1,600,000 SHARES
GARDEN FRESH RESTAURANT CORP.
COMMON STOCK
UNDERWRITING AGREEMENT
DATED MAY __, 1998
TABLE OF CONTENTS
SECTION 1. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . .2
A. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SIGNIFICANT
SELLING STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
COMPLIANCE WITH REGISTRATION REQUIREMENTS . . . . . . . . . . . . . . . . . . .2
OFFERING MATERIALS FURNISHED TO UNDERWRITERS. . . . . . . . . . . . . . . . . .3
DISTRIBUTION OF OFFERING MATERIAL BY THE COMPANY. . . . . . . . . . . . . . . .3
THE UNDERWRITING AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . .3
AUTHORIZATION OF THE COMMON SHARES. . . . . . . . . . . . . . . . . . . . . . .3
NO APPLICABLE REGISTRATION OR OTHER SIMILAR RIGHTS. . . . . . . . . . . . . . .3
NO MATERIAL ADVERSE CHANGE. . . . . . . . . . . . . . . . . . . . . . . . . . .4
INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
PREPARATION OF THE FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . .4
INCORPORATION AND GOOD STANDING OF THE COMPANY. . . . . . . . . . . . . . . . .4
CAPITALIZATION AND OTHER CAPITAL STOCK MATTERS. . . . . . . . . . . . . . . . .5
STOCK EXCHANGE LISTING. . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
NON-CONTRAVENTION OF EXISTING INSTRUMENTS; NO FURTHER AUTHORIZATIONS
OR APPROVALS REQUIRED . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
NO MATERIAL ACTIONS OR PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . .6
INTELLECTUAL PROPERTY RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . .6
ALL NECESSARY PERMITS, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . .7
TITLE TO PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
TAX LAW COMPLIANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
COMPANY NOT AN "INVESTMENT COMPANY" . . . . . . . . . . . . . . . . . . . . . .7
INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
NO PRICE STABILIZATION OR MANIPULATION. . . . . . . . . . . . . . . . . . . . .8
RELATED PARTY TRANSACTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . .8
NO UNLAWFUL CONTRIBUTIONS OR OTHER PAYMENTS . . . . . . . . . . . . . . . . . .8
COMPANY'S ACCOUNTING SYSTEM . . . . . . . . . . . . . . . . . . . . . . . . . .8
COMPLIANCE WITH ENVIRONMENTAL LAWS. . . . . . . . . . . . . . . . . . . . . . .8
ERISA COMPLIANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
B. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS. . . . . . . . . . 10
THE UNDERWRITING AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . 10
THE CUSTODY AGREEMENT AND POWER OF ATTORNEY . . . . . . . . . . . . . . . . . 10
TITLE TO COMMON SHARES TO BE SOLD; ALL AUTHORIZATIONS OBTAINED. . . . . . . . 10
DELIVERY OF THE COMMON SHARES TO BE SOLD. . . . . . . . . . . . . . . . . . . 10
NON-CONTRAVENTION; NO FURTHER AUTHORIZATIONS OR APPROVALS REQUIRED. . . . . . 11
NO REGISTRATION OR OTHER SIMILAR RIGHTS . . . . . . . . . . . . . . . . . . . 11
NO FURTHER CONSENTS, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
DISCLOSURE MADE BY SUCH SELLING STOCKHOLDER IN THE PROSPECTUS . . . . . . . . 11
NO PRICE STABILIZATION OR MANIPULATION. . . . . . . . . . . . . . . . . . . . 12
CONFIRMATION OF COMPANY REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . 12
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SECTION 2. PURCHASE, SALE AND DELIVERY OF THE COMMON SHARES . . . . . . . . . . . 12
THE FIRM COMMON SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
THE FIRST CLOSING DATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
THE OPTIONAL COMMON SHARES; THE SECOND CLOSING DATE . . . . . . . . . . . . . 13
PUBLIC OFFERING OF THE COMMON SHARES. . . . . . . . . . . . . . . . . . . . . 14
PAYMENT FOR THE COMMON SHARES . . . . . . . . . . . . . . . . . . . . . . . . 14
DELIVERY OF THE COMMON SHARES . . . . . . . . . . . . . . . . . . . . . . . . 14
DELIVERY OF PROSPECTUS TO THE UNDERWRITERS. . . . . . . . . . . . . . . . . . 15
SECTION 3. ADDITIONAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 15
A. COVENANTS OF THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
UNDERWRITERS' REVIEW OF PROPOSED AMENDMENTS AND SUPPLEMENTS . . . . . . . . . 15
SECURITIES ACT COMPLIANCE . . . . . . . . . . . . . . . . . . . . . . . . . . 15
AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS AND OTHER SECURITIES
ACT MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
COPIES OF ANY AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS. . . . . . . . . . 16
BLUE SKY COMPLIANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
TRANSFER AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
EARNINGS STATEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
PERIODIC REPORTING OBLIGATIONS. . . . . . . . . . . . . . . . . . . . . . . . 17
AGREEMENT NOT TO OFFER OR SELL ADDITIONAL SECURITIES. . . . . . . . . . . . . 17
FUTURE REPORTS TO THE UNDERWRITERS. . . . . . . . . . . . . . . . . . . . . . 17
B. COVENANTS OF THE SELLING STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . 18
AGREEMENT NOT TO OFFER OR SELL ADDITIONAL SECURITIES. . . . . . . . . . . . . 18
DELIVERY OF FORMS W-8 AND W-9 . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 4. PAYMENT OF EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. . . . . . . . . . . 19
ACCOUNTANTS' COMFORT LETTER . . . . . . . . . . . . . . . . . . . . . . . . . 20
COMPLIANCE WITH REGISTRATION REQUIREMENTS; NO STOP ORDER; NO OBJECTION
FROM NASD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
NO MATERIAL ADVERSE CHANGE OR RATINGS AGENCY CHANGE . . . . . . . . . . . . . 20
OPINION OF COUNSEL FOR THE COMPANY. . . . . . . . . . . . . . . . . . . . . . 21
OPINION OF COUNSEL FOR THE UNDERWRITERS . . . . . . . . . . . . . . . . . . . 21
OFFICERS' CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
BRING-DOWN COMFORT LETTER . . . . . . . . . . . . . . . . . . . . . . . . . . 22
OPINION OF COUNSEL FOR THE SELLING STOCKHOLDERS . . . . . . . . . . . . . . . 22
SELLING STOCKHOLDERS' CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . 22
SELLING STOCKHOLDERS' DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . 22
LOCK-UP AGREEMENT FROM CERTAIN STOCKHOLDERS OF THE COMPANY OTHER THAN
SELLING STOCKHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ADDITIONAL DOCUMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 6. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. . . . . . . . . . . . . . . . 23
SECTION 7. EFFECTIVENESS OF THIS AGREEMENT. . . . . . . . . . . . . . . . . . . . 24
SECTION 8. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
INDEMNIFICATION OF THE UNDERWRITERS . . . . . . . . . . . . . . . . . . . . . 24
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INDEMNIFICATION OF THE COMPANY, ITS DIRECTORS AND OFFICERS AND THE SELLING
STOCKHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
NOTIFICATIONS AND OTHER INDEMNIFICATION PROCEDURES. . . . . . . . . . . . . . 26
SETTLEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 9. CONTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 10. DEFAULT OF ONE OR MORE OF THE SEVERAL UNDERWRITERS. . . . . . . . . . 29
SECTION 11. TERMINATION OF THIS AGREEMENT . . . . . . . . . . . . . . . . . . . . 30
SECTION 12. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY . . . . . . . . . 30
SECTION 13. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 14. SUCCESSORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 15. PARTIAL UNENFORCEABILITY. . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 16. GOVERNING LAW PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 17. FAILURE OF ONE OR MORE OF THE SELLING STOCKHOLDERS TO SELL AND
DELIVER COMMON SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 18. GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 32
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UNDERWRITING AGREEMENT
May __, 1998
NATIONSBANC XXXXXXXXXX SECURITIES LLC
BANCAMERICA XXXXXXXXX XXXXXXXX
XXXXXX XXXXXX & COMPANY, INC.
c/o NATIONSBANC XXXXXXXXXX SECURITIES LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
INTRODUCTORY. Garden Fresh Restaurant Corp., a Delaware
corporation (the "Company), proposes to issue and sell to the several
underwriters named in SCHEDULE A (the "Underwriters") an aggregate of
1,300,000 shares of its Common Stock, par value $0.01 per share (the "Common
Stock"); and the stockholders of the Company named in SCHEDULE B
(collectively, the "Selling Stockholders") severally propose to sell to the
Underwriters an aggregate of 300,000 shares of Common Stock. The 1,300,000
shares of Common Stock to be sold by the Company and the 300,000 shares of
Common Stock to be sold by the Selling Stockholders are collectively called
the "Firm Common Shares." In addition, the Company has granted to the
Underwriters an option to purchase up to an additional 240,000 shares (the
"Optional Common Shares") of Common Stock, as provided in Section 2. The Firm
Common Shares and, if and to the extent such option is exercised, the
Optional Common Shares are collectively called the "Common Shares."
The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-1
(File No. 333-[___]), which contains a form of prospectus to be used in
connection with the public offering and sale of the Common Shares. Such
registration statement, as amended, including the financial statements,
exhibits and schedules thereto, in the form in which it was declared
effective by the Commission under the Securities Act of 1933 and the rules
and regulations promulgated thereunder (collectively, the "Securities Act"),
including any information deemed to be a part thereof at the time of
effectiveness pursuant to Rule 430A or Rule 434 under the Securities Act, is
called the "Registration Statement." 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. Such
prospectus, in the form first used by the Underwriters to confirm sales of
the Common Shares, is called the "Prospectus"; PROVIDED, HOWEVER, if the
Company has, with the consent of NationsBanc Xxxxxxxxxx Securities LLC
("NMS"), elected to rely upon Rule 434 under the Securities Act, the term
"Prospectus" shall mean the Company's prospectus subject to completion (a
"preliminary prospectus") dated [___](such preliminary prospectus is called
the "Rule 434 preliminary prospectus"), together with the applicable term
sheet (the "Term Sheet") prepared and filed by the Company with the
Commission under Rules 434 and 424(b) under the Securities Act and all
references in this Agreement to the date of the Prospectus shall mean the
date of the Term Sheet. All references in this Agreement to the Registration
Statement, the Rule 462(b) Registration Statement, a preliminary prospectus,
the Prospectus or the Term Sheet, or any amendments or supplements to any of
the foregoing, shall include any copy thereof filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval System
("XXXXX").
The Company and each of the Selling Stockholders hereby
confirm their respective agreements with the Underwriters as follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES.
A. REPRESENTATIONS AND WARRANTIES OF THE COMPANY The
Company hereby represents, warrants and covenants to each Underwriter as
follows:
(a) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The
Registration Statement and any Rule 462(b) Registration Statement have been
declared effective by the Commission under the Securities Act. The Company
has complied to the Commission's satisfaction with all requests of the
Commission for additional or supplemental information. No stop order
suspending the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement is in effect and no proceedings for such purpose have
been instituted or are pending or, to the best knowledge of the Company, are
contemplated or threatened by the Commission.
Each preliminary prospectus and the Prospectus when
filed complied in all material respects with the Securities Act and, if filed
by electronic transmission pursuant to XXXXX (except as may be permitted by
Regulation S-T under the Securities Act), was identical to the copy thereof
delivered to the Underwriters for use in connection with the offer and sale
of the Common Shares. Each of the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendment thereto, at the time
it became effective and at all subsequent times up to and including each
Closing Date, complied and will comply in all material respects with the
Securities Act and did not and will not contain 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. The Prospectus,
as amended or supplemented, as of its date and at all subsequent times up to
and including each Closing Date, did not and will not contain any untrue
statement of a material fact or omit to state a material fact necessary in
2
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The representations and warranties set
forth in the two immediately preceding sentences do not apply to statements
in or omissions from the Registration Statement, any Rule 462(b) Registration
Statement, or any post-effective amendment thereto, or the Prospectus, or any
amendments or supplements thereto, made in reliance upon and in conformity
with information relating to any Underwriter furnished to the Company in
writing by the Underwriters expressly for use therein. There are no
contracts or other documents required to be described in the Prospectus or to
be filed as exhibits to the Registration Statement which have not been
described or filed as required.
(b) OFFERING MATERIALS FURNISHED TO UNDERWRITERS.
The Company has delivered to each Underwriter a complete manually signed copy
of the Registration Statement and of each consent and certificate of experts
filed as a part thereof, and the Company will deliver conformed copies of the
Registration Statement (without exhibits) and preliminary prospectuses and
the Prospectus, as amended or supplemented, in such quantities and at such
places as the Underwriters have reasonably requested for each of the
Underwriters.
(c) DISTRIBUTION OF OFFERING MATERIAL BY THE
COMPANY. The Company has not distributed and will not distribute, prior to
the later of the Second Closing Date (as defined below) and the completion of
the Underwriters' distribution of the Common Shares, any offering material in
connection with the offering and sale of the Common Shares other than a
preliminary prospectus, the Prospectus or the Registration Statement.
(d) THE UNDERWRITING AGREEMENT. This Agreement has
been duly authorized, executed and delivered by, and is a valid and binding
agreement of, the Company, enforceable in accordance with its terms, except
as rights to indemnification hereunder may be limited by applicable law and
except as the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles.
(e) AUTHORIZATION OF THE COMMON SHARES. The Common
Shares to be purchased by the Underwriters from the Company have been duly
authorized for issuance and sale pursuant to this Agreement and, when issued
and delivered by the Company pursuant to this Agreement against payment
therefor, will be validly issued, fully paid and nonassessable.
(f) NO APPLICABLE REGISTRATION OR OTHER SIMILAR
RIGHTS. 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.
3
(g) NO MATERIAL ADVERSE CHANGE. Except as
otherwise disclosed in the Prospectus, subsequent to the respective dates as
of which information is given in the Prospectus: (i) there has been no
material adverse change, or any development that could reasonably be expected
to result in a material adverse change, in the condition, financial or
otherwise, or in the earnings, business, operations or prospects, whether or
not arising from transactions in the ordinary course of business, of the
Company (any such change is called a "Material Adverse Change"); (ii) the
Company has not incurred any material liability or obligation, indirect,
direct or contingent, not in the ordinary course of business nor entered into
any material transaction or agreement not in the ordinary course of business;
and (iii) there has been no dividend or distribution of any kind declared,
paid or made by the Company on any class of capital stock or repurchase or
redemption by the Company of any class of capital stock.
(h) INDEPENDENT ACCOUNTANTS. Price Waterhouse LLP,
who have expressed their opinion with respect to the financial statements
(which term as used in this Agreement includes the related notes thereto) and
supporting schedules filed with the Commission as a part of the Registration
Statement and included in the Prospectus, are [to the Company's knowledge]
independent public or certified public accountants as required by the Securities
Act and the Securities Exchange Act of 1934 and the rules and regulations
promulgated thereunder (the "Exchange Act").
(i) PREPARATION OF THE FINANCIAL STATEMENTS. The
financial statements filed with the Commission as a part of the Registration
Statement and included in the Prospectus present fairly the financial
position of the Company as of and at the dates indicated and the results of
their operations and cash flows for the periods specified. The supporting
schedules included in the Registration Statement present fairly the
information required to be stated therein.
(j) INCORPORATION AND GOOD STANDING OF THE COMPANY.
The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation and has corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Prospectus and
to enter into and perform its obligations under this Agreement. The Company
is duly qualified as a foreign corporation to transact business and is in
good standing in the States of California, Florida, Arizona, New Mexico, Utah
and Nevada and each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property
4
or the conduct of business, except for such jurisdictions (other than the
States of California, Florida, Arizona, New Mexico, Utah and Nevada) where
the failure to so qualify or to be in good standing would not, individually
or in the aggregate, result in a Material Adverse Change. The Company has no
subsidiaries.
(k) CAPITALIZATION AND OTHER CAPITAL STOCK MATTERS.
The authorized, issued and outstanding capital stock of the Company is as set
forth in the Prospectus under the caption "Capitalization" (other than for
subsequent issuances, if any, pursuant to employee benefit plans described in
the Prospectus or upon exercise of outstanding options described in the
Prospectus). The Common Stock (including the Common Shares) conforms in all
material respects to the description thereof contained in the Prospectus.
All of the issued and outstanding shares of Common Stock (including the
shares of Common Stock owned by Selling Stockholders) have been, or will be
at the First Closing Date, duly authorized and validly issued, are fully paid
and nonassessable and have been issued in compliance with federal and state
securities laws. None of the outstanding shares of Common Stock were issued
in violation of any preemptive rights, rights of first refusal or other
similar rights to subscribe for or purchase securities of the Company. There
are no authorized or outstanding options, warrants, preemptive rights, rights
of first refusal or other rights to purchase, or equity or debt securities
convertible into or exchangeable or exercisable for, any capital stock of the
Company other than those accurately described in the Prospectus. The
description of the Company's stock option, stock bonus and other stock plans
or arrangements, and the options or other rights granted thereunder, set
forth in the Prospectus accurately and fairly presents the information
required to be shown with respect to such plans, arrangements, options and
rights.
(l) STOCK EXCHANGE LISTING. The Common Stock
(including the Common Shares) is registered pursuant to Section 12(g) of the
Exchange Act and is listed on the Nasdaq National Market, and the Company has
taken no action designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or delisting the
Common Stock from the Nasdaq National Market, nor has the Company received
any notification that the Commission or the National Association of
Securities Dealers LLC (the "NASD") is contemplating terminating such
registration or listing.
(m) NON-CONTRAVENTION OF EXISTING INSTRUMENTS; NO
FURTHER AUTHORIZATIONS OR APPROVALS REQUIRED. The Company is not in
violation of its charter or by-laws or in default (or, with the giving of
notice or lapse of time, would be in default) ("Default") under any
indenture, mortgage, loan or credit agreement, note, contract, franchise,
lease or other instrument to which the Company is a party or by which it may
be bound (including, without limitation, the Company's Revolving Credit
Facility with Xxxxx Fargo Bank, N.A., as lender), or to which any of the
property or assets of the Company is subject (each, an "Existing
Instrument"), except for such Defaults as would not, individually or in the
aggregate, result in a Material Adverse Change. The Company's execution,
delivery and performance of this Agreement and consummation of the
transactions contemplated hereby and by the Prospectus (i) have
5
been duly authorized by all necessary corporate action and will not result in
any violation of the provisions of the charter or by-laws of the Company,
(ii) will not conflict with or constitute a breach of, or Default under, or
result in the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company pursuant to, or require the consent of
any other part to, any Existing Instrument, except for such conflicts,
breaches, Defaults, liens, charges or encumbrances as would not, individually
or in the aggregate, result in a Material Adverse Change and (iii) will not
result in any violation of any law, administrative regulation or
administrative or court decree applicable to the Company. No consent,
approval, authorization or other order of, or registration or filing with,
any court or other governmental or regulatory authority or agency, is
required for the Company's execution, delivery and performance of this
Agreement and consummation of the transactions contemplated hereby and by the
Prospectus, except such as have been obtained or made and are in full force
and effect under the Securities Act, applicable state securities or blue sky
laws and from the NASD.
(n) NO MATERIAL ACTIONS OR PROCEEDINGS. Except as
otherwise disclosed in the Prospectus, there are no legal or governmental
actions, suits or proceedings pending or, to the best of the Company's
knowledge, threatened (i) against or affecting the Company, (ii) which has as
the subject thereof any officer or director of, or property owned or leased
by, the Company or (iii) relating to environmental or discrimination matters,
where in any such case (A) there is a reasonable possibility that such
action, suit or proceeding might be determined adversely to the Company and
(B) any such action, suit or proceeding, if so determined adversely, would
reasonably be expected to result in a Material Adverse Change or adversely
affect the consummation of the transactions contemplated by this Agreement.
No material labor dispute with the employees of the Company, or to the
Company's knowledge (and without investigation) with the employees of any
principal supplier of the Company, exists or, to the best of the Company's
knowledge, is threatened or imminent.
(o) INTELLECTUAL PROPERTY RIGHTS. The Company owns
or possesses sufficient trademarks, trade names, patent rights, copyrights,
licenses, approvals, trade secrets and other similar rights (collectively,
"Intellectual Property Rights") reasonably necessary to conduct its business
as now conducted; and the expected expiration of any of such Intellectual
Property Rights would not result in a Material Adverse Change. The Company
has not received any notice of infringement or conflict with asserted
Intellectual Property Rights of others, which infringement or conflict, if
the subject of an unfavorable decision, would result in a Material Adverse
Change.
(p) ALL NECESSARY PERMITS, ETC. The Company
possesses such valid and current certificates, authorizations or permits
issued by the appropriate state, federal or foreign regulatory agencies or
bodies necessary to conduct its business, and the Company has not received
any notice of proceedings relating to the revocation or modification of, or
non-compliance with, any such certificate, authorization or permit which,
singly or in the aggregate, if the subject of an unfavorable decision, ruling
or finding, could result in a Material Adverse Change.
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(q) TITLE TO PROPERTIES. The Company has good and
marketable title to all the properties and assets reflected as owned in the
financial statements referred to in Section 1(A)(i) above, in each case free
and clear of any security interests, mortgages, liens, encumbrances,
equities, claims and other defects, except such as do not materially and
adversely affect the value of such property and do not materially interfere
with the use made or proposed to be made of such property by the Company.
The real property, improvements, equipment and personal property held under
lease by the Company are held under valid and enforceable leases, with such
exceptions as are not material and do not materially interfere with the use
made or proposed to be made of such real property, improvements, equipment or
personal property by the Company.
(r) TAX LAW COMPLIANCE. The Company has filed all
necessary federal, state and foreign income and franchise tax returns and has
paid all taxes required to be paid by it and, if due and payable, any related
or similar assessment, fine or penalty levied against it. The Company has
made adequate charges, accruals and reserves in the applicable financial
statements referred to in Section 1(A)(i) above in respect of all federal,
state and foreign income and franchise taxes for all periods as to which the
tax liability of the Company has not been finally determined.
(s) COMPANY NOT AN "INVESTMENT COMPANY." The
Company has been advised of the rules and requirements under the Investment
Company Act of 1940, as amended (the "Investment Company Act"). The Company
is not, and after receipt of payment for the Common Shares will not be, an
"investment company" within the meaning of Investment Company Act and will
conduct its business in a manner so that it will not become subject to the
Investment Company Act.
(t) INSURANCE. The Company is insured by
recognized, financially sound and reputable institutions with policies in
such amounts and with such deductibles and covering such risks as are
generally deemed adequate and customary for its business including, but not
limited to, policies covering real and personal property owned or leased by
the Company against theft, damage, destruction, acts of vandalism and
earthquakes. The Company has no reason to believe that it will not be able
(i) to renew its existing insurance coverage as and when such policies expire
or (ii) to obtain comparable coverage from similar institutions as may be
necessary or appropriate to conduct its business as now conducted and at a
cost that would not result in a Material Adverse Change. The Company has not
been denied any insurance coverage which it has sought or for which it has
applied.
(u) NO PRICE STABILIZATION OR MANIPULATION. The
Company has not taken and will not take, directly or indirectly, any action
designed to or that might be reasonably expected to cause or result in
stabilization or manipulation of the price of the Common Stock to facilitate
the sale or resale of the Common Shares.
7
(v) RELATED PARTY TRANSACTIONS. There are no
business relationships or related-party transactions involving the Company or
any other person required to be described in the Prospectus which have not
been described as required.
(w) NO UNLAWFUL CONTRIBUTIONS OR OTHER PAYMENTS.
Neither the Company nor, to the best of the Company's knowledge, any employee
or agent of the Company, has made any contribution or other payment to any
official of, or candidate for, any federal, state or foreign office in
violation of any law or of the character required to be disclosed in the
Prospectus.
(x) COMPANY'S ACCOUNTING SYSTEM. The Company
maintains a system of accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management's
general or specific authorization; (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; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(y) COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as
would not, individually or in the aggregate, result in a Material Adverse
Change (i) the Company is not in violation of any federal, state, local or
foreign law or regulation relating to pollution or protection of human health
or the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) or wildlife, including
without limitation, laws and regulations relating to emissions, discharges,
releases or threatened releases of chemicals, pollutants, contaminants,
wastes, toxic substances, hazardous substances, petroleum and petroleum
products (collectively, "Materials of Environmental Concern"), or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of Environment Concern
(collectively, "Environmental Laws"), which violation includes, but is not
limited to, noncompliance with any permits or other governmental
authorizations required for the operation of the business of the Company
under applicable Environmental Laws, or noncompliance with the terms and
conditions thereof, nor has the Company received any written communication,
whether from a governmental authority, citizens group, employee or otherwise,
that alleges that the Company is in violation of any Environmental Law; (ii)
there is no claim, action or cause of action filed with a court or
governmental authority, no investigation with respect to which the Company
has received written notice, and no written notice by any person or entity
alleging potential liability for investigatory costs, cleanup costs,
governmental responses costs, natural resources damages, property damages,
personal injuries, attorneys' fees or penalties arising out of, based on or
resulting from the presence, or release into the environment, of any Material
of Environmental Concern at any location owned, leased or operated by the
Company, now or in the past (collectively, "Environmental Claims"), pending
or, to the best of the Company's knowledge, threatened against the Company or
8
any person or entity whose liability for any Environmental Claim the Company
has retained or assumed either contractually or by operation of law; and
(iii) to the best of the Company's knowledge, there are no past or present
actions, activities, circumstances, conditions, events or incidents,
including, without limitation, the release, emission, discharge, presence or
disposal of any Material of Environmental Concern, that reasonably could
result in a violation of any Environmental Law or form the basis of a
potential Environmental Claim against the Company or against any person or
entity whose liability for any Environmental Claim the Company has retained
or assumed either contractually or by operation of law.
[(z) ERISA COMPLIANCE. The Company and any
"employee benefit plan" (as defined under the Employee Retirement Income
Security Act of 1974, as amended, and the regulations and published
interpretations thereunder (collectively, "ERISA")) established or maintained
by the Company is in compliance in all material respects with ERISA. No
"reportable event" (as defined under ERISA) has occurred or is reasonably
expected to occur with respect to any "employee benefit plan" established or
maintained by the Company. No "employee benefit plan" established or
maintained by the Company, if such "employee benefit plan" were terminated,
would have any "amount of unfunded benefit liabilities" (as defined under
ERISA). The Company has not incurred or reasonably expects to incur any
liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "employee benefit plan" or (ii) Sections 412, 4971, 4975
or 4980B of the Code. Each "employee benefit plan" established or maintained
by the Company that is intended to be qualified under Section 401(a) of the
Code is so qualified and nothing has occurred, whether by action or failure
to act, which would cause the loss of such qualification.]
Any certificate signed by an officer of the Company
and delivered to the Underwriters or to counsel for the Underwriters shall be
deemed to be a representation and warranty by the Company to each Underwriter
as to the matters set forth therein.
B. REPRESENTATIONS AND WARRANTIES OF THE SELLING
STOCKHOLDERS. Each Selling Stockholder represents, warrants and covenants to
each Underwriter as follows:
(a) THE UNDERWRITING AGREEMENT. This Agreement has
been duly authorized, executed and delivered by or on behalf of such Selling
Stockholder and is a valid and binding agreement of such Selling Stockholder,
enforceable in accordance with its terms, except as rights to indemnification
hereunder may be limited by applicable law and except as the enforcement
hereof may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or affecting the rights and remedies of
creditors or by general equitable principles.
(b) THE CUSTODY AGREEMENT AND POWER OF ATTORNEY.
Each of the (i) Custody Agreement signed by such Selling Stockholder and
[The First National Bank of Boston], as custodian (the "Custodian"), relating
to the deposit of the Common
9
Shares to be sold by such Selling Stockholder (the "Custody Agreement") and
(ii) Power of Attorney appointing certain individuals named therein as such
Selling Stockholder's attorneys-in-fact (each, an "Attorney-in-Fact") to the
extent set forth therein relating to the transactions contemplated hereby and
by the Prospectus (the "Power of Attorney"), of such Selling Stockholder has
been duly authorized, executed and delivered by such Selling Stockholder and
is a valid and binding agreement of such Selling Stockholder, enforceable in
accordance with its terms, except as rights to indemnification thereunder may
be limited by applicable law and except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights and remedies of creditors or
by general equitable principles.
(c) TITLE TO COMMON SHARES TO BE SOLD; ALL
AUTHORIZATIONS OBTAINED. Such Selling Stockholder has, and on the First
Closing Date (as defined below) will have, good and valid title to all of the
Common Shares which may be sold by such Selling Stockholder pursuant to this
Agreement on such date and the legal right and power, and all authorizations
and approvals required by law, and, if such Selling Stockholder is a
corporation, under its charter or by-laws, to enter into this Agreement and
its Custody Agreement and Power of Attorney, to sell, transfer and deliver
all of the Common Shares which may be sold by such Selling Stockholder
pursuant to this Agreement and to comply with its other obligations hereunder
and thereunder.
(d) DELIVERY OF THE COMMON SHARES TO BE SOLD. Upon
delivery of the Common Shares which are sold by such Selling Stockholder
pursuant to this Agreement [the Underwriters will be owners of] such Common
Shares, free and clear of any security interest, mortgage, pledge, lien,
encumbrance or other claim.
(e) NON-CONTRAVENTION; NO FURTHER AUTHORIZATIONS OR
APPROVALS REQUIRED. The execution and delivery by such Selling Stockholder
of, and the performance by such Selling Stockholder of its obligations under,
this Agreement, the Custody Agreement and the Power of Attorney will not
contravene or conflict with, result in a breach of, or constitute a Default
under, or require the consent of any other party to, the charter or by-laws,
if such Selling Stockholder is a corporation, of such Selling Stockholder or
any other agreement or instrument to which such Selling Stockholder is a
party or by which it is bound or under which it is entitled to any right or
benefit, any provision of applicable law or any judgment, order, decree or
regulation applicable to such Selling Stockholder of any court, regulatory
body, administrative agency, governmental body or arbitrator having
jurisdiction over such Selling Stockholder. No consent, approval,
authorization or other order of, or registration or filing with, any court or
other governmental authority or agency, is required for the consummation by
such Selling Stockholder of the transactions contemplated in this Agreement,
except such as have been obtained or made and are in full force and effect
under the Securities Act, applicable state securities or blue sky laws and
from the NASD.
(f) NO REGISTRATION OR OTHER SIMILAR RIGHTS. Such
Selling Stockholder does not have any registration or other similar rights to
have any equity or
10
debt securities registered for sale by the Company under the Registration
Statement or included in the offering contemplated by this Agreement.
(g) NO FURTHER CONSENTS, ETC. No consent,
approval or waiver is required under any instrument or agreement to which
such Selling Stockholder is a party or by which it is bound or under which it
is entitled to any right or benefit, in connection with the offering, sale or
purchase by the Underwriters of any of the Common Shares which may be sold by
such Selling Stockholder under this Agreement or the consummation by such
Selling Stockholder of any of the other transactions contemplated hereby.
(h) DISCLOSURE MADE BY SUCH SELLING STOCKHOLDER IN
THE PROSPECTUS. All information furnished by or on behalf of such Selling
Stockholder in writing expressly for use in the Registration Statement and
Prospectus is, and on the First Closing Date will be, true, correct, and
complete in all material respects, and does not, and on the First Closing
Date will not, contain any untrue statement of a material fact or omit to
state any material fact necessary to make such information not misleading.
Such Selling Stockholder confirms as accurate the number of shares of Common
Stock set forth opposite such Selling Stockholder's name in the Prospectus
under the caption "Principal and Selling Stockholders" (both prior to and
after giving effect to the sale of the Common Shares).
(i) NO PRICE STABILIZATION OR MANIPULATION. Such
Selling Stockholder has not taken and will not take, directly or indirectly,
any action designed to or that might be reasonably expected to cause or
result in stabilization or manipulation of the price of the Common Stock to
facilitate the sale or resale of the Common Shares.
(j) CONFIRMATION OF COMPANY REPRESENTATIONS AND
WARRANTIES. Such Selling Stockholder, if a Significant Selling Stockholder,
has no reason to believe that the representations and warranties of the
Company contained in Section 1(A) hereof are not true and correct. Each
Selling Stockholder, whether or not a Significant Selling Stockholder, has no
knowledge of any material fact, condition or information not disclosed in the
Prospectus which has had or may have a Material Adverse Effect and is not
prompted to sell shares of Common Stock by any information concerning the
Company which is not set forth in the Registration Statement and the
Prospectus.
Any certificate signed by or on behalf of any Selling
Stockholder and delivered to the Underwriters or to counsel for the
Underwriters shall be deemed to be a representation and warranty by such
Selling Stockholder to each Underwriter as to the matters covered thereby.
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE COMMON SHARES.
11
THE FIRM COMMON SHARES. Upon the terms herein set forth, (i)
the Company agrees to issue and sell to the several Underwriters an aggregate
of 1,300,000 Firm Common Shares and (ii) the Selling Stockholders agree to
sell to the several Underwriters an aggregate of 300,000 Firm Common Shares,
each Selling Stockholder selling the number of Firm Common Shares set forth
opposite such Selling Stockholder's name on SCHEDULE B. On the basis of the
representations, warranties and agreements herein contained, and upon the
terms but subject to the conditions herein set forth, the Underwriters agree,
severally and not jointly, to purchase from the Company and the Selling
Stockholders the respective number of Firm Common Shares set forth opposite
their names on SCHEDULE A. The purchase price per Firm Common Share to be
paid by the several Underwriters to the Company and the Selling Stockholders
shall be $[___] per share.
THE FIRST CLOSING DATE. Delivery of certificates for the Firm
Common Shares to be purchased by the Underwriters and payment therefor shall
be made at the offices of NMS, 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx (or such other place as may be agreed to by the Company and the
Underwriters) at 6:00 a.m. San Francisco time, on [___], or such other time
and date, not later than 10:30 a.m. San Francisco time, on the tenth business
day following such date, as the Underwriters shall designate by notice to the
Company (the time and date of such closing are called the "First Closing
Date"). The Company and the Selling Stockholders hereby acknowledge that
circumstances under which the Underwriters may provide notice to postpone the
First Closing Date as originally scheduled include, but are in no way limited
to, any determination by the Company, the Selling Stockholders or the
Underwriters to recirculate to the public copies of an amended or
supplemented Prospectus or a delay as contemplated by the provisions of
Section 10.
THE OPTIONAL COMMON SHARES; THE SECOND CLOSING DATE. In
addition, on the basis of the representations, warranties and agreements
herein contained, and upon the terms but subject to the conditions herein set
forth, the Company hereby grants an option to the several Underwriters to
purchase, severally and not jointly, up to an aggregate 240,000 Optional
Common Shares from the Company at the purchase price per share to be paid by
the Underwriters for the Firm Common Shares. The option granted hereunder is
for use by the Underwriters solely in covering any over-allotments in
connection with the sale and distribution of the Firm Common Shares. The
option granted hereunder may be exercised at any time (but not more than
once) upon notice by the Underwriters to the Company, which notice may be
given at any time within 30 days from the date of this Agreement. Such
notice shall set forth (i) the aggregate number of Optional Common Shares as
to which the Underwriters are exercising the option, (ii) the names and
denominations in which the certificates for the Optional Common Shares are to
be registered and (iii) the time, date and place at which such certificates
will be delivered (which time and date may be simultaneous with, but not
earlier than, the First Closing Date; and in such case the term "First
Closing Date" shall refer to the time and date of delivery of certificates
for the Firm Common Shares and the Optional Common Shares).
12
Such time and date of delivery, if subsequent to the First Closing Date, is
called the "Second Closing Date" and shall be determined by the Underwriters
and shall not be earlier than three nor later than five full business days
after delivery of such notice of exercise. If any Optional Common Shares are
to be purchased, each Underwriter agrees, severally and not jointly, to
purchase the number of Optional Common Shares (subject to such adjustments to
eliminate fractional shares as the Underwriters may determine) that bears the
same proportion to the total number of Optional Common Shares to be purchased
as the number of Firm Common Shares set forth on SCHEDULE A opposite the name
of such Underwriter bears to the total number of Firm Common Shares. The
Underwriters may cancel the option at any time prior to its expiration by
giving written notice of such cancellation to the Company.
PUBLIC OFFERING OF THE COMMON SHARES. The Underwriters hereby
advise the Company and the Selling Stockholders that the Underwriters intend
to offer for sale to the public, as described in the Prospectus, their
respective portions of the Common Shares as soon after this Agreement has
been executed and the Registration Statement has been declared effective as
the Underwriters, in their sole judgment, have determined is advisable and
practicable.
PAYMENT FOR THE COMMON SHARES. Payment for the Common Shares
to be sold by the Company shall be made at the First Closing Date (and, if
applicable, at the Second Closing Date) by wire transfer of immediately
available funds to the order of the Company. Payment for the Common Shares
to be sold by the Selling Stockholders shall be made at the First Closing
Date by wire transfer of immediately available funds to the order of the
Custodian.
NMS, individually and not as the representative of the
Underwriters, may (but shall not be obligated to) make payment for any Common
Shares to be purchased by any Underwriter whose funds shall not have been
received by NMS by the First Closing Date or the Second Closing Date, as the
case may be, for the account of such Underwriter, but any such payment shall
not relieve such Underwriter from any of its obligations under this Agreement.
Each Selling Stockholder hereby agrees that (i) it will pay
all stock transfer taxes, stamp duties and other similar taxes, if any,
payable upon the sale or delivery of the Common Shares to be sold by such
Selling Stockholder to the several Underwriters, or otherwise in connection
with the performance of such Selling Stockholder's obligations hereunder and
(ii) the Custodian is authorized to deduct for such payment any such amounts
from the proceeds to such Selling Stockholder hereunder and to hold such
amounts for the account of such Selling Stockholder with the Custodian under
the Custody Agreement.
DELIVERY OF THE COMMON SHARES. The Company and the Selling
Stockholders shall deliver, or cause to be delivered, to the Underwriters for
the accounts of the several Underwriters certificates for the Firm Common
Shares to be sold by them at the First
13
Closing Date, against the irrevocable release of a wire transfer of
immediately available funds for the amount of the purchase price therefor.
The Company shall also deliver, or cause to be delivered, to the Underwriters
for the accounts of the several Underwriters, certificates for the Optional
Common Shares the Underwriters have agreed to purchase at the Second Closing
Date, against the irrevocable release of a wire transfer of immediately
available funds for the amount of the purchase price therefor. The
certificates for the Common Shares shall be in definitive form and registered
in such names and denominations as the Underwriters shall have requested at
least two full business days prior to the First Closing Date (or the Second
Closing Date, as the case may be) and shall be made available for inspection
on the business day preceding the First Closing Date (or the Second Closing
Date, as the case may be) at a location in New York City as the Underwriters
may designate. 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.
DELIVERY OF PROSPECTUS TO THE UNDERWRITERS. Not later than
12:00 p.m. on the second business day following the date the Common Shares of
released by the Underwriters for sale to the public, the Company shall
delivery or cause to be delivered copies of the Prospectus in such quantities
and at such places as the Underwriters shall request.
SECTION 3. ADDITIONAL COVENANTS.
A. COVENANTS OF THE COMPANY. The Company further
covenants and agrees with each Underwriter as follows:
(a) UNDERWRITERS' REVIEW OF PROPOSED AMENDMENTS AND
SUPPLEMENTS. During such period beginning on the date hereof and ending on
the later of the First Closing Date or such date, as in the opinion of
counsel for the Underwriters, the Prospectus is no longer required by law to
be delivered in connection with sales by an Underwriter or dealer (the
"Prospectus Delivery Period"), prior to amending or supplementing the
Registration Statement (including any registration statement filed under Rule
462(b) under the Securities Act) or the Prospectus (including any amendment
or supplement through incorporation by reference of any report filed under
the Exchange Act), the Company shall furnish to the Underwriters for review a
copy of each such proposed amendment or supplement, and the Company shall not
file any such proposed amendment or supplement to which the Underwriters
reasonably object.
(b) SECURITIES ACT COMPLIANCE. After the date of
this Agreement, the Company shall promptly advise the Underwriters in writing
(i) of the receipt of any comments of, or requests for additional or
supplemental information from, the Commission, (ii) of the time and date of
any filing of any post-effective amendment to the Registration Statement or
any amendment or supplement to any preliminary prospectus or the Prospectus,
(iii) of the time and date that any post-effective amendment
14
to the Registration Statement becomes effective and (iv) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto or of any
order preventing or suspending the use of any preliminary prospectus or the
Prospectus, or of any proceedings to remove, suspend or terminate from
listing or quotation the Common Stock from any securities exchange upon which
it is listed for trading or included or designated for quotation, or of the
threatening or initiation of any proceedings for any of such purposes. 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. Additionally, the Company agrees that it shall comply with
the provisions of Rules 424(b), 430A and 434, as applicable, under the
Securities Act and will use its reasonable efforts to confirm that any
filings made by the Company under such Rule 424(b) were received in a timely
manner by the Commission.
(c) AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS
AND OTHER SECURITIES ACT MATTERS. If, during the Prospectus Delivery Period,
any event shall occur or condition exist as a result of which it is necessary
to amend or supplement the Prospectus in order to make the statements
therein, in the light of the circumstances when the Prospectus is delivered
to a purchaser, not misleading, or if in the opinion of the Underwriters or
counsel for the Underwriters it is otherwise necessary to amend or supplement
the Prospectus to comply with law, the Company agrees to promptly prepare
(subject to Section 3(A)(a) hereof), file with the Commission and furnish at
its own expense to the Underwriters and to dealers, amendments or supplements
to the Prospectus so that the statements in the Prospectus as so amended or
supplemented will not, in the light of the circumstances when the Prospectus
is delivered to a purchaser, be misleading or so that the Prospectus, as
amended or supplemented, will comply with law.
(d) COPIES OF ANY AMENDMENTS AND SUPPLEMENTS TO THE
PROSPECTUS. The Company agrees to furnish the Underwriters, without charge,
during the Prospectus Delivery Period, as many copies of the Prospectus and
any amendments and supplements thereto as the Underwriters may request.
(e) BLUE SKY COMPLIANCE. The Company shall
cooperate with the Underwriters and counsel for the Underwriters to qualify
or register the Common Shares for sale under (or obtain exemptions from the
application of) the state securities or blue sky laws or Canadian
provincial Securities laws of those jurisdictions designated by the
Underwriters, shall comply with such laws and shall continue such
qualifications, registrations and exemptions in effect so long as required
for the distribution of the Common Shares. The Company shall not be required
to qualify as a foreign corporation or to take any action that would subject
it to general 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 in any
jurisdiction or any initiation or threat of any proceeding for any such
purpose, and in the event of the issuance of any order
15
suspending such qualification, registration or exemption, the Company shall
use its best efforts to obtain the withdrawal thereof at the earliest
possible moment.
(f) USE OF PROCEEDS. The Company shall apply the
net proceeds from the sale of the Common Shares sold by it in the manner
described under the caption "Use of Proceeds" in the Prospectus.
(g) TRANSFER AGENT. The Company shall maintain, at
its expense, a registrar and transfer agent for the Common Stock.
(h) EARNINGS STATEMENT. As soon as practicable,
the Company will make generally available to its security holders and to the
Underwriters an earnings statement (which need not be audited) covering the
twelve-month period ending June 30, 1998 that satisfies the provisions of
Section 11(a) of the Securities Act.
(j) PERIODIC REPORTING OBLIGATIONS. During the
Prospectus Delivery Period the Company shall file, on a timely basis, with
the Commission and the Nasdaq National Market all reports and documents
required to be filed under the Exchange Act.
(k) AGREEMENT NOT TO OFFER OR SELL ADDITIONAL
SECURITIES. During the period of 120 days following the date of the
Prospectus, the Company will not, without the prior written consent of NMS
(which consent may be withheld at the sole discretion of NMS), directly or
indirectly, sell, offer, contract or grant any option to sell, pledge,
transfer or establish an open "put equivalent position" within the meaning of
Rule 16a-1(h) under the Exchange Act, or otherwise dispose of or transfer, or
announce the offering of, or file any registration statement under the
Securities Act in respect of, any shares of Common Stock, options or warrants
to acquire shares of the Common Stock or securities exchangeable or
exercisable for or convertible into shares of Common Stock (other than as
contemplated by this Agreement with respect to the Common Shares); PROVIDED,
HOWEVER, that the Company may issue shares of its Common Stock or options to
purchase its Common Stock, or Common Stock upon exercise of options, pursuant
to any of the Company's equity compensation plans described in the Prospectus.
(l) FUTURE REPORTS TO THE UNDERWRITERS. During the
period of five years hereafter the Company will furnish to the Underwriters
care of NMS at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, XX 00000, Attention:
Xxxx X. Xxxxxxxx: (i) as soon as practicable after the end of each fiscal
year, copies of the Annual Report 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 or certified 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, Current
Report on Form 8-K or other report filed by the Company with the Commission,
the NASD or
16
any securities exchange; and (iii) as soon as available, copies of any report
or communication of the Company mailed generally to holders of its capital
stock.
B. COVENANTS OF THE SELLING STOCKHOLDERS. Each Selling
Stockholder further covenants and agrees with each Underwriter:
(a) AGREEMENT NOT TO OFFER OR SELL ADDITIONAL
SECURITIES. Such Selling Stockholder will not, without the prior written
consent of NMS (which consent may be withheld in its sole discretion),
directly or indirectly, sell, offer, contract or grant any option to sell
(including without limitation any short sale), pledge, transfer, establish an
open "put equivalent position" within the meaning of Rule 16a-1(h) under the
Exchange Act, or otherwise dispose of any shares of Common Stock, options or
warrants to acquire shares of Common Stock, or securities exchangeable or
exercisable for or convertible into shares of Common Stock currently or
hereafter owned either of record or beneficially (as defined in Rule 13d-3
under Securities Exchange Act of 1934, as amended) by the undersigned, or
publicly announce the undersigned's intention to do any of the foregoing, for
a period commencing on the date hereof and continuing through the close of
trading on the date 120 days after the date of the Prospectus.
(b) DELIVERY OF FORMS W-8 AND W-9. To deliver to
the Underwriters prior to the First Closing Date a properly completed and
executed United States Treasury Department Form W-8 (if the Selling
Stockholder is a non-United States person) or Form W-9 (if the Selling
Stockholder is a United States Person).
NMS, on behalf of the several Underwriters, may, in
its sole discretion, waive in writing the performance by the Company or any
Selling Stockholder of any one or more of the foregoing covenants or extend
the time for their performance.
SECTION 4. PAYMENT OF EXPENSES. The Company and the Selling
Stockholders, jointly and severally, agree to pay in such proportions as they
may agree upon among themselves all costs, fees and expenses incurred in
connection with the performance of their obligations hereunder and in
connection with the transactions contemplated hereby, including without
limitation (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, independent public or certified public
accountants and other advisors, (v) all costs and expenses incurred in
connection with the preparation, printing, filing, shipping and distribution
of the Registration Statement (including financial statements, exhibits,
schedules, consents and certificates of experts), each preliminary prospectus
and the Prospectus, and all amendments and supplements thereto, and this
Agreement, (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
17
of) all or any part of the Common Shares for offer and sale under the state
securities or blue sky laws or the provincial securities laws of Canada, and,
if requested by the Underwriters, preparing and printing a "Blue Sky Survey"
or memorandum, and any supplements thereto, advising the Underwriters of such
qualifications, registrations and exemptions, not to exceed $___________,
(vii) the filing fees incident to, and the reasonable fees and expenses of
counsel for the Underwriters in connection with, the NASD's review and
approval of the Underwriters' participation in the offering and distribution
of the Common Shares, (viii) the fees and expenses associated with including
the Common Shares on the Nasdaq National Market, and (ix) all other fees,
costs and expenses referred to in Item 13 of Part II of the Registration
Statement. Except as provided in this Section 4, Section 6, Section 8 and
Section 9 hereof, the Underwriters shall pay their own expenses, including
the fees and disbursements of their counsel.
The Selling Stockholders further agree with each Underwriter
to pay (directly or by reimbursement) all fees and expenses incident to the
performance of their obligations under this Agreement which are not otherwise
specifically provided for herein, including but not limited to (i) fees and
expenses of counsel and other advisors for such Selling Stockholders, (ii)
fees and expenses of the Custodian and (iii) expenses and taxes incident to
the sale and delivery of the Common Shares to be sold by such Selling
Stockholders to the Underwriters hereunder (which taxes, if any, may be
deducted by the Custodian under the provisions of Section 2 of this
Agreement).
This Section 4 shall not affect or modify any separate, valid
agreement relating to the allocation of payment of expenses between the
Company, on the one hand, and the Selling Stockholders, on the other hand.
SECTION 5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS.
The obligations of the several Underwriters to purchase and pay for the
Common Shares as provided herein on the First Closing Date and, with respect
to the Optional Common Shares, 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 set forth in Sections 1(A) and 1(B) hereof as of
the date hereof and as of the First Closing Date as though then made and,
with respect to the Company only, as of the Second Closing Date as
though then made, to the timely performance by the Company and the Selling
Stockholders of their respective covenants and other obligations hereunder,
and to each of the following additional conditions:
(a) ACCOUNTANTS' COMFORT LETTER. On the date
hereof, the Underwriters shall have received from Price Waterhouse LLP,
independent public or certified public accountants for the Company, a letter
dated the date hereof addressed to the Underwriters, in form and substance
satisfactory to the Underwriters, containing statements and information of
the type ordinarily included in accountant's "comfort letters" to
underwriters, delivered according to Statement of Auditing Standards No. 72
(or any successor bulletin), with respect to the audited and unaudited
financial statements
18
and certain financial information contained in the Registration Statement and
the Prospectus (and the Underwriters shall have received additional conformed
copies of such accountants' letter for each of the several Underwriters).
(b) COMPLIANCE WITH REGISTRATION REQUIREMENTS; NO
STOP ORDER; NO OBJECTION FROM NASD. For the period from and after
effectiveness of this Agreement and prior to the First Closing Date and, with
respect to the Optional Common Shares, the Second Closing Date:
(i) the Company shall have filed the
Prospectus with the Commission (including the information required by Rule
430A under the Securities Act) in the manner and within the time period
required by Rule 424(b) under the Securities Act; or the Company shall have
filed a post-effective amendment to the Registration Statement containing the
information required by such Rule 430A, and such post-effective amendment
shall have become effective; or, if the Company elected to rely upon Rule 434
under the Securities Act and obtained the Underwriters' consent thereto, the
Company shall have filed a Term Sheet with the Commission in the manner and
within the time period required by such Rule 424(b);
(ii) 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 be in effect
and no proceedings for such purpose shall have been instituted or threatened
by the Commission; and
(iii) the NASD shall have raised no
objection to the fairness and reasonableness of the underwriting terms and
arrangements.
(c) NO MATERIAL ADVERSE CHANGE OR RATINGS AGENCY
CHANGE. For the period from and after the date of this Agreement and prior
to the First Closing Date and, with respect to the Optional Common Shares,
the Second Closing Date, in the judgment of the Underwriters there shall not
have occurred any Material Adverse Change.
(d) OPINION OF COUNSEL FOR THE COMPANY. On each of
the First Closing Date and the Second Closing Date the Underwriters shall
have received the favorable opinion of Xxxx Xxxx Xxxx & Freidenrich LLP,
counsel for the Company, dated as of such Closing Date, the form of which is
attached as EXHIBIT A (and the
19
Underwriters shall have received additional conformed copies of such
counsel's legal opinion for each of the several Underwriters).
(e) OPINION OF COUNSEL FOR THE UNDERWRITERS. On
each of the First Closing Date and the Second Closing Date the Underwriters
shall have received the favorable opinion of Fried, Frank, Harris, Xxxxxxx &
Xxxxxxxx (a partnership including professional corporations), counsel for the
Underwriters, dated as of such Closing Date, with respect to the matters set
forth in paragraphs (i), (v) through (x), and the next-to-last paragraph of
EXHIBIT A (and the Underwriters shall have received additional conformed
copies of such counsel's legal opinion for each of the several Underwriters).
(f) OFFICERS' CERTIFICATE. On each of the First
Closing Date and the Second Closing Date the Underwriters shall have received
a written certificate executed by the Chairman of the Board, Chief Executive
Officer or President of the Company and the Chief Financial Officer or Chief
Accounting Officer of the Company, dated as of such Closing Date, to the
effect set forth in subsection (b)(ii) of this Section 5, and further to the
effect that:
(i) for the period from and after the date of
this Agreement and prior to such Closing Date, there has not occurred any
Material Adverse Change;
(ii) the representations, warranties and
covenants of the Company set forth in Section 1(A) of this Agreement are true
and correct with the same force and effect as though expressly made on and as
of such Closing Date; and
(iii) the Company has complied with all the
agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to such Closing Date.
(g) BRING-DOWN COMFORT LETTER. On each of the
First Closing Date and the Second Closing Date the Underwriters shall have
received from Price Waterhouse LLP, independent public or certified public
accountants for the Company, a letter dated such date, in form and substance
satisfactory to the Underwriters, to the effect that they reaffirm the
statements made in the letter furnished by them pursuant to subsection (a) of
this Section 5, except that the specified date referred to therein for the
carrying out of procedures shall be no more than three business days prior to
the First Closing Date or Second Closing Date, as the case may be (and the
Underwriters shall have received additional conformed copies of such
accountants' letter for each of the several Underwriters).
(h) OPINION OF COUNSEL FOR THE SELLING
STOCKHOLDERS. On the First Closing Date the Underwriters shall have received
the favorable opinion of Xxxx Xxxx Xxxx & Freidenrich LLP and certain others,
counsel for the Selling Stockholders, dated as of such Closing Date, the form
of which is
20
attached as EXHIBIT B (and the Underwriters shall have received additional
conformed copies of such counsel's legal opinion for each of the several
Underwriters).
(i) SELLING STOCKHOLDERS' CERTIFICATE. On the
First Closing Date the Underwriters shall have received a written certificate
executed by the Attorney-in-Fact of each Selling Stockholder, dated as of
such Closing Date, to the effect that:
(i) the representations, warranties and
covenants of such Selling Stockholder set forth in Section 1(B) of this
Agreement are true and correct with the same force and effect as though
expressly made by such Selling Stockholder on and as of such Closing Date; and
(ii) such Selling Stockholder has complied with
all the agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to such Closing Date.
(j) SELLING STOCKHOLDERS' DOCUMENTS. On the date
hereof, the Company and the Selling Stockholders shall have furnished for
review by the Underwriters copies of the Powers of Attorney and Custody
Agreements executed by each of the Selling Stockholders and such further
information, certificates and documents as the Underwriters may reasonably
request.
(k) LOCK-UP AGREEMENT FROM CERTAIN STOCKHOLDERS OF
THE COMPANY OTHER THAN SELLING STOCKHOLDERS. On the date hereof, the Company
shall have furnished to the Underwriters an agreement in the form of EXHIBIT
C hereto from each director and executive officer of the Company (other than
the Selling Stockholders), and such agreement shall be in full force and
effect on each of the First Closing Date and the Second Closing Date.
(l) ADDITIONAL DOCUMENTS. On or before each of the
First Closing Date and the Second Closing Date, the Underwriters and counsel
for the Underwriters shall have received such information, documents and
opinions as they may reasonably require for the purposes of enabling them to
pass upon the issuance and sale of the Common Shares as contemplated herein,
or in order to evidence the accuracy of any of the representations and
warranties, or the satisfaction of any of the conditions or agreements,
herein contained.
If any condition specified in this Section 5 is not satisfied
when and as required to be satisfied, this Agreement may be terminated by the
Underwriters by notice to the Company and the Selling Stockholders at any
time on or prior to the First Closing Date and, with respect to the Optional
Common Shares, at any time prior to the Second Closing Date, which
termination shall be without liability on the part of any party to any other
party, except that Section 4, Section 6, Section 8 and Section 9 shall at
all times be effective and shall survive such termination.
21
SECTION 6. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If this
Agreement is terminated by the Underwriters pursuant to Section 5, Section 7,
Section 10, Section 11 or Section 17, or if the sale to the Underwriters of
the Common Shares on the First Closing Date is not consummated because of any
refusal, inability or failure on the part of the Company or the Selling
Stockholders to perform any agreement herein or to comply with any provision
hereof, the Company agrees to reimburse the Underwriters and the other
Underwriters (or such Underwriters as have terminated this Agreement with
respect to themselves), severally, upon demand for all documented
out-of-pocket expenses that shall have been reasonably incurred by the
Underwriters in connection with the proposed purchase and the offering and
sale of the Common Shares, including but not limited to fees and
disbursements of counsel, printing expenses, travel expenses, postage,
facsimile and telephone charges.
SECTION 7. EFFECTIVENESS OF THIS AGREEMENT.
This Agreement shall not become effective until the later of
(i) the execution of this Agreement by the parties hereto and (ii)
notification by the Commission to the Company and the Underwriters of the
effectiveness of the Registration Statement under the Securities Act.
Prior to such effectiveness, this Agreement may be terminated
by any party by notice to each of the other parties hereto, and any such
termination shall be without liability on the part of (a) the Company or the
Selling Stockholders to any Underwriter, except that the Company and the
Selling Stockholders shall be obligated to reimburse the expenses of the
Underwriters pursuant to Sections 4 and 6 hereof, (b) of any Underwriter to
the Company or the Selling Stockholders, or (c) of any party hereto to any
other party except that the provisions of Section 8 and Section 9 shall at
all times be effective and shall survive such termination.
SECTION 8. INDEMNIFICATION.
(a) INDEMNIFICATION OF THE UNDERWRITERS BY THE
COMPANY AND SIGNIFICANT SELLING STOCKHOLDERS. Each of the Company and each
of the Significant Selling Stockholders agrees to indemnify and hold harmless
each Underwriter, its officers and employees, and each person, if any, who
controls any Underwriter within the meaning of the Securities Act and the
Exchange Act against any loss, claim, damage, liability or expense, as
incurred, to which such Underwriter or such controlling person may become
subject, under the Securities Act, the Exchange Act or other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Company), insofar as such loss, claim, damage, liability or
expense (or actions in respect thereof as contemplated below) arises out of
or is based (i) upon any untrue statement or alleged
22
untrue statement of a material fact contained in the Registration Statement,
or any amendment thereto, including any information deemed to be a part
thereof pursuant to Rule 430A or Rule 434 under the Securities Act, or the
omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading; or
(ii) upon any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus or the Prospectus (or any amendment
or supplement thereto), or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading; or (iii) in
whole or in part upon any inaccuracy in the representations and warranties of
the Company or the Selling Stockholders contained herein, PROVIDED that each
Significant Selling Stockholder shall not be liable for any inaccuracy in a
representation or warranty given by any Selling Stockholder other than such
Significant Selling Stockholder; or (iv) in whole or in part upon any failure
of the Company or the Selling Stockholders (with respect to the Company) or
of each Significant Selling Stockholder (with respect to such Significant
Selling Stockholder) to perform their respective obligations hereunder or
under law, PROVIDED that each Significant Selling Stockholder shall not be
liable for any failure to perform by any Selling Stockholder other than such
Significant Selling Stockholder; or (v) any act or failure to act or any
alleged act or failure to act by any Underwriter in connection with, or
relating in any manner to, the Common Shares or the offering contemplated
hereby, and which is included as part of or referred to in any loss, claim,
damage, liability or action arising out of or based upon any matter covered
by clause (i) or (ii) above, PROVIDED that the Company and the Significant
Selling Stockholders shall not be liable under this clause (v) to the extent
that a court of competent jurisdiction shall have determined by a final
judgment that such loss, claim, damage, liability or action resulted directly
from any such acts or failures to act undertaken or omitted to be taken by
such Underwriter through its bad faith or willful misconduct; and to
reimburse each Underwriter and each such controlling person for any and all
expenses (including the fees and disbursements of counsel chosen by NMS) as
such expenses are reasonably incurred by such Underwriter or such controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action; PROVIDED,
HOWEVER, that the foregoing indemnity agreement shall not apply to any loss,
claim, damage, liability or expense to the extent, but only to the extent,
arising out of or based upon any untrue statement or alleged untrue statement
or omission or alleged omission made in reliance upon and in conformity with
written information furnished to the Company and the Selling Stockholders by
the Underwriters expressly for use in the Registration Statement, any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto); and PROVIDED, FURTHER, that with respect to any preliminary
prospectus, the foregoing indemnity agreement shall not inure to the benefit
of any Underwriter from whom the person asserting any loss, claim, damage,
liability or expense purchased Common Shares, or any person controlling such
Underwriter, if copies of the Prospectus were timely delivered to the
Underwriter pursuant to Section 2 and a copy of the Prospectus (as then
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such
Underwriter to such person, if required by law so to have been delivered,
23
at or prior to the written confirmation of the sale of the Common Shares to
such person, and if the Prospectus (as so amended or supplemented) would have
cured the defect giving rise to such loss, claim, damage, liability or
expense; and PROVIDED, FURTHER, that the liability of each Significant
Selling Stockholder under the foregoing indemnity agreement shall be limited
to an amount equal to the [net proceeds]; and PROVIDED, FURTHER, that no
Significant Selling Stockholder shall be required to provide indemnification
under this Section 8(a) until the Underwriter, officer, employee or
controlling person seeking indemnification shall have first made a demand for
payment on the Company with respect to any such loss, claim, damage,
liability or expense and the Company shall have either rejected such demand
or failed to make such requested payment within [90] days after receipt
thereof. The indemnity agreement set forth in this Section 8(a) shall be in
addition to any liabilities that the Company and the Significant Selling
Stockholders may otherwise have.
(b) INDEMNIFICATION OF THE UNDERWRITERS BY THE
OTHER SELLING STOCKHOLDERS. Each of the Selling Stockholders other than the
Significant Selling Stockholders (the "Other Selling Stockholders") agrees to
indemnify and hold harmless each Underwriter, its officers and employees, and
each person, if any, who controls any Underwriter within the meaning of the
Securities Act and the Exchange Act against any loss, claim, damage,
liability or expense, as incurred, to which such Underwriter or such
controlling person may become subject, under the Securities Act, the Exchange
Act or other federal or state statutory law or regulation, or at common law
or otherwise (including in settlement of any litigation, if such settlement
is effected with the written consent of the Company), insofar as such loss,
claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based (i) upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement, or any amendment thereto, including any information deemed to be a
part thereof pursuant to Rule 430A or Rule 434 under the Securities Act, or
the omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading,
but only if such untrue statement or omission relates to information included
in any of such documents that was provided by or that directly relates to
such Other Selling Stockholder individually; or (ii) upon any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, but only if such
untrue statement or omission relates to information included in any of such
documents that was provided by or that directly relates to such Other Selling
Stockholder individually; or (iii) in whole or in part upon any inaccuracy in
the representations and warranties of such Other Selling Stockholder
individually contained herein; or (iv) in whole or in part upon any failure
of such Other Selling Stockholder individually to perform its respective
obligations hereunder or under law; or (v) any act or failure to act or any
alleged act or failure to act by any Underwriter
24
in connection with, or relating in any manner to, the Common Stock or the
offering contemplated hereby, and which is included as part of or referred to
in any loss, claim, damage, liability or action arising out of or based upon
any matter covered by clause (i) or (ii) above, PROVIDED that the Other
Selling Stockholders shall not be liable under this clause (v) to the extent
that a court of competent jurisdiction shall have determined by a final
judgment that such loss, claim, damage, liability or action resulted directly
from any such acts or failures to act undertaken or omitted to be taken by
such Underwriter through its bad faith or willful misconduct; and to
reimburse each Underwriter and each such controlling person for any and all
expenses (including the fees and disbursements of counsel chosen by NMS) as
such expenses are reasonably incurred by such Underwriter or such controlling
person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action; PROVIDED,
HOWEVER, that with respect to any preliminary prospectus, the foregoing
indemnity agreement shall not inure to the benefit of any Underwriter from
whom the person asserting any loss, claim, damage, liability or expense
purchased Common Shares, or any person controlling such Underwriter, if
copies of the Prospectus were timely delivered to the Underwriter pursuant to
Section 2 and a copy of the Prospectus (as then amended or supplemented if
the Company shall have furnished any amendments or supplements thereto) was
not sent or given by or on behalf of such Underwriter to such person, if
required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Common Shares to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, claim, damage, liability or expense; and PROVIDED,
FURTHER, that the liability of each Other Selling Stockholder under the
foregoing indemnity agreement shall be limited to an amount equal to the
initial public offering price of the Common Shares sold by such Other Selling
Stockholder, less the underwriting discount, as set forth on the front cover
page of the Prospectus; and PROVIDED, FURTHER, that no Other Selling
Stockholder shall be required to provide indemnification under this Section
8(b) until the Underwriter, officer, employee or controlling person seeking
indemnification shall have first made a demand for payment on the Company
with respect to any such loss, claim, damage, liability or expense and the
Company shall have either rejected such demand or failed to make such
requested payment within 90 days after receipt thereof. The indemnity
agreement set forth in this Section 8(b) shall be in addition to any
liabilities that the Other Selling Stockholders may otherwise have.
(c) INDEMNIFICATION OF THE COMPANY, ITS DIRECTORS
AND OFFICERS AND THE SELLING STOCKHOLDERS. Each Underwriter agrees,
severally and not jointly, to indemnify and hold harmless the Company, each
of its directors, each of its officers who signed the Registration Statement,
the Selling Stockholders and each person, if any, who controls the Company or
any Selling Stockholder within the meaning of the Securities Act or the
Exchange Act, against any loss, claim, damage, liability or expense, as
incurred, to which the Company, or any such director, officer, Selling
Stockholder or controlling person may become subject, under the Securities
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
25
consent of such Underwriter), insofar as such loss, claim, damage, liability
or expense (or actions in respect thereof as contemplated below) arises out
of or is based upon any untrue or alleged untrue statement of a material fact
contained in the Registration Statement, any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto), or arises out of or is
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 written information furnished to the Company and the Selling
Stockholders by the Underwriters expressly for use therein; and to 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. Each of
the Company and each of the Selling Stockholders hereby acknowledges that the
only information that the Underwriters have furnished to the Company and the
Selling Stockholders expressly for use in the Registration Statement, any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) are the statements set forth (A) as the last two paragraphs on the
inside front cover page of the Prospectus concerning stabilization and
passive market making by the Underwriters and (B) in the table in the first
paragraph and as the second paragraph and the last three paragraphs under the
caption "Underwriting" in the Prospectus; and the Underwriters confirm that
such statements are correct. The indemnity agreement set forth in this
Section 8(c) shall be in addition to any liabilities that each Underwriter
may otherwise have.
(d) NOTIFICATIONS AND OTHER INDEMNIFICATION
PROCEDURES. Promptly after receipt by an indemnified party under this Section
8 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 8, notify the indemnifying party in writing of the
commencement thereof, but the omission so to notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party for contribution or otherwise than under the indemnity agreement
contained in this Section 8 or to the extent it is not prejudiced as a
proximate result of such failure. In case any such action is brought against
any indemnified party and such indemnified party seeks or intends to seek
indemnity from an indemnifying party, the indemnifying party will be entitled
to participate in, and, to the extent that it shall elect, jointly with all
other indemnifying parties similarly notified, by written notice delivered to
the indemnified party promptly after receiving the aforesaid notice from such
indemnified party, 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 a
conflict may arise between the positions of the indemnifying party and the
indemnified party in conducting the defense of any such
26
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 such indemnifying party's 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 8 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel 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 (together with local counsel), approved by the indemnifying
party (NMS in the case of Section 8(c) and Section 9), representing the
indemnified parties who are parties to such action) or (ii) the indemnifying
party shall not have employed counsel satisfactory to the indemnified party
to represent the indemnified party within a reasonable time after notice of
commencement of the action, in each of which cases the fees and expenses of
counsel shall be at the expense of the indemnifying party.
(e) SETTLEMENTS. The indemnifying party under this
Section 8 shall not be liable for any settlement of any proceeding effected
without its written consent, but if settled with such consent or if there be
a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party against any loss, claim, damage, liability or
expense by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and
expenses of counsel as contemplated by Section 8(d) hereof, the indemnifying
party agrees that it shall be liable for any settlement of any proceeding
effected without its written consent if (i) such settlement is entered into
more than 30 days after receipt by such indemnifying party of the aforesaid
request and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent
of the indemnified party, effect any settlement, compromise or consent to the
entry of judgment in any pending or threatened action, suit or proceeding in
respect of which any indemnified party is or could have been a party and
indemnity was or could have been sought hereunder by such indemnified party,
unless such settlement, compromise or consent includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such action, suit or proceeding.
SECTION 9. CONTRIBUTION.
If the indemnification provided for in Section 8 is for any
reason held to be unavailable to or otherwise insufficient to hold harmless
an indemnified party in respect of any losses, claims, damages, liabilities
or expenses referred to therein, then each
27
indemnifying party shall contribute to the aggregate amount paid or payable
by such indemnified party, as incurred, as a result of any losses, claims,
damages, liabilities or expenses referred to therein (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company
and the Selling Stockholders, on the one hand, and the Underwriters, on the
other hand, from the offering of the Common Shares pursuant to this Agreement
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault
of the Company and the Selling Stockholders, on the one hand, and the
Underwriters, on the other hand, in connection with the statements or
omissions or inaccuracies in the representations and warranties herein which
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received
by the Company and the Selling Stockholders, on the one hand, and the
Underwriters, on the other hand, in connection with the offering of the
Common Shares pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Common Shares pursuant to this Agreement (before deducting expenses) received
by the Company and the Selling Stockholders, and the total underwriting
discount received by the Underwriters, in each case as set forth on the front
cover page of the Prospectus (or, if Rule 434 under the Securities Act is
used, the corresponding location on the Term Sheet) bear to the aggregate
initial public offering price of the Common Shares as set forth on such
cover. The relative fault of the Company and the Selling Stockholders, on
the one hand, and the Underwriters, on the other hand, shall be determined by
reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact or any such inaccurate or alleged inaccurate representation or
warranty relates to information supplied by the Company or the Selling
Stockholders, on the one hand, or the Underwriters, on the other hand, 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 Section 8(d), any
legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim. The
provisions set forth in Section 8(d) with respect to notice of commencement
of any action shall apply if a claim for contribution is to be made under
this Section 9; PROVIDED, HOWEVER, that no additional notice shall be
required with respect to any action for which notice has been given under
Section 8(d) for purposes of indemnification.
The Company, the Selling Stockholders and the Underwriters
agree that it would not be just and equitable if contribution pursuant to
this Section 9 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable
considerations referred to in this Section 9.
28
Notwithstanding the provisions of this Section 9, no
Underwriter shall be required to contribute any amount in excess of the
underwriting commissions received by such Underwriter in connection with the
Common Shares underwritten by it and distributed to the public, and no
Selling Stockholder shall be required to contribute any amount in excess of
the amount of net proceeds received by such Selling Stockholder from the
Common Shares sold by it hereunder. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities 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 9 are several, and not joint, in proportion to their
respective underwriting commitments as set forth opposite their names in
SCHEDULE A. For purposes of this Section 9, each officer and employee of an
Underwriter and each person, if any, who controls an Underwriter within the
meaning of the Securities Act and the Exchange Act shall have the same rights
to contribution as such Underwriter, and each director of the Company, each
officer of the Company who signed the Registration Statement, and each
person, if any, who controls the Company with the meaning of the Securities
Act and the Exchange Act shall have the same rights to contribution as the
Company.
SECTION 10. DEFAULT OF ONE OR MORE OF THE SEVERAL
UNDERWRITERS. If, on the First Closing Date or the Second Closing Date, as
the case may be, any one or more of the several Underwriters shall fail or
refuse to purchase Common Shares that it or they have agreed to purchase
hereunder on such date, and the aggregate number of Common Shares which such
defaulting Underwriter or Underwriters agreed but failed or refused to
purchase does not exceed 10% of the aggregate number of the Common Shares to
be purchased on such date, the other Underwriters shall be obligated,
severally, in the proportions that the number of Firm Common Shares set forth
opposite their respective names on SCHEDULE A bears to the aggregate number
of Firm Common Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as may be specified by the
Underwriters with the consent of the non-defaulting Underwriters, to purchase
the Common Shares which such defaulting Underwriter or Underwriters agreed
but failed or refused to purchase on such date. If, on the First Closing Date
or the Second Closing Date, as the case may be, any one or more of the
Underwriters shall fail or refuse to purchase Common Shares and the aggregate
number of Common Shares with respect to which such default occurs exceeds 10%
of the aggregate number of Common Shares to be purchased on such date, and
arrangements satisfactory to the Underwriters and the Company for the
purchase of such Common Shares are not made within 48 hours after such
default, this Agreement shall terminate without liability of any party to any
other party except that the provisions of Section 4, Section 8 and Section 9
shall at all times be effective and shall survive such termination. In any
such case either the Underwriters or the Company shall have the right to
postpone the First Closing Date or the Second Closing Date, as the case may
be, but in no event for longer than seven days in order that the required
changes, if any, to the Registration Statement and the Prospectus or any
other documents or arrangements may be effected.
29
As used in this Agreement, the term "Underwriter" shall be
deemed to include any person substituted for a defaulting Underwriter under
this Section 10. Any action taken under this Section 10 shall not relieve
any defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
SECTION 11. TERMINATION OF THIS AGREEMENT. Prior to the
First Closing Date this Agreement maybe terminated by the Underwriters by
notice given to the Company and the Selling Stockholders if at any time (i)
trading or quotation in any of the Company's securities shall have been
suspended or limited by the Commission or by the Nasdaq Stock Market, or
trading in securities generally on either the Nasdaq Stock Market or the New
York Stock Exchange shall have been suspended or limited, or minimum or
maximum prices shall have been generally established on any of such stock
exchanges by the Commission or the NASD; (ii) a general banking moratorium
shall have been declared by any of federal, New York, Delaware or California
authorities; (iii) there shall have occurred any outbreak or escalation of
national or international hostilities or any crisis or calamity, or any
change in the United States or international financial markets, or any
substantial change or development involving a prospective substantial change
in United States' or international political, financial or economic
conditions, as in the judgment of the Underwriters is material and adverse
and makes it impracticable to market the Common Shares in the manner and on
the terms described in the Prospectus or to enforce contracts for the sale of
securities; (iv) in the judgment of the Underwriters there shall have
occurred any Material Adverse Change; or (v) the Company shall have sustained
a loss by strike, fire, flood, earthquake, accident or other calamity of such
character as in the judgment of the Underwriters may interfere materially
with the conduct of the business and operations of the Company regardless of
whether or not such loss shall have been insured. Any termination pursuant
to this Section 11 shall be without liability on the part of (a) the Company
or the Selling Stockholders to any Underwriter, except that the Company and
the Selling Stockholders shall be obligated to reimburse the expenses of the
Underwriters and the Underwriters pursuant to Sections 4 and 6 hereof, (b)
any Underwriter to the Company or the Selling Stockholders, or (c) of any
party hereto to any other party except that the provisions of Section 8 and
Section 9 shall at all times be effective and shall survive such termination.
SECTION 12. REPRESENTATIONS AND INDEMNITIES TO SURVIVE
DELIVERY. The respective indemnities, agreements, representations,
warranties and other statements of the Company, of its officers, of the
Selling Stockholders and of the several Underwriters set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless
of any investigation made by or on behalf of any Underwriter or the Company
or any of its or their partners, officers or directors or any controlling
person, or the Selling Stockholders, as the case may be, and will survive
delivery of and payment for the Common Shares sold hereunder and any
termination of this Agreement.
30
SECTION 13. NOTICES. All communications hereunder shall be
in writing and shall be mailed, hand delivered or telecopied and confirmed to
the parties hereto as follows:
If to the Underwriters:
NationsBanc Xxxxxxxxxx Securities LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
with a copy to:
NationsBanc Xxxxxxxxxx Securities LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
If to the Company:
Garden Fresh Restaurant Corp.
00000 Xxxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxx
If to the Selling Stockholders:
[The First National Bank of Boston]
[address]
Facsimile: [___]
Attention: [___]
Any party hereto may change the address for receipt of communications by
giving written notice to the others.
SECTION 14. SUCCESSORS. This Agreement will inure to the
benefit of and be binding upon the parties hereto, including any substitute
Underwriters pursuant to Section 10 hereof, and to the benefit of the
employees, officers and directors and controlling persons referred to in
Section 8 and Section 9, and in each case their respective successors and
personal representatives, and no other person will have any right or
obligation hereunder. The term "successors" shall not include any purchaser
of
31
the Common Shares as such from any of the Underwriters merely by reason of
such purchase.
SECTION 15. PARTIAL UNENFORCEABILITY. The invalidity or
unenforceability of any Section, paragraph or provision of this Agreement
shall not affect the validity or enforceability of any other Section,
paragraph or provision hereof. If any Section, paragraph or provision of this
Agreement is for any reason determined to be invalid or unenforceable, there
shall be deemed to be made such minor changes (and only such minor changes)
as are necessary to make it valid and enforceable.
SECTION 16. GOVERNING LAW PROVISIONS. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH
STATE.
SECTION 17. FAILURE OF ONE OR MORE OF THE SELLING
STOCKHOLDERS TO SELL AND DELIVER COMMON SHARES. If one or more of the
Selling Stockholders shall fail to sell and deliver to the Underwriters the
Common Shares to be sold and delivered by such Selling Stockholders at the
First Closing Date pursuant to this Agreement, then the Underwriters may at
their option, by written notice from the Underwriters 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
4, 6, 8 and 9 hereof, the Company or the Selling Stockholders, or (ii)
purchase the shares which the Company and other Selling Stockholders have
agreed to sell and deliver in accordance with the terms hereof, or (iii) to
postpone the First Closing Date but in no event for longer than seven days in
order that the required changes, if any, to the Registration Statement and
the Prospectus or any other documents or arrangements may be effected.
SECTION 18. GENERAL PROVISIONS. 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 two or more counterparts, each one of which shall be an
original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement may not be amended or modified
unless in writing by all of the parties hereto, and no condition herein
(express or implied) may be waived unless waived in writing by each party
whom the condition is meant to benefit. The Table of Contents and the Section
headings herein are for the convenience of the parties only and shall not
affect the construction or interpretation of this Agreement.
32
Each of the parties hereto acknowledges that it is a
sophisticated business person who was adequately represented by counsel
during negotiations regarding the provisions hereof, including, without
limitation, the indemnification provisions of Section 8 and the contribution
provisions of Section 9, and is fully informed regarding said provisions.
Each of the parties hereto further acknowledges that the provisions of
Sections 8 and 9 hereto fairly allocate the risks in light of the ability of
the parties to investigate the Company, its affairs and its business in order
to assure that adequate disclosure has been made in the Registration
Statement, any preliminary prospectus and the Prospectus (and any amendments
and supplements thereto), as required by the Securities Act and the Exchange
Act.
33
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to the Company and the Custodian the
enclosed copies hereof, whereupon this instrument, along with all
counterparts hereof, shall become a binding agreement in accordance with its
terms.
Very truly yours,
GARDEN FRESH RESTAURANT CORP.
By:____________________________________
Name:
Title:
SELLING STOCKHOLDERS
By:____________________________________
(Attorney-in-fact)
The foregoing Underwriting Agreement is hereby confirmed and
accepted by the Underwriters in San Francisco, California as of the date
first above written.
NATIONSBANC XXXXXXXXXX SECURITIES LLC
BANCAMERICA XXXXXXXXX XXXXXXXX
XXXXXX XXXXXX & COMPANY, INC.
By NATIONSBANC XXXXXXXXXX SECURITIES LLC
By:_____________________________________
Xxxxxxx X. Xxxxx
Managing Director
34
SCHEDULE A
NUMBER OF
FIRM
COMMON SHARES
UNDERWRITERS TO BE PURCHASED
NationsBanc Xxxxxxxxxx Securities LLC..................... [___]
BancAmerica Xxxxxxxxx Xxxxxxxx............................ [___]
Xxxxxx Xxxxxx & Company, Inc. ............................ [___]
Total.......................................... [___]
SCHEDULE B
NUMBER OF
FIRM
COMMON SHARES
SELLING STOCKHOLDER TO BE SOLD
St. Xxxx Venture Capital, Inc.
0000 Xxxxxxxxxx Xxxx Xxxx., Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: [___] 160,000
Xxxxxxx X. Xxxx *
c/o Garden Fresh Restauraunt Corp.
00000 Xxxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000 56,500
Xxxxx X. Xxxxxx *
c/o Garden Fresh Restauraunt Corp.
00000 Xxxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000 50,000
R. Xxxxxxx Xxxxxx *
c/o Garden Fresh Restauraunt Corp.
00000 Xxxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000 21,000
Xxxxxxx X. Xxxxxxx, Xx. *
c/o Garden Fresh Restauraunt Corp.
00000 Xxxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000 12,500
Total: 300,000
-------
-------
* Significant Selling Stockholder
EXHIBIT A
THE FINAL OPINION IN DRAFT FORM SHOULD BE ATTACHED AS EXHIBIT A AT THE TIME
THIS AGREEMENT IS EXECUTED.
Opinion of counsel for the Company to be delivered
pursuant to Section 5(e) of the Underwriting Agreement.
References to the Prospectus in this EXHIBIT A include
any supplements thereto at the Closing Date.
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
State of Delaware.
(ii) The Company has corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Prospectus and to enter into and perform its obligations
under the Underwriting Agreement.
(iii) The Company is duly qualified as a foreign
corporation to transact business and is in good standing in the States of
California, Florida, Arizona, New Mexico, Utah and Nevada and in each other
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except for
such jurisdictions (other than the States of California, Florida, Arizona,
New Mexico, Utah and Nevada) where the failure to so qualify or to be in good
standing would not, individually or in the aggregate, result in a Material
Adverse Change.
(iv) The authorized, issued and outstanding capital
stock of the Company (including the Common Stock) conform to the descriptions
thereof set forth in the Prospectus. All of the outstanding shares of Common
Stock (including the shares of Common Stock owned by Selling Stockholders)
have been duly authorized and validly issued, are fully paid and
nonassessable and, to the best of such counsel's knowledge, have been issued
in compliance with the registration and qualification requirements of federal
and state securities laws. The form of certificate used to evidence the
Common Stock is in due and proper form and complies with all applicable
requirements of the charter and by-laws of the Company and the General
Corporation Law of the State of Delaware. The description of the Company's
stock option, stock bonus and other stock plans or arrangements, and the
options or other rights granted and exercised thereunder, set forth in the
Prospectus accurately and fairly presents the information required to be
shown with respect to such plans, arrangements, options and rights.
(v) No stockholder of the Company or any other
person has any preemptive right, right of first refusal or other similar
right to subscribe for or purchase securities of the Company arising (i) by
operation of the charter or by-laws of
A-1
the Company or the General Corporation Law of the State of Delaware or (ii)
to the best knowledge of such counsel, otherwise.
(vi) The Underwriting Agreement has been duly
authorized, executed and delivered by, and is a valid and binding agreement
of, the Company, enforceable in accordance with its terms, except as rights
to indemnification thereunder may be limited by applicable law and except as
the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally or by general equitable principles.
(vii) The Common Shares to be purchased by the
Underwriters from the Company have been duly authorized for issuance and sale
pursuant to the Underwriting Agreement and, when issued and delivered by the
Company pursuant to the Underwriting Agreement against payment of the
consideration set forth therein, will be validly issued, fully paid and
nonassessable.
(viii) Each of the Registration Statement and the
Rule 462(b) Registration Statement, if any, has been declared effective by
the Commission under the Securities Act. To the best knowledge of such
counsel, no stop order suspending the effectiveness of either of the
Registration Statement or the Rule 462(b) Registration Statement, if any, has
been issued under the Securities Act and no proceedings for such purpose have
been instituted or are pending or are contemplated or threatened by the
Commission. Any required filing of the Prospectus and any supplement thereto
pursuant to Rule 424(b) under the Securities Act has been made in the manner
and within the time period required by such Rule 424(b).
(ix) The Registration Statement, including any Rule
462(b) Registration Statement, the Prospectus, and each amendment or
supplement to the Registration Statement and the Prospectus, as of their
respective effective or issue dates (other than the financial statements and
supporting schedules included therein or in exhibits to or excluded from the
Registration Statement, as to which no opinion need be rendered) comply as to
form in all material respects with the applicable requirements of the
Securities Act.
(x) The Common Shares have been approved for
listing on the Nasdaq National Market.
(xi) The statements (i) in the Prospectus under the
captions "Risk Factors--Legal Matters," "Risk Factors--Government
Regulation," "Risk Factors--Anti-takeover Measures," "Risk Factors--Shares
Eligible for Future Sale," "Management's Discussion and Analysis and Results
of Operations--Liquidity and Capital Resources," "Business--Government
Regulation," "Business--Trade Names and
A-2
Service Marks," "Business--Legal Proceedings," "Management--Limitations of
Liability and Indemnification Matters," "Management--Benefit Plans,"
"Management--Employment Contracts and Termination of Employment and Change of
Control Arrangements," "Certain Transactions," "Description of Capital Stock"
and "Underwriting" and (ii) in Item 14 of the Registration Statement, insofar
as such statements constitute matters of law, summaries of legal matters, the
Company's charter or by-law provisions, documents or legal proceedings, or
legal conclusions, has been reviewed by such counsel and fairly present and
summarize, in all material respects, the matters referred to therein.
(xii) To the best knowledge of such counsel,
there are no legal or governmental actions, suits or proceedings pending or
threatened which are required to be disclosed in the Registration Statement,
other than those disclosed therein.
(xiii) To the best knowledge of such counsel,
there are no Existing Instruments required to be described or referred to in
the Registration Statement or to be filed as exhibits thereto other than
those described or referred to therein or filed or incorporated by reference
as exhibits thereto; and the descriptions thereof and references thereto are
correct in all material respects.
(xiv) No consent, approval, authorization or
other order of, or registration or filing with, any court or other
governmental authority or agency, is required for the Company's execution,
delivery and performance of the Underwriting Agreement and consummation of
the transactions contemplated thereby and by the Prospectus, except as
required under the Securities Act, applicable state securities or blue sky
laws and from the NASD.
(xv) The execution and delivery of the Underwriting
Agreement by the Company and the performance by the Company of its
obligations thereunder (other than performance by the Company of its
obligations under the indemnification section of the Underwriting Agreement,
as to which no opinion need be rendered) (i) have been duly authorized by all
necessary corporate action on the part of the Company; (ii) will not result
in any violation of the provisions of the charter or by-laws of the Company;
(iii) will not constitute a breach of, or Default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company pursuant to, (A) the Company's Revolving Credit
Facility with Xxxxx Fargo Bank, N.A., as lender, or (B) to the best knowledge
of such counsel, any other material Existing Instrument; or (iv) to the best
knowledge of such counsel, will not result in any violation of any law,
administrative regulation or administrative or court decree applicable to the
Company.
A-3
(xvi) The Company is not, and after receipt of
payment for the Common Shares will not be, an "investment company" within the
meaning of Investment Company Act.
(xvii) To the best knowledge of such counsel,
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 the Underwriting
Agreement, other than the Selling Stockholders.
(xviii) To the best knowledge of such counsel, the
Company is not in violation of its charter or by-laws or any law,
administrative regulation or administrative or court decree applicable to the
Company or is in Default in the performance or observance of any obligation,
agreement, covenant or condition contained in any material Existing
Instrument, except in each such case for such violations or Defaults as would
not, individually or in the aggregate, result in a Material Adverse Change.
In addition, such counsel shall state that they have
participated in conferences with officers and other representatives of the
Company, representatives of the independent public or certified public
accountants for the Company and with representatives of the Underwriters at
which the contents of the Registration Statement and the Prospectus, and any
supplements or amendments thereto, 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 or the Prospectus (other than as
specified above), and any supplements or amendments thereto, on the basis of
the foregoing, nothing has come to their attention which would lead them to
believe that either the Registration Statement or any amendments thereto, at
the time the Registration Statement or such amendments 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 not misleading or that the Prospectus, as of its date or
at the First Closing Date or the Second Closing Date, as the case may be,
contained an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading (it being
understood that such counsel need express no belief as to the financial
statements or schedules or other financial or statistical data derived
therefrom, included in the Registration Statement or the Prospectus or any
amendments or supplements thereto).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the General
Corporation Law of the State of Delaware, the General Corporation Law of the
State of California or the federal law of the United States, to the extent
they deem proper and specified in such opinion,
A-4
upon the opinion (which shall be dated the First Closing Date or the Second
Closing Date, as the case may be, shall be satisfactory in form and substance
to the Underwriters, shall expressly state that the Underwriters may rely on
such opinion as if it were addressed to them and shall be furnished to the
Underwriters) of other counsel of good standing whom they believe to be
reliable and who are satisfactory to counsel for the Underwriters; PROVIDED,
HOWEVER, that such counsel shall further state that they believe that they
and the Underwriters are justified in relying upon such opinion of other
counsel, and (B) as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company and public officials.
A-5
EXHIBIT B
THE FINAL OPINION IN DRAFT FORM SHOULD BE ATTACHED AS EXHIBIT B AT THE TIME
THIS AGREEMENT IS EXECUTED.
The opinion of such counsel pursuant to Section 5h shall
be rendered to the Underwriters at the request of the Company and shall so
state therein. References to the Prospectus in this EXHIBIT B include any
supplements thereto at the Closing Date.
(i) The Underwriting Agreement has been duly
authorized, executed and delivered by or on behalf of, and is a valid and
binding agreement of, such Selling Stockholder, enforceable in accordance
with its terms, except as rights to indemnification thereunder may be limited
by applicable law and except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or by general equitable
principles.
(ii) The execution and delivery by such Selling
Stockholder of, and the performance by such Selling Stockholder of its
obligations under, the Underwriting Agreement and its Custody Agreement and
its Power of Attorney will not contravene or conflict with, result in a
breach of, or constitute a default under, the charter or by-laws, if such
Selling Stockholder is a corporation, of such Selling Stockholder, or, to the
best of such counsel's knowledge, violate or contravene any provision of
applicable law or regulation, or violate, result in a breach of or constitute
a default under the terms of any other agreement or instrument to which such
Selling Stockholder is a party or by which it is bound, or any judgment,
order or decree applicable to such Selling Stockholder of any court,
regulatory body, administrative agency, governmental body or arbitrator
having jurisdiction over such Selling Stockholder.
(iii) Such Selling Stockholder has good and
valid title to all of the Common Shares which may be sold by such Selling
Stockholder under the Underwriting Agreement and has the legal right and
power, and, if such Selling Stockholder is a corporation, all authorizations
and approvals required under its charter and by-laws, to enter into the
Underwriting Agreement and its Custody Agreement and its Power of Attorney,
to sell, transfer and deliver all of the Common Shares which may sold by such
Selling Stockholder under the Underwriting Agreement and to comply with its
other obligations under the Underwriting Agreement, its Custody Agreement and
its Power of Attorney.
(iv) Each of the Custody Agreement and Power of
Attorney of such Selling Stockholder has been duly authorized, executed and
delivered by such
B-1
Selling Stockholder and is a valid and binding agreement of such Selling
Stockholder, enforceable in accordance with its terms, except as rights to
indemnification thereunder may be limited by applicable law and except as the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally or by general equitable principles.
(v) Assuming that the Underwriters purchase the
Common Shares which are sold by such Selling Stockholder pursuant to the
Underwriting Agreement for value, in good faith and without notice of any
adverse claim, the delivery of such Common Shares pursuant to the
Underwriting Agreement will pass good and valid title to such Common Shares,
free and clear of any security interest, mortgage, pledge, lieu encumbrance
or other claim.
(vi) To the best of such counsel's knowledge, no
consent, approval, authorization or other order of, or registration or filing
with, any court or governmental authority or agency, is required for the
consummation by such Selling Stockholder of the transactions contemplated in
the Underwriting Agreement, except as required under the Securities Act,
applicable state securities or blue sky laws, and from the NASD.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other than the
General Corporation Law of the State of Delaware, the General Corporation Law
of the State of California or the federal law of the United States, to the
extent they deem proper and specified in such opinion, upon the opinion
(which shall be dated the First Closing Date or the Second Closing Date, as
the case may be, shall be satisfactory in form and substance to the
Underwriters, shall expressly state that the Underwriters may rely on such
opinion as if it were addressed to them and shall be furnished to the
Underwriters) of other counsel of good standing whom they believe to be
reliable and who are satisfactory to counsel for the Underwriters; PROVIDED,
HOWEVER, that such counsel shall further state that they believe that they
and the Underwriters are justified in relying upon such opinion of other
counsel, and (B) as to matters of fact, to the extent they deem proper, on
certificates of the Selling Stockholders and public officials.
B-2
EXHIBIT C
May __, 1998
NationsBanc Xxxxxxxxxx Securities LLC
BancAmerica Xxxxxxxxx Xxxxxxxx
Xxxxxx Xxxxxx & Company, Inc.
c/o NationsBanc Xxxxxxxxxx Securities LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
RE: ___________________________ (the "Company")
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of
Common Stock of the Company ("Common Stock") or securities convertible into
or exchangeable or exercisable for Common Stock. The Company proposes to
carry out a public offering of Common Stock (the "Offering") for which you
will act as the underwriters. The undersigned recognizes that the Offering
will be of benefit to the undersigned and will benefit the Company by, among
other things, raising additional capital for its operations. The undersigned
acknowledges that you and the other underwriters are relying on the
representations and agreements of the undersigned contained in this letter in
carrying out the Offering and in entering into underwriting arrangements with
the Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that the
undersigned will not, without the prior written consent of NMS (which consent
may be withheld in its sole discretion), directly or indirectly, sell, offer,
contract or grant any option to sell (including without limitation any short
sale), pledge, transfer, establish an open "put equivalent position" within
the meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934, or
otherwise dispose of any shares of Common Stock, options or warrants to
acquire shares of Common Stock, or securities exchangeable or exercisable for
or convertible into shares of Common Stock currently or hereafter owned
either of record or beneficially (as defined in Rule 13d-3 under Securities
Exchange Act of 1934, as amended) by the undersigned, or publicly announce
the undersigned's intention to do any of the foregoing, for a period
commencing on the date hereof and continuing through the close of trading on
the date 90 days after the date of the Prospectus. The undersigned also
agrees and consents to the entry of stop transfer instructions with the
Company's transfer agent and registrar against the transfer of shares of
Common Stock or securities convertible into or exchangeable or exercisable
for Common Stock held by the undersigned except in compliance with the
foregoing restrictions.
C-1
With respect to the Offering only, the undersigned waives any registration
rights relating to registration under the Securities Act of any Common Stock
owned either of record or beneficially by the undersigned, including any
rights to receive notice of the Offering.
This agreement is irrevocable and will be binding on the undersigned and the
respective successors, heirs, personal representatives, and assigns of the
undersigned.
______________________________________
Printed Name of Holder
By: __________________________________
Signature
______________________________________
Printed Name of Person Signing
(AND INDICATE CAPACITY OF PERSON
SIGNING IF SIGNING AS CUSTODIAN,
TRUSTEE, OR ON BEHALF OF AN ENTITY)
C-2
