DRAFT 1/31/97
2,000,000 Shares
FINE HOST CORPORATION
Common Stock
UNDERWRITING AGREEMENT
__________, 1997
XXXXXXXXXX SECURITIES
XXXXX XXXXXXX INC.
XXXXX XXXXXX INC.
As Representatives of the several Underwriters
c/x XXXXXXXXXX SECURITIES
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
SECTION 1. Introductory. Fine Host Corporation, a Delaware corporation
(the "Company"), proposes to issue and sell 1,814,000 shares of its authorized
but unissued Common Stock (the "Common Stock") and certain stockholders of the
Company named in Schedule B annexed hereto (the "Selling Stockholders") propose
to sell an aggregate of 186,000 shares of the Company's issued and outstanding
Common Stock to the several underwriters named in Schedule A annexed hereto (the
"Underwriters"), for whom you are acting as Representatives. Said aggregate of
2,000,000 shares are herein called the "Firm Common Shares." In addition, the
Company proposes to grant to the Underwriters an option to purchase up to
300,000 additional shares of Common Stock (the "Optional Common Shares"), as
provided in Section 5 hereof. The Firm Common Shares and, to the extent such
option is exercised, the Optional Common Shares are hereinafter collectively
referred to as the "Common Shares."
You have advised the Company and the Selling Stockholders that the
Underwriters propose to make a public offering of their respective portions of
the Common Shares on the effective date of the registration statement
hereinafter referred to, or as soon thereafter as in your judgment is advisable.
The Company and each of the Selling Stockholders hereby confirm their
respective agreements with respect to the purchase of the Common Shares by the
Underwriters as follows:
SECTION 2. Representations and Warranties of the Company. The Company
represents and warrants to the several Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-19909) with
respect to the Common Shares has been prepared by the Company in
conformity with the requirements of the Securities Act of 1933, as amended
(the "Act"), and the rules and regulations (the "Rules and Regulations")
of the Securities and Exchange Commission (the "Commission") thereunder,
and has been filed with the Commission. The Company has prepared and has
filed or proposes to file prior to the effective date of such registration
statement an amendment or amendments to such registration statement, which
amendment or amendments have been or will be similarly prepared. There
have been delivered to you two signed copies of such registration
statement and amendments, together with two copies of each exhibit filed
therewith. Conformed copies of such registration statement and amendments
(but without exhibits) and of the related preliminary prospectus have been
delivered to you in such reasonable quantities as you have requested for
each of the Underwriters. The Company will next file with the Commission
one of the following: (i) prior to effectiveness of such registration
statement, a further amendment thereto, including the form of final
prospectus, (ii) a final prospectus in accordance with Rules 430A and
424(b) of the Rules and Regulations or (iii) a term sheet (the "Term
Sheet") as described in and in accordance with Rules 434 and 424(b) of the
Rules and Regulations. As filed, the final prospectus, if one is used, or
the Term Sheet and Preliminary Prospectus, if a final prospectus is not
used, shall include all Rule 430A Information and, except to the extent
that you shall agree in writing to a modification, shall be in all
substantive respects in the form furnished to you prior to the date and
time that this Agreement was executed and delivered by the parties hereto,
or, to the extent not completed at such date and time, shall contain only
such specific additional information and other changes (beyond that
contained in the latest Preliminary Prospectus) as the Company shall have
previously advised you in writing would be included or made therein.
The term "Registration Statement" as used in this Agreement shall
mean such registration statement at the time such registration statement
becomes effective and, in the event any post-effective amendment thereto
becomes effective
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prior to the First Closing Date (as hereinafter defined), shall also mean
such registration statement as so amended; provided, however, that such
term shall also include (i) all Rule 430A Information deemed to be
included in such registration statement at the time such registration
statement becomes effective as provided by Rule 430A of the Rules and
Regulations and (ii) any registration statement filed pursuant to 462(b)
of the Rules and Regulations relating to the Common Shares. The term
"Preliminary Prospectus" shall mean any preliminary prospectus referred to
in the preceding paragraph and any preliminary prospectus included in the
Registration Statement at the time it becomes effective that omits Rule
430A Information. The term "Prospectus" as used in this Agreement shall
mean (i) the prospectus relating to the Common Shares in the form in which
it is first filed with the Commission pursuant to Rule 424(b) of the Rules
and Regulations, or (ii) if a Term Sheet is not used and no filing
pursuant to Rule 424(b) of the Rules and Regulations is required, the form
of final prospectus included in the Registration Statement at the time
such registration statement becomes effective or (iii) if a Term Sheet is
used, the Term Sheet in the form in which it is first filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations, together
with the Preliminary Prospectus included in the Registration Statement at
the time it becomes effective. The term "Rule 430A Information" means
information with respect to the Common Shares and the offering thereof
permitted to be omitted from the Registration Statement when it becomes
effective pursuant to Rule 430A of the Rules and Regulations.
(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus, and each Preliminary Prospectus has
conformed in all material respects to the requirements of the Act and the
Rules and Regulations and, as of its date, has not included any untrue
statement of a material fact or omitted to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; and at the time the Registration
Statement becomes effective, the Registration Statement will contain all
material statements and information required to be included therein by the
Act and the Rules and Regulations, will conform in all material respects
to the requirements of the Act and the Rules and Regulations, and will not
include any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and the Prospectus, as amended and
supplemented, as applicable, at the time the Registration Statement
becomes effective, and at the First Closing Date hereinafter mentioned,
will not include any untrue statement
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of a material fact or omit 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; provided, however, no representation or
warranty contained in this subsection 2(b) shall be applicable to
information contained in or omitted from any Preliminary Prospectus, the
Registration Statement, the Prospectus or any such amendment or supplement
in reliance upon and in conformity with written information furnished to
the Company by or on behalf of any Underwriter, directly or through the
Representatives, specifically for use in the preparation thereof.
(c) The Company does not own or control, directly or indirectly, any
corporation, association or other entity other than (i) the subsidiaries
listed in Exhibit 21 to the Registration Statement (the "Significant
Subsidiaries") and (ii) Fine Host International Corporation, Fine Host of
Vermont, Inc., Global Fanfare, Inc., Tarrant County Concessions, L.L.C.,
Fine Host/R&N/A Cup Above Joint Venture, Fine Host/X. Xxxxxx and
Associates Joint Venture, Fine Host International Corporation and F&B
International Company Joint Venture, Five-Star Marketing, Inc., Ideal
Management Services, Inc. and Service Dynamics Corp. (collectively, the
"Excluded Subsidiaries" and, together with the Significant Subsidiaries,
the Company's "subsidiaries"). The Excluded Subsidiaries, considered in
the aggregate as a single subsidiary, would not constitute a significant
subsidiary within the meaning of Rule 1-02(v) of Regulation S-X under the
Act. The Company and each of its subsidiaries have been duly incorporated
and are validly existing as corporations in good standing under the laws
of their respective jurisdictions of incorporation, with full power and
authority (corporate and other) to own and lease their properties and
conduct their respective businesses as described in the Prospectus; the
Company owns all of the outstanding capital stock of its Significant
Subsidiaries, and owns the stock or other interest held by it directly or
indirectly in the Excluded Subsidiaries, free and clear of all claims,
liens, charges and encumbrances; the Company and each of its subsidiaries
are in possession of and operating in compliance with all authorizations,
licenses, permits, consents, certificates and orders material to the
conduct of their respective businesses, all of which are valid and in full
force and effect except where the failure to possess or be operating in
compliance with such authorizations, licenses, permits, consents,
certificates or orders would not have a material adverse effect on the
Company and its subsidiaries taken as a whole; the Company and each of its
subsidiaries are duly qualified to do business and in good standing as
foreign corporations in each jurisdiction in which the ownership or
leasing of properties or the conduct of their
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respective businesses requires such qualification, except for
jurisdictions in which the failure to so qualify would not have a material
adverse effect upon the Company and its subsidiaries taken as a whole;
and, to the knowledge of the Company, no proceeding has been instituted in
any such jurisdiction, revoking, limiting or curtailing, or seeking to
revoke, limit or curtail, such power and authority or qualification.
(d) The Company has an authorized and outstanding capital stock as
set forth under the heading "Capitalization" in the Prospectus; the issued
and outstanding shares of Common Stock (including the Common Shares to be
sold by the Selling Stockholders hereunder) have been duly authorized and
validly issued, are and will be fully paid and nonassessable, have been
and will be issued in compliance with all federal and state securities
laws, were not and will not be issued in violation of any preemptive
rights or other rights to subscribe for or purchase securities or, except
for such rights that will expire or be terminated on the First Closing
Date, subject to any such rights, and conform in all material respects to
the description thereof contained in the Prospectus. All issued and
outstanding shares of capital stock of each Significant Subsidiary, and
all shares of capital stock held by the Company directly or indirectly in
any Excluded Subsidiary, have been duly authorized and validly issued and
are fully paid and nonassessable. Except as disclosed in or contemplated
by the Prospectus and the financial statements of the Company, and the
related notes thereto, included in the Prospectus, neither the Company nor
any subsidiary has outstanding any options to purchase, or any preemptive
rights or other rights to subscribe for or to purchase, any securities or
obligations convertible into, or any contracts or commitments to issue or
sell, shares of its capital stock or any such options, rights, convertible
securities or obligations (other than preemptive or other such rights
which have been waived in connection with the transactions contemplated by
this Agreement and will expire or be terminated on the First Closing
Date). 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.
(e) The Common Shares to be sold by the Company have been duly
authorized and, when issued, delivered and paid for in the manner set
forth in this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable, and will conform in all material respects to the
description
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thereof contained in the Prospectus. No preemptive rights or other rights
to subscribe for or purchase any security of the Company exist with
respect to the issuance and sale of the Common Shares by the Company
pursuant to this Agreement (other than those which have been waived). No
stockholder of the Company has any right which has not been waived to
require the Company to register the sale of any shares owned by such
stockholder under the Act in the public offering contemplated by this
Agreement. No further approval or authority of the stockholders or the
Board of Directors of the Company will be required for the transfer and
sale of the Common Shares to be sold by the Selling Stockholders or the
issuance and sale of the Common Shares to be sold by the Company as
contemplated herein.
(f) The Company has full legal right, power and authority to enter
into this Agreement and perform the transactions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by the Company
and constitutes a valid and binding obligation of the Company enforceable
in accordance with its terms except (x) as enforceability may be limited
by general equitable principles, bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally, (y) as
availability of equitable remedies may be limited by equitable principles
of general applicability and (z) with respect to those provisions relating
to indemnities or contributions for liabilities under the Act. The making
and performance of this Agreement by the Company and the consummation of
the transactions herein contemplated will not violate any provisions of
the certificate of incorporation or bylaws, or other organizational
documents, of the Company or any of its subsidiaries, and will not
conflict with, result in the breach or violation of, or constitute, either
by itself or upon notice or the passage of time or both, a default under
any agreement, mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries
or any of its respective properties may be bound or affected, any statute
or any authorization, judgment, decree, order, rule or regulation of any
court or any regulatory body, administrative agency or other governmental
body applicable to the Company or any of its subsidiaries or any of their
respective properties except for such conflicts, breaches or violations or
defaults which would not have a material adverse effect on the Company and
its subsidiaries taken as a whole. No consent, approval, authorization or
other order of any court, regulatory body, administrative agency or other
governmental body is required for the execution and delivery of this
Agreement or the consummation of the transactions
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contemplated by this Agreement, except for compliance with the Act, the
Blue Sky laws applicable to the public offering of the Common Shares by
the several Underwriters and the clearance of such offering with the
National Association of Securities Dealers, Inc. (the "NASD").
(g) Deloitte & Touche LLP, who have expressed their opinion with
respect to the financial statements and schedules filed with the
Commission as a part of the Registration Statement and included in the
Prospectus and in the Registration Statement, are independent accountants
as required by the Act and the Rules and Regulations.
(h) The financial statements and schedules of the Company, and the
related notes thereto, included in the Registration Statement and the
Prospectus present fairly the financial position of the Company as of the
respective dates of such financial statements and schedules, and the
results of operations and changes in financial position of the Company for
the respective periods covered thereby. Such statements, schedules and
related notes have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis as certified by the
independent accountants named in subsection 2(g). No other financial
statements, pro forma financial statements or schedules are required to be
included in the Registration Statement. The selected financial data set
forth in the Prospectus under the captions "Capitalization" and "Selected
Consolidated Financial Data" fairly present the information set forth
therein on the basis stated in the Registration Statement.
(i) Except as disclosed in the Prospectus, and except as to defaults
which individually or in the aggregate would not be material to the
Company and its subsidiaries taken as a whole, neither the Company nor any
of its subsidiaries is in violation or default of any provision of its
certificate of incorporation or bylaws, or other organizational documents,
or is in breach of or default with respect to any provision of any
agreement, judgment, decree, order, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other instrument to which it is a
party or by which it or any of its properties are bound; and there does
not exist any state of facts which constitutes an event of default on the
part of the Company or any such subsidiary as defined in such documents or
which, with notice or lapse of time or both, would constitute such an
event of default, which event of default would have a material adverse
effect on the Company and its subsidiaries taken as a whole.
(j) There are no contracts or other documents required to be
described in the Registration Statement or to be filed
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as exhibits to the Registration Statement by the Act or by the Rules and
Regulations which have not been described or filed as required. The
contracts so described in or filed as an exhibit to the Registration
Statement are in full force and effect on the date hereof; and neither the
Company nor any of its subsidiaries, nor to the best of the Company's
knowledge, any other party is in breach of or default under any of such
contracts.
(k) Except as 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 to which the Company or any of its
subsidiaries is or may be a party or of which property owned or leased by
the Company or any of its subsidiaries is or may be the subject, or
related to environmental or discrimination matters, which actions, suits
or proceedings might, individually or in the aggregate, prevent or
adversely affect the Company's ability to consummate the transactions
contemplated by this Agreement or result in a material adverse change in
the condition (financial or otherwise), properties, business, results of
operations or prospects of the Company and its subsidiaries taken as a
whole; and no labor disturbance by the employees of the Company or any of
its subsidiaries exists or, to the Company's knowledge, is imminent which
might be expected to materially adversely affect such condition,
properties, business, results of operations or prospects. Neither the
Company nor any of its subsidiaries is a party or subject to the
provisions of any material injunction, judgment, decree or order of any
court, regulatory body, administrative agency or other governmental body.
(l) The Company or the applicable subsidiary has good and marketable
title to all the properties and assets reflected as owned in the financial
statements hereinabove described (or elsewhere in the Prospectus), subject
to no lien, mortgage, pledge, charge or encumbrance of any kind except (i)
those, if any, reflected in such financial statements (or elsewhere in the
Prospectus), or (ii) those which are not material in amount and do not
materially adversely affect the use made and proposed to be made of such
property by the Company and its subsidiaries. The Company or the
applicable subsidiary holds its leased properties under valid and binding
leases, with such exceptions as are not materially significant in relation
to the business of the Company. Except as disclosed in the Prospectus, the
Company owns or leases all such properties as are necessary to its
operations as now conducted.
(m) Since the respective dates as of which information is given in
the Registration Statement and Prospectus, and
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except as described in or specifically contemplated by the Prospectus: (i)
the Company and its subsidiaries have not incurred any material
liabilities or obligations, indirect, direct or contingent, or entered
into any material agreement or other transaction which is not in the
ordinary course of business or which could result in a material reduction
in the future earnings of the Company and its subsidiaries; (ii) the
Company and its subsidiaries have not sustained any material loss or
interference with their respective businesses or properties from fire,
flood, windstorm, accident or other calamity, whether or not covered by
insurance; (iii) the Company has not paid or declared any dividends or
other distributions with respect to its capital stock and the Company and
its subsidiaries are not in default in the payment of principal or
interest on any outstanding debt obligations; (iv) there has not been any
change in the capital stock (other than upon the sale of the Common Shares
hereunder) or indebtedness material to the Company and its subsidiaries
(other than in the ordinary course of business); and (v) there has not
been any material adverse change in the condition (financial or
otherwise), business, properties, results of operations or prospects of
the Company and its subsidiaries taken as a whole.
(n) Except as disclosed in or specifically contemplated by the
Prospectus, the Company and its subsidiaries have sufficient trademarks,
trade names, patent rights, mask works, copyrights, licenses, approvals
and governmental authorizations to conduct their businesses as now
conducted; except for "Fine Host" and the Company's pear symbol, the
expiration of any trademarks, trade names, patent rights, mask works,
copyrights, licenses, approvals or governmental authorizations would not
have a material adverse effect on the condition (financial or otherwise),
business, results of operations or prospects of the Company and its
subsidiaries taken as a whole; and the Company has no knowledge of any
material infringement by it or its subsidiaries of trademark, trade name
rights, patent rights, mask works, copyrights, licenses, trade secret or
other similar rights of others, and the Company has no knowledge of any
claim being made against the Company or its subsidiaries regarding
trademark, trade name, patent, mask work, copyright, license, trade secret
or other infringement which could have a material adverse effect on the
condition (financial or otherwise), business, results of operations or
prospects of the Company and its subsidiaries taken as a whole.
(o) The Company has not been advised, and has no reason to believe,
that either it or any of its subsidiaries is not conducting business in
compliance with all applicable laws, rules and regulations of the
jurisdictions in which it is
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conducting business, including, without limitation, all applicable local,
state and federal environmental laws and regulations; except where failure
to be so in compliance would not materially adversely affect the condition
(financial or otherwise), business, results of operations or prospects of
the Company and its subsidiaries taken as a whole.
(p) The Company and its subsidiaries have filed all federal, state
and foreign income and franchise tax returns required to be filed and have
paid all taxes shown as due thereon other than those being contested in
good faith and as to which adequate reserves have been established; and
the Company has no knowledge of any tax deficiency which has been or might
be asserted or threatened against the Company or its subsidiaries which
could materially and adversely affect the business, operations or
properties of the Company and its subsidiaries taken as a whole.
(q) The Company is not an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
(r) The Company has not distributed and will not distribute prior to
the First Closing Date any offering material in connection with the
offering and sale of the Common Shares other than the Preliminary
Prospectus dated January 16, 1997, the Prospectus, the Registration
Statement and the other materials permitted by the Act.
(s) Each of the Company and its subsidiaries maintains insurance of
the types and in amounts which the Company believes to be adequate for its
business, including, but not limited to, insurance covering real and
personal property owned or leased by the Company and its subsidiaries
against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and
effect except where the failure to maintain such insurance would not have
a material adverse effect on the Company and its subsidiaries taken as a
whole.
(t) Neither the Company nor any of its subsidiaries has at any time
during the last five years (i) made any unlawful contribution to any
candidate for foreign office, or failed to disclose fully any contribution
in violation of law, or (ii) made any payment to any federal or state
governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or permitted
by the laws of the United States of any jurisdiction thereof.
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(u) 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.
(v) The Common Stock of the Company has been registered under
Section 12(g) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and all of the outstanding shares of Common Stock
(including the Common Shares to be sold by the Selling Stockholders
hereunder) and the Common Shares to be issued and sold by the Company
hereunder have been listed on the Nasdaq National Market.
(w) The Company has filed with the Commission, on a timely basis,
all documents required to have been filed by the Company pursuant to the
Exchange Act or the rules and regulations promulgated thereunder. Each
such document, when filed with the Commission, conformed in all material
respects to the requirements of the Exchange Act and the rules and
regulations promulgated thereunder, and did not contain an 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, in light of
the circumstances under which they were made, not misleading.
SECTION 3. Representations, Warranties and Covenants of the Selling
Stockholders.
(a) Each of the Selling Stockholders severally represents and
warrants to, and agrees with, the several Underwriters that:
(i) Such Selling Stockholder has, and on the First Closing
Date hereinafter mentioned will have, good and marketable title to
the Common Shares proposed to be sold by such Selling Stockholder
hereunder on such Closing Date and full right, power and authority
to enter into this Agreement and to sell, assign, transfer and
deliver such Common Shares hereunder, free and clear of all voting
trust arrangements, liens, encumbrances, equities, security
interests, restrictions and claims whatsoever; and upon delivery of
and payment for such Common Shares hereunder in the manner set forth
in this Agreement, the Underwriters will acquire good and marketable
title thereto, free and clear of all liens, encumbrances, equities,
claims, restrictions, security interests, voting trusts or other
defects of title whatsoever.
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(ii) Such Selling Stockholder has executed and delivered an
Irrevocable Power of Attorney and has executed and delivered or caused to
be executed and delivered on his behalf a Custody Agreement (hereinafter
collectively referred to as the "Stockholders Agreement") and in
connection herewith such Selling Stockholder further represents, warrants
and agrees that such Selling Stockholder has deposited in custody, under
the Stockholders Agreement, with the agent named therein (the "Agent") as
custodian, certificates in negotiable form for the Common Shares to be
sold hereunder by such Selling Stockholder (or notices to exercise options
to purchase Common Stock exercisable for a number of shares of Common
Stock at least equal to the number of Common Shares to be sold hereunder
by such Selling Stockholder), for the purpose of further delivery pursuant
to this Agreement. Such Selling Stockholder agrees that the Common Shares
to be sold by such Selling Stockholder (or the option exercise materials,
as the case may be) on deposit with the Agent are subject to the interests
of the Company and the Underwriters, that the arrangements made for such
custody are to that extent irrevocable, and that the obligations of such
Selling Stockholder hereunder shall not be terminated, except as provided
in this Agreement or in the Stockholders Agreement, by any act of such
Selling Stockholder, by operation of law, by the death or incapacity of
such Selling Stockholder or by the occurrence of any other event. If the
Selling Stockholder should die or become incapacitated, or if any other
event should occur, before the delivery of the Common Shares hereunder,
the documents evidencing Common Shares then on deposit with the Agent
shall be delivered by the Agent in accordance with the terms and
conditions of this Agreement as if such death, incapacity or other event
had not occurred, regardless of whether or not the Agent shall have
received notice thereof.
(iii) This Agreement and the Stockholders Agreement have been duly
authorized, executed and delivered by such Selling Stockholder and each
constitutes the valid and binding obligation and agreement of such Selling
Stockholder, enforceable against such Selling Stockholder in accordance
with its terms except (x) as enforceability may be limited by general
equitable principles, bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors' rights generally, (y) as availability
of equitable remedies may be limited by equitable principles of general
applicability and (z) with respect to those provisions
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relating to indemnities or contributions for liabilities under the Act.
(iv) The performance of this Agreement and the Stockholders
Agreement and the consummation of the transactions contemplated hereby and
by the Stockholders Agreement will not result in a breach or violation by
such Selling Stockholder of any of the terms or provisions of, or
constitute a default by such Selling Stockholder under, any indenture,
mortgage, deed of trust, trust (constructive or other), loan agreement,
lease, franchise, license or other agreement or instrument to which such
Selling Stockholder is a party or by which such Selling Stockholder or any
of its properties is bound, any statute, or any judgment, decree, order,
rule or regulation of any court or governmental agency or body applicable
to such Selling Stockholder or any of its properties except for such
breaches or violations or defaults which would not have a material adverse
effect on the ability of such Selling Stockholder to consummate the
transactions contemplated by this Agreement and deliver good and
marketable title to the Common Shares to be sold by such Selling
Stockholder hereunder. No consent, approval, authorization or other order
of any court, regulatory body, administrative agency or other governmental
body is required for the execution and delivery by such Selling
Stockholder of this Agreement and the Stockholders Agreement or the
consummation by such Selling Stockholder of the transactions contemplated
by this Agreement and the Stockholders Agreement, except such consents,
approvals, authorizations or orders (x) as have been obtained, (y) as may
be required under state securities or Blue Sky laws or foreign securities
laws in connection with the purchase and distribution of the Shares by the
Underwriters, and (z) as may be required by the NASD.
(v) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action designed to or which has constituted or
which might reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Common Shares.
(vi) The information pertaining to such Selling Stockholder under
the captions "Principal and Selling Stockholders" and, if applicable,
"Certain Transactions" included in the Prospectus is complete and accurate
in all material respects.
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(vii) Such Selling Stockholder is not aware that any of the
representations and warranties of the Company set forth in Section 2 above
is untrue or inaccurate in any material respect.
(b) Each of the Selling Stockholders agrees with the Company and the
Underwriters that he or it will not, without the prior written consent
either of Xxxxxxxxxx Securities or of each of the Representatives (which
consent may be withheld in its or their 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 the Exchange Act) by such Selling Stockholder, or publicly announce
his or its intention to do any of the foregoing, for a period continuing
through the date 90 days after the first date any of the Common Shares are
released by you for sale to the public. Each Selling Stockholder 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 him or it except in compliance with the foregoing
restrictions.
SECTION 4. Representations and Warranties of the Underwriters. The
Representatives, on behalf of the several Underwriters, represent and warrant to
the Company and to the Selling Stockholders that the information set forth (i)
in the first sentence of the last paragraph on the cover page of the Prospectus,
(ii) in the stabilization and passive market making legends on the inside front
cover page of the Prospectus and (iii) in the first and second paragraphs under
the caption "Underwriting" in the Prospectus (including the list of Underwriters
set forth in tabular form in the first paragraph) was furnished to the Company
by and on behalf of the Underwriters for use in connection with the preparation
of the Registration Statement and the Prospectus and is correct in all material
respects. The Representatives represent and warrant that they have been
authorized by each of the other Underwriters as the Representatives to enter
into this Agreement on its behalf and to act for it in the manner herein
provided.
SECTION 5. Purchase, Sale and Delivery of Common Shares. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set
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forth, (i) the Company agrees to issue and sell to the Underwriters 1,814,000 of
the Firm Common Shares, and (ii) the Selling Stockholders agree, severally and
not jointly, to sell to the Underwriters in the respective amounts set forth in
Schedule B hereto, an aggregate of 186,000 of the Firm Common Shares. The
Underwriters agree, severally and not jointly, to purchase from the Company and
the Selling Stockholders, respectively, the number of Firm Common Shares
described below. The purchase price per share to be paid by the several
Underwriters to the Company and to the Selling Stockholders, respectively, shall
be $_____ per share.
The obligation of each Underwriter to the Company shall be to purchase
from the Company that number of full shares which (as nearly as practicable, as
determined by you) bears to 1,814,000 the same proportion as the number of
shares set forth opposite the name of such Underwriter in Schedule A hereto
bears to the total number of Firm Common Shares. The obligation of each
Underwriter to the Selling Stockholders shall be to purchase from the Selling
Stockholders that number of full shares which (as nearly as practicable, as
determined by you) bears to 186,000 the same proportion as the number of shares
set forth opposite the name of such Underwriter in Schedule A hereto bears to
the total number of Firm Common Shares.
Delivery of certificates for the Firm Common Shares to be purchased by the
Underwriters and payment therefor shall be made at the offices of Xxxxxxxxxx
Securities, 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx (or such other
place as may be agreed upon by the Company and the Representatives) at such time
and date, not later than the third (or, if the Firm Common Shares are priced, as
contemplated by Rule 15c6-1(c) under the Exchange Act, after 4:30 P.M.
Washington, D.C. time, the fourth) full business day following the first date
that any of the Common Shares are released by you for sale to the public, as you
shall designate by at least 48 hours prior notice to the Company (or at such
other time and date, not later than one week after such third or fourth, as the
case may be, full business day as may be agreed upon by the Company and the
Representatives) (the "First Closing Date"); provided, however, that if the
Prospectus is at any time prior to the First Closing Date recirculated to the
public, the First Closing Date shall occur upon the later of the fifth full
business day following the first date that any of the Common Shares are released
by you for sale to the public or the date that is 48 hours after the date that
the Prospectus has been so recirculated.
Delivery of certificates for the Firm Common Shares shall be made by or on
behalf of the Company and the Selling Stockholders to you, for the respective
accounts of the Underwriters with respect to the Firm Common Shares to be sold
by the Company and by the Selling Stockholders against payment by you, for the
accounts of the several Underwriters, of the purchase price therefor by
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wire transfer or other same-day funds to the order of the Company and of the
Agent in proportion to the number of Firm Common Shares to be sold by the
Company and the Selling Stockholders, respectively. The certificates for the
Firm Common Shares shall be registered in such names and denominations as you
shall have requested at least two full business days prior to the First Closing
Date, and shall be made available for checking and packaging on the business day
preceding the First Closing Date at a location in New York, New York, as may be
designated by you. 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.
In addition, on the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company hereby grants an option to the several Underwriters to
purchase, severally and not jointly, up to an aggregate of 300,000 Optional
Common Shares at the purchase price per share to be paid for the Firm Common
Shares, for use solely in covering any over-allotments made by you for the
account of the Underwriters in the sale and distribution of the Firm Common
Shares. The option granted hereunder may be exercised at any time (but not more
than once) within 30 days after the first date that any of the Common Shares are
released by you for sale to the public, upon notice by you to the Company
setting forth the aggregate number of Optional Common Shares as to which the
Underwriters are exercising the option, the names and denominations in which the
certificates for such shares are to be registered and the time and place at
which such certificates will be delivered. Such time of delivery (which may not
be earlier than the First Closing Date), being herein referred to as the "Second
Closing Date," shall be determined by you, but if at any time other than the
First Closing Date shall not be earlier than three nor later than five full
business days after delivery of such notice of exercise. The number of Optional
Common Shares to be purchased by each Underwriter shall be determined by
multiplying the number of Optional Common Shares to be sold by the Company
pursuant to such notice of exercise by a fraction, the numerator of which is the
number of Firm Common Shares to be purchased by such Underwriter as set forth
opposite its name in Schedule A and the denominator of which is the total number
of Firm Common Shares (subject to such adjustments to eliminate any fractional
share purchases as you in your discretion may make). Certificates for the
Optional Common Shares will be made available for checking and packaging on the
business day preceding the Second Closing Date at a location in New York, New
York, as may be designated by you. The manner of payment for and delivery of the
Optional Common Shares shall be the same as for the Firm Common Shares purchased
from the Company as specified in the two preceding paragraphs. At any time
before lapse of the option, you may cancel such option by giving written notice
of such
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cancellation to the Company. If the option is cancelled or expires unexercised
in whole or in part, the Company will deregister under the Act the number of
Option Shares as to which the option has not been exercised.
You have advised the Company and the Selling Stockholders that each
Underwriter has authorized you to accept delivery of its Common Shares, to make
payment and to receipt therefor. You, individually and not as the
Representatives 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 you by the First Closing Date or the Second
Closing Date, as the case may be, for the account of such Underwriter, but any
such payment shall not relieve such Underwriter from any of its obligations
under this Agreement.
Subject to the terms and conditions hereof, the Underwriters propose to
make a public offering of their respective portions of the Common Shares as soon
after the effective date of the Registration Statement as in the judgment of the
Representatives is advisable and at the public offering price set forth on the
cover page of and on the terms set forth in the final prospectus, if one is
used, or on the first page of the Term Sheet, if one is used.
SECTION 6. Covenants of the Company. The Company covenants and agrees
that:
(a) The Company will use its best efforts to cause the Registration
Statement and any amendment thereof, if not effective at the time and date
that this Agreement is executed and delivered by the parties hereto, to
become effective. If the Registration Statement has become or becomes
effective pursuant to Rule 430A of the Rules and Regulations, or the
filing of the Prospectus is otherwise required under Rule 424(b) of the
Rules and Regulations, the Company will file the Prospectus, properly
completed, pursuant to the applicable paragraph of Rule 424(b) of the
Rules and Regulations within the time period prescribed and will provide
evidence satisfactory to you of such timely filing. The Company will
promptly advise you in writing (i) of the receipt of any comments of the
Commission, (ii) of any request of the Commission for amendment of or
supplement to the Registration Statement (either before or after it
becomes effective), any Preliminary Prospectus or the Prospectus or for
additional information, (iii) when the Registration Statement shall have
become effective and (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of the
institution of any proceedings for that purpose. If the Commission shall
enter any such stop order at any time,
-17-
the Company will use its best efforts to obtain the lifting of such order
at the earliest possible moment. The Company will not file any amendment
or supplement to the Registration Statement (either before or after it
becomes effective), any Preliminary Prospectus or the Prospectus of which
you have not been furnished with a copy a reasonable time prior to such
filing or to which you reasonably object (except to the extent any
amendment or supplement to which you object is necessary in the opinion of
counsel to the Company to make the statements in the Registration
Statement, Preliminary Prospectus or Prospectus not misleading) or which
is not in compliance in all material respects with the Act and the Rules
and Regulations.
(b) The Company will prepare and file with the Commission, promptly
upon your request, any amendments or supplements to the Registration
Statement or the Prospectus which in your judgment may be necessary or
advisable to enable the several Underwriters to continue the distribution
of the Common Shares and will use its best efforts to cause the same to
become effective as promptly as possible (except to the extent any
amendment or supplement would in the opinion of counsel to the Company
make the statements in the Registration Statement or Prospectus
misleading). The Company will fully and completely comply with the
provisions of Rule 430A of the Rules and Regulations with respect to
information omitted from the Registration Statement in reliance upon such
Rule.
(c) If at any time within the nine-month period referred to in
Section 10(a)(3) of the Act during which a prospectus relating to the
Common Shares is required to be delivered under the Act any event occurs,
as a result of which the Prospectus, including any amendments or
supplements, would include an untrue statement of a material fact, or omit
to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances then existing,
not misleading, or if it is necessary at any time to amend the Prospectus,
including any amendments or supplements, to comply with the Act or the
Rules and Regulations, the Company will promptly advise you thereof and
will promptly prepare and file with the Commission, at its own expense, an
amendment or supplement which will correct such statement or omission or
an amendment or supplement which will effect such compliance and will use
its best efforts to cause the same to become effective as soon as
possible; and, in case any Underwriter is required to deliver a prospectus
after such nine-month period, the Company upon request, but at the expense
of such Underwriter, will promptly prepare such amendment or amendments to
the Registration Statement and such Prospectus or Prospectuses as
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may be necessary to permit compliance with the requirements of Section
10(a)(3) of the Act.
(d) As soon as practicable, but not later than 45 days after the end
of the first quarter ending after one year following the "effective date
of the Registration Statement" (as defined in Rule 158(c) of the Rules and
Regulations), the Company will make generally available to its security
holders an earnings statement (which need not be audited) covering a
period of 12 consecutive months beginning after the effective date of the
Registration Statement which will satisfy the provisions of the last
paragraph of Section 11(a) of the Act.
(e) During such period as a prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer, the
Company, at its expense, but only for the nine-month period referred to in
Section 10(a)(3) of the Act, will furnish to you and the Selling
Stockholders or mail to your order copies of the Registration Statement,
the Prospectus and all amendments and supplements to any such documents in
each case as soon as available and in such quantities as you and the
Selling Stockholders may reasonably request, for the purposes contemplated
by the Act.
(f) The Company shall cooperate with you and your counsel in order
to qualify or register the Common Shares for sale under (or obtain
exemptions from the application of) the Blue Sky laws of such
jurisdictions as you designate and Canadian securities laws, will comply
with such laws and will continue such qualifications, registrations and
exemptions in effect so long as reasonably required for the distribution
of the Common Shares. The Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process in
any such jurisdiction where it is not presently qualified or where it
would be subject to taxation as a foreign corporation. The Company will
advise you 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 received
by the Company of any proceeding for any such purpose, and in the event of
the issuance of any order suspending such qualification, registration or
exemption, the Company, with your cooperation, will use its best efforts
to obtain the withdrawal thereof.
(g) During the period of five years hereafter, the Company will
furnish to the Representatives and, upon request of the Representatives,
to each of the other Underwriters: (i) as soon as practicable after the
end of each fiscal year, copies of the Annual Report of the Company
containing the
-19-
balance sheet of the Company as of the close of such fiscal year and
statements of income, stockholders' equity and cash flows for the year
then ended and the opinion thereon of the Company's independent public
accountants; (ii) as soon as practicable after the filing thereof, copies
of each proxy statement, Annual Report on Form 10-K, Quarterly Report on
Form 10-Q, Report on Form 8-K or other report filed by the Company with
the Commission, the NASD or any securities exchange; and (iii) as soon as
available, copies of any report or communication of the Company mailed
generally to holders of its Common Stock.
(h) During the period of 90 days after the first date that any of
the Common Shares are released by you for sale to the public, without the
prior written consent either of Xxxxxxxxxx Securities or of each of the
Representatives (which consent may be withheld at the sole discretion of
Xxxxxxxxxx Securities or the Representatives, as the case may be), the
Company will not offer, sell, grant options to purchase or otherwise
dispose of any of the Company's equity securities or any other securities
convertible into or exchangeable with its Common Stock or other equity
security; provided, however, that the Company may (i) issue shares of
Common Stock upon the exercise of stock options and warrants outstanding
on the date hereof and described in the Prospectus (it being agreed that
the Company shall not accelerate the exercisability of any such options or
warrants) and (ii) grant options and issue shares of Common Stock in
accordance with its 1994 Stock Option Plan and 1996 Non-Employee Director
Stock Plan as described in the Prospectus and as they may be subsequently
amended by the stockholders of the Company.
(i) The Company will apply the net proceeds of the sale of the
Common Shares sold by it substantially in accordance with its statements
under the caption "Use of Proceeds" in the Prospectus.
(j) The Company will use its best efforts to qualify or register its
Common Stock for sale in non-issuer transactions under (or obtain
exemptions from the application of) the Blue Sky laws of the State of
California (and thereby permit market making transactions and secondary
trading in the Company's Common Stock in California), will comply with
such Blue Sky laws and will continue such qualifications, registrations
and exemptions in effect for a period of five years after the date hereof.
You, on behalf of the Underwriters, may, in your sole discretion, waive in
writing the performance by the Company of any
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one or more of the foregoing covenants or extend the time for their performance.
SECTION 7. Payment of Expenses. Whether or not the transactions
contemplated hereunder are consummated or this Agreement becomes effective or is
terminated, the Company and, unless otherwise paid by the Company, the Selling
Stockholders 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 limiting the generality of
the foregoing, (i) all expenses incident to the issuance and delivery of the
Common Shares (including all printing and engraving costs), (ii) all fees and
expenses of the registrar and transfer agent of the Common Stock, (iii) all
necessary issue, transfer and other stamp taxes in connection with the issuance
and sale of the Common Shares to the Underwriters, (iv) all fees and expenses of
the Company's counsel and the Company's independent accountants, (v) all costs
and expenses incurred in connection with the preparation, printing, filing,
shipping and distribution of the Registration Statement, each Preliminary
Prospectus and the Prospectus (including all exhibits and financial statements)
and all amendments and supplements provided for herein, this Agreement, the
Agreement Among Underwriters, the Selected Dealers Agreement, the Underwriters'
Questionnaire, the Underwriters' Power of Attorney and the Blue Sky memorandum,
(vi) all filing fees, attorneys' fees and expenses incurred by the Company or
the Underwriters in connection with qualifying or registering (or obtaining
exemptions from the qualification or registration of) all or any part of the
Common Shares for offer and sale under the Blue Sky laws and Canadian securities
laws, (vii) the filing fee of the National Association of Securities Dealers,
Inc., and (viii) all other fees, costs and expenses referred to in Item 13 of
the Registration Statement. The Underwriters may deem the Company to be the
primary obligor with respect to all costs, fees and expenses to be paid by the
Company and by the Selling Stockholders. Except as provided in this Section 7,
Section 9 and Section 11 hereof, the Underwriters shall pay all of their own
expenses, including the fees and disbursements of their counsel (excluding those
relating to qualification, registration or exemption under the Blue Sky laws and
Canadian securities laws and the Blue Sky memorandum referred to above). This
Section 7 shall not affect any agreements relating to the payment of expenses
between the Company and the Selling Stockholders.
The Selling Stockholders will 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) any fees and expenses of counsel for such Selling
Stockholders
-21-
to the extent the Company is not contractually obligated to pay such fees and
expenses; (ii) any fees and expenses of the Agent; and (iii) all expenses and
taxes incident to the sale and delivery of the Common Shares to be sold by such
Selling Stockholders to the Underwriters hereunder.
SECTION 8. Conditions of the Obligations of the Underwriters. The
obligations of the several Underwriters to purchase and pay for the Firm Common
Shares on the First Closing Date and the Optional Common Shares on the Second
Closing Date shall be subject to the accuracy of the representations and
warranties on the part of the Company and the Selling Stockholders herein set
forth as of the date hereof and as of the First Closing Date or the Second
Closing Date, as the case may be, to the accuracy of the statements of Company
officers and the Selling Stockholders made pursuant to the provisions hereof, to
the performance by the Company and the Selling Stockholders of their respective
obligations hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become effective not later
than 5:00 P.M. (or, in the case of a registration statement filed pursuant
to Rule 462(b) of the Rules and Regulations relating to the Common Shares,
not later than 10:00 P.M.), Washington, D.C. Time, on the date of this
Agreement, or at such later time as shall have been consented to by you;
if the filing of the Prospectus, or any supplement thereto, is required
pursuant to Rule 424(b) of the Rules and Regulations, the Prospectus shall
have been filed in the manner and within the time period required by Rule
424(b) of the Rules and Regulations; and prior to such Closing Date, no
stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have been
instituted or shall be pending or, to the knowledge of the Company, the
Selling Stockholders or you, shall be contemplated by the Commission; and
any request of the Commission for inclusion of additional information in
the Registration Statement, or otherwise, shall have been complied with to
your satisfaction.
(b) You shall be satisfied that since the respective dates as of
which information is given in the Registration Statement and Prospectus,
(i) except as set forth or contemplated by the Registration Statement or
the Prospectus, there shall not have been any change in the capital stock
of the Company or any of its subsidiaries, other than pursuant to the
exercise of outstanding options and warrants disclosed in the Prospectus,
or any material change in the indebtedness (other than in the ordinary
course of business) of the Company or any of its subsidiaries, (ii) except
as set forth
-22-
or contemplated by the Registration Statement or the Prospectus, no
material agreement or other transaction shall have been entered into by
the Company or any of its subsidiaries, which is not in the ordinary
course of business or which could result in a material reduction in the
future earnings of the Company and its subsidiaries, (iii) no loss or
damage (whether or not insured) to the property of the Company or any of
its subsidiaries shall have been sustained which materially and adversely
affects the condition (financial or otherwise), business, results of
operations or prospects of the Company and its subsidiaries taken as a
whole, (iv) no legal or governmental action, suit or proceeding affecting
the Company, any of its subsidiaries or any Selling Stockholder which is
material to the Company and its subsidiaries taken as a whole or which
affects or may affect the ability of the Company or any Selling
Stockholder to consummate the transactions contemplated by this Agreement
shall have been instituted or threatened and (v) there shall not have been
any material change in the condition (financial or otherwise), business,
management, results of operations or prospects of the Company and its
subsidiaries taken as a whole which makes it impracticable or inadvisable
in the judgment of the Representatives to proceed with the public offering
or purchase the Common Shares as contemplated hereby.
(c) There shall have been furnished to you, as Representatives of
the Underwriters, on each Closing Date, in form and substance satisfactory
to you, except as otherwise expressly provided below:
(i) An opinion of Xxxxxxx Xxxx & Xxxxxxxxx, counsel for the
Company and the Selling Stockholders, addressed to the Underwriters
and dated the First Closing Date, or the Second Closing Date (in the
latter case with respect to the Company only), as the case may be,
to the effect that:
(1) Each of the Company and its Significant Subsidiaries
has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its
jurisdiction of incorporation, is duly qualified to do
business as a foreign corporation and is in good standing in
all other jurisdictions where the ownership or leasing of
properties or the conduct of its business requires such
qualification, except where the failure to so qualify
(considering all such cases in the aggregate) would not have a
material adverse effect on the Company and its subsidiaries
taken as a whole, and has full corporate power and
-23-
authority to own its properties and conduct its business as
described in the Registration Statement;
(2) The authorized, issued and outstanding capital stock
of the Company is as set forth under the caption
"Capitalization" in the Prospectus; all necessary and proper
corporate proceedings have been taken in order to authorize
validly such authorized Common Stock; all outstanding shares
of Common Stock have been duly and validly issued, are (except
for an aggregate of 154,000 shares of Common Stock issued to
Xxxxxxx X. Xxxxxx, Xxxxx X. Xxxxxxx and Xxxxxxx Xxxxxxx in
consideration for promissory notes as described in the
Prospectus) fully paid and nonassessable, have been issued
pursuant to an exemption from the registration requirements of
the Act, were not issued in violation of any statutory
preemptive rights or, to the best of such counsel's knowledge,
other rights to subscribe for or purchase any securities and
conform in all material respects to the description thereof
contained in the Prospectus; the issued and outstanding shares
of Common Stock to be sold hereunder by Xxxxxxx X. Xxxxxx,
Xxxxx X. Xxxxxxx and Xxxxxxx Xxxxxxx are and will be fully
paid and nonassessable;
(3) All of the issued and outstanding shares of the
Company's Significant Subsidiaries have been duly and validly
authorized and issued, are fully paid and nonassessable and
are owned beneficially by the Company free and clear, to the
best of such counsel's knowledge, of any liens, encumbrances
or security interests, except as disclosed in the Registration
Statement;
(4) The certificates evidencing the Common Shares to be
delivered hereunder are in due and proper form under Delaware
law, and when duly countersigned by the Company's transfer
agent and registrar, and delivered to you or upon your order
against payment of the agreed consideration therefor in
accordance with the provisions of this Agreement, the Common
Shares represented thereby will be duly authorized and validly
issued, fully paid and nonassessable, will not have been
issued in violation of any statutory preemptive rights or, to
the best of such counsel's knowledge, other rights to
subscribe for or purchase securities and
-24-
will conform in all material respects to the description
thereof contained in the Prospectus;
(5) Except as disclosed in or specifically contemplated
by the Prospectus, to the best of such counsel's knowledge,
there are no outstanding options, warrants or other rights
calling for the issuance of, no agreements to issue, and no
reservation of shares for future issuance of, any shares of
capital stock of the Company or any security convertible into
or exchangeable for capital stock of the Company;
(6)(a) To the best of such counsel's knowledge, based
solely upon a telephone conversation with a member of the
staff of the Commission, the Registration Statement has become
effective under the Act, and, to the best of such counsel's
knowledge, no stop order suspending the effectiveness of the
Registration Statement or preventing the use of the Prospectus
has been issued and, to the best of such counsel's knowledge,
no proceedings for that purpose have been instituted or are
pending or contemplated by the Commission; any required filing
of the Prospectus and any supplement thereto pursuant to Rule
424(b) of the Rules and Regulations has been made in the
manner and within the time period required by such Rule
424(b);
(b) The Registration Statement, the Prospectus and each
amendment or supplement thereto (except for the financial
statements and schedules included therein as to which such
counsel need express no opinion) appear on their face to have
been appropriately responsive in all material respects with
the requirements of the Act and the Rules and Regulations.
(c) To the best of such counsel's knowledge, there are
no leases, contracts, agreements or documents of a character
required to be disclosed in the Registration Statement or
Prospectus or to be filed as exhibits to the Registration
Statement which are not disclosed or filed, as required;
(d) To the best of such counsel's knowledge, there are
no legal or governmental actions, suits or proceedings pending
or threatened against the Company which are required to be
described in the Prospectus which are not described as
required;
-25-
(7) The Company has full right, power and authority to
enter into this Agreement and to sell and deliver the Common
Shares to be sold by it to the several Underwriters; this
Agreement has been duly and validly authorized by all
necessary corporate action by the Company and has been duly
and validly executed and delivered by and on behalf of the
Company; and no approval, authorization, order, consent,
registration, filing, qualification, license or permit of or
with any court, regulatory, administrative or other
governmental body is required for the execution and delivery
of this Agreement by the Company or the consummation of the
transactions contemplated by this Agreement, except such as
have been obtained and are in full force and effect under the
Act and such as may be required under applicable Blue Sky laws
and Canadian securities laws in connection with the purchase
and distribution of the Common Shares by the Underwriters and
the clearance of such offering with the NASD (as to which such
counsel need express no opinion);
(8) The execution and performance of this Agreement by
the Company and the consummation of the transactions herein
contemplated will not conflict with, result in the breach of,
or constitute, either by itself or upon notice or the passage
of time or both, a default under, any agreement filed as an
exhibit to the Registration Statement, or violate any of the
provisions of the certificate of incorporation or bylaws, or
other organizational documents, of the Company or any of its
Significant Subsidiaries or, so far as is known to such
counsel, violate any statute, judgment, decree, order, rule or
regulation of any court or governmental body having
jurisdiction over the Company or any of its Significant
Subsidiaries or any of its or their property;
(9) To the best of such counsel's knowledge, no holders
of securities of the Company have rights which have not been
waived to the registration of shares of Common Stock or other
securities, because of the filing of the Registration
Statement by the Company or the offering contemplated hereby;
(10) This Agreement and the Stockholders Agreement have
been duly authorized, executed and delivered by or on behalf
of each of the Selling Stockholders; the Agent has been duly
and validly
-26-
authorized to act as the custodian of the Common Shares to be
sold by each such Selling Stockholder; and the performance of
this Agreement and the Stockholders Agreement and the
consummation of the transactions herein contemplated by the
Selling Stockholders will not result in a breach of, or
constitute a default under, any indenture, mortgage, deed of
trust, trust (constructive or other), loan agreement, lease,
franchise, license or other agreement or instrument known to
such counsel to which any of the Selling Stockholders is a
party or by which any of the Selling Stockholders or any of
their properties may be bound, or violate any statute,
judgment, decree, order, rule or regulation known to such
counsel of any court or governmental body having jurisdiction
over any of the Selling Stockholders or any of their
properties except for such breaches, defaults or violations
which would not have a material adverse effect on the
consummation of the transactions contemplated by this
Agreement or the ability of such Selling Stockholder to
deliver good and marketable title to the Shares to be sold by
it hereunder; and, to the best of such counsel's knowledge, no
approval, authorization, order or consent of any court,
regulatory body, administrative agency or other governmental
body is required for the execution and delivery of this
Agreement or the Stockholders Agreement or the consummation by
the Selling Stockholders of the transactions contemplated by
this Agreement, except such as have been obtained and are in
full force and effect under the Act and such as may be
required under the rules of the NASD and applicable Blue Sky
laws;
(11) To the best of such counsel's knowledge, each
Selling Stockholder has full right, power and authority to
enter into this Agreement and the Stockholders Agreement and
to sell, transfer and deliver the Common Shares to be sold on
such Closing Date by such Selling Stockholder hereunder and
good and marketable title to such Common Shares so sold, free
and clear of all adverse claims has been transferred to the
Underwriters (whom counsel may assume to be bona fide
purchasers without notice of any adverse claim) who have
purchased such Common Shares hereunder;
(12) The Stockholders Agreement is a valid and binding
agreement of each of the Selling Stockholders in accordance
with its terms, except
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(i) as enforceability may be limited by general equitable
principles, bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors' rights generally, (ii) as
availability of equitable remedies may be limited by equitable
principles of general applicability and (iii) except with
respect to those provisions relating to indemnities or
contributions for liabilities under the Act, as to which no
opinion need be expressed; and
(13) No transfer taxes are required to be paid in
connection with the sale and delivery of the Common Shares to
the Underwriters hereunder;
it being understood that any of the matters in paragraphs (1), (3)
and (8) of such opinion, insofar as they relate to any Significant
Subsidiary not incorporated in Delaware, may be the subject of one
or more separate opinions of local counsel to the Company reasonably
accepted to the Underwriters, in which case the opinion of Xxxxxxx
Xxxx and Xxxxxxxxx need not address such matters.
In rendering such opinion, such counsel may rely as to matters
of local law, on opinions of local counsel, and as to matters of
fact, on certificates of the Selling Stockholders and of officers of
the Company and of governmental officials, in which case their
opinion is to state that they are so doing and that the Underwriters
are justified in relying on such opinions or certificates and copies
of said opinions or certificates are to be attached to the opinion.
Such counsel shall also include a statement to the effect that no
facts have come to such counsel's attention that would lead such
counsel to believe that, at its effective date, the Registration
Statement contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or that the
Prospectus, as amended or supplemented, if applicable, as of its
date or at the applicable Closing Date, included or includes an
untrue statement of a material fact or omitted or omits 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.
(ii) Such opinion or opinions of Xxxx and Xxxx LLP, counsel
for the Underwriters dated the First Closing Date or the Second
Closing Date, as the case may be,
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with respect to the incorporation of the Company, the sufficiency of
all corporate proceedings and other legal matters relating to this
Agreement, the validity of the Common Shares, the Registration
Statement and the Prospectus and other related matters as you may
reasonably require, and the Company and the Selling Stockholders
shall have furnished to such counsel such documents and shall have
exhibited to them such papers and records as they may reasonably
request for the purpose of enabling them to pass upon such matters.
In connection with such opinions, such counsel may rely on
representations or certificates of officers of the Company and
governmental officials.
(iii) A certificate of the Company executed by the Chairman of
the Board or President and the chief financial or accounting officer
of the Company, dated the First Closing Date or the Second Closing
Date, as the case may be, to the effect that:
(1) The representations and warranties of the Company
set forth in Section 2 of this Agreement are true and correct
as of the date of this Agreement and as of the First Closing
Date or the Second Closing Date, as the case may be, and the
Company has complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied on or
prior to such Closing Date;
(2) The Commission has not issued any order preventing
or suspending the use of the Prospectus or any Preliminary
Prospectus filed as a part of the Registration Statement or
any amendment thereto; no stop order suspending the
effectiveness of the Registration Statement has been issued;
and to the best of the knowledge of the respective signers, no
proceedings for that purpose have been substituted or are
pending or contemplated under the Act;
(3) Each of the respective signers of the certificate
has carefully examined the Registration Statement and the
Prospectus; in his opinion and to the best of his knowledge,
the Registration Statement and the Prospectus and any
amendments or supplements thereto contain all statements
required to be stated therein regarding the Company and its
subsidiaries; and neither the Registration Statement nor the
Prospectus nor any amendment or supplement thereto includes
any untrue statement of
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a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading;
(4) Since the initial date on which the Registration
Statement was filed, no agreement, written or oral,
transaction or event has occurred which should have been set
forth in an amendment to the Registration Statement or in a
supplement to or amendment of any prospectus which has not
been disclosed in such a supplement or amendment;
(5) Since the respective dates as of which information
is given in the Registration Statement and the Prospectus, and
except as disclosed in or contemplated by the Prospectus,
there has not been any material adverse change or a
development involving a material adverse change in the
condition (financial or otherwise), business, properties,
results of operations, management or prospects of the Company
and its subsidiaries taken as a whole; and no legal or
governmental action, suit or proceeding is pending or
threatened against the Company or any of its subsidiaries
which is material to the Company and its subsidiaries taken as
whole, whether or not arising from transactions in the
ordinary course of business, or which may adversely affect the
Company's ability to consummate the transactions contemplated
by this Agreement; since such dates and except as so
disclosed, neither the Company nor any of its subsidiaries has
entered into any agreement or other transaction which is not
in the ordinary course of business or which could result in a
material reduction in the future earnings of the Company or
incurred any material liability or obligation, direct,
contingent or indirect, made any change in its capital stock,
made any material change in its short-term debt or funded debt
or repurchased or otherwise acquired any of the Company's
capital stock; and, except as so disclosed, the Company has
not declared or paid any dividend, or made any other
distribution, upon its outstanding capital stock payable to
stockholders of record on a date prior to the First Closing
Date or Second Closing Date; and
(6) Since the respective dates as of which information
is given in the Registration Statement
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and the Prospectus and except as disclosed in or contemplated
by the Prospectus, the Company and its subsidiaries have not
sustained a material loss or damage by strike, fire, flood,
windstorm, accident or other calamity (whether or not
insured).
(iv) On the First Closing Date, a certificate, dated such
Closing Date and addressed to you, signed by or on behalf of each of
the Selling Stockholders to the effect that the representations and
warranties of such Selling Stockholder in this Agreement are true
and correct, as if made at and as of the First Closing Date, and
such Selling Stockholder has complied with all the agreements and
satisfied all the conditions on his part to be performed or
satisfied prior to the First Closing Date.
(v) On the date this Agreement is executed and also on the
First Closing Date and the Second Closing Date, a letter addressed
to you, as Representatives of the Underwriters, from Deloitte &
Touche LLP, independent accountants, the first one to be dated the
date of this Agreement, the second one to be dated the First Closing
Date and the third one (in the event of a Second Closing) to be
dated the Second Closing Date, in form and substance satisfactory to
you.
(vi) On or before the First Closing Date, letters from each of
the Selling Stockholders, from each director and officer of the
Company, and from stockholders of the Company, and the holders of
certain warrants and options to purchase Common Stock, holding a
number of shares of Common Stock, or options and warrants to
purchase the number of shares of Common Stock, as the case may be,
as described in the Prospectus under the caption "Underwriting", in
the form previously provided by you, confirming that for a period of
90 days after the first date that any of the Common Shares are
released by you for sale to the public, such person will not
directly or indirectly sell or offer to sell or otherwise dispose of
any shares of Common Stock or any right to acquire such shares
without the prior written consent either of Xxxxxxxxxx Securities or
of each of the Representatives, which consent may be withheld at the
sole discretion of Xxxxxxxxxx Securities or each of the
Representatives, as the case may be.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are reasonably satisfactory
to you and to Xxxx and Xxxx LLP, counsel for the Underwriters. The Company shall
furnish you with such
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manually signed or conformed copies of such opinions, certificates, letters and
documents as you reasonably request. Any certificate signed by any officer of
the Company and delivered to the Representatives or to counsel for the
Underwriters shall be deemed to be a representation and warranty by the Company
to the Underwriters as to the statements made therein.
If any condition to the Underwriters' obligations hereunder to be
satisfied prior to or at the First Closing Date is not so satisfied, this
Agreement at your election will terminate upon notification by you as
Representatives to the Company and the Selling Stockholders without liability on
the part of any Underwriter, the Company or the Selling Stockholders except for
the expenses to be paid or reimbursed by the Company and by the Selling
Stockholders pursuant to Sections 7 and 9 hereof and except to the extent
provided in Section 11 hereof.
SECTION 9. Reimbursement of Underwriters' Expenses. Notwithstanding any
other provisions hereof, if this Agreement shall be terminated by you pursuant
to Section 8, or if the sale to the Underwriters of the Common Shares at the
First Closing 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
you and the other Underwriters upon demand for all out-of-pocket expenses that
shall have been reasonably incurred by you and them in connection with the
proposed purchase and the sale of the Common Shares, including but not limited
to reasonable fees and disbursements of counsel, printing expenses, travel
expenses, postage, telegraph charges and telephone charges relating directly to
the offering contemplated by the Prospectus. Any such termination shall be
without liability of any party to any other party except that the provisions of
this Section, Section 7 and Section 11 shall at all times be effective and shall
apply.
SECTION 10. Effectiveness of Registration Statement. You, the Company and
the Selling Stockholders will use your, its and their best efforts to cause the
Registration Statement to become effective, to prevent the issuance of any stop
order suspending the effectiveness of the Registration Statement and, if such
stop order be issued, to obtain as soon as possible the lifting thereof.
SECTION 11. Indemnification. (a)(i) The Company and each of the Selling
Stockholders, jointly and severally, agree to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of the Act against any losses, claims, damages, liabilities or expenses,
joint or several, to which such Underwriter or such controlling person may
become subject, under the Act, the Exchange Act or
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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 losses,
claims, damages, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state in any of them a material fact required to be stated therein
or necessary to make the statements in any of them not misleading, or arise out
of or are based in whole or in part on any inaccuracy in the representations and
warranties of the Company or the Selling Stockholders contained herein or any
failure of the Company or the Selling Stockholders to perform their respective
obligations hereunder or under law; and, subject to the third sentence of
subsection (c) of this Section, will reimburse each Underwriter and each such
controlling person for any legal and other expenses as such expenses are
reasonably incurred by such Underwriter or such controlling person in connection
with investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; provided, however, that neither the
Company nor the Selling Stockholders will be liable in any such case to the
extent that any such loss, claim, damage, liability or expense arises out of or
is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement, any Preliminary Prospectus,
the Prospectus or any amendment or supplement thereto (x) in reliance upon and
in conformity with the information furnished to the Company by and on behalf of
the Underwriters pursuant to Section 4 hereof or (y) in reliance upon and in
conformity with information furnished to the Company by a Selling Stockholder
with respect to such Selling Stockholder (except that the Selling Stockholder
furnishing such information shall not be so relieved of liability); provided
further that the foregoing indemnity agreement with respect to any Preliminary
Prospectus shall not inure to the benefit of any Underwriter from whom the
person asserting any such loss, claim, damage, liability or expenses purchased
Shares, or any person controlling such Underwriter, if a copy of the Prospectus
(as then amended or supplemented) 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 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 the Company
has delivered the Prospectus (as so amended or supplemented) to the several
Underwriters on a timely basis to permit such delivery or sending; provided
further that no Selling Stockholder shall have any liability hereunder with
respect to any inaccuracy in the
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representations and warranties of the Company or any other Selling Stockholder
contained herein or with respect to any failure of the Company or any other
Selling Stockholder to perform its obligations hereunder or under law; and
provided further that no Selling Stockholder shall be required to provide
indemnification hereunder until the Underwriter 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 Company and the Selling Stockholders
may agree, as among themselves and without limiting the rights of the
Underwriters under this Agreement, as to their respective amounts of such
liability for which they each shall be responsible. In addition to their other
obligations under this Section 11(a)(i), the Company and the Selling
Stockholders agree that, as an interim measure during the pendency of any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, or any
inaccuracy in the representations and warranties of the Company or the Selling
Stockholders herein or failure to perform their obligations hereunder, all as
described in this Section 11(a)(i), they will reimburse each Underwriter on a
quarterly basis for all reasonable legal or other expenses incurred in
connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the Company's
or the Selling Stockholders' obligation to reimburse each Underwriter for such
expenses and the possibility that such payments might later be held to have been
improper by a court of competent jurisdiction. To the extent that any such
interim reimbursement payment is so held to have been improper, each Underwriter
shall promptly return it to the Company and the Selling Stockholders, as
applicable, together with interest, compounded daily, determined on the basis of
the prime rate (or other commercial lending rate for borrowers of the highest
credit standing) announced from time to time by Bank of America NT&SA, San
Francisco, California (the "Prime Rate"). Any such interim reimbursement
payments which are not made to an Underwriter within 30 days of a request for
reimbursement, shall bear interest at the Prime Rate from the date of such
request. This indemnity agreement will be in addition to any liability which the
Company or the Selling Stockholders may otherwise have.
(ii) Notwithstanding anything to the contrary herein, no Selling
Stockholder shall be liable under this Section 11(a) for an amount in excess of
the proceeds (net of the applicable underwriting discount) received by such
Selling Stockholder with respect to the Shares purchased by the Underwriters
from such Selling Stockholder hereunder.
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(b) Each Underwriter will severally 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 Act, against any
losses, claims, damages, liabilities or expenses to which the Company, or any
such director, officer, Selling Stockholder or controlling person may become
subject, under the Act, the Exchange Act, or other federal or state statutory
law or regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Underwriter), insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof as contemplated below) arise out of or are based
upon any untrue or alleged untrue statement of any material fact contained in
the Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, in reliance upon and in conformity with the information
furnished to the Company by and on behalf of the Underwriters pursuant to
Section 4 hereof; and will, subject to the third sentence of subsection (c) of
this Section 11, reimburse the Company, or any such director, officer, Selling
Stockholder or controlling person for any legal and other expense reasonably
incurred by the Company, or any such director, officer, Selling Stockholder or
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action. In addition to its other obligations under this Section 11(b), each
Underwriter severally agrees that, as an interim measure during the pendency of
any claim, action, investigation, inquiry or other proceeding arising out of or
based upon any statement or omission, or any alleged statement or omission,
described in this Section 11(b) which relates to information furnished to the
Company pursuant to Section 4 hereof, it will reimburse the Company (and, to the
extent applicable, each officer, director, controlling person or Selling
Stockholder) on a quarterly basis for all reasonable legal or other expenses
incurred in connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the
Underwriters' obligation to reimburse the Company (and, to the extent
applicable, each officer, director, controlling person or Selling Stockholder)
for such expenses and the possibility that such payments might later be held to
have been improper by a court of competent jurisdiction. To the extent
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that any such interim reimbursement payment is so held to have been improper,
the Company (and, to the extent applicable, each officer, director, controlling
person or Selling Stockholder) shall promptly return it to the Underwriters,
together with interest, compounded daily, determined on the basis of the Prime
Rate. Any such interim reimbursement payments which are not made to the Company
within 30 days of a request for reimbursement, shall bear interest at the Prime
Rate from the date of such request. This indemnity agreement will be in addition
to any liability which such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section, notify the indemnifying party 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 indemnity or
contribution contained in this Section to the extent the indemnifying party 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 may wish, jointly
with all other indemnifying parties similarly notified, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be a conflict between the positions of
the indemnifying party and the indemnified party in conducting the defense of
any such action or that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select one separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed such counsel in
connection with the assumption of legal defenses in accordance with the proviso
to the next preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel, approved by the Representatives in the case of paragraph (a),
representing the indemnified parties who are parties to such
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action) or (ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of the action, in
each of which cases the fees and expenses of counsel shall be at the expense of
the indemnifying party.
(d) If the indemnification provided for in this Section 11 is required by
its terms but is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party under paragraphs (a), (b) or
(c) in respect of any losses, claims, damages, liabilities or expenses referred
to herein, then each applicable indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of any losses,
claims, damages, liabilities or expenses referred to herein (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, the Selling Stockholders and the Underwriters from the offering of the
Common Shares or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company, the Selling Stockholders and the Underwriters in
connection with the statements or omissions 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 respective relative benefits received by the Company, the
Selling Stockholders and the Underwriters shall be deemed to be in the same
proportion, in the case of the Company and the Selling Stockholders as the total
price paid to the Company and to the Selling Stockholders, respectively, for the
Common Shares sold by them to the Underwriters (net of underwriting commissions
but before deducting expenses), and in the case of the Underwriters as the
underwriting commissions received by them bears to the total of such amounts
paid to the Company and to the Selling Stockholders and received by the
Underwriters as underwriting commissions. The relative fault of the Company, the
Selling Stockholders and the Underwriters shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact or the
inaccurate or the alleged inaccurate representation and/or warranty relates to
information supplied by the Company, the Selling Stockholders or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
paid or payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include, subject
to the limitations set forth in subparagraph (c) of this Section 11, any legal
or other fees or expenses reasonably incurred by such party in connection with
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investigating or defending any action or claim. The provisions set forth in
subparagraph (c) of this Section 11 with respect to notice of commencement of
any action shall apply if a claim for contribution is to be made under this
subparagraph (d); provided, however, that no additional notice shall be required
with respect to any action for which notice has been given under subparagraph
(c) 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 11 were determined solely by pro rata allocation (even
if the Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to in this paragraph. Notwithstanding the provisions of this Section
11, no Underwriter shall be required to contribute any amount in excess of the
amount of the total underwriting commissions received by such Underwriter in
connection with the Common Shares underwritten by it and distributed to the
public. No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute pursuant to this Section 11 are several in proportion
to their respective underwriting commitments and not joint.
(e) It is agreed that any controversy arising out of the operation of the
interim reimbursement arrangements set forth in Sections 11(a) and 11(b) hereof,
including the amounts of any requested reimbursement payments and the method of
determining such amounts, shall be settled by arbitration conducted under the
provisions of the Constitution and Rules of the Board of Governors of the New
York Stock Exchange, Inc. or pursuant to the Code of Arbitration Procedure of
the NASD. Any such arbitration must be commenced by service of a written demand
for arbitration or written notice of intention to arbitrate, therein electing
the arbitration tribunal. In the event the party demanding arbitration does not
make such designation of an arbitration tribunal in such demand or notice, then
the party responding to said demand or notice is authorized to do so. Such an
arbitration would be limited to the operation of the interim reimbursement
provisions contained in Sections 11(a) and 11(b) hereof and would not resolve
the ultimate propriety or enforceability of the obligation to reimburse expenses
which is created by the provisions of such Sections 11(a) and 11(b) hereof.
SECTION 12. Default of Underwriters. It shall be a condition to this
Agreement and the obligation of the Company and the Selling Stockholders to sell
and deliver the Common Shares hereunder, and of each Underwriter to purchase the
Common Shares in the manner as described herein, that, except as hereinafter in
this paragraph provided, each of the Underwriters shall purchase
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and pay for all the Common Shares agreed to be purchased by such Underwriter
hereunder upon tender to the Representatives of all such shares in accordance
with the terms hereof. If any Underwriter or Underwriters default in their
obligations to purchase Common Shares hereunder on either the First or Second
Closing Date and the aggregate number of Common Shares which such defaulting
Underwriter or Underwriters agreed but failed to purchase on such Closing Date
does not exceed 10% of the total number of Common Shares which the Underwriters
are obligated to purchase on such Closing Date, the non-defaulting Underwriters
shall be obligated severally, in proportion to their respective commitments
hereunder, to purchase the Common Shares which such defaulting Underwriters
agreed but failed to purchase on such Closing Date. If any Underwriter or
Underwriters so default and the aggregate number of Common Shares with respect
to which such default occurs is more than the above percentage and arrangements
satisfactory to the Representatives and the Company for the purchase of such
Common Shares by other persons are not made within 48 hours after such default,
this Agreement will terminate without liability on the part of any
non-defaulting Underwriter or the Company or the Selling Stockholders except for
the expenses to be paid by the Company and the Selling Stockholders pursuant to
Section 7 hereof and except to the extent provided in Section 11 hereof.
In the event that Common Shares to which a default relates are to be
purchased by the non-defaulting Underwriters or by another party or parties, the
Representatives or the Company shall have the right to postpone the First or
Second Closing Date, as the case may be, for not more than five business days in
order that the necessary changes in the Registration Statement, Prospectus and
any other documents, as well as any other arrangements, may be effected. As used
in this Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
SECTION 13. Effective Date. This Agreement shall become effective
immediately as to Sections 7, 9, 11, 14 and 16 and, as to all other provisions,
(i) if at the time of execution of this Agreement the Registration Statement has
not become effective, at 2:00 P.M., California time, on the first full business
day following the effectiveness of the Registration Statement, or (ii) if at the
time of execution of this Agreement the Registration Statement has been declared
effective, at 2:00 P.M., California time, on the first full business day
following the date of execution of this Agreement; but this Agreement shall
nevertheless become effective at such earlier time after the Registration
Statement becomes effective as you may determine on and by notice to the Company
or by release of any of the Common Shares for sale to the public. For the
purposes of this
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Section 13, the Common Shares shall be deemed to have been so released upon the
release for publication of any newspaper advertisement relating to the Common
Shares or upon the release by you of telegrams (i) advising Underwriters that
the Common Shares are released for public offering, or (ii) offering the Common
Shares for sale to securities dealers, whichever may occur first.
SECTION 14. Termination. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof:
(a) This Agreement may be terminated by the Company by notice to you
and the Selling Stockholders or by you by notice to the Company and the
Selling Stockholders at any time prior to the time this Agreement shall
become effective as to all its provisions, and any such termination shall
be without liability on the part of the Company or the Selling
Stockholders to any Underwriter (except for the expenses to be paid or
reimbursed by the Company and the Selling Stockholders pursuant to
Sections 7 and 9 hereof and except to the extent provided in Section 11
hereof) or of any Underwriter to the Company or the Selling Stockholders
(except to the extent provided in Section 11 hereof).
(b) This Agreement may also be terminated by you prior to the First
Closing Date by notice to the Company (i) if additional material
governmental restrictions, not in force and effect on the date hereof,
shall have been imposed upon trading in securities generally or minimum or
maximum prices shall have been generally established on the New York Stock
Exchange or on the American Stock Exchange or in the over the counter
market by the NASD, or trading in securities generally shall have been
suspended on either such Exchange or in the over the counter market by the
NASD, or a general banking moratorium shall have been established by
federal, New York or California authorities, (ii) if an outbreak of major
hostilities or other national or international calamity or any substantial
change in political, financial or economic conditions shall have occurred
or shall have accelerated or escalated to such an extent, as, in the
judgment of the Representatives, to affect adversely the marketability of
the Common Shares, (iii) if any adverse event shall have occurred or shall
exist which makes untrue or incorrect in any material respect any
statement or information contained in the Registration Statement or
Prospectus or which is not reflected in the Registration Statement or
Prospectus but should be reflected therein in order to make the statements
or information contained therein not misleading in any material respect,
or (iv) if there shall be any action, suit or proceeding pending or
threatened, or there shall have been any development or prospective
development involving particularly the business or properties or
securities of the
-40-
Company or any of its subsidiaries or the transactions contemplated by this
Agreement, which, in the reasonable judgment of the Representatives, may
materially and adversely affect the Company's business or earnings and makes it
impracticable or inadvisable to offer or sell the Common Shares. Any termination
pursuant to this subsection (b) shall be without liability on the part of any
Underwriter to the Company or the Selling Stockholders or on the part of the
Company or the Selling Stockholders to any Underwriter (except for expenses to
be paid or reimbursed by the Company and the Selling Stockholders pursuant to
Sections 7 and 9 hereof and except to the extent provided in Section 11 hereof.
SECTION 15. Failure of the Selling Stockholders to Sell and Deliver. 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 under the terms of this Agreement, then
the Underwriters may at their option, by written notice from you to the Company
and the Selling Stockholders, either (i) terminate this Agreement without any
liability on the part of any Underwriter (except as provided in Section 11
hereof) or the Company or the Selling Stockholders (except as provided in
Sections 7, 9 and 11 hereof) or (ii) purchase the shares which the Company and
other Selling Stockholders have agreed to sell and deliver in accordance with
the terms hereof. In the event of a failure by one or more of the Selling
Stockholders to sell and deliver as referred to in this Section, either you or
the Company shall have the right to postpone the Closing Date for a period not
exceeding seven business days in order that the necessary changes in the
Registration Statement, Prospectus and any other documents, as well as any other
arrangements, may be effected.
SECTION 16. 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.
SECTION 17. Notices. All communications hereunder shall be in writing and,
if sent to the Representatives shall be mailed, delivered or telegraphed and
confirmed to you at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000,
Attention: Xxxx X. Xxxxxxxx and Xxxx Xxxxx, with a copy to Xxxx and Xxxx LLP, 00
-00-
Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, 00000, Attention: Xxxx X. Xxxxxx, Esq.; and
if sent to the Company or the Selling Stockholders shall be mailed, delivered or
telegraphed and confirmed to the Company at 0 Xxxxxxxxx Xxxxxx Xxxx, Xxxxxxxxx,
Xxxxxxxxxxx, 00000, Attention: Xxxxx X. Xxxxxxx, with a copy to Xxxxxxx Xxxx &
Xxxxxxxxx, One Citicorp Center, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxx X. Xxxxxxx, Esq. The Company, the Selling Stockholders or you
may change the address for receipt of communications hereunder by giving notice
to the others.
SECTION 18. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto, including any substitute Underwriters pursuant
to Section 12 hereof, and to the benefit of the officers and directors and
controlling persons referred to in Section 11, and in each case their respective
successors, personal representatives and assigns, and no other person will have
any right or obligation hereunder. No such assignment shall relieve any party of
its obligations hereunder. The term "successors" shall not include any purchaser
of the Common Shares as such from any of the Underwriters merely by reason of
such purchase.
SECTION 19. Representation of Underwriters. You will act as
Representatives for the several Underwriters in connection with all dealings
hereunder, and any action under or in respect of this Agreement taken by you
jointly or by Xxxxxxxxxx Securities, as Representatives, will be binding upon
all the Underwriters.
SECTION 20. 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 21. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the laws pertaining to
conflicts of laws) of the State of California.
SECTION 22. General. This Agreement constitutes the entire agreement of
the parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof. This Agreement may be executed in several
counterparts, each one of which shall be an original, and all of which shall
constitute one and the same document.
-42-
In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company, the Selling Stockholders and you.
Any person executing and delivering this Agreement as Attorney-in-fact for
the Selling Stockholders represents by so doing that he has been duly appointed
as Attorney-in-fact by such Selling Stockholder pursuant to a validly existing
and binding Power of Attorney which authorizes such Attorney-in-fact to take
such action. Any action taken under this Agreement by any of the
Attorneys-in-fact will be binding on all the Selling Stockholders.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed copies hereof, whereupon it
will become a binding agreement among the Company, the Selling Stockholders and
the several Underwriters including you, all in accordance with its terms.
Very truly yours,
FINE HOST CORPORATION
By:______________________________
Name:
Title:
SELLING STOCKHOLDERS
By:______________________________
(Attorney-in-fact)
-43-
The foregoing Underwriting Agreement
is hereby confirmed and accepted by
us in San Francisco, California as of
the date first above written.
XXXXXXXXXX SECURITIES
XXXXX XXXXXXX INC.
XXXXX XXXXXX INC.
Acting as Representatives of the
several Underwriters named in
the attached Schedule A.
By XXXXXXXXXX SECURITIES
By:______________________________
Authorized Signatory
-44-
SCHEDULE A
Number of Firm
Common Shares
Name of Underwriter to be Purchased
------------------- ---------------
Xxxxxxxxxx Securities ............................
Xxxxx Xxxxxxx Inc. ...............................
Xxxxx Xxxxxx Inc. ................................
TOTAL ................................. ---------
2,000,000
=========
A-1
SCHEDULE B
Number of Firm
Common Shares to
be Sold by Selling
Name of Selling Stockholder Stockholders
--------------------------- ------------------
Xxxxxxx X. Xxxxxxx ............................... 116,000
Xxxxxxx X. Xxxxxx ................................ 15,000
Xxxxxxx X. Xxxxxxx ............................... 15,000
Xxxxx X. Xxxxxxx ................................. 10,000
Xxxxxx X. Xxxxxx ................................. 17,500
Xxxxxxxxx X. Xxxxx ............................... 8,500
Xxxxxx X. Xxxxx .................................. 4,000
-------
TOTAL ................................. 186,000
=======
B-1
