recapitalization of the Corporation by
means of a stock dividend on, or stock split or combination of, outstanding
shares of Class A Common Stock or Class B, Common Stock, or ia the event of any
merger, consolidation or other reorganization of the Corporation with another
corporation. Upon the conversion of shares of Class B Common Stock into shares
of Class A Common stock, such shares of Class B Common Stock shall be retired
and not subject to reissue.
Each share of Class B Common Stock shall automatically be converted into
one share of Class A Common Stock upon its sale, gift, assignment, distribution,
conveyance or other disposition or transfer whether by operation of law or
otherwise (collectively, a "Transfer") to other than a Permitted Transferee (as
defined herein). The term Transfer as used herein shall not include a Pledge or
hypothecation of shares of Class B Common Stock; provided, however, that a
Transfer shall have occurred if a pledgee or party to whom such shares are
hypothecated forecloses thereon. The term "Permitted Transferee" as used herein
shall mean:
(i) Edward L. Kaplan, Carol K. Kaplan, Gerhard Cless, Ruth I. Cless,
Stewart A. Shiman, Meyer S. Kaplan, Bee R. Kaplan, John H. Kindsvater, Jr.,
Lenin Pellegrino, M.D., any of their respective descendants (including adopted
children), any spouses, widows or widowers or any of their respective
descendants (including adopted children) (collectively, the "Family Holders");
(ii) any trust, a majority of the interest of which is held, directly
or indirectly, by or for the benefit of one or more of the Family Holders or any
entity or entities described in clauses (iii), (iv), (v) or (vi) of this Article
FOURTH Section A.5.;
(iii) any estate of a Family Holder;
(iv) any foundation, or any charitable organization established by one
or more of the Family Holders that qualifies as an exempt organization under the
Internal Revenue Code of 1986, as amended, or any successor statute;
(v) any charitable lead trust or charitable remainder trust
established by one or more of the Family Holders; or
(vi) any corporation or partnership or other entity of which voting
control is held, directly or indirectly, by or for the benefit of one or more of
the Family Holders or any entity or entities described in clauses (ii), (iii),
(iv) or (v) above. For Purposes of this clause (vi), "voting control" shall
mean either (a) the beneficial ownership, direct or indirect, of more than
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<PAGE>
50% of the outstanding voting securities of a corporation, or in the case of an
unincorporated entity, of the similar power to control the affairs of such
entity, or (b) the contractual power to elect or designate a majority of the
directors of a corporation or in the case of an unincorporated entity, of
individuals exercising similar functions.
If any shares of Class B Common Stock are held by a Permitted Transferee as
described in clauses (ii), (iii), (iv) or (v) of this Article FOURTH Section
A.5. and such Permitted Transferee shall cease to be a Permitted Transferee,
then such shares of Class B Common Stock shall automatically be converted into
an equal number of shares of Class A Common Stock.
A majority of the Board of Directors of the Corporation shall have, the
power and duty to determine for purposes of this Article FOURTH Section A.5., on
the basis of information known to the Board of Directors after reasonable
inquiry, (a) whether a person or entity is a Permitted Transferee or shall have
ceased to be a Permitted Transferee, and (b) whether a transfer of shares of
Class B Common Stock shall have occurred so as to effect a conversion of such
shares of Class B Common Stock to an equal number of shares of Class A Common
Stock. The holders of Class B Common Stock shall upon demand disclose to the
Board of Directors in writing such information with respect to the direct and
indirect beneficial ownership of such shares of Class B Common Stock as the
Board of Directors deem necessary to make the determination required of it
pursuant to this paragraph.
4.A.6. STOCK SPLITS, DIVISIONS AND COMBINATIONS. The Corporation
may not split, divide or combine the shares of the Class A Common Stock or the
Class B Common Stock, unless, at the same time, the Corporation splits, divides
or combines, as the case may be, the shares of the other class of Common Stock
in the same proportion and manner.
4.A.7. ISSUANCE OF ADDITIONAL SHARES OF CLASS B COMMON STOCK.
Additional shares of Class B Common Stock may only be issued to Permitted
Transferees (as the term Permitted Transferee is defined in Article FOURTH
Section A.5. hereof) unless such issuance to such other persons is approved by a
majority of the issued and outstanding shares of Class B Common Stock.
4.B. PREFERRED STOCK PROVISIONS.
The Preferred Stock may be issued from time to time in one or more series.
Subject to the other provisions of this Certificate of Incorporation, the Board
of Directors is authorized, subject to any limitations prescribed by law, to
provide for the issuance of and issue shares of the Preferred Stock in series,
and by filing a certificate pursuant to the laws Of the State of Delaware, to
establish from time to time the number of shares to be included in each such
series, and to fix the designation, powers, preferences and rights of the shares
of each such series and any qualifications, limitations or restrictions thereof.
The number of authorized shares of Preferred Stock may be increased or decreased
(but not below the number of shares thereof then outstanding) by the affirmative
vote of the holders of a majority of the votes entitled to be cast by the
outstanding Common Stock, without a vote of the holders of any Preferred Stock,
or of any
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<PAGE>
series thereof, unless a vote of any such holders is required pursuant to the
certificate or certificates establishing such series of Preferred Stock.
4.C. GENERAL PROVISIONS.
4.C.1. QUORUM AT STOCKHOLDERS' MEETINGS. At any meeting of
stockholders, the presence in person or by proxy of the holders of record of
outstanding shares of stock of the corporation entitled to vote a majority of
the votes entitled to be voted at such meeting shall constitute a quorum for all
purposes, except as otherwise provided by this Certificate of Incorporation or
required by applicable law.
4.C.2. NO PREEMPTIVE RIGHTS. No stockholder of this Corporation
shall by reason of holding shares of any class of stock have any pre-emptive or
preferential right to purchase or subscribe to any shares of any class of stock
of this Corporation, now or hereafter to be authorized, or any notes,
debentures, bonds, or other securities convertible into or carrying options or
warrants to purchase shares of any class of such stock, now or hereafter to be
authorized, whether or not the issuance of any such shares, or such notes,
debentures, bonds or other securities would adversely affect the dividend or
voting rights of such stockholder, other than such rights, if any, as the board
of directors, in its discretion from time to time, may grant and at such price
as the board of the directors in its discretion may fix; and the board of
directors may issue shares of any class of stock of this Corporation, or any
notes, debentures, bonds or other securities convertible into or carrying
options or warrants to purchase shares of any class of such stock, without
offering any such shares of any class, either in whole or in part, to the
existing stockholders of any class of such stock.
FIFTH: 5.(a) WRITTEN CONSENT. At any time after the closing of a
public offering of the Corporation's securities registered under the Securities
Act of 1933, as amended, any action required or permitted to be taken by the
holders of the Common Stock (whether voting separately as a class or together
with other classes) of the Corporation may be effected by a consent in writing
by such holders only if such consent is signed by holders of shares of Common
Stock representing at least 66-2/3% of the votes entitled to be cast by the
outstanding Common Stock.
5.(b) SPECIAL MEETINGS. Special meetings of stockholders of the
Corporation may be called upon not less than 10 or more than 60 days' prior
written notice only by (1) the Board of Directors pursuant to a resolution
approved by a majority of the Board of Directors, or (2) by holders of shares of
Common Stock representing at least 66-2/3% of the votes entitled to be cast
generally in the election of directors.
5.(c) AMENDMENT. Notwithstanding anything contained in this
Certificate of Incorporation to the contrary, the affirmative vote of the
holders of shares of Common Stock representing at least 66-2/3% of the votes
entitled to be cast generally in the election of directors shall be required to
amend, alter or repeal, or to adopt any provision inconsistent with, this
Article FIFTH.
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<PAGE>
SIXTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter or repeal
the By-Laws of the Corporation. The By-Laws of the Corporation may be altered,
amended or repealed, or new By-Laws may be adopted, by the Board of Directors in
accordance with the preceding sentence or by the vote of the holders of shares
representing at least 66-2/3% of the votes entitled to be cast by the
outstanding Common Stock. Notwithstanding anything contained in this
Certificate of Incorporation to the contrary, the affirmative vote of shares
representing at least 66-2/3% of the votes entitled to be cast by the
outstanding Common Stock shall be required to amend, alter or repeal, or adopt
any provision inconsistent with, this Article SIXTH.
SEVENTH: Meetings of stockholders may be held within or without the State
of Delaware as the By-Laws may provide. The books of the Corporation may be
kept outside the State of Delaware at such place or places as may be designated
from time to time by the Board of Directors of the Corporation or in the By-Laws
of the Corporation. Election of directors need not be by written ballot unless
the By-Laws of the Corporation so provide.
EIGHTH: No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, provided, however, that this provision shall not eliminate
or limit the liability of a director (i) for any breach of the director's duty
of loyalty to the Corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the General Corporation Law of the State of
Delaware, or (iv) for any transaction from which the director derived an
improper personal benefit.
NINTH: The Corporation shall indemnify, in accordance with and to the full
extent now or hereafter permitted by law, any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including, without limitation, an action by or in the right of the
Corporation), by reason of his acting as a director of the Corporation (and the
Corporation, in the discretion of the Board of Directors, may so indemnify a
person by reason of the fact that he is or was an officer or employee of the
Corporation or is or was serving at the request of the Corporation in any other
capacity for or on behalf of the Corporation) against any liability or expense
actually and reasonably incurred by such person in respect thereof; provided,
however, that, the Corporation shall not be obligated to indemnify any such
person (i) with respect to proceedings, claims or actions initiated or brought
voluntarily by such person and not by way of defense, or (ii) for any amounts
paid in settlement of an action effected without the prior written consent of
the corporation to such settlement. Such indemnification is not exclusive of
any other right to indemnification provided by law, agreement or otherwise.
TENTH: No amendment to or repeal of Article EIGHTH or NINTH of this
Certificate of Incorporation shall apply to or have any effect on the rights of
any individual referred to in Articles EIGHTH or NINTH for or with respect to
acts or omissions of such individual occurring prior to such amendment or
repeal.
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<PAGE>
This Certificate of Incorporation has been signed by the sole incorporator
of the Corporation on July 10, 1991.
Zebra Technologies Corporation
By:
----------------------------------------
Karen S. McDonald
525 W. Monroe, #1600
Chicago, IL 60661
Being the Sole Incorporator
of Zebra Technologies Corporation
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
ZEBRA TECHNOLOGIES CORPORATION
ZEBRA TECHNOLOGIES CORPORATION (the "Corporation"), a corporation organized
and existing under and by virtue of the General Corporation Law of the State of
Delaware (the "Act"), DOES HEREBY CERTIFY THAT:
1. In accordance with the provisions of Section 242 of the Act, and the
Certificate of Incorporation of the Corporation (the "Certificate of
Incorporation"), an amendment to the Certificate of Incorporation has been duly
adopted by the Board of Directors acting at a duly convened meeting and approved
by the requisite votes of the stockholders of the Corporation entitled to vote
thereon voting at a duly convened meeting.
2. Said amendment amends the first paragraph of Article Fourth of the
Certificate of Incorporation so that, as amended, said first paragraph of
Article Fourth, in its entirety, shall read as follows:
"Fourth: The total number of shares of capital stock of all classes
which the Corporation shall have authority to issue is 88,358,189 shares,
which shall be divided as follows: (i) 50,000,000 shares of Class A common
stock, par value $.01 per share (the "Class A Common Stock"), (ii)
28,358,189 shares of Class B common stock, par value $.01 per share (the
"Class B Common Stock"), and (iii) 10,000,000 shares of preferred stock,
par value $.01 per share (the "Preferred Stock"). "Common Stock", when
used herein, shall mean the Class A Common Stock and the Class B Common
Stock together."
3. Said amendment amends the second sentence of the first paragraph of
Section 4.A.5. of the Certificate of Incorporation so that, as amended, said
sentence, in its entirety, shall read as follows:
"Upon such conversion, the total number of shares of Class A Common
Stock the Corporation shall have authority to issue shall be 78,358,189 and
the total number of shares of Class B Common Stock the Corporation shall
have authority to issue shall be zero."
<PAGE>
IN WITNESS WHEREOF, ZEBRA TECHNOLOGIES CORPORATION has caused this
Certificate of Amendment to be executed this 25th day of June, 1997.
ZEBRA TECHNOLOGIES CORPORATION
By: /s/ Edward L. Kaplan
-----------------------------------
Edward L. Kaplan
Chairman and Chief Executive Officer
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<PAGE>
Zebra Technologies Corporation
August 11, 1997
Page 1
August 11, 1997
Zebra Technologies Corporation
333 Corporate Woods Parkway
Vernon Hills, Illinois 60061
Re: Registration Statement on Form S-3
----------------------------------
Ladies and Gentlemen:
We have acted as counsel for Zebra Technologies Corporation, a Delaware
corporation (the "Company"), and certain stockholders of the Company (the
"Selling Stockholders") in connection with the preparation and filing of a
Registration Statement on Form S-3 (the "Registration Statement") with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended. The Registration Statement relates to 2,364,795 shares of the
Company's Class A Common Stock, $.01 par value per share (the "Class A Common
Stock").
In connection with this opinion, we have relied as to matters of fact,
without investigation, upon certificates of public officials and others and
upon affidavits, certificates and written statements of directors, officers
and employees of, and the accountants for, the Company. We have also
examined originals or copies, certified or otherwise identified to our
satisfaction, of such instruments, documents and records as we have deemed
relevant and necessary to examine for the purpose of this opinion, including
(a) the Registration Statement, (b) the proposed Underwriting Agreement among
the Company, the Selling Stockholders and William Blair & Company, The
Robinson-Humphrey Company Inc. and Montgomery Securities (the "Underwriting
Agreement"), (c) the Certificate of Incorporation of the Company, as amended,
(d) the By-laws of the Company, as amended, and (e) resolutions adopted by
the Board of Directors of the Company.
In connection with this opinion, we have assumed the accuracy and
completeness of all documents and records that we have reviewed, the genuineness
of all signatures, the due authority of the parties signing such documents, the
authenticity of the documents submitted to us as originals and the conformity to
authentic original documents of all documents submitted to us as certified,
conformed or reproduced copies.
<PAGE>
Zebra Technologies Corporation
August 11, 1997
Page 2
Based upon and subject to the foregoing, it is our opinion that:
(1) The Company is a corporation duly incorporated and existing under
the laws of the State of Delaware.
(2) The 2,364,795 shares of Class A Common Stock covered by the
Registration Statement, when sold by the Selling Stockholders in
accordance with the provisions of the Underwriting Agreement,
will be legally issued, fully paid and non-assessable shares of
Class A Common Stock.
We hereby consent to the reference to our name in the Registration
Statement under the caption "Legal Matters" and further consent to the inclusion
of this opinion as Exhibit 5 to the Registration Statement.
Very truly yours,
/s/ Katten Muchin & Zavis
KATTEN MUCHIN & ZAVIS
<PAGE>
EXHIBIT 24.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Zebra Technologies Corporation:
We consent to the use of our reports dated February 7, 1997 on the consolidated
financial statements and schedule of Zebra Technologies Corporation and
subsidiaries as of December 31, 1996 and 1995, and for each of the years in the
three-year period ended December 31, 1996 incorporated herein by reference and
to the reference to our firm under the headings "Selected Financial Data" and
"Experts" in the prospectus.
KPMG Peat Marwick LLP
Chicago, Illinois
August 8, 1997
<PAGE>
EXHIBIT 24.2
LETTER REGARDING UNAUDITED
INTERIM FINANCIAL INFORMATION
Zebra Technologies Corporation
333 Corporate Woods Parkway
Vernon Hills, Illinois 60061-3109
Ladies and Gentlemen:
With respect to the registration statement on Form S-3, we acknowledge our
awareness of the use therein of our reports dated April 15, 1997 and July 15,
1997 related to our reviews of interim financial information.
Pursuant to Rule 436(c) under the Securities Act of 1933, such reports are not
considered part of a registration statement prepared or certified by an
accountant or a report prepared or certified by an accountant within the meaning
of sections 7 and 11 of the Act.
Very truly yours,
KPMG Peat Marwick LLP
Chicago, Illinois
August 8, 1997
