EXHIBIT 1
1,200,000 Shares
PJ AMERICA, INC.
Common Stock
UNDERWRITING AGREEMENT
----------------------
July ____, 1997
XXXXXXXXXX SECURITIES
ALEX. XXXXX & SONS INCORPORATED
c/x Xxxxxxxxxx Securities
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Dear Sirs:
SECTION 1. Introductory. PJ America, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell 750,000 shares of its authorized but
unissued Common Stock, $.01 par value per share (the "Common Stock"), and
certain stockholders of the Company named in Schedule B annexed hereto (the
"Selling Stockholders") propose to sell an aggregate of 450,000 shares of the
Company's issued and outstanding Common Stock to the underwriters named in
Schedule A annexed hereto (the "Underwriters"). Said shares, aggregating a total
of 1,200,000 shares, are herein referred to as the "Firm Common Shares." In
addition, the Company proposes to grant to the Underwriters an option to
purchase up to 180,000 additional shares of Common Stock (such 180,000 shares
being referred to as the "Optional Common Shares"), as provided in Section 5
hereof. The Firm Common Shares and, to the extent such option is exercised, the
Optional Common Shares are hereinafter collectively referred to as the "Common
Shares."
You have advised the Company and the Selling Stockholders that the
Underwriters propose to make a public offering of the Common Shares on the
effective date of the registration statement hereinafter referred to, or as soon
thereafter as in their judgment is advisable.
The Company and the Selling Stockholders hereby confirm their respective
agreements with respect to the purchase of the Common Shares by the Underwriters
as follows:
SECTION 2. Representations and Warranties of the Company. The Company
hereby represents and warrants to the Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-________) with
respect to the Common Shares has been prepared by the Company in conformity
with the requirements of the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") thereunder, and has
been filed with the Commission. The Company has met all of the eligibility
requirements for the use of a registration statement on Form S-1. There
have been delivered to the Underwriters two signed copies of such
registration statement and amendments, together with two copies of each
exhibit filed therewith. Conformed copies of such registration statement
and amendments (but without exhibits) and of the related preliminary
prospectus have been delivered to each of the Underwriters in such
reasonable quantities as each of them has requested. The Company will next
file with the
Commission one of the following: (i) prior to effectiveness of such
registration statement, a further amendment thereto, including the form of
final prospectus, or (ii) a final prospectus in accordance with Rules 430A
and 424(b) of the Rules and Regulations. As filed, such amendment and form
of final prospectus, or such final prospectus, shall include all Rule 430A
Information and, except to the extent that the Underwriters shall agree in
writing to a modification, shall be in all substantive respects in the form
furnished to the Underwriters prior to the date and time that this
Agreement was executed and delivered by the parties hereto, or, to the
extent not completed at such date and time, shall contain only such
specific additional information and other changes (beyond that contained in
the latest Preliminary Prospectus) as the Company shall have previously
advised the Underwriters would be included or made therein.
The term "Registration Statement" as used in this Agreement shall mean
such registration statement at the time such registration statement becomes
effective and, in the event any post-effective amendment thereto becomes
effective prior to the First Closing Date (as hereinafter defined), shall
also mean such registration statement as so amended; provided, however,
that such term shall also include all Rule 430A Information deemed to be
included in such registration statement at the time such registration
statement becomes effective as provided by Rule 430A of the Rules and
Regulations. Any registration statement filed by the Company pursuant to
Rule 462(b) under the Securities Act is called the "Rule 462(b)
Registration Statement", and from and after the date and time of filing of
the Rule 462(b) Registration Statement, the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. The term "Preliminary
Prospectus" shall mean any preliminary prospectus referred to in the
preceding paragraph and any preliminary prospectus included in the
Registration Statement at the time it becomes effective that omits Rule
430A Information. The term "Prospectus" as used in this Agreement shall
mean the prospectus relating to the Common Shares in the form in which it
is first filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations or, if no filing pursuant to Rule 424(b) of the Rules and
Regulations is required, shall mean the form of final prospectus included
in the Registration Statement at the time such registration statement
becomes effective. The term "Rule 430A Information" means information with
respect to the Common Shares and the offering thereof permitted to be
omitted from the Registration Statement when it becomes effective pursuant
to Rule 430A of the Rules and Regulations. All references in this Agreement
to the Registration Statement, the Rule 462(b) Registration Statement, a
Preliminary Prospectus, or the Prospectus, or any amendments or supplements
to any of the foregoing, shall include a copy thereof filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval System ("XXXXX").
(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus, and each Preliminary Prospectus has
conformed in all material respects to the requirements of the Act and the
Rules and Regulations and, as of its date, has not included any untrue
statement of a material fact or omitted to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; and at the time the Registration
Statement becomes effective, and at all times subsequent thereto up to and
including each Closing Date hereinafter mentioned, the Registration
Statement and the Prospectus, and any amendments or supplements thereto,
will contain all material statements and information required to be
included therein by the Act and the Rules and Regulations and will in all
material respects conform to the requirements of the Act and the Rules and
Regulations, and neither the Registration Statement nor the Prospectus, nor
any amendment or supplement thereto, will include any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light
of circumstances under which they were made; provided, however, no
representation or warranty contained in this subsection
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2(b) shall be applicable to information contained in or omitted from any
Preliminary Prospectus, the Registration Statement, the Prospectus or any
such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by or on behalf of either
Underwriter specifically for use in the preparation thereof.
(c) The Company does not own or control, directly or indirectly, any
corporation, association or other entity other than the subsidiaries listed
in Exhibit 21 to the Registration Statement, and any reference herein to
the Company's "subsidiaries" shall mean the subsidiaries listed in such
Exhibit 21. The Company and each of the subsidiaries have been duly
incorporated and are validly existing as corporations in good standing
under the laws of their respective jurisdictions of incorporation, with
full corporate power and authority (corporate and other) to own and lease
their properties and conduct their respective businesses as described in
the Prospectus; on the First Closing Date, the Company will own all of the
outstanding capital stock of its subsidiaries; the Company and its
subsidiaries are in possession of and are operating in compliance with all
authorizations, licenses, permits, consents, certificates and orders
material to the conduct of their respective businesses, except where
noncompliance would not have a material adverse effect on the business or
financial condition of the Company and its subsidiaries, taken as a whole;
the Company and each of its subsidiaries are duly qualified to do business
and are in good standing as foreign corporations in each jurisdiction in
which the ownership or leasing of properties or the conduct of their
respective businesses requires such qualification, except for jurisdictions
in which the failure to so qualify would not have a material adverse effect
upon the Company and its subsidiaries taken as a whole; and no proceeding
has been instituted in any such jurisdiction revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and
authority or qualification.
(d) The Company has an authorized and outstanding capital stock as
set forth under the heading "Capitalization" in the Prospectus; the issued
and outstanding shares of Common Stock have been duly authorized and
validly issued, are fully paid and nonassessable, have been issued in
compliance with all federal and state securities laws, were not issued in
violation of or subject to any preemptive rights or other rights to
subscribe for or purchase securities, and conform to the description
thereof contained under the heading "Description of Capital Stock" in the
Prospectus. As of the Closing Dates (as hereinafter defined), the Company
will have no outstanding shares of preferred stock. All issued and
outstanding shares of capital stock of the Company's subsidiaries have been
duly authorized and validly issued and are fully paid and nonassessable and
are owned by the Company free and clear of any lien, claim, equity or other
encumbrance of any kind or character. Except as disclosed in or
contemplated by the Prospectus and the financial statements of the Company
and its subsidiaries, and the related notes thereto, included in the
Prospectus, neither the Company nor any of its subsidiaries has outstanding
any options to purchase, or any preemptive rights or other rights to
subscribe for or to purchase, any securities or obligations convertible
into, or any contracts or commitments to issue or sell, shares of its
capital stock or any such options, rights, convertible securities or
obligations. The description of the Company's outstanding stock options,
and other stock plans or arrangements, and the options or other rights
granted and exercised thereunder, set forth in the Prospectus, accurately
and fairly presents in all material respects the information required to be
shown with respect to such options, plans, arrangements, and rights.
(e) The Common Shares to be sold by the Company have been duly
authorized and, when issued, delivered and paid for in the manner set forth
in this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, and will conform to the description thereof contained in the
Prospectus; and when duly countersigned by the Company's transfer agent and
registrar, and
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delivered to the Underwriters in accordance with the provisions of this
Agreement, good and valid title thereto will pass to the Underwriters free
and clear of any liens, claims, equities or other encumbrances of any kind
or character. No preemptive rights or other rights to subscribe for or
purchase exist with respect to the issuance and sale of the Common Shares
by the Company pursuant to this Agreement. There are no persons with
registration or other similar rights to have any equity or debt securities
registered for sale under the Registration Statement or included in the
offering contemplated by this Agreement other than the Selling Stockholders
with respect to the Common Shares included in the Registration Statement
and other persons whose rights have been duly waived.
(f) The Company has full legal right, power and authority to enter
into this Agreement and perform the transactions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by the Company
and constitutes a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except to the extent that
(i) the validity and binding effect and enforcement of this Agreement may
be limited by any applicable bankruptcy, reorganization, moratorium, or
similar laws of general application, (ii) the availability of equitable
remedies may be limited by principles of equity, whether considered in a
proceeding at law or in equity, and (iii) the terms thereof may be limited
by applicable securities laws and the policies embodied therein. The making
and performance of this Agreement by the Company and the consummation of
the transactions herein contemplated by the Company or the performance by
the Company of the transactions contemplated hereby does not (i) require
any consent, approval, authorization or order of or registration or filing
with any court, regulatory body, administrative agency or other
governmental body, agency or official (except such as may be required for
the registration of the Common Shares under the Act and compliance with the
securities or Blue Sky laws and Canadian securities laws, and the clearance
of the public offering of the Common Shares by the National Association of
Securities Dealers, Inc. (the "NASD")), or conflict or will conflict with,
constitute or will constitute a breach of, or a default under, the
Certificate or Articles of Incorporation, or Bylaws or other organizational
documents of the Company or any of its subsidiaries, (ii) conflict or will
conflict or constitute or will constitute a breach of or a default under
any agreement, indenture, lease or other instrument to which the Company or
any of its subsidiaries is a party or by which any of them or any of their
respective properties may be bound (except for such conflicts, breaches or
defaults for which waivers or consents have been obtained), or violate or
will violate any statute, law, regulation or filing or judgment,
injunction, order or decree applicable to the Company or any of its
subsidiaries or any of the their respective properties, or will result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant to
the terms of any agreement or instrument to which any of them is a party or
by which any of the them may be bound or to which any of the property or
assets of any of them is subject, in each case, except for such conflicts,
breaches, defaults, violations, or encumbrances that would not singly or in
the aggregate have a material adverse effect the ability of the Company.
(g) Ernst & Young, who have expressed their opinion with respect to
the financial statements filed with the Commission as a part of the
Registration Statement and included in the Prospectus and in the
Registration Statement, are independent accountants as required by the Act
and the Rules and Regulations.
(h) The Consolidated Financial Statements and the related notes
thereto of PJ America and Subsidiary, the Financial Statements of Ohio
Pizza Delivery Co., and the Supplemental Consolidated PJ America, Inc.
Financial Statements included in the Registration Statement and the
Prospectus present fairly the financial position of the
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corporations covered by such financial statements, respectively, as of the
respective dates of such financial statements, and the results of
operations and changes in financial position of the corporations covered by
such financial statements, respectively, for the respective periods covered
thereby. Such financial statements and related notes have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis and have been certified by Ernst & Young, the Company's
independent accountants. The unaudited financial data for the fiscal year
ended December 28, 1992, and for the three months ended March 29, 1996 and
March 30, 1997 set forth in the Prospectus under the caption "Selected
Consolidated Financial Data" have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis. The
selected financial data under the caption "PJ America Supplemental for the
fiscal years ended December 31, 1995 and December 29, 1996, and for the
three months ended March 29, 1996 and March 30, 1997 present fairly the
financial position of the corporations covered by such data, respectively,
as of such dates, have been derived from the financial statements of the
corporations covered by such financial statements, respectively, and have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis, subject to normal year end adjustments
consistent with past practice. The pro forma financial information included
in the Prospectus has been prepared in accordance with the applicable
requirements of Rules 11-01 and 11-02 of Regulation S-X under the Act and
the Rules and Regulations and American Institute of Certified Public
Accountant guidelines with respect to pro forma financial information, has
been properly compiled on the pro forma basis described therein, and in the
opinion of the Company, the assumptions used in preparation thereof are
reasonable and the adjustments therein are appropriate. No other financial
statements, schedules or financial information are required to be included
in the Registration Statement. The financial and statistical data set forth
in the Prospectus under the captions "Prospectus Summary," "Prior S
Corporation Status of Predecessor Companies," "Risk Factors," "Use of
Proceeds," "Dividend Policy," "Price Range of Common Stock,"
"Capitalization," "Selected Consolidated Financial Data," "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Business," "Management," "Certain Transactions," "Principal and Selling
Stockholders" and "Shares Eligible for Future Sale" fairly present the
information set forth therein on the basis stated in the Registration
Statement.
(i) The Company is not in violation or default of any provision of
its Restated Certificate of Incorporation; none of the Company's
subsidiaries is in violation or default of its Certificate of
Incorporation; neither the Company nor any of its subsidiaries is in
violation or default of any provision of its Bylaws or is in breach of or
default with respect to any provision of any judgment, decree or order, or
is in breach of or default with respect to any provision of any material
agreement, mortgage, deed of trust, lease, loan agreement, security
agreement, license, indenture, permit or other instrument to which it is a
party or by which it or any of its properties are bound; and there does not
exist any state of facts which constitutes an event of default on the part
of the Company or any of its subsidiaries as defined in such documents or
which, with notice or lapse of time or both, would constitute such an event
of default.
(j) There are no contracts or other documents required to be
described in the Registration Statement or to be filed as exhibits to the
Registration Statement by the Act or by the Rules and Regulations which
have not been described or filed as required. The contracts so described in
the Prospectus are in full force and effect on the date hereof; and neither
the Company nor any of its subsidiaries, nor to the best of the Company's
or any subsidiaries's knowledge any other party, is in breach of or default
under any material provision of any such contract which would have a
material adverse effect on the Company and its subsidiaries, taken as a
whole.
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(k) There are no legal or governmental actions, suits or proceedings
pending or, to the best of the Company's knowledge, threatened to which the
Company or any of its subsidiaries is or may be a party or with respect to
which property owned or leased by the Company or any of its subsidiaries is
or may be the subject, or related to environmental, employment of aliens or
discrimination matters, which actions, suits or proceedings might,
individually or in the aggregate, prevent or adversely affect the
transactions contemplated by this Agreement or result in a material adverse
change in the condition (financial or otherwise), properties, business,
results of operations or prospects of the Company and its subsidiaries
taken as a whole, and no labor disturbance by the employees of the Company
or its subsidiaries exists or, to the knowledge of the Company or any of
its subsidiaries is imminent which might be expected to result in a
material adverse change in the condition (financial or otherwise),
properties, business, results of operations or prospects of the Company or
any of its subsidiaries taken as a whole. Neither the Company, any of its
subsidiaries is a party to, or subject to the provisions of, any material
injunction, judgment, decree or order of any court, regulatory body,
administrative agency or other governmental body.
(l) The Company and each of its subsidiaries have good and marketable
title to all the properties and assets reflected as owned by them,
respectively, in the financial statements hereinabove described (or as
reflected or described elsewhere in the Prospectus), subject to no lien,
mortgage, pledge, charge or encumbrance of any kind except (i) those, if
any, reflected in such financial statements (or elsewhere in the
Prospectus), or (ii) those which do not materially adversely affect the use
made and proposed to be made of such property by the Company or any of its
subsidiaries. The Company and each of its subsidiaries hold their
respective leased properties under valid and binding leases, with such
exceptions as are not materially significant in relation to the business of
the Company or its subsidiaries. Except as disclosed in the Prospectus,
the Company and each of its subsidiaries own or lease all such properties
as are necessary to their respective operations as now conducted.
(m) Since the respective dates as of which information is given in
the Registration Statement and Prospectus, and except as described in or
specifically contemplated by the Prospectus (i) neither the Company nor any
of its subsidiaries has incurred any liabilities or obligations, direct,
indirect or contingent, or entered into any verbal or written agreement or
other transaction which is not in the ordinary course of business and which
reasonably could be expected to result in a material reduction in the
future earnings of the Company or its subsidiaries taken as a whole; (ii)
the Company and its subsidiaries taken as a whole, have not sustained any
material loss or interference with their respective businesses or
properties from fire, flood, windstorm, accident or other calamity, whether
or not covered by insurance; (iii) the Company has not paid or declared any
dividends or other distributions with respect to its capital stock, and the
Company and its subsidiaries are not in default in the payment of principal
or interest on any outstanding debt obligations; (iv) there has not been
any change in the capital stock (other than upon the sale of the Common
Shares hereunder) or indebtedness material to the Company; and (v) there
has not been any material adverse change in the condition (financial or
otherwise), business, properties, results of operations or prospects of the
Company or its subsidiaries taken as a whole.
(n) The Company and its subsidiaries have sufficient trademarks,
trade names, patent rights, mask works, copyrights, licenses, approvals and
governmental authorizations to conduct their respective businesses as now
conducted; and the Company has no knowledge of any infringement by it or
its subsidiaries of trademarks, trade name rights, trade dress, patent
rights, mask works, copyrights, licenses, trade secret or other similar
rights of others; and except as disclosed in the Prospectus, the Company
has no knowledge of any infringement by others of "Papa John's" as a
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service xxxx, "Pizza Papa John's" and design as a trademark, and "Pizza
Papa John's Delivering the Perfect Pizza!" and design as a trademark and as
a servicemark, or of the Company's or its subsidiaries' trademarks, trade
name rights, trade dress, patent rights, mask works, copyrights, licenses,
trade secrets or other similar rights that would be material to the
business or financial condition of the Company and its subsidiaries taken
as a whole; and there is no claim being made against the Company or any of
its subsidiaries regarding trademark, trade name, trade dress, patent
right, mask work, copyright, license, trade secret or other infringement
which could have a material adverse effect on the condition (financial or
otherwise), business, results of operations or prospects of the Company and
its subsidiaries, taken as a whole.
(o) The Company has not been advised, and has no reason to believe,
that either it or any of its subsidiaries is not conducting business in
compliance with all applicable laws, rules and regulations of the
jurisdictions in which it is conducting business, including, without
limitation, all applicable local, state and federal employment, truth-in-
advertising, franchising, immigration and environmental laws and
regulations, except where failure to be so in compliance would not
materially adversely affect the condition (financial or otherwise),
business, results of operations or prospects of the Company and its
subsidiaries taken as a whole.
(p) The Company and each of its subsidiaries have filed all federal,
state and foreign income and franchise tax returns or extensions therefor
required to be filed and have paid all taxes shown as due thereon; and the
Company has no knowledge of any tax deficiency which has been or might be
asserted or threatened against the Company or any of its subsidiaries which
could materially and adversely affect the business, operations or
properties of the Company and its subsidiaries taken as a whole.
(q) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets;
and (iii) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with respect
to any differences.
(r) The Company is not required to make, and following receipt of the
proceeds from the sale of the Common Shares will not be required to make,
any filing or to register under the Investment Company Act of 1940, as
amended.
(s) There is no proceeding pending or threatened (or, to the
knowledge of the Company or any of its subsidiaries or any officer of the
Company or its subsidiaries, any basis therefor) which may lead to the
revocation, suspension, termination or nonrenewal or any certificate,
order, license, permit, easement, consent, waiver, approval, franchise,
grant, authorization or concession required to conduct the business of the
Company or its subsidiaries as now conducted and as proposed to be
conducted and which are material to the Company and its subsidiaries taken
as a whole.
(t) The Company does not sell alcoholic beverages at any of the
Company's restaurants.
(u) There is no proceeding pending or threatened (or to the knowledge
of the Company or any of its officers, any basis therefor) which may lead
to the delisting or suspension from trading of the Common stock on the
Nasdaq National Market.
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(v) Neither the Company, any subsidiary of the Company nor any of the
Roll-Up Entities conducts business with the Government of Cuba, or in Cuba
or with any Cuban business entity or enterprise.
(w) No transfer taxes are required to be paid under the laws of the
Commonwealth of Kentucky or the States of Alabama or Virginia in connection
with the sale and delivery of the Common Shares to the Underwriters
hereunder.
SECTION 3. Additional Representations, Warranties and Covenants of the
Selling Stockholders.
(a) Each of the Selling Stockholders severally represents and warrants
to, and agrees with, the several Underwriters that:
(i) Such Selling Stockholder has good and valid title to the
Common Shares proposed to be sold by such Selling Stockholder
hereunder and the full right, power and authority to enter into this
Agreement and to sell, assign, transfer and deliver such Common Shares
hereunder, free and clear of all liens, claims, equities or other
encumbrances of any kind or character; and upon delivery of and
payment for such Common Shares hereunder, the Underwriters will
acquire good and valid title thereto, free and clear of all liens,
claims, equities or other encumbrances of any kind or character.
(ii) Such Selling Stockholder has executed and delivered a Power
of Attorney and a Custody Agreement (hereinafter collectively referred
to as the "Stockholders' Agreement") and in connection herewith such
Selling Stockholder further represents, warrants and agrees that such
Selling Stockholder has deposited in custody, under the Stockholders'
Agreement, with the agent named therein (the "Agent") as custodian,
certificates in negotiable form for the Common Shares to be sold
hereunder by such Selling Stockholder for the purpose of further
delivery pursuant to this Agreement. Such Selling Stockholder agrees
that the Common Shares to be sold by such Selling Stockholder on
deposit with the Agent are subject to the interests of the Company and
the Underwriters, that the arrangements made for such custody are in
that extent irrevocable, and that the obligations of such Selling
Stockholder hereunder shall not be terminated, except as provided in
this Agreement or in the Stockholders' Agreement, by any act of such
Selling Stockholder, by operation of law, by the death or incapacity
of such Selling Stockholder or by the occurrence of any other event.
If the Selling Stockholder should die, become incapacitated, or if any
other event should occur before the delivery of the Common Shares
hereunder, the certificates and documents evidencing Common Shares
then on deposit with the Agent shall be delivered by the Agent in
accordance with the terms and conditions of this Agreement as if such
death, incapacity or other event had not occurred, regardless of
whether the Agent shall have received notice thereof. This Agreement
and the Stockholders' Agreement have been duly executed and delivered
by or on behalf of such Selling Stockholder and the form of such
Stockholders' Agreement has been delivered to you.
(iii) The performance of this Agreement and the Stockholders'
Agreement and the consummation of the transactions contemplated hereby
and by the Stockholders' Agreement will not result in a breach or
violation by such Selling Stockholder of any of the terms or
provisions of, or constitute a default by, such Selling Stockholder
under any indenture, mortgage, deed of trust, trust (constructive or
other), loan agreement, lease, franchise, license or other agreement
or instrument to which such Selling Stockholder is a
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party or by which such Selling Stockholder or any of his properties is
bound, or any statute, judgment, decree, order, rule or regulation of
any court or governmental agency or body applicable to such Selling
Stockholder or any of his properties.
(iv) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action designed to, or which has
constituted or which might reasonably be expected to cause or result
in, stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Common Shares.
(v) Each Preliminary Prospectus and the Prospectus, respectively,
has conformed or conform, as the case may be, in all material respects
to the requirements of the Act and the Rules and Regulations and has
not included any untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein not
misleading in light of the circumstances under which they were made;
and neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto will include any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
(vi) The representations and warranties of the Company set forth
in Section 2 above are true and correct in all material respects.
(vii) Such Selling Stockholder has reviewed and is familiar
with the Registration Statement as originally filed with the
Commission, and as amended through the date hereof, and the
Preliminary Prospectus dated June ____, 1997; to the best knowledge of
such Selling Stockholder, neither the registration Statement nor such
Preliminary Prospectus contains any untrue statement of a material
fact or omits to state any material fact necessary in order to make
the statements therein in light of the circumstances in which
presented not misleading; and such Selling Stockholder is not prompted
to sell the Securities to be sold by such Selling Stockholder
hereunder by any information concerning the Company which is not set
forth in the Prospectus.
(b) Each of the Selling Stockholders agrees with the Company and the
Underwriters not to offer to sell, sell or contract to sell or otherwise
dispose of any shares of Common Stock or securities convertible into or
exchangeable for any shares of Common Stock for a period of 120 days from
the date of the Prospectus without the prior written consent of either
Xxxxxxxxxx Securities or the Underwriters acting jointly (the giving or
withholding of such consent being in the sole discretion of Xxxxxxxxxx
Securities, or the Underwriters acting jointly, as the case may be).
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 (i) on the cover page of the Prospectus with
respect to price, underwriting discounts and commissions and terms of the
offering and (ii) under "Underwriting" in the Prospectus furnished to the
Company by the Underwriters for use in connection with the preparation of the
Registration Statement and the Prospectus is correct in all material respects.
The Company and the Selling Stockholders acknowledge that this information is
the sole information furnished to the Company by the Underwriters for inclusion
in the Registration Statement, any Preliminary Prospectus, any Prospectus, or
any amendment or supplement thereto.
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SECTION 5. Purchase, Sale and Delivery of Common Shares. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Company agrees to issue and sell
to the Underwriters 750,000 Firm Common Shares, and the Selling Stockholders
agree to sell to the Underwriters the number of Firm Common Shares set forth
beside such Selling Stockholders' name on Schedule B hereto, aggregating 450,000
Firm Common Shares, and the Underwriters agree, severally and not jointly, to
purchase from the Company and the Selling Stockholders the number of Firm Common
Shares set forth opposite their respective names in Schedule A hereto. The
purchase price per share to be paid by the several Underwriters to the Company
and the Selling Stockholders shall be $_________ per share.
Delivery of certificate(s) for the Firm Common Shares to be purchased by
the Underwriters shall be made by or on behalf of the Company and the Selling
Stockholders to the Underwriters or to the account of Xxxxxxxxxx Securities at
the Depositary Trust Corporation, New York, New York ("DTC"), as the
Representatives may direct, for the respective accounts of Underwriters. In the
event certificates are delivered to the Underwriters other than through DTC,
such delivery shall be made at the offices of Xxxxxxxxxx Xxxx & XxXxxxxx, 0000
Xxxxxxxx Xxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxx 00000-0000 (or such other place as
may be agreed upon by the Company, the Selling Stockholders and the
Representatives). Delivery of certificates, whether through DTC or otherwise,
shall be made at such time and date, not later than the third (or, if the Firm
Common Shares are priced, as contemplated by Rule 15cb-1(c) promulgated under
the Securities Exchange Act of 1934, as amended, after 4:30 p.m., Washington,
D.C. time, the fourth) full business day following the first day that any of
Common Shares are released by the Underwriters for sale to the public, as the
Representatives shall designate (the "First Closing Date"); provided, however,
that if the Prospectus is at any time prior to the First Closing Date
recirculated to the public, the First Closing Date shall occur upon the later of
the third or fourth, as the case may be, full business day following the first
date that any of the Common Shares are released by the Underwriters for sale to
public or the date that is 48 hours after the date that the Prospectus has been
so recirculated. The certificates for the Firm Common Shares shall be
registered in such names and denominations as the Representatives shall have
requested at least two full business days prior to the First Closing Date and
shall be made available for checking and packaging on the business day preceding
the First Closing Date at a location in New York, New York, as may be designated
by the Representatives. Time shall be of the essence, and delivery at the time
and place specified in this Agreement is a further condition to the obligations
of the Underwriters. Payment by the Underwriters for the purchase price for the
Firm Common Shares shall be made by wire transfer in immediately available funds
to [AmSouth Bank of Alabama, Birmingham, Alabama, account number 00000000 in the
case of the Company, and to National City Bank, Louisville, Kentucky, account
number 000-0000-0 in the case of the Selling Stockholders.]
In addition, on the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Company hereby grants an option to the Underwriters to purchase up to 180,000
Optional Common Shares, at the purchase price per share to be paid for the
Firm Common Shares, for use solely in covering any over-allotments made by the
Underwriters in the sale and distribution of the Firm Common Shares. The
options granted hereunder may be exercised at any time (but not more than once)
within 30 days after the first date that any of the Firm Common Shares are
released by the Underwriters for sale to the public upon notice by the
Underwriters to the Company and the Selling Stockholders setting forth the
aggregate number of Optional Common Shares as to which the Underwriters are
exercising the options, 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 the Underwriters, but
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if at any time other than the First Closing Date shall not be earlier than three
nor later than five full business days after delivery of such notice of
exercise. The number of Optional Common Shares to be purchased by each
Underwriter shall be determined by multiplying the aggregate number of Optional
Common Shares to be sold by the Company and the Selling Stockholders,
respectively, pursuant to such notice of exercise by a fraction, the numerator
of which is the number of Firm Common Shares to be purchased by such Underwriter
as set forth opposite its name in Schedule A and the denominator of which is
_________ (subject to such adjustments to eliminate any fractional share
purchases as the Underwriters in their discretion may make). Certificates for
the Optional Common Shares will be made available for checking and packaging on
the business day preceding the Second Closing Date at a location in New York,
New York, designated by you. The manner of payment for and delivery of the
Optional Common Shares shall be the same as for the Firm Common Shares
purchased, as specified in this Section 5. At any time before lapse of the
option, the Underwriters may cancel such option by giving written notice of such
cancellation to the Company and the Option Selling Stockholder. If the option is
canceled or expires unexercised in whole or in part, the Company will deregister
under the Act the number of Optional Common Shares as to which the option has
not been exercised.
Subject to the terms and conditions hereof, the Underwriters propose to
make a public offering of their respective portions of the Firm Common Shares,
and of the Optional Common Shares if and to the extent that the Underwriters
exercise their option to purchase Optional Common Shares, as soon after the
effective date of the Registration Statement as in the judgment of the
Underwriters is advisable and at the public offering price set forth on the
cover page of and on the terms set forth in the Prospectus.
Not later than 12:00 p.m. on the second business day following the date the
Common Shares are released by the Underwriters for sale to the public, the
Company shall deliver or cause to be delivered copies of the Prospectus in such
quantities and at such places as the Representatives shall request.
SECTION 6. Covenants of the Company. The Company covenants and agrees
------------------------
that:
(a) The Company will use its best efforts to cause the Registration
Statement and any amendment thereof, if not effective at the time and date
that this Agreement is executed and delivered by the parties hereto, to
become effective. If the Registration Statement has become or becomes
effective pursuant to Rule 430A of the Rules and Regulations, or the filing
of the Prospectus is otherwise required under Rule 424(b) of the Rules and
Regulations, the Company will file the Prospectus, properly completed,
pursuant to the applicable paragraph of Rule 424(b) of the Rules and
Regulations within the time period prescribed and will provide evidence
satisfactory to the Underwriters of such timely filing. The Company will
promptly advise the Underwriters in writing (i) of the receipt of any
comments of the Commission, (ii) of any request of the Commission for
amendment of or supplement to the Registration Statement (either before or
after it becomes effective), any Preliminary Prospectus or the Prospectus
or for additional information, (iii) when the Registration Statement shall
have become effective and (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or of
the institution of any proceedings for that purpose. If the Commission
shall enter any such stop order at any time, the Company will use its best
efforts to obtain the lifting of such order at the earliest possible
moment. The Company will not file any amendment or supplement to the
Registration Statement (either before or after it becomes effective), any
Preliminary Prospectus or the Prospectus of which the Underwriters have not
been furnished with a copy a reasonable time prior to such filing or to
which
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the Underwriters reasonably object in writing or which is not in compliance
with the Act and the Rules and Regulations.
(b) The Company will prepare and file with the Commission, promptly
upon the Underwriters' request, any amendments or supplements to the
Registration Statement or the Prospectus which in the Underwriters'
judgment may be necessary or advisable to enable the several Underwriters
to continue the distribution of the Common Shares and will use its best
efforts to cause the same to become effective as promptly as possible. The
Company will fully and completely comply with the provisions of Rule 430A
of the Rules and Regulations with respect to information omitted from the
Registration Statement in reliance upon such Rule.
(c) If at any time within the nine-month period referred to in
Section 10(a)(3) of the Act during which a prospectus relating to the
Common Shares is required to be delivered under the Act any event occurs,
as a result of which the Prospectus, including any amendments or
supplements, would include an untrue statement of a material fact, or omit
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, or if it is necessary at any
time to amend the Prospectus, including any amendments or supplements, to
comply with the Act or the Rules and Regulations, the Company will promptly
advise the Underwriters thereof and will promptly prepare and file with the
Commission, at its own expense, an amendment or supplement which will
correct such statement or omission or an amendment or supplement which will
effect such compliance and will use its best efforts to cause the same to
become effective as soon as possible; and, in case any Underwriter is
required to deliver a prospectus after such nine-month period, the Company,
upon request, but at the expense of such Underwriter, will promptly prepare
such amendment or amendments to the Registration Statement and such
Prospectus or Prospectuses as may be necessary to permit compliance with
the requirements of Section 10(a)(3) of the Act.
(d) As soon as practicable, but not later than 45 days after the end
of the first quarter ending after one year following the "effective date of
the Registration Statement" (as defined in Rule 158(c) of the Rules and
Regulations), the Company will make generally available to its security
holders an earnings statement (which need not be audited) covering a period
of 12 consecutive months beginning after the effective date of the
Registration Statement which will satisfy the provisions of the last
paragraph of Section 11(a) of the Act.
(e) During such period as a prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer, the
Company, at its expense, but only for the nine-month period referred to in
Section 10(a)(3) of the Act, will furnish to the Underwriters or mail
copies of the Registration Statement, the Prospectus, the Preliminary
Prospectus and all amendments and supplements to any such documents in
each case as soon as available and in such quantities as the Underwriters
may request, for the purposes contemplated by the Act.
(f) The Company shall cooperate with the Underwriters and their
counsel in order to qualify or register the Common Shares for sale under
(or obtain exemptions from the application of) the Blue Sky laws of such
jurisdictions as the Underwriters designate, will comply with such laws and
will continue such qualifications, registrations and exemptions in effect
so long as reasonably required for the distribution of the Common Shares.
The Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any such jurisdiction where
it is not presently qualified or where it would be subject to taxation as a
foreign corporation. The Company will advise the Underwriters promptly of
the suspension of the qualification or registration of (or any such
exemption relating to) the Common Shares for offering, sale or trading
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in any jurisdiction or any initiation or overt threat of any proceeding for
any such purpose, and in the event of the issuance of any order suspending
such qualification, registration or exemption, the Company, with the
Underwriters' cooperation, will use its best efforts to obtain the
withdrawal thereof.
(g) During the period of five years hereafter, the Company will
furnish to the Underwriters: (i) as soon as practicable after the end of
each fiscal year, copies of the Annual Report to Stockholders of the
Company containing the balance sheet of the Company as of the close of such
fiscal year and statements of income, stockholders' equity and cash flows
for the year then ended and the opinion thereon of the Company's
independent public accountants; (ii) as soon as practicable after the
filing thereof, copies of each proxy statement, Annual Report on Form 10-K,
Quarterly Report on Form 10-Q, Report on Form 8-K or other report filed by
the Company with the Commission, the NASD or any securities exchange; and
(iii) as soon as available, copies of any report or communication of the
Company mailed generally to holders of its Common Stock.
(h) During the period of 120 days from the date of the Prospectus,
without the prior written consent of either Xxxxxxxxxx Securities or the
Underwriters acting jointly (the giving or withholding of such written
consent being in the sole discretion of Xxxxxxxxxx Securities, or the
Underwriters acting jointly, as the case may be), the Company will not
issue, offer, sell, grant options to purchase or otherwise dispose of any
of the Company's equity securities or any other securities convertible into
or exchangeable with its Common Stock or other equity security, except for
(i) the grant of options in the ordinary course of business pursuant to
existing stock option plans described in the Prospectus, or (ii) the
issuance of shares of Common Stock pursuant to the exercise of director,
officer or employee stock options that are disclosed in the Registration
Statement or Prospectus and are outstanding on the date of the Prospectus;
or the issuance of up to a maximum of 350,000 shares of Common Stock for
the acquisition of additional Papa John's franchised restaurants.
(i) The Company will apply the net proceeds of the sale of the Common
Shares sold by it substantially in accordance with its statements under the
caption "Use of Proceeds" in the Prospectus.
(j) The Company will use its best efforts to qualify or register its
Common Stock for sale in non-issuer transactions under (or obtain
exemptions from the application of) the Blue Sky laws of the State of
California (and thereby permit market making transactions and secondary
trading in the Company's Common Stock in California), will comply with such
Blue Sky laws and will use its best efforts to maintain such
qualifications, registrations and exemptions in effect for a period of five
years after the date hereof.
The Representatives may, in their sole discretion and on behalf of the
Underwriters, waive in writing the performance by the Company of any one or more
of the foregoing covenants or extend the time for their performance.
SECTION 7. Payment of Expenses. Whether or not the transactions
contemplated hereunder are consummated or this Agreement becomes effective or is
terminated, the Company agrees to pay all costs, fees and expenses incurred in
connection with the performance of its obligations hereunder, including without
limiting the generality of the foregoing, (i) all expenses incident to the
issuance and delivery of the Common Shares (including all printing and engraving
costs), (ii) all fees and expenses of the registrar and transfer agent of the
Common Stock, (iii) all necessary issue, transfer and other stamp taxes in
connection with the issuance and sale of the Common Shares to the Underwriters,
(iv) all fees and expenses of the Company's counsel, Selling Stockholders'
counsel and the Company's independent accountants, (v) all costs and expenses
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incurred in connection with the preparation, printing, filing, shipping and
distribution to the Underwriters and dealers of the Registration Statement, each
Preliminary Prospectus and the Prospectus (including all exhibits and financial
statements) and all amendments and supplements provided for herein, this
Agreement, the Agreement Among Underwriters, the Selected Dealers Agreement, the
Underwriters' Questionnaire, the Underwriters' Power of Attorney and the
preliminary Blue Sky memorandum and final Blue Sky memorandum, (vi) all filing
fees, attorneys' fees and expenses incurred by the Company or the Underwriters
in connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Common Shares for offer
and sale under the Blue Sky laws and applicable Canadian securities laws, (vii)
the filing fee of the NASD and attorneys fees and expenses incurred by the
Company or the Underwriters in obtaining a letter of no objection from the NASD,
and (viii) all other fees, costs and expenses referred to in Item 13 of the
Registration Statement. Except as provided in this Section 7, Section 9 and
Section 11 hereof, the Underwriters shall pay all of their own expenses,
including the fees and disbursements of their counsel (excluding those relating
to qualification, registration or exemption under the Blue Sky laws, Canadian
securities laws, the Blue Sky memoranda and relating to obtaining a letter of no
objection from the NASD, referred to above).
SECTION 8. Conditions of the Obligations of the Underwriters. The
obligations of the Underwriters to purchase and pay for the Firm Common Shares
on the First Closing Date and the Optional Common Shares on the Second Closing
Date shall be subject to the accuracy of the representations and warranties on
the part of the Company and the Selling Stockholders herein set forth as of the
date hereof and as of the First Closing Date or the Second Closing Date, as the
case may be, to the accuracy of the statements of Company officers and the
Selling Stockholders made pursuant to the provisions of this Agreement, 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; if the
filing of the Prospectus, or any supplement thereto, is required pursuant
to Rule 424(b) of the Rules and Regulations, the Prospectus shall have been
filed in the manner and within the time period required by Rule 424(b) of
the Rules and Regulations; and prior to such Closing Date, no stop order
suspending the effectiveness of the Registration Statement, any Rule 462(b)
Registration Statement or any post-effective amendment to 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 the Underwriters, shall be
contemplated by the Commission; and any request of the Commission for
inclusion of additional information in the Registration Statement, or
otherwise, shall have been complied with to the Underwriters' satisfaction.
(b) The Underwriters shall be satisfied that since the respective
dates as of which information is given in the Registration Statement and
Prospectus, (i) there shall not have been any change in the capital stock
(other than pursuant to the exercise of director, officer or employee stock
options disclosed in the Registration Statement or Prospectus and
outstanding as of the date of the Prospectus) of the Company or its
subsidiaries or any material change in the indebtedness of the Company or
its subsidiaries, (ii) except as set forth in or contemplated by the
Registration Statement or the Prospectus, no material verbal or written
agreement or other transaction shall have been entered into by the Company
or its subsidiaries which is not in the ordinary course of business and
which reasonably could be expected to result in a material reduction in the
future earnings of the Company or its subsidiaries, taken as a whole, (iii)
no loss or damage (whether or not insured) to the property of the Company
or its subsidiaries shall have been sustained which materially and
adversely affects the condition (financial or otherwise), business, results
of operations or prospects of the Company or its subsidiaries, taken as a
whole, (iv) no legal or governmental action, suit or
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proceeding affecting the Company or its subsidiaries which could have a
material adverse effect upon the Company and its subsidiaries, taken as a
whole, or which affects or may affect the transactions contemplated by this
Agreement shall have been instituted or threatened and (v) there shall not
have been any material change in the condition (financial or otherwise),
business, management, results of operations or prospects of the Company and
its subsidiaries taken as a whole which makes it impractical or inadvisable
in the judgment of the Underwriters to proceed with the public offering or
purchase of the Common Shares as contemplated hereby.
(c) There shall have been furnished to the Underwriters on each
Closing Date, in form and substance satisfactory to the Underwriters, such
documents and certificates as the Underwriters shall reasonably request,
including the following:
(i) An opinion of Xxxxxxxxxx Xxxx & XxXxxxxx, counsel for the
Company and the Selling Stockholders, addressed to the Underwriters
and dated the First Closing Date, or the Second Closing Date, as the
case may be, to the effect that:
(1) Each of the Company and its subsidiaries, respectively,
has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction
of incorporation, is duly qualified to do business as a foreign
corporation and is in good standing in all other jurisdictions
where the ownership or leasing of properties or the conduct of
its business requires such qualification, except for
jurisdictions in which the failure to so qualify would not have a
material adverse effect on the Company or its subsidiaries, as
the case may be, and each has full corporate power and authority
to own its properties and conduct its business as described in
the Registration Statement;
(2) The authorized capital stock of the Company is as set
forth under the caption "Capitalization" in the Prospectus, and
the number of shares of Common Stock that will be issued and
outstanding after consummation of the transactions contemplated
hereby is as set forth under the caption "Prospectus Summary -
The Offering" (assuming the Underwriters do not elect to purchase
any of the Optional Common Shares); all necessary and proper
corporate proceedings have been taken in order to validly
authorize such authorized Common Stock and to validly issue such
issued and outstanding Common Stock; all outstanding shares of
Common Stock (including the Firm Common Shares and Optional
Common Shares, if any) have been duly and validly authorized and
issued, are fully paid and nonassessable, were not issued in
violation of any preemptive rights or other rights to subscribe
for or purchase any securities and conform to the description
thereof contained in the Prospectus; without limiting the
foregoing, there are no preemptive or other rights to subscribe
for or purchase any of the Common Shares to be sold by the
Company hereunder; neither the Restated Certificate of
Incorporation nor Bylaws of the Company, nor does any contract,
contain any restriction upon the voting or transfer of any of the
shares of capital stock of the Company (including the Firm Common
Shares and the Optional Common Shares), except such restrictions
as may be imposed by federal and state securities laws or as may
be expressly described in the Prospectus;
-15-
(3) All of the issued and outstanding shares of capital
stock of the Company's subsidiaries have been duly and validly
authorized and issued, are fully paid and nonassessable, and good
and valid title thereto is held by the Company free and clear of
all liens, claims, equities or other encumbrances of any kind or
character;
(4) The certificate(s) evidencing the Common Shares to be
delivered hereunder are in due and proper form under Delaware
law, and when duly countersigned by the Company's transfer agent
and registrar, and delivered to the Underwriters or to the order
of the Underwriters against payment of the agreed consideration
therefor in accordance with the provisions of this Agreement,
good and valid title to the Common Shares (including the Firm
Common Shares to be sold by the Company and the Optional Common
Shares to be sold by the Company to the extent that the over-
allotment option is exercised) will pass to the Underwriters free
and clear of any liens, claims, equities or other encumbrances of
any kind or character, and the Common Shares represented by such
certificate(s) will be duly authorized and validly issued, fully
paid and nonassessable, will not have been issued in violation of
or subject to any preemptive rights or other rights to subscribe
for or purchase securities, and will conform to the description
thereof contained in the Prospectus;
(5) Except as disclosed in the Prospectus, there are no
outstanding options, warrants or other rights calling for the
issuance of, and no commitments or obligations to issue, any
shares of capital stock of the Company or any security
convertible into or exchangeable for capital stock of the
Company;
(6) (a) The Registration Statement has become effective
under the Act, and, to such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement or
preventing the use of the Prospectus has been issued and no
proceedings for that purpose have been instituted or are pending
or overtly threatened by the Commission; any required filing of
the Prospectus and any supplement thereto pursuant to Rule 424(b)
of the Rules and Regulations has been made in the manner and
within the time period required by such Rule 424(b);
(b) The Registration Statement, the Prospectus and
each amendment or supplement thereto (except for the financial
statements and schedules and other statistical financial data and
schedules included therein, as to which such counsel need express
no opinion) comply as to form in all material respects with the
requirements of the Act and the Rules and Regulations; and
(c) To such counsel's knowledge, there are no
franchises, leases, contracts, agreements or documents of a
character required to be disclosed in the Registration Statement
or Prospectus or to be filed as exhibits to the Registration
Statement which are not disclosed or filed, as required;
(7) The Company has full right, corporate power and
authority to enter into this Agreement and to sell and deliver
the Common Shares to be sold by it to the Underwriters; this
Agreement has been duly and validly authorized by all
-16-
necessary corporate action by the Company, has been duly and
validly executed and delivered by and on behalf of the Company,
and is a valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, except to the
extent that (i) the validity and binding effect and enforcement
of this Agreement may be limited by any applicable bankruptcy,
reorganization, moratorium, or similar laws of general
application, (ii) the availability of equitable remedies may be
limited by principles of equity, whether considered in a
proceeding at law or in equity, and (iii) the terms hereof may be
limited by applicable securities laws and the policies embodied
therein; and no approval, authorization, order, consent,
registration, filing, qualification, license or permit of or with
any court, regulatory, administrative or other governmental body
is required for the execution and delivery of this Agreement by
the Company or the consummation of the transactions contemplated
by this Agreement, except such as have been obtained and are in
full force and effect under the Act and such as may be required
under applicable Blue Sky laws and applicable Canadian securities
laws in connection with the purchase and distribution of the
Common Shares by the Underwriters and the obtaining of a letter
of no objection from the NASD with respect to such offering;
(8) The execution and performance of this Agreement, the
sale of the Common Shares and the consummation of the
transactions herein contemplated will not violate any of the
provisions of the Certificate of Incorporation or Bylaws of the
Company or the Certificate of Incorporation or Bylaws of any of
its subsidiaries or, to such counsel's knowledge, conflict with,
result in the breach of, or constitute, either by itself or upon
notice or the passage of time or both, a default under any
agreement, mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument to which the Company or its
subsidiaries is a party or by which the Company or its
subsidiaries or any of its or their property may be bound or
affected, or violate any statute, judgment, decree, order, rule
or regulation of any court or government body having jurisdiction
over the Company or its subsidiaries or any of its or their
property (other than state securities or Blue Sky laws and
regulations as to which counsel need not express any opinion);
(9) The Company is not in violation of its Certificate of
Incorporation or Bylaws and the Company's subsidiaries are not in
violation of their Certificates of Incorporation or Bylaws, and,
to such counsel's knowledge neither the Company nor its
subsidiaries is in breach of or default with respect to any
provision of any agreement, mortgage, deed of trust, lease, loan
agreement, security agreement, license, indenture, permit or
other instrument to which the Company or its subsidiaries is a
party or by which the Company or any of its properties or the
Company's subsidiaries or any of their properties may be bound
or affected, except where such default would not materially
adversely affect the Company or its subsidiaries, taken as a
whole; and, to such counsel's knowledge, the Company and its
subsidiaries are in compliance with all laws, rules, regulations,
judgments, decrees, orders and statutes of any court or
jurisdiction to which they are subject, except where
noncompliance would not materially adversely affect the Company
or its subsidiaries, taken as a whole;
-17-
(10) To such counsel's knowledge, there are no legal
actions, suits or governmental proceedings pending or threatened
before any court or governmental agency, authority or body which,
if determined adversely to the Company or its subsidiaries, would
individually or in the aggregate have a material adverse effect
on the financial position, stockholders' equity or results of
operations of the Company or its subsidiaries, taken as a whole;
(11) To such counsel's knowledge, no holders of securities
of the Company have rights to the registration of shares of
Common Stock or other securities which would be required to be
included in the Registration Statement filed by the Company or
included in the offering contemplated thereby;
(12) No transfer taxes are required to be paid under the
laws of the Commonwealth of Kentucky in connection with the sale
and delivery of the Common Shares to the Underwriters hereunder;
(13) To such counsel's knowledge, this Agreement and the
Stockholders' Agreement have been duly authorized, executed and
delivered by each of the Selling Stockholders; and to the best of
such counsel's knowledge, the performance of this Agreement and
the Stockholders' Agreement and the consummation of the
transactions herein contemplated by the respective Selling
Stockholders will not result in a breach of, or constitute a
default under, any indenture, mortgage, deeds of trust, trust
(constructive or other), loan agreement, lease, franchise,
license or other agreement or instrument to which the respective
Selling Stockholder is a party or by which the respective Selling
Stockholder or any of his properties may be bound, or violate any
statute, judgment, decree, order, rule or regulation known to
such counsel of any court or governmental body having
jurisdiction over the Selling Stockholders, respectively, or any
of the properties of the respective Selling Stockholders; and to
such counsel's knowledge, no approval, authorization, order or
consent of any court, regulatory body, administrative agency or
other governmental body is required for the execution and
delivery of this Agreement or the Stockholders' Agreement or the
consummation by the respective Selling Stockholders of the
transactions contemplated by this Agreement and the Stockholders'
Agreement, except such as have been obtained and are in full
force and effect under the Act and such as may be required under
the rules of NASD, applicable Blue Sky laws and Canadian
securities laws;
(14) To the best knowledge of such counsel, each of the
Selling Stockholders has the full right, power and authority to
enter into this Agreement and the Stockholders' Agreement and to
sell, transfer and deliver the Common Shares to be sold by each
Selling Stockholder on the Closing Date, and good and valid title
to such Common Shares so sold, free and clear of all liens,
claims, equities or other encumbrances of any kind or character,
will be transferred to the Underwriters who have purchased such
Common Shares hereunder; and
(15) To the best knowledge of such counsel, this Agreement
and the Stockholders' Agreement are valid and binding agreements
of the respective Selling Stockholders in accordance with their
respective terms except to the extent that (i) the validity and
binding effect and enforcement of this Agreement and the
-18-
Stockholders' Agreement may be limited by any applicable
bankruptcy, reorganization, moratorium, or similar laws of
general application, (ii) the availability of equitable remedies
may be limited by principles of equity, whether considered in a
proceeding at law or in equity, and (iii) the indemnification
provisions contained in this Agreement may be limited by
applicable securities laws and the policies embodied therein.
(16) To the best knowledge of such counsel, neither
issuance, sale or delivery of the Common Shares, nor the
execution, delivery or performance of this Agreement, or
compliance by the Company with the transactions contemplated
hereby or thereby conflicts or will conflict or constitutes or
will constitute a breach of, or a default under, the Certificate
or Articles of Incorporation or Bylaws or other organizational
documents of the Company or any agreement, indenture, lease, or
other instrument to which the Company is a party, or will result
in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of its
subsidiaries under any such agreement, indenture, lease or other
instrument, nor will any such action result in any violation of
any existing law, regulation, ruling, (assuming compliance with
all applicable state securities and Blue Sky laws and Canadian
securities laws), judgment, injunction, order or decree known to
such counsel, and applicable to the Company, any of its
subsidiaries or any of their respective properties, in each case
except for such conflicts, breaches, defaults, violation, or
encumbrances that would not singly or in the aggregate have a
material adverse effect on the ability of the Company to fulfill
its obligations under this Agreement.
In rendering such opinion, such counsel may rely, as to matters
of fact, on certificates of the Selling Stockholders and of officers
of the Company and of governmental officials, in which case their
opinion shall state that they are so doing and that the Underwriters
are justified in relying on such certificates and copies of such
certificates are to be attached to the opinion.
In addition, such counsel shall state that they have participated
in conferences with officers, employees and other representatives of
the Company, counsel for the Underwriters, representatives of the
independent public accountants for the Company and representatives of
the Underwriters at which the contents of the Registration Statement
and Prospectus and related matters were discussed and, although such
counsel is not passing upon and does not assume any responsibility
for, the accuracy, completeness or fairness of the statements
contained in the Registration Statement and Prospectus and has not
made any independent check or verification thereof, on the basis of
the foregoing (relying as to materiality to a large extent upon the
statements of officers, employees and other representatives of the
Company), no facts have come to such counsel's attention that lead
them to believe that either the Registration Statement at the time
such Registration Statement became effective contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein in light of the circumstances in which they were made, not
misleading, or the Prospectus as of its date contained an untrue
statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that
such counsel need express no opinion with respect to the financial
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statements, schedules and other statistical financial data included in
the Registration Statement or Prospectus.
(ii) Such opinion or opinions of Xxxxx Xxxxxxx Rain Xxxxxxx (A
Professional Corporation), 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 and its subsidiaries,
the sufficiency of all corporate proceedings and other legal matters
relating to this Agreement, the validity of the Common Shares, the
Registration Statement and the Prospectus and other related matters as
the Underwriters may reasonably require, and the Company and the
Selling Stockholders shall have furnished to such counsel such
documents and shall have exhibited to them such papers and records as
they reasonably may request for the purpose of enabling them to pass
upon such matters. In connection with such opinions, such counsel may
rely on representations or certificates of the Selling Stockholders
and of officers of the Company and governmental officials.
(iii) A certificate of the Company executed by the President and
Chief Executive Officer and the Chief Financial or Accounting Officer
of the Company, dated the First Closing Date or the Second Closing
Date, as the case may be, to the effect that:
(1) The representations and warranties of the Company set
forth in Section 2 of this Agreement are true and correct as of
the date of this Agreement and as of the First Closing Date or
the Second Closing Date, as the case may be, and the Company has
complied with all the agreements and satisfied all the conditions
on its part to be performed or satisfied on or prior to such
Dates, respectively;
(2) The Commission has not issued any order preventing or
suspending the use of the Prospectus or any Preliminary
Prospectus filed as a part of the Registration Statement or any
amendment thereto; no stop order suspending the effectiveness of
the Registration Statement has been issued; and to the best of
the knowledge of the respective signers, no proceedings for that
purpose have been instituted or are pending or overtly threatened
under the Act;
(3) Each of the respective signers of the certificate has
carefully examined the Registration Statement and the Prospectus;
in his opinion and to the best of his knowledge, the Registration
Statement and the Prospectus and any amendments or supplements
thereto contain all statements required to be stated therein
regarding the Company and its subsidiaries, and neither the
Registration Statement nor the Prospectus nor any amendment or
supplement thereto includes any untrue statement of a material
fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading;
(4) Since the initial date on which the Registration
Statement was filed, no agreement, written or oral, transaction
or event has occurred which should have been set forth in an
amendment to the Registration Statement or in a supplement to or
amendment of any Prospectus which has not been disclosed in such
a supplement or amendment;
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(5) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, and
except as disclosed in or contemplated by the Prospectus, there
has not been any material adverse change or a development
involving a material adverse change in the condition (financial
or otherwise), business, properties, results of operations,
management or prospects of the Company and its subsidiaries,
taken as a whole; and no legal or governmental action, suit or
proceeding is pending or threatened against the Company or its
subsidiaries which is material to the Company or its
subsidiaries, whether or not arising from transactions in the
ordinary course of business, or which may adversely affect the
transactions contemplated by this Agreement; neither the Company
nor its subsidiaries has entered into any verbal or written
agreement or other transaction which is not in the ordinary
course of business or which reasonably could be expected to
result in a material reduction in the future earnings of the
Company or its subsidiaries, or incurred any material liability
or obligation, direct, contingent or indirect, made any change in
its capital stock, made any material change in its short-term
debt or long-term debt or repurchased or otherwise acquired any
of the Company's capital stock; and the Company has not declared
or paid any dividend, or declared or made any other distribution,
with respect to its outstanding capital stock payable to
stockholders of record, except as disclosed in the Prospectus, on
a date prior to the First Closing Date or Second Closing Date, as
the case may be;
(6) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus and except
as disclosed in or contemplated by the Prospectus, neither the
Company nor its subsidiaries has sustained a material loss or
damage by strike, fire, flood, windstorm, accident or other
calamity (whether or not insured).
(iv) On the First Closing Date, a certificate, dated such
Closing Date and addressed to the Underwriters, signed by or on behalf
of the Selling Stockholders, and on the Second Closing Date a
certificate, dated the Second Closing Date and addressed to the
Underwriters, signed by the Selling Stockholders, to the effect that
the representatives and warranties of such Selling Stockholders are
true and correct as if made at and as of such Closing Date, and such
Selling Stockholder have complied with all the agreements and
satisfied all the conditions to be performed or satisfied prior to the
First Closing Date or the Second Closing Date, as the case may be.
(v) On the date before this Agreement is executed and also on
the First Closing Date and the Second Closing Date, a letter addressed
to the Underwriters from Ernst & Young, independent accountants, the
first one to be dated the day before the date of this Agreement, the
second one to be dated the First Closing Date and the third one (in
the event of a Second Closing) to be dated the Second Closing Date, in
form and substance satisfactory to you.
(vi) On or before the First Closing Date, letters from each
director and officer of the Company and from each person or entity
named under the caption "Principal and Selling Stockholders" in the
Prospectus, in form and substance satisfactory to you, confirming that
for a period of 120 days from the date of the Prospectus such person
or entity will not directly or indirectly sell or offer to sell or
otherwise dispose of any shares of Common Stock
-21-
or any right to acquire such shares without the prior written consent
of either Xxxxxxxxxx Securities or the Underwriters acting jointly,
which consent may be withheld at the sole discretion of Xxxxxxxxxx
Securities, or the Underwriters acting jointly, as the case may be.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are reasonably
satisfactory to the Underwriters and to Xxxxx Xxxxxxx Rain Xxxxxxx (A
Professional Corporation), counsel for the Underwriters. The Company and
the Selling Stockholders shall furnish the Underwriters with such manually
signed or conformed copies of such opinions, certificates, letters and
documents as the Underwriters request. Any certificate signed by any
officer of the Company and delivered to the Underwriters shall be deemed to
be a representation and warranty by the Company to the Underwriters as to
the statements made therein.
If any condition to the Underwriters' obligations hereunder to be
satisfied prior to or at the First Closing Date is not so satisfied, this
Agreement at the election of the Underwriters will terminate upon
notification by the Underwriters to the Company without liability on the
part of any Underwriter or the Company, 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 12 hereof.
SECTION 9. Reimbursement of Underwriters' Expenses. If this Agreement
shall be terminated by the Underwriters pursuant to Section 8, or if the sale to
the Underwriters of the Common Shares at the First Closing Date is not
consummated because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or to comply with any provision hereof,
the Company agrees to reimburse the Underwriters upon demand for all out-of-
pocket expenses that shall have been reasonably incurred by the Underwriters in
connection with the proposed purchase and the sale of the Common Shares,
including but not limited to fees and disbursements of Underwriters' counsel,
printing expenses, travel expenses, postage, telecopy charges and telephone
charges relating directly to the offering contemplated by the Prospectus. Any
such termination shall be without liability of any party to any other party,
except that the provisions of this Section, Section 7 and Section 11 shall at
all times be effective and shall apply.
SECTION 10. Effectiveness of Registration Statement. The Underwriters and
the Company will use their respective best efforts to cause the Registration
Statement to become effective, to prevent the issuance of any stop order
suspending the effectiveness of the Registration Statement and, if such stop
order be issued, to obtain as soon as possible the lifting thereof.
SECTION 11. Indemnification.
(a) The Company and the Selling Stockholders jointly and severally,
agree to indemnify and hold harmless each Underwriter and each person, if
any, who controls any Underwriter within the meaning of the Act against any
losses, claims, damages, liabilities or expenses, joint or several, to
which such Underwriter or such controlling person may become subject, under
the Act, the Exchange Act, or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Company and the Selling Stockholders), insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state in any of them a material fact required to be
stated therein or necessary to make the statements in any of them not
misleading, or arise out of or are based in whole or in part on any
inaccuracy in the representations and warranties of the
-22-
Company or the Selling Stockholders contained herein or any failure of the
Company or the Selling Stockholders to perform their respective obligations
hereunder or under law; and will reimburse each Underwriter and each such
controlling person for any legal and other expenses as such expenses are
reasonably incurred by such Underwriter or such controlling person in
connection with investigating, defending, settling, compromising or paying
any such loss, claim, damage, liability, expense or action; provided, that
the Company and the Selling Stockholders will not be liable in any such
case to the extent that any such loss, claim, damage, liability or expense
arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto in reliance upon and in conformity with the information
furnished to the Company by the Underwriters pursuant to Section 4 hereof;
and provided further, that with respect to any untrue statement or omission
or alleged untrue statement or omission made in any Preliminary Prospectus,
the indemnity agreement contained in this paragraph shall not inure to the
benefit of any Underwriter from whom the person asserting any such losses,
claims, damages, liabilities or expenses purchased the Common Shares
concerned (or to the benefit of any person controlling such Underwriter) to
the extent that any such loss, claim, damage, liability or expense of such
Underwriter or controlling person results from the fact that a copy of the
Prospectus was not sent or given to such person at or prior to the written
confirmation of sale of such Common Shares to such person as required by
the Act, and if the untrue statement or omission has been corrected in the
Prospectus, unless such failure to deliver the Prospectus was a result of
noncompliance by the Company with its obligations under Section 6(e)
hereof; and, provided further, that the aforesaid joint and several
liability of each Selling Stockholder under this Section 11(a) shall not
exceed the sum of the net proceeds received by such Selling Stockholder
from the Common Shares sold by such Selling Stockholder pursuant hereto.
The Company and the Selling Stockholders may agree, as among themselves and
without limiting the rights of the Underwriters under this Agreement, as to
their respective amounts of such liability for which they each shall be
responsible, and this Agreement shall not modify or supersede any
agreements now in effect between the Company and the Selling Stockholders
with respect thereto.
(b) In addition to their other obligations under this Section 11 the
Company and the Selling Stockholders jointly and severally agree that, as
an interim measure during the pendency of any claim, action, investigation,
inquiry or other proceeding arising out of or based upon any statement or
omission, or any alleged statement or omission, or any inaccuracy in the
representations and warranties of the Company or the Selling Stockholders
herein or failure to perform the respective obligations of the Company and
the Selling Stockholders hereunder, all as described in Section 11(a), the
Company and the Selling Stockholders will reimburse each Underwriter on a
quarterly basis for all reasonable legal or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of
a judicial determination as to the propriety and enforceability of the
Company's or the Selling Stockholders' obligations to reimburse each
Underwriter for such expenses and the possibility that such payments might
later be held to have been improper by a court of competent jurisdiction.
To the extent that any such interim reimbursement payment is so held to
have been improper, each Underwriter shall promptly return such payment to
the Company and the Selling Stockholders, pro rata, together with interest,
compounded daily, determined on the basis of the prime rate (or other
commercial lending rate for borrowers of the highest credit standing)
announced from time to time by Bank of America NT&SA, San Francisco,
California (the "Prime Rate"). Any such interim reimbursement payments
which are not made to an Underwriter within 30 days of a request for
reimbursement shall bear interest at the Prime Rate from the date of such
request. This indemnity agreement will be in addition to any liability
which the Company and the Selling Stockholders may otherwise have.
-23-
(c) Each Underwriter will severally indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the
Registration Statement, Selling Stockholders and each person, if any, who
controls the Company within the meaning of the Act, against any losses,
claims, damages, liabilities or expenses to which the Company, or any such
director, officer, or controlling person may become subject under the Act,
the Exchange Act, or other federal or state statutory law or regulation, or
at common law or otherwise (including in settlement of any litigation, if
such settlement is effected with the written consent of such Underwriter),
insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof as contemplated below) arise out of or are based
upon any untrue or alleged untrue statement of any material fact contained
in the Registration Statement, any Preliminary Prospectus, the Prospectus,
or any amendment or supplement thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, in
reliance upon and in conformity with the information furnished to the
Company pursuant to Section 4 hereof (which information is the sole
information furnished to the Company by the Underwriters for inclusion in
the Registration Statement, any Preliminary Prospectus, any Prospectus, or
any amendment or supplement thereto); and will reimburse the Company, or
any such director, officer, Selling Stockholder, or controlling person for
any legal and other expense reasonably incurred by the Company, or any such
director, officer, Selling Stockholder or controlling person in connection
with investigating, defending, settling, compromising or paying any such
loss, claim, damage, liability, expense or action. In addition to its other
obligations under this Section 11(c), each Underwriter severally agrees
that, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
statement or omission, or any alleged statement or omission, described in
this Section 11(c) which relates to information furnished to the Company
pursuant to Section 4 hereof, it will reimburse the Company (and, to the
extent applicable, each officer, director, Selling Stockholder or
controlling person) on a quarterly basis for all reasonable legal or other
expenses incurred in connection with investigating or defending any such
claim, action, investigation, inquiry or other proceeding, notwithstanding
the absence of a judicial determination as to the propriety and
enforceability of the Underwriters' obligation to reimburse the Company
(and, to the extent applicable, each officer, director, Selling Stockholder
or controlling person) for such expenses and the possibility that such
payments might later be held to have been improper by a court of competent
jurisdiction. To the extent that any such interim reimbursement payment is
so held to have been improper, the Company (and, to the extent applicable,
each officer, director, Selling Stockholder or controlling person) shall
promptly return such payment to the Underwriters, together with interest,
compounded daily, determined on the basis of the Prime Rate. Any such
interim reimbursement payments which are not made within 30 days of a
request for reimbursement, shall bear interest at the Prime Rate from the
date of such request. This indemnity agreement will be in addition to any
liability which such Underwriter may otherwise have.
(d) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against an indemnifying party
under this Section, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party for contribution or otherwise hereunder to the extent it is not
materially prejudiced as a proximate result of such failure. In case any
such action is brought against any indemnified party and such indemnified
party seeks or intends to seek indemnity from an indemnifying party, the
indemnifying party will be entitled to participate in, and,
-24-
to the extent that it may wish, jointly with all other indemnifying parties
similarly notified, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably
concluded that there may be a conflict between the positions of the
indemnifying party and the indemnified party in conducting the defense of
any such action or that there may be legal defenses available to it and/or
other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall
have the right to select separate counsel to assume such legal defenses and
to otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of its election so to assume the defense of
such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal expenses subsequently incurred by such indemnified
party in connection with the defense thereof unless (i) the indemnified
party shall have employed such counsel in connection with the assumption of
legal defenses in accordance with the proviso to the next preceding
sentence (it being understood, however, that the indemnifying party shall
not be liable for the expenses of more than one separate counsel, approved
by the Underwriters in the case of Section 11(a), representing the
indemnified parties who are parties to such action) or (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory
to the indemnified party to represent the indemnified party within a
reasonable time after notice of commencement of the action, in each of
which cases the fees and expenses of counsel shall be at the expense of the
indemnifying party.
(e) If the indemnification provided for in this Section 11 is
required by its terms, but for any reason is held to be unavailable to or
otherwise insufficient to hold harmless any indemnified party under
paragraphs (a), (b), (c) or (d) in respect of any losses, claims, damages,
liabilities or expenses as referred to herein, then each applicable
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of any losses, claims, damages, liabilities
or expenses referred to herein (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company, the Selling
Stockholders and the Underwriters from the offering of the Common Shares or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, then 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 or inaccuracies in their
representations and warranties herein which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The respective relative benefits received by the
Company, the Selling Stockholders and the Underwriters shall be deemed to
be in the same proportion, in the case of the Company and the Selling
Stockholders as the total price paid to the Company and the Selling
Stockholders, respectively for the Common Shares sold by them to the
Underwriters (before deducting expenses), and in the case of Underwriters
as the underwriting commissions received by them, bears to the total of
such amounts paid to the Company and the Selling Stockholders and the
amounts received by the Underwriters as underwriting commissions. The
relative fault of the Company, the Selling Stockholders and the
Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to stating material fact or the inaccurate or
the alleged inaccurate representations and/or warranty relates to the
information supplied by the Company, the Selling Stockholders or the
Underwriters and the parties relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed
to include, subject to the limitations set forth in subsection (d) of this
Section 11, any legal or other fees or expenses
-25-
reasonably incurred by such party in connection with investigating or
defending any action or claim. The provisions set forth in subsection (d)
of this Section 11 with respect to notice of commencement of any action
shall apply if a claim for contribution is to be made under this subsection
(e); provided, however, that no additional notice shall be required with
respect to any action for which notice has been given under subsection (d)
for the purposes of indemnification. The Company, the Selling
Stockholders, and the Underwriters agree that it would not be just
inequitable if contribution pursuant to this Section 11 were determined
solely by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does
not take into account the equitable considerations referred to in this
subsection (e). Notwithstanding the provisions of this Section 11, no
Underwriter shall be required to contribute any amount in excess of the
amount of the total underwriting commissions received by such Underwriter
in connection with the Common Shares underwritten by it and distributed to
the public. No person guilty of fraudulent misrepresentation (within a
meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute pursuant to this Section 11 are
several in proportion to their respective underwriting commitments and not
joint.
(f) It is agreed that any controversy arising out of the operation of
the interim reimbursement arrangements set forth in this Section 11,
including the amounts of any requested reimbursement payments and the
method of determining such amounts, shall be settled by arbitration
conducted under the provisions of the Constitution and Rules of the Board
of Governors of the New York Stock Exchange, Inc. or pursuant to the Code
of Arbitration Procedure of the NASD. Any such arbitration must be
commenced by service of a written demand for arbitration or written notice
of intention to arbitrate, therein electing the arbitration tribunal. In
the event the party demanding arbitration does not make such designation of
an arbitration tribunal in such demand or notice, then the party responding
to said demand or notice is authorized to do so. Such an arbitration would
be limited to the operation of the interim reimbursement provisions
contained in this Section 11 and would not resolve the ultimate propriety
or enforceability of the obligation to reimburse expenses which is created
by the provisions of this Section 11.
SECTION 12. Default of Underwriters. It shall be a condition to this
Agreement and the obligation of the Company and the Selling Stockholders to sell
and deliver the Common Shares hereunder, and of each Underwriter to purchase the
Common Shares in the manner described herein, that, except as hereinafter in
this paragraph provided, each of the Underwriters shall purchase and pay for all
the Common Shares agreed to be purchased by such Underwriter hereunder upon
tender to the Underwriters of all such shares in accordance with the terms
hereof. If either Underwriter defaults in its obligation to purchase Common
Shares hereunder on either the First or Second Closing Date and the aggregate
number of Common Shares that such defaulting Underwriter agreed but failed to
purchase on such Closing Date does not exceed 10% of the total number of Common
Shares which the Underwriters are obligated severally, in proportion to their
respective commitments hereunder, to purchase on such Closing Date, the non-
defaulting Underwriters shall be obligated to purchase the Common Shares that
such defaulting Underwriter agreed but failed to purchase on such Closing Date.
If any Underwriter so defaults and the aggregate number of Common Shares with
respect to which such default occurs is more than the above percentage and
arrangements satisfactory to the Underwriters and the sellers of such Common
Shares for the purchase of such Common Shares by other persons are not made
within 48 hours after such default, this Agreement will terminate without
liability on the part of the non-defaulting Underwriters or the Company (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).
-26-
In the event that Common Shares to which a default relates are to be
purchased by the non-defaulting Underwriters or by another party or parties, the
Underwriters or the sellers of such Common Shares shall have the right to
postpone the First or Second Closing Date, as the case may be, for not more than
five business days in order that the necessary changes in the Registration
Statement, Prospectus and any other documents, as well as any other
arrangements, may be effected. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability
for its default.
SECTION 13. Effective Date. This Agreement shall become effective at such
time as the Registration Statement has become effective and you shall have
released the Firm Common Shares for sale to the public; provided, however, that
the provisions of Sections 7, 9, 11, 14 and 15 hereof shall at all times be
effective. For the purposes of this Section 13, the Firm Common Shares shall be
deemed to have been so released upon the release by the Underwriters for
publication, at any time after the Registration Statement has become effective,
of any newspaper advertisement relating to any of the Common Shares, or upon the
release by the Underwriters of any of the Common Shares for sale to the public,
whichever may occur first.
SECTION 14. Termination. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof:
(a) This Agreement may be terminated by the Company and the Selling
Stockholders by notice to the Underwriters or by the Underwriters 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 the Underwriters (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 Sections 11 and 15 hereof) or of any
Underwriter to the Company (except to the extent provided in Sections 11
and 15 hereof).
(b) This Agreement may also be terminated by the Underwriters prior
to the First Closing Date or prior to the Second Closing Date, as the case
may be, by notice to the Company and the Selling Stockholders (i) if
additional material governmental restrictions not in force and effect on
the date hereof shall have been imposed upon trading in securities
generally or minimum or maximum prices shall have been generally
established on the New York Stock Exchange or on the American Stock
Exchange or in the NASDAQ National Market System or in the over the counter
market by the NASD, or trading in securities generally shall have been
suspended on either such Exchange or in the NASDAQ National Market System
or in the over the counter market by the NASD or the Commission, or a
general banking moratorium shall have been established by federal, New
York, Kentucky or California authorities, (ii) if an outbreak of
hostilities or other national or international calamity or any material
change in political, financial or economic conditions shall have occurred
or shall have accelerated to such an extent that the effect on the
financial markets shall, in the judgment of the Underwriters, affect
adversely the marketability of the Common Shares, (iii) if any adverse
event shall have occurred or shall exist which makes untrue or incorrect in
any material respect any statement or information contained in the
Registration Statement or Prospectus or which is not reflected in the
Registration Statement or Prospectus but should be reflected therein in
order to make the statements or information contained therein not
misleading in any material respect, or (iv) if there shall be any action,
suit or proceeding pending or threatened, or there shall have been any
development involving particularly the business or properties or securities
of the Company or its subsidiaries or the transactions contemplated by this
Agreement, which, in the judgment of the Underwriters, may materially and
adversely affect the business or earnings of the Company and its
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subsidiaries taken as a whole or makes it impracticable to offer or sell
the Common Shares. Any termination pursuant to this subsection (b) shall be
without liability on the part of the Underwriters to the Company or the
Selling Stockholders or on the part of the Company or the Selling
Stockholders to the Underwriters (except for expenses to be paid or
reimbursed by the Company or the Selling Stockholders pursuant to Sections
7 or 11 hereof and except to the extent provided in Sections 11 and 15).
SECTION 15. Failure of the Selling Stockholders to Sell and Deliver. If
any Selling Stockholder fails to sell and deliver to the Underwriters the Common
Shares to be sold and delivered by such Selling Stockholder at the First Closing
Date or the Second Closing Date under the terms of this Agreement, then the
Underwriters may at their option, by written notice to the Company and the
Selling Stockholders, either (i) terminate this Agreement without any liability
on the part of any Underwriter or, except as provided in Sections 7, 9, 11 and
16 hereof, the Company or the Selling Stockholders, or (ii) purchase the shares
which the Company and the Selling Stockholders who have sold and delivered the
Common Shares to be sold and delivered by them to the Underwriters in accordance
with the terms hereof. In the event of a failure by a Selling Stockholder to
sell and deliver as referred to in this Section, either the Underwriters or the
Company and the Selling Stockholders who have sold and delivered their shares to
the Underwriters shall have the right to postpone the Closing Date for a period
not exceeding seven (7) 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 effective.
SECTION 16. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company and its officers, the Selling Stockholders and of the
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 the
Underwriters or the Company, or the Selling Stockholders, or any of their
partners, officers or directors or any controlling person, as the case may be,
and will survive delivery of and payment for the Common Shares sold hereunder
and any termination of this Agreement.
SECTION 17. Notices. All communications hereunder shall be in writing
and, if sent to the Underwriters, shall be mailed, delivered or telecopied or
telegraphed and confirmed to the Underwriters at Xxxxxxxxxx Securities, 000
Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attention: General Counsel,
and Alex. Xxxxx & Sons Incorporated, 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxx 00000, Attention: Xxxx Xxxxxxx, with a copy to Xxxxx Xxxxxxx Rain
Xxxxxxx (A Professional Corporation), 0000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx,
Xxxxx 00000, Attention: Xxx Xxxxxx; and if sent to the Company or the Selling
Stockholders shall be mailed, delivered or telecopied or telegraphed and
confirmed to the Company at 0000 Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxx 00000,
Attention: Xxxxxxx X. Xxxxxxxx, President, with a copy to Xxxxxxxxxx Xxxx &
XxXxxxxx, 0000 Xxxxxxxx Xxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxx, 00000, Attention: Xxxx
Xxxxxxx. The Company, the Selling Stockholders or the Underwriters may change
the address for receipt of communications hereunder by giving notice to the
others.
SECTION 18. Successors. This Agreement will inure to the benefit of and
be binding upon the parties hereto, including any substitute Underwriters
pursuant to Section 12 hereof, and to the benefit of the officers and directors
and controlling persons referred to in Section 11, and in each case their
respective successors, personal Underwriters and assigns, and no other person
will have any right or obligation hereunder. No such assignment shall relieve
any party of its obligations hereunder. The term "successors" shall not
include any purchaser of the Common Shares as such from any of the Underwriters
merely by reason of such purchase.
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SECTION 19. Partial Unenforceability. The invalidity or unenforceability
of any Section, subsection, paragraph or provision of this Agreement shall not
affect the validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, subsection, paragraph or provision of this
Agreement is for any reason determined to be invalid or unenforceable, there
shall be deemed to be made such minor changes (and only such minor changes) as
are necessary to make it valid and enforceable.
SECTION 20. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the laws pertaining to
conflicts of laws) of the State of Kentucky.
SECTION 21. General. This Agreement constitutes the entire agreement of
the parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof. This Agreement may be executed in several
counterparts, each one of which shall be an original, and all of which shall
constitute one and the same document.
In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company, the Selling Stockholders and the
Underwriters.
If the foregoing is in accordance with the Underwriters' understanding of
our agreement, kindly sign and return to us the enclosed copies hereof,
whereupon it will become a binding agreement among the Company, the Selling
Stockholders and the Underwriters, all in accordance with its terms.
Very truly yours,
PJ AMERICA, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
SELLING STOCKHOLDERS
*
----------------------------------
*
----------------------------------
*
----------------------------------
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*
--------------------------------
*
--------------------------------
*
--------------------------------
*By:
-------------------------------------
(Attorney-In-Fact)
--------------------
The foregoing Underwriting Agreement
is hereby confirmed and accepted
as of the date first above written
by the undersigned Underwriters.
XXXXXXXXXX SECURITIES
ALEX. XXXXX & SONS INCORPORATED
By: XXXXXXXXXX SECURITIES
By:
-------------------------------
Its: Managing Director
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SCHEDULE A
Number of Firm Common
Name of Underwriter Shares to be Purchased
--------------------------------------------------------------------------------
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SCHEDULE B
Number of Firm Common Shares
Name of Selling Stockholder to be Sold by Selling Stockholder
--------------------------- ---------------------------------
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