900,000 SHARES(1)
ROCKY MOUNTAIN CHOCOLATE FACTORY, INC.
COMMON STOCK
PURCHASE AGREEMENT
,
1995
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XXXXX XXXXXXX INC.
Xxxxx Xxxxxxx Tower
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Gentlemen:
Rocky Mountain Chocolate Factory, Inc., a Colorado
corporation (the
"Company"), and the stockholders listed on Schedule I hereto (the
"Selling
Stockholders"), severally propose to sell to you (the
"Underwriter") an
aggregate of 900,000 shares (the "Firm Shares") of Common Stock,
par value $.03
per share (the "Common Stock"), of the Company. The Firm Shares
consist of
300,000 authorized but unissued shares of Common Stock to be
issued and sold by
the Company and 600,000 outstanding shares of Common Stock to be
sold by the
Selling Stockholders. The Company and certain of the Selling
Stockholders have
also granted to you an option to purchase up to 50,625 and 84,375
additional
shares of Common Stock, respectively, on the terms and for the
purposes set
forth in Section 3 hereof (the "Option Shares"). The Firm Shares
and any Option
Shares purchased pursuant to this Purchase Agreement are herein
collectively
called the "Securities."
The Company and the Selling Stockholders hereby confirm
their agreement
with respect to the sale of the Securities to you.
1. REGISTRATION STATEMENT. A registration statement on Form
S-1 (File No.
33-_____) with respect to the Securities, including a preliminary
form of
prospectus, 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 ("Rules and Regulations") of the Securities and
Exchange Commission
(the "Commission") thereunder and has been filed with the
Commission; one or
more amendments to such registration statement have also been so
prepared and
have been, or will be, so filed. Copies of such registration
statement and
amendments and each related preliminary prospectus have been
delivered to you.
If the Company has elected not to rely upon Rule 430A of the
Rules and
Regulations, the Company has prepared and will promptly file an
amendment to the
registration statement and an amended prospectus. If the Company
has elected to
rely upon Rule 430A of the Rules and Regulations, it will prepare
and file a
prospectus pursuant to Rule 424(b) that discloses the information
previously
omitted
-------------------
(1)Plus an option to purchase up to 135,000 additional shares to
cover over-
allotments.
from the prospectus in reliance upon Rule 430A. Such
registration statement as
amended at the time it is or was declared effective by the
Commission, and, in
the event of any amendment thereto after the effective date and
prior to the
First Closing Date (as hereinafter defined), such registration
statement as so
amended (but only from and after the effectiveness of such
amendment), including
the information deemed to be part of the registration statement
at the time of
effectiveness pursuant to Rule 430A(b), if applicable, is
hereinafter called the
"Registration Statement." The prospectus included in the
Registration Statement
at the time it is or was declared effective by the Commission is
hereinafter
called the "Prospectus," except that if any prospectus filed by
the Company with
the Commission pursuant to Rule 424(b) of the Rules and
Regulations or any other
prospectus provided to you by the Company for use in connection
with the
offering of the Securities (whether or not required to be filed
by the Company
with the Commission pursuant to Rule 424(b) of the Rules and
Regulations)
differs from the prospectus on file at the time the Registration
Statement is or
was declared effective by the Commission, the term "Prospectus"
shall refer to
such differing prospectus from and after the time such prospectus
is filed with
the Commission or transmitted to the Commission for filing
pursuant to such
Rule 424(b) or from and after the time it is first provided to
you by the
Company for such use. The term "Preliminary Prospectus" as used
herein means
any preliminary prospectus included in the Registration Statement
prior to the
time it becomes or became effective under the Act and any
prospectus subject to
completion as described in Rule 430A of the Rules and
Regulations.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SELLING
STOCKHOLDERS.
(a) The Company represents and warrants to, and agrees
with you, as
follows:
(i) No order preventing or suspending the use of any
Preliminary
Prospectus has been issued by the Commission and each
Preliminary
Prospectus, at the time of filing thereof, 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 the light
of the circumstances under which they were made, not
misleading; except
that the foregoing shall not apply to statements in or
omissions from any
Preliminary Prospectus in reliance upon, and in conformity
with, written
information furnished to the Company by you specifically for
use in the
preparation thereof.
(ii) As of the time the Registration Statement (or any
post-effective
amendment thereto) is or was declared effective by the
Commission, upon the
filing or first delivery to you of the Prospectus (or any
supplement to the
Prospectus) and at the First Closing Date and Second Closing
Date (as
hereinafter defined), (A) the Registration Statement and
Prospectus (in
each case, as so amended and/or supplemented) will conform
or conformed in
all material respects to the requirements of the Act and the
Rules and
Regulations, (B) the Registration Statement (as so amended)
will not or did
not include 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 not misleading, and (C) the Prospectus
(as so
supplemented) will not or did not include 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 in
which they are or were made, not misleading; except that the
foregoing
shall not apply to statements in or omissions from any such
document in
reliance upon, and in conformity with, written information
furnished to the
Company by you or the Selling Stockholders, specifically for
use in the
preparation thereof. If the Registration Statement has been
declared
effective by the Commission, no stop order suspending the
effectiveness of
the Registration Statement has been issued, and no
proceeding for that
purpose has been initiated or, to the Company's knowledge,
threatened by
the Commission.
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(iii) The consolidated financial statements of the
Company, together
with the notes thereto, set forth in the Registration
Statement and
Prospectus comply in all material respects with the
requirements of the Act
and fairly present the financial condition of the Company as
of the dates
indicated and the results of operations and changes in cash
flows for the
periods therein specified in conformity with generally
accepted accounting
principles consistently applied throughout the periods
involved (except as
otherwise stated therein); and the supporting schedules
included in the
Registration Statement present fairly the information
required to be stated
therein. No other financial statements or schedules are
required to be
included in the Registration Statement or Prospectus. Xxxxx
Xxxxxxxx, LLP,
which has expressed its opinion with respect to the
consolidated financial
statements and schedules filed as a part of the Registration
Statement and
included in the Registration Statement and Prospectus, are
independent
public accountants as required by the Act and the Rules and
Regulations.
(iv) The Company has been duly organized and is
validly existing as a
corporation in good standing under the laws of its
jurisdiction of
incorporation. The Company has full corporate power and
authority to own
its properties and conduct its business as currently being
carried on and
as described in the Registration Statement and Prospectus,
and is duly
qualified to do business as a foreign corporation in good
standing in each
jurisdiction in which it owns or leases real property or in
which the
conduct of its business makes such qualification necessary
and in which the
failure to so qualify would have a material adverse effect
upon its
business, condition (financial or otherwise) or properties,
taken as a
whole.
(v) Except as contemplated in the Prospectus,
subsequent to the
respective dates as of which information is given in the
Registration
Statement and the Prospectus, the Company has not incurred
any material
liabilities or obligations, direct or contingent, or entered
into any
material transactions, or declared or paid any dividends or
made any
distribution of any kind with respect to its capital stock;
and there has
not been any change in the capital stock (other than a
change in the number
of outstanding shares of Common Stock due to the issuance of
shares upon
the exercise of outstanding options or warrants or pursuant
to employee
benefit plans referred to in the Registration Statement), or
any material
change in the short-term or long-term debt, or any issuance
of options,
warrants, convertible securities or other rights to purchase
the capital
stock, of the Company (other than pursuant to employee
benefit plans
referred to in the Registration Statement) or any material
adverse change,
or any development involving a prospective material adverse
change, in the
general affairs, condition (financial or otherwise),
business, key
personnel, property, prospects, net worth or results of
operations of the
Company, taken as a whole.
(vi) Except as set forth in the Prospectus, there is
not pending or,
to the knowledge of the Company, threatened or contemplated,
any action,
suit or proceeding to which the Company is a party before or
by any court
or governmental agency, authority or body, or any
arbitrator, which might
result in any material adverse change in the condition
(financial or
otherwise), business, prospects, net worth or results of
operations of the
Company, taken as a whole.
(vii) There are no contracts or documents of the
Company that are
required to be filed as exhibits to the Registration
Statement by the Act
or by the Rules and Regulations that have not been so filed.
(viii) This Agreement has been duly authorized,
executed and
delivered by the Company, and constitutes a valid, legal and
binding
obligation of the Company, enforceable in accordance
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with its terms, except as rights to indemnity hereunder may
be limited by
federal or state securities laws and except as such
enforceability may be
limited by bankruptcy, insolvency, reorganization or similar
laws affecting
the rights of creditors generally and subject to general
principles of
equity. The execution, delivery and performance of this
Agreement and the
consummation of the transactions herein contemplated will
not result in a
breach or violation of any of the terms and provisions of,
or constitute a
default under, any statute, any agreement or instrument to
which the
Company is a party or by which it is bound or to which any
of its property
is subject, the Company's charter or by-laws, or any order,
rule,
regulation or decree of any court or governmental agency or
body having
jurisdiction over the Company or any of its properties; no
consent,
approval, authorization or order of, or filing with, any
court or
governmental agency or body is required for the execution,
delivery and
performance of this Agreement or for the consummation of the
transactions
contemplated hereby, including the issuance or sale of the
Securities by
the Company, except such as may be required under the Act or
state
securities or blue sky laws; and the Company has full power
and authority
to enter into this Agreement and to authorize, issue and
sell the
Securities as contemplated by this Agreement.
(ix) All of the issued and outstanding shares of
capital stock of the
Company, including the outstanding shares of Common Stock,
are duly
authorized and validly issued, fully paid and nonassessable,
have been
issued in compliance with all federal and state securities
laws, were not
issued in violation of or subject to any preemptive rights
or other rights
to subscribe for or purchase securities, and the holders
thereof are not
subject to personal liability by reason of being such
holders; the
Securities which may be sold hereunder by the Company have
been duly
authorized and, when issued, delivered and paid for in
accordance with the
terms hereof, will have been validly issued and will be
fully paid and
nonassessable, and the holders thereof will not be subject
to personal
liability by reason of being such holders; and the capital
stock of the
Company, including the Common Stock, conforms to the
description thereof in
the Registration Statement and Prospectus. Except as
otherwise stated in
the Registration Statement and Prospectus, there are no
preemptive rights
or other rights to subscribe for or to purchase, or any
restriction upon
the voting or transfer of, any shares of Common Stock
pursuant to the
Company's charter, by-laws or any agreement or other
instrument to which
the Company is a party or by which the Company is bound.
Neither the
filing of the Registration Statement nor the offering or
sale of the
Securities as contemplated by this Agreement gives rise to
any rights for
or relating to the registration of any shares of Common
Stock or other
securities of the Company. Except as described in the
Registration
Statement and the Prospectus, there are no options,
warrants, agreements,
contracts or other rights in existence to purchase or
acquire from the
Company any shares of the capital stock of the Company. The
Company has an
authorized and outstanding capitalization as set forth in
the Registration
Statement and the Prospectus.
(x) The Company holds, and is operating in compliance
in all material
respects with, all franchises, grants, authorizations,
licenses, permits,
easements, consents, certificates and orders of any
governmental or
self-regulatory body required for the conduct of its
business and to the
knowledge of the Company all such franchises, grants,
authorizations,
licenses, permits, easements, consents, certifications and
orders are valid
and in full force and effect; and the Company is in
compliance in all
material respects with all applicable federal, state, local
and foreign
laws, regulations, orders and decrees.
(xi) The Company has good and marketable title to all
property
described in the Registration Statement and Prospectus as
being owned by
it, in each case free and clear of all
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liens, claims, security interests or other encumbrances
except such as are
described in the Registration Statement and the Prospectus
and such as do
not substantially affect the value of such property and do
not materially
interfere with the use made and proposed to be made of such
property by the
Company; the property held under lease by the Company is
held by it under
valid, subsisting and enforceable leases with only such
exceptions with
respect to any particular lease as do not interfere in any
material respect
with the conduct of the business of the Company; the Company
owns or
possesses all patents, patent applications, trademarks,
service marks,
tradenames, trademark registrations, service xxxx
registrations,
copyrights, licenses, inventions, trade secrets and rights
necessary for
the conduct of the business of the Company as currently
carried on and as
described in the Registration Statement and Prospectus;
except as stated in
the Registration Statement and Prospectus, no name which the
Company uses
and no other aspect of the business of the Company will
involve or give
rise to any infringement of, or license or similar fees for,
any patents,
patent applications, trademarks, service marks, tradenames,
trademark
registrations, service xxxx registrations, copyrights,
licenses,
inventions, trade secrets or other similar rights of others
material to the
business or prospects of the Company and the Company has not
received any
notice alleging any such infringement or fee.
(xii) The Company is not in violation of its
respective charter or
by-laws or in breach of or otherwise in default in the
performance of any
material obligation, agreement or condition contained in any
bond,
debenture, note, indenture, loan agreement or any other
contract, lease or
other instrument material to the conduct of the business of
the Company to
which it is subject or by which it may be bound, or to which
any of the
material property or assets of the Company is subject.
(xiii) The Company has filed all federal, state, local
and foreign
income and franchise tax returns required to be filed and is
not in default
in the payment of any taxes which were stated to be payable
pursuant to
said returns or any assessments with respect thereto, other
than any which
the Company is contesting in good faith.
(xiv) The Company has not distributed and will not
distribute any
prospectus or other offering material in connection with the
offering and
sale of the Securities other than any Preliminary Prospectus
or the
Prospectus or other materials permitted by the Act to be
distributed by the
Company.
(xv) The Securities have been approved for listing on
the Nasdaq
National Market.
(xvi) The Company owns no capital stock or other
equity or ownership
or proprietary interest in any corporation, partnership,
association, trust
or other entity.
(xvii) The Company maintains a system of internal
accounting controls
sufficient to provide reasonable assurances that (i)
transactions are
executed in accordance with management's general or specific
authorization;
(ii) transactions are recorded as necessary to permit
preparation of
financial statements in conformity with generally accepted
accounting
principles and to maintain accountability for assets; (iii)
access to
assets is permitted only in accordance with management's
general or
specific authorization; and (iv) the recorded accountability
for assets is
compared with existing assets at reasonable intervals and
appropriate
action is taken with respect to any differences.
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(xviii) Other than as contemplated by this Agreement,
the Company has
not incurred any liability for any finder's or broker's fee
or agent's
commission in connection with the execution and delivery of
this Agreement
or the consummation of the transactions contemplated hereby.
(xix) Neither the Company nor any of its affiliates is
presently
doing business with the government of Cuba or with any
person or affiliate
located in Cuba.
(xx) The Company maintains insurance, which is in full
force and
effect, of the types and in the amounts adequate, in its
reasonable
opinion, for its business and in line with the insurance
maintained by
similar companies and businesses.
(b) Each Selling Stockholder represents and warrants
to, and agrees
with, you as follows:
(i) The Selling Stockholder is the sole record owner
of, and on the
First Closing Date and/or the Second Closing Date, as the
case may be, will
be the sole record owner of, the Securities to be sold by
the Selling
Stockholder, free and clear of all security interests,
claims, liens,
restrictions on transferability, legends, proxies, equities
or other
encumbrances (other than pursuant to federal and state
securities laws and
other than such security interests described in the
Prospectus); and upon
delivery of and payment for such Securities hereunder, you
will become the
sole record owner of such Securities, free and clear of any
security
interests, claims, liens, restrictions on transferability,
legends,
proxies, equities or other encumbrances (including any
security interests
described in the Prospectus). The Selling Stockholder is
selling the
Securities to be sold by the Selling Stockholder for the
Selling
Stockholder's own account and is not selling such
Securities, directly or
indirectly, for the benefit of the Company, and no part of
the proceeds of
such sale received by the Selling Stockholder will inure,
either directly
or indirectly, to the benefit of the Company other than as
described in the
Registration Statement and Prospectus.
(ii) The Selling Stockholder has duly authorized,
executed and
delivered a Letter of Transmittal and Custody Agreement
("Custody
Agreement"), which Custody Agreement is a valid and binding
obligation of
the Selling Stockholder, to American Securities Transfer,
Inc., as
Custodian (the "Custodian"); pursuant to the Custody
Agreement the Selling
Stockholder has placed in custody with the Custodian, for
delivery under
this Agreement, the certificates representing the Securities
to be sold by
the Selling Stockholder; such certificates represent validly
issued,
outstanding, fully paid and nonassessable shares of Common
Stock; and such
certificates were duly and properly endorsed in blank for
transfer, or were
accompanied by all documents duly and properly executed that
are necessary
to validate the transfer of title thereto, to you, free of
any legend,
restriction on transferability, proxy, lien or claim,
whatsoever.
(iii) The Selling Stockholder has the power and
authority to enter
into this Agreement and to sell, transfer and deliver the
Securities to be
sold by the Selling Stockholder; and (with respect to
Xxxxxxxx X. Xxxxx)
the Selling Stockholder has duly authorized, executed and
delivered to
Xxxxxxxx X. Xxxxx and Xxxxxxxx X. Xxxxxxxx, as
attorneys-in-fact (the
"Attorneys-in-Fact"), an irrevocable power of attorney (a
"Power of
Attorney") authorizing and directing the Attorneys-in-Fact,
or either of
them, to effect the sale and delivery of the Securities
being sold by the
Selling Stockholder, to enter into this Agreement and to
take all such
other action as may be necessary hereunder.
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(iv) This Agreement, the Custody Agreement and (if
applicable) the
Power of Attorney have each been duly authorized, executed
and delivered by
or on behalf of the Selling Stockholder and each constitutes
a valid and
binding agreement of the Selling Stockholder, enforceable in
accordance
with its terms, except as rights to indemnity hereunder or
thereunder may
be limited by federal or state securities laws and except as
such
enforceability may be limited by bankruptcy, insolvency,
reorganization or
laws affecting the rights of creditors generally and subject
to general
principles of equity. The execution and delivery of this
Agreement, the
Custody Agreement and (if applicable) the Power of Attorney
and the
performance of the terms hereof and thereof and the
consummation of the
transactions herein and therein contemplated will not result
in a breach or
violation of any of the terms and provisions of, or
constitute a default
under, any agreement or instrument to which the Selling
Stockholder is a
party or by which the Selling Stockholder is bound, or any
law, regulation,
order or decree applicable to the Selling Stockholder; no
consent,
approval, authorization or order of, or filing with, any
court or
governmental agency or body is required for the execution,
delivery and
performance of this Agreement, the Custody Agreement and (if
applicable)
the Power of Attorney or for the consummation of the
transactions
contemplated hereby and thereby, including the sale of the
Securities being
sold by the Selling Stockholder, except such as may be
required under the
Act or state securities laws or blue sky laws.
(v) The Selling Stockholder has not distributed and
will not
distribute any prospectus or other offering material in
connection with the
offering and sale of the Securities other than any
Preliminary Prospectus
or the Prospectus or other materials permitted by the Act to
be distributed
by the Selling Stockholder.
(vi) To the extent that any statements or omissions
made in the
Registration Statement, any Preliminary Prospectus, the
Prospectus or any
amendment or supplement thereto are made in reliance upon
and in conformity
with written information provided by the Selling Stockholder
to the Company
for use in the preparation thereof, such Registration
Statement, any
Preliminary Prospectus, the Prospectus or any amendment or
supplement
thereto, as of the time the Registration Statement (or any
post-effective
amendment thereto) is or was declared effective by the
Commission, upon the
filing or first delivery to you of the Prospectus (or any
supplement to the
Prospectus) and at the First Closing Date and Second Closing
Date, did not
or will not include an untrue statement of a material fact
or omit to state
a material fact required to be stated therein or necessary
to make the
statement therein, in light of the circumstances in which
they were made or
are made, not misleading.
(vii) The Selling Stockholder has reviewed the
Registration Statement
and the Prospectus and to the best knowledge of the Selling
Stockholder
neither the Registration Statement nor the Prospectus
contains any untrue
statement of a material fact or omits to state any material
fact required
to be stated therein or necessary to make the statements
therein not
misleading regarding the Selling Stockholder, the Company or
otherwise.
(viii) To the best knowledge of the Selling
Stockholder, the
representations and warranties of the Company contained in
paragraph (a) of
this Section 2 are true and correct.
(c) Any certificate signed by any officer of the
Company and
delivered to you or to your counsel pursuant to this Agreement
shall be deemed a
representation and warranty by the Company
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to you as to the matters covered thereby; any certificate signed
by or on behalf
of the Selling Stockholders as such and delivered to you or to
your counsel
pursuant to this Agreement shall be deemed a representation and
warranty by the
Selling Stockholders to you as to the matters covered thereby.
3. Purchase, Sale and Delivery of Securities.
(a) On the basis of the representations, warranties
and agreements
herein contained, but subject to the terms and conditions herein
set forth, the
Company agrees to issue and sell 300,000 Firm Shares, and the
Selling
Stockholders agree to sell 600,000 Firm Shares to you, and you
agree to purchase
from the Company and the Selling Stockholders such Firm Shares.
The purchase
price for each Firm Share shall be $___per share. In making this
Agreement, you
are contracting, except as provided in Section 8 hereof, to
purchase only the
number of Firm Shares in this Section 3(a).
The Firm Shares will be delivered by the Company and
the Custodian to
you for your account against payment of the purchase price
therefor by certified
or official bank check or other next day funds payable to the
order of the
Company and the Custodian, as appropriate, at the offices of
Xxxxx Xxxxxxx Inc.,
Xxxxx Xxxxxxx Tower, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx,
Xxxxxxxxx, or such
other location as may be mutually acceptable, at 9:00 a.m.,
Minneapolis time, on
the third full business day following the date hereof, or at such
other time as
you and the Company determine, such time and date of delivery
being herein
referred to as the "First Closing Date." The Firm Shares, in
definitive form
and in such denominations and registered in such names as you may
request upon
at least two business days' prior notice to the Company and the
Custodian, will
be made available for checking and packaging at the offices of
Xxxxx Xxxxxxx
Inc., Xxxxx Xxxxxxx Tower, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx,
Xxxxxxxxx, or
such other location as may be mutually acceptable, at least one
business day
prior to the First Closing Date.
(b) On the basis of the representations, warranties
and agreements
herein contained, but subject to the terms and conditions herein
set forth, the
Company, with respect to 50,625 of the Option Shares, and certain
of the Selling
Stockholders, with respect to the number of Option Shares set
forth opposite the
name of such Selling Stockholder in Schedule I hereto, hereby
grant to you an
option to purchase all or any portion of the Option Shares at the
same purchase
price as the Firm Shares, for use solely in covering any
over-allotments made by
you in the sale and distribution of the Firm Shares. The option
granted
hereunder may be exercised at any time (but not more than once)
within 30 days
after the effective date of this Agreement upon notice (confirmed
in writing) by
you to the Company and to the Attorneys-in-Fact setting forth the
aggregate
number of Option Shares as to which you are exercising the
option, the names and
denominations in which the certificates for the Option Shares are
to be
registered and the date and time, as determined by you, when the
Option Shares
are to be delivered, such time and date being herein referred to
as the "Second
Closing" and "Second Closing Date", respectively; provided,
however, that the
Second Closing Date shall not be earlier than the First Closing
Date nor earlier
than the second business day after the date on which the option
shall have been
exercised. If the option is exercised, your obligation shall be
to purchase the
Option Shares from the Company and the Selling Stockholders
granting an option
to purchase Option Shares in the amounts indicated in Schedule I
hereto. No
Option Shares shall be sold and delivered unless the Firm Shares
previously have
been, or simultaneously are, sold and delivered.
The Option Shares will be delivered by the Custodian
and the Company,
as appropriate, to you for your account against payment of the
purchase price
therefor by certified or official bank check or other next day
funds payable to
the order of the Custodian or the Company, as appropriate, at the
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offices of Xxxxx Xxxxxxx Inc., Xxxxx Xxxxxxx Tower, 000 Xxxxx
Xxxxx Xxxxxx,
Xxxxxxxxxxx, Xxxxxxxxx, or such other location as may be mutually
acceptable at
9:00 a.m., Minneapolis time, on the Second Closing Date. The
Option Shares in
definitive form and in such denominations and registered in such
names as you
have set forth in your notice of option exercise, will be made
available for
checking and packaging at the office of Xxxxx Xxxxxxx Inc., Xxxxx
Xxxxxxx Tower,
000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx, or such other
location as may be
mutually acceptable, at least one business day prior to the
Second Closing Date.
4. COVENANTS.
(a) The Company covenants and agrees with you as
follows:
(i) If the Registration Statement has not already been
declared
effective by the Commission, the Company will use its best
efforts to cause
the Registration Statement and any post-effective amendments
thereto to
become effective as promptly as possible; the Company will
notify you
promptly of the time when the Registration Statement or any
post-effective
amendment to the Registration Statement has become effective
or any
supplement to the Prospectus has been filed and of any
request by the
Commission for any amendment or supplement to the
Registration Statement or
Prospectus or additional information; if the Company has
elected to rely on
Rule 430A of the Rules and Regulations, the Company will
file a Prospectus
containing the information omitted therefrom pursuant to
such Rule 430A
with the Commission within the time period required by, and
otherwise in
accordance with the provisions of, Rules 424(b) and 430A of
the Rules and
Regulations; the Company will prepare and file with the
Commission,
promptly upon your request, any amendments or supplements to
the
Registration Statement or Prospectus that, in the written
opinion of your
counsel, may be necessary or advisable in connection with
the distribution
of the Securities by you; and the Company will not file any
amendment or
supplement to the Registration Statement or Prospectus to
which you shall
reasonably object by notice to the Company after having been
furnished a
copy a reasonable time prior to the filing, unless in the
written opinion
of Company counsel such amendment or supplement is required
by law.
(ii) The Company will advise you, promptly after it
shall receive
notice or obtain knowledge thereof, of the issuance by the
Commission of
any stop order suspending the effectiveness of the
Registration Statement,
of the suspension of the qualification of the Securities for
offering or
sale in any jurisdiction, or of the initiation or
threatening of any
proceeding for any such purpose; and the Company will
promptly use its best
efforts to prevent the issuance of any stop order or to
obtain its
withdrawal if such a stop order should be issued.
(iii) Within the time during which a prospectus
relating to the
Securities is required to be delivered under the Act, the
Company will
comply as far as it is able with all requirements imposed
upon it by the
Act, as now and hereafter amended, and by the Rules and
Regulations, as
from time to time in force, so far as necessary to permit
the continuance
of sales of or dealings in the Securities as contemplated by
the provisions
hereof and the Prospectus. If during such period any event
occurs as a
result of which the Prospectus would include an untrue
statement of a
material fact or omit to state a material fact necessary to
make the
statements therein, in the light of the circumstances then
existing, not
misleading, or if during such period it is necessary to
amend the
Registration Statement or supplement the Prospectus to
comply with the Act,
the Company will promptly notify you and will amend the
Registration
Statement or supplement the
-9-
Prospectus (at the expense of the Company) so as to correct
such statement
or omission or effect such compliance.
(iv) The Company will cooperate with you and your
counsel in
qualifying the Securities for sale under the securities laws
of such
jurisdictions as you reasonably designate and to continue
such
qualifications in effect so long as required for the
distribution of the
Securities, except that the Company shall not be required in
connection
therewith to qualify as a foreign corporation or to execute
a general
consent to service of process in any state.
(v) The Company will furnish to you copies of the
Registration
Statement (three of which will be signed and will include
all exhibits),
each Preliminary Prospectus, the Prospectus, and all
amendments and
supplements to such documents, in each case as soon as
available and in
such quantities as you may from time to time reasonably
request.
(vi) During a period of five years commencing with the
date hereof,
the Company will furnish to you copies of all periodic and
special reports
furnished to the stockholders of the Company and all
information, documents
and reports filed with the Commission, the National
Association of
Securities Dealers, Inc., Nasdaq or any securities exchange.
(vii) The Company will make generally available to its
security
holders as soon as practicable, but in any event not later
than 15 months
after the end of the Company's current fiscal quarter, an
earnings
statement (which need not be audited) covering a 12-month
period beginning
after the effective date of the Registration Statement that
shall satisfy
the provisions of Section 11(a) of the Act and Rule 158 of
the Rules and
Regulations.
(viii) The Company, whether or not the transactions
contemplated
hereunder are consummated or this Agreement is prevented
from becoming
effective under the provisions of Section 9(a) hereof or is
terminated,
will pay or cause to be paid (A) all expenses (including
transfer taxes
allocated to the respective transferees) incurred in
connection with the
delivery to you of the Securities, (B) all expenses and fees
(including,
without limitation, fees and expenses of the Company's
accountants and
counsel but, except as otherwise provided below, not
including fees of your
counsel) in connection with the preparation, printing,
filing, delivery,
and shipping of the Registration Statement (including the
financial
statements therein and all amendments, schedules, and
exhibits thereto),
the Securities, each Preliminary Prospectus, the Prospectus,
and any
amendment thereof or supplement thereto, and the printing,
delivery, and
shipping of this Agreement and other underwriting documents,
including Blue
Sky Memoranda, (C) all filing fees and fees and
disbursements of your
counsel incurred in connection with the qualification of the
Securities for
offering and sale by you or by dealers under the securities
or blue sky
laws of the states and other jurisdictions which you shall
designate in
accordance with Section 4(d) hereof, up to a maximum of
$5,000, (D) the
fees and expenses of any transfer agent or registrar, (E)
the filing fees
incident to any required review by the National Association
of Securities
Dealers, Inc. of the terms of the sale of the Securities,
(F) listing fees,
if any, and (G) all other costs and expenses incident to the
performance of
its obligations hereunder that are not otherwise
specifically provided for
herein. If the sale of the Securities provided for herein
is not
consummated by reason of action by the Company pursuant to
Section 9(a)
hereof which prevents this Agreement from becoming
effective, or by reason
of any failure, refusal or inability on the part of the
Company or the
Selling Stockholders to perform any agreement on its or
their part to be
performed, or because any other condition of your
obligations hereunder
required to be
-10-
fulfilled by the Company or the Selling Stockholders is not
fulfilled, the
Company will reimburse you for all out-of-pocket
disbursements (including
fees and disbursements of counsel) incurred by you in
connection with their
investigation, preparing to market and marketing the
Securities or in
contemplation of performing their obligations hereunder up
to a maximum of
$100,000. The Company shall not in any event be liable to
you for loss of
anticipated profits from the transactions covered by this
Agreement.
(ix) The Company will apply the net proceeds from the
sale of the
Securities to be sold by it hereunder for the purposes set
forth in the
Prospectus and will file such reports with the Commission
with respect to
the sale of the Securities and the application of the
proceeds therefrom as
may be required in accordance with Rule 463 of the Rules and
Regulations.
(x) The Company will not, without your prior written
consent, offer
for sale, sell, contract to sell, grant any option for the
sale of or
otherwise issue or dispose of any Common Stock or any
securities
convertible into or exchangeable for, or any options or
rights to purchase
or acquire, Common Stock, except to you pursuant to this
Agreement and
except pursuant to employee stock option plans referred to
in the
Registration Statement for a period of 180 days after the
commencement of
the public offering of the Securities by you.
(xi) The Company either has caused to be delivered to
you or will
cause to be delivered to you prior to the effective date of
the
Registration Statement a letter from each of the Company's
directors and
officers stating that such person agrees that he or she will
not, without
your prior written consent, offer for sale, sell, contract
to sell or
otherwise dispose of any shares of Common Stock or rights to
purchase
Common Stock, except to you pursuant to this Agreement, for
a period of 180
days after commencement of the public offering of the
Securities by you.
(xii) The Company has not taken and will not take,
directly or
indirectly, any action designed to or which might reasonably
be expected to
cause or result in, or which has constituted, the
stabilization or
manipulation of the price of any security of the Company to
facilitate the
sale or resale of the Securities, and has not effected any
sales of Common
Stock which are required to be disclosed in response to Item
701 of
Regulation S-K under the Act which have not been so
disclosed in the
Registration Statement.
(xiii) The Company will not incur any liability for
any finder's or
broker's fee or agent's commission in connection with the
execution and
delivery of this Agreement or the consummation of the
transactions
contemplated hereby.
(xiv) The Company will inform the Florida Department
of Banking and
Finance at any time prior to the consummation of the
distribution of the
Securities by the Underwriter[s] if it commences engaging in
business with
the government of Cuba or with any person or affiliate
located in Cuba.
Such information will be provided within 90 days after the
commencement
thereof or after a change occurs with respect to previously
reported
information.
(b) Each Selling Stockholder covenants and agrees with
you as
follows:
(i) Except as otherwise agreed to by the Company and
the Selling
Stockholder, the Selling Stockholder will pay all taxes, if
any, on the
transfer and sale, respectively, of the
-11-
Securities being sold by the Selling Stockholder, the fees
of the Selling
Stockholder's counsel and the Selling Stockholder's
proportionate share
(based upon the number of Securities being offered by such
Selling
Stockholder pursuant to the Registration Statement) of all
costs and
expenses (except for legal and accounting expenses and fees
of the
registrar and transfer agent) incurred by the Company
pursuant to the
provisions of Section 4(a)(viii) of this Agreement;
provided, however, that
the Selling Stockholder agrees to reimburse the Company for
any
reimbursement made by the Company to you pursuant to Section
4(a)(viii)
hereof to the extent such reimbursement resulted from the
failure or
refusal on the part of the Selling Stockholder to comply
under the terms or
fulfill any of the conditions of this Agreement.
(ii) If this Agreement shall be terminated by you
because of any
failure, refusal or inability on the part of the Selling
Stockholder to
perform any agreement on the Selling Stockholder's part to
be performed, or
because any other condition of your obligations hereunder
required to be
fulfilled by the Selling Stockholder are not fulfilled, the
Selling
Stockholder agrees to reimburse you for all out-of-pocket
disbursements
(including fees and disbursements of your counsel) incurred
by you in
connection with your investigation, preparing to market and
marketing the
Securities or in contemplation of performing your
obligations hereunder.
The Selling Stockholder shall not in any event be liable to
you for loss of
anticipated profits from the transactions covered by this
Agreement.
(iii) The Securities to be sold by the Selling
Stockholder,
represented by the certificates on deposit with the
Custodian pursuant to
the Custody Agreement of the Selling Stockholder, are
subject to your
interest; the arrangements made for such custody are, except
as
specifically provided in the Custody Agreement, irrevocable;
and the
obligations of the Selling Stockholder hereunder shall not
be terminated,
except as provided in this Agreement or in the Custody
Agreement, by any
act of the Selling Stockholder, by operation of law, whether
by the
liquidation, dissolution or merger of the Selling
Stockholder, by the death
of any of the Selling Stockholder, or by the occurrence of
any other event.
If the Selling Stockholder should liquidate, dissolve or be
a party to a
merger or if any other such event should occur before the
delivery of the
Securities hereunder, certificates for the Securities
deposited with the
Custodian shall be delivered by the Custodian in accordance
with the terms
and conditions of this Agreement as if such liquidation,
dissolution,
merger or other event had not occurred, whether or not the
Custodian shall
have received notice thereof.
(iv) The Selling Stockholder will not, without your
prior written
consent, offer for sale, sell, contract to sell, grant any
option for the
sale of or otherwise dispose of any Common Stock or any
securities
convertible into or exchangeable for, or any options or
rights to purchase
or acquire, Common Stock, except to you pursuant to this
Agreement, for a
period of 180 days after the commencement of the public
offering of the
Securities by you.
(v) The Selling Stockholder has not taken and will not
take, directly
or indirectly, any action designed to 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 Securities,
and has not effected any sales of Common Stock which, if
effected by the
Company, would be required to be disclosed in response to
Item 701 of
Regulation S-K.
(vi) The Selling Stockholder shall immediately notify
you if any
event occurs, or of any change in information relating to
the Selling
Stockholder or the Company or any new information
-12-
relating to the Company or relating to any matter stated in
the Prospectus
or any supplement thereto, which results in the Prospectus
(as
supplemented) including an untrue statement of a material
fact or omitting
to state any material fact necessary to make the statements
therein, in
light of the circumstances under which they were made, not
misleading.
5. CONDITIONS OF UNDERWRITER'S OBLIGATIONS. Your
obligations hereunder
are subject to the accuracy, as of the date hereof and at each of
the First
Closing Date and the Second Closing Date (as if made at such
Closing Date), of
and compliance with all representations, warranties and
agreements of the
Company and the Selling Stockholders contained herein, 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., Minneapolis time, on the date of this Agreement,
or such later
time and date as you shall approve and all filings required by
Rule 424 and Rule
430A of the Rules and Regulations shall have been timely made; no
stop order
suspending the effectiveness of the Registration Statement or any
amendment
thereof shall have been issued; no proceedings for the issuance
of such an order
shall have been initiated or threatened; and any request of the
Commission for
additional information (to be included in the Registration
Statement or the
Prospectus or otherwise) shall have been complied with to your
satisfaction.
(b) You shall not have advised the Company that the
Registration
Statement or the Prospectus, or any amendment thereof or
supplement thereto,
contains an untrue statement of fact which, in your opinion, is
material, or
omits to state a fact which, in your opinion, is material and is
required to be
stated therein or necessary to make the statements therein not
misleading.
(c) Except as contemplated in the Prospectus,
subsequent to the
respective dates as of which information is given in the
Registration Statement
and the Prospectus, neither the Company nor any of its
subsidiaries shall have
incurred any material liabilities or obligations, direct or
contingent, or
entered into any material transactions, or declared or paid any
dividends or
made any distribution of any kind with respect to its capital
stock; and there
shall not have been any change in the capital stock (other than a
change in the
number of outstanding shares of Common Stock due to the issuance
of shares upon
the exercise of outstanding options or warrants), or any material
change in the
short-term or long-term debt of the Company, or any issuance of
options,
warrants, convertible securities or other rights to purchase the
capital stock
of the Company or any of its subsidiaries, or any material
adverse change or any
development involving a prospective material adverse change
(whether or not
arising in the ordinary course of business), in the general
affairs, condition
(financial or otherwise), business, key personnel, property,
prospects, net
worth or results of operations of the Company and its
subsidiaries, taken as a
whole, that, in your judgment, makes it impractical or
inadvisable to offer or
deliver the Securities on the terms and in the manner
contemplated in the
Prospectus.
(d) On each Closing Date, there shall have been
furnished to you the
opinion of Xxxxxxxx & Xxxxxx, a Professional Corporation, counsel
for the
Company, dated such Closing Date and addressed to you, to the
effect that:
(i) The Company has been duly organized and is validly
existing as a
corporation in good standing under the laws of its
jurisdiction of
incorporation. The Company has full corporate power and
authority to own
its properties and conduct its business as currently being
carried on and
as described in the Registration Statement and Prospectus,
and is duly
qualified to do business as a foreign corporation and is in
good standing
in each jurisdiction in which it
-13-
owns or leases real property or in which the conduct of its
business makes
such qualification necessary and in which the failure to so
qualify would
have a material adverse effect upon the business, condition
(financial or
otherwise) or properties of the Company and its
subsidiaries, taken as a
whole.
(ii) The capital stock of the Company conforms as to
legal matters to
the description thereof contained in the Prospectus under
the caption
"Description of Capital Stock." All of the issued and
outstanding shares
of the capital stock of the Company have been duly
authorized and validly
issued and are fully paid and nonassessable, and the holders
thereof are
not subject to personal liability by reason of being such
holders. The
Securities to be issued and sold by the Company hereunder
have been duly
authorized and, when issued, delivered and paid for in
accordance with the
terms of this Agreement, will have been validly issued and
will be fully
paid and nonassessable, and the holders thereof will not be
subject to
personal liability by reason of being such holders. Except
as otherwise
stated in the Registration Statement and Prospectus, there
are no
preemptive rights or other rights to subscribe for or to
purchase, or any
restriction upon the voting or transfer of, any shares of
Common Stock
pursuant to the Company's charter, by-laws or any agreement
or other
instrument known to such counsel to which the Company is a
party or by
which the Company is bound. To the best of such counsel's
knowledge,
neither the filing of the Registration Statement nor the
offering or sale
of the Securities as contemplated by this Agreement gives
rise to any
rights for or relating to the registration of any shares of
Common Stock or
other securities of the Company, except those rights which
have been
complied with or waived.
(iii) To the best of such counsel's knowledge, except
as described in
the Registration Statement and Prospectus, there are no
options, warrants,
agreements, contracts or other rights in existence to
purchase or acquire
from the Company any shares of the capital stock of the
Company.
(iv) 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 has been issued
and no
proceeding for that purpose has been instituted or, to the
knowledge of
such counsel, threatened by the Commission.
(v) The descriptions in the Registration Statement and
Prospectus of
statutes, legal and governmental proceedings, contracts and
other documents
are accurate and fairly present the information required to
be shown; and
such counsel does not know of any statutes or legal or
governmental
proceedings required to be described in the Prospectus that
are not
described as required, or of any contracts or documents of a
character
required to be described in the Registration Statement or
Prospectus or
included as exhibits to the Registration Statement that are
not described
or included as required.
(vi) The Company has full corporate power and
authority to enter into
this Agreement, and this Agreement has been duly authorized,
executed and
delivered by the Company and constitutes a valid, legal and
binding
obligation of the Company enforceable in accordance with its
terms (except
as rights to indemnity hereunder may be limited by federal
or state
securities laws and except as such enforceability may be
limited by
bankruptcy, insolvency, reorganization or similar laws
affecting the rights
of creditors generally and subject to general principles of
equity); the
execution, delivery and performance of this Agreement and
the consummation
of the
-14-
transactions herein contemplated will not result in a breach
or violation
of any of the terms and provisions of, or constitute a
default under, any
statute, rule or regulation, any agreement or instrument
known to such
counsel to which the Company is a party or by which it is
bound or to which
any of its property is subject, the Company's charter or
by-laws, or any
order or decree known to such counsel of any court or
governmental agency
or body having jurisdiction over the Company or any of its
respective
properties; and no consent, approval, authorization or order
of, or filing
with, any court or governmental agency or body is required
for the
execution, delivery and performance of this Agreement or for
the
consummation of the transactions contemplated hereby,
including the
issuance or sale of the Securities by the Company, except
such as may be
required under the Act or state securities laws.
(vii) To the best of such counsel's knowledge, the
Company holds, and
is operating in compliance in all material respects with,
all franchises,
grants, authorizations, licenses, permits, easements,
consents,
certificates and orders of any governmental or
self-regulatory body
required for the conduct of its business and all such
franchises, grants,
authorizations, licenses, permits, easements, consents,
certifications and
orders are valid and in full force and effect.
(viii) To the best of such counsel's knowledge, the
Company is not in
violation of its charter or by-laws. To the best of such
counsel's
knowledge, the Company is not in breach of or otherwise in
default in the
performance of any material obligation, agreement or
condition contained in
any bond, debenture, note, indenture, loan agreement or any
other material
contract, lease or other instrument to which it is subject
or by which any
of them may be bound, or to which any of the material
property or assets of
the Company or any of its subsidiaries is subject.
(ix) The Registration Statement and the Prospectus,
and any amendment
thereof or supplement thereto, comply as to form in all
material respects
with the requirements of the Act and the Rules and
Regulations.
In rendering such opinion, such counsel may rely (i) as
to matters of
law other than Texas, Colorado and federal law, upon the opinion
or opinions of
local counsel provided that the extent of such reliance is
specified in such
opinion and that such counsel shall state that such opinion or
opinions of local
counsel are satisfactory to them and that they believe they and
you are
justified in relying thereon, and (ii) as to matters of fact, to
the extent such
counsel deems reasonable upon certificates of officers of the
Company and its
subsidiaries provided that the extent of such reliance is
specified in such
opinion. In rendering such opinion, as to matters of franchise
law, such
counsel may also rely upon the opinion or opinions of franchise
counsel for the
Company, or may provide for delivery of a separate opinion or
opinions from
franchise counsel, in each case subject to the same conditions as
described in
the preceding sentence.
In addition to the opinions set forth above, such
counsel shall state
that on the basis of conferences with officers of the Company,
examination of
documents referred to in the Registration Statement and
Prospectus and such
other procedures as such counsel deemed appropriate, nothing has
come to the
attention of such counsel that causes such counsel to believe
that the
Registration Statement or any amendment thereof, at the time the
Registration
Statement became effective and as of such Closing Date, contained
any untrue
statement of a material fact or omitted to state any material
fact required to
be stated therein or necessary to make the statements therein not
misleading or
that the Prospectus (as of its date and as of such Closing Date),
as amended or
supplemented, includes any untrue statement of material fact or
omits to state a
material fact necessary to make the statements therein, in light
of the
-15-
circumstances under which they were made, not misleading; it
being understood
that such counsel need express no view as to the financial
statements, schedules
or other financial or statistical data included in any of the
documents
mentioned in this paragraph.
(e) On each Closing Date, there shall have been
furnished to you the
opinion of Xxxxxxxx & Knight, a Professional Corporation, counsel
for the
Selling Stockholder, dated such Closing Date and addressed to
you, to the effect
that:
(i) Each of the Selling Stockholders is the sole
record owner of, and
on such Closing Date, will be the sole record owner of, the
Securities to
be sold by the Selling Stockholder, free and clear of all
security
interests, claims, liens, restrictions on transferability,
legends,
proxies, equities or other encumbrances (other than pursuant
to federal and
state securities laws and other than such security interests
described in
the Prospectus); and upon delivery of and payment for such
Securities
hereunder, you will become the sole record owner of such
Securities, free
and clear of any security interests, claims, liens,
restrictions on
transferability, legends, proxies, equities or other
encumbrances
(including any security interests described in the
Prospectus).
(ii) Each of the Selling Stockholders has the power
and authority to
enter into this Agreement, the Custody Agreement and (if
applicable) the
Power of Attorney and to perform and discharge the Selling
Stockholder's
obligations thereunder and hereunder; and this Agreement,
the Custody
Agreement and (if applicable) the Power of Attorney has been
duly and
validly authorized, executed and delivered by (or by the
Attorneys-in-Fact,
or either of them, on behalf of) the Selling Stockholder and
are valid and
binding agreements of the Selling Stockholder, enforceable
in accordance
with their respective terms (except as rights to indemnity
hereunder or
thereunder may be limited by federal or state securities
laws and except as
such enforceability may be limited by bankruptcy,
insolvency,
reorganization or similar laws affecting creditors' rights
generally and
subject to general principles of equity).
(iii) The execution and delivery of this Agreement,
the Custody
Agreement and (if applicable) the Power of Attorney and the
performance of
the terms hereof and thereof and the consummation of the
transactions
herein and therein contemplated will not result in a breach
or violation of
any of the terms and provisions of, or constitute a default
under, any
statute, rule or regulation, or any agreement or instrument
known to such
counsel to which such Selling Stockholder is a party or by
which such
Selling Stockholder is bound or to which any of its property
is subject,
such Selling Stockholder's charter or by-laws, or any order
or decree known
to such counsel of any court or government agency or body
having
jurisdiction over such Selling Stockholder or any of his or
its respective
properties; and no consent, approval, authorization or order
of, or filing
with, any court or governmental agency or body is required
for the
execution, delivery and performance of this Agreement, the
Custody
Agreement and (if applicable) the Power of Attorney or for
the consummation
of the transactions contemplated hereby and thereby,
including the sale of
the Securities being sold by such Selling Stockholder,
except such as may
be required under the Act or state securities laws or blue
sky laws.
In rendering such opinion, such counsel may rely (i) as
to matters of
law other than Texas, Colorado and federal law, upon the opinion
or opinions of
local counsel provided that the extent of such reliance is
specified in such
opinion and that such counsel shall state that such opinion or
opinions of local
counsel are satisfactory to them and that they believe they and
you are
justified in relying
-16-
thereon, and (ii) as to matters of fact, to the extent such
counsel deems
reasonable upon certificates of officers of the Selling
Stockholders provided
that the extent of such reliance is specified in such opinion.
(f) On each Closing Date, there shall have been
furnished to you,
such opinion or opinions from Xxxxxxxxxxx Xxxxx & Xxxxxxxx, your
counsel, dated
such Closing Date and addressed to you, with respect to the
formation of the
Company, the validity of the Securities, the Registration
Statement, the
Prospectus and other related matters as you reasonably may
request, and such
counsel shall have received such papers and information as they
request to
enable them to pass upon such matters.
(g) On each Closing Date you shall have received a
letter of Xxxxx
Xxxxxxxx, LLP, dated such Closing Date and addressed to you and
to the Company,
confirming that they are independent public accountants within
the meaning of
the Act and are in compliance with the applicable requirements
relating to the
qualifications of accountants under Rule 2-01 of Regulation S-X
of the
Commission, and stating, as of the date of such letter (or, with
respect to
matters involving changes or developments since the respective
dates as of which
specified financial information is given in the Prospectus, as of
a date not
more than five days prior to the date of such letter), the
conclusions and
findings of said firm with respect to the financial information
and other
matters covered by its letter delivered to you concurrently with
the execution
of this Agreement, and the effect of the letter so to be
delivered on such
Closing Date shall be to confirm the conclusions and findings set
forth in such
prior letter.
(h) On each Closing Date, there shall have been
furnished to you a
certificate, dated such Closing Date and addressed to you, signed
on behalf of
the Company by the chief executive officer and by the chief
financial officer of
the Company, to the effect that:
(i) The representations and warranties of the Company
in this
Agreement are true and correct, in all material respects, as
if made at and
as of such Closing Date, and the Company has complied with
all the
agreements and satisfied all the conditions on its part to
be performed or
satisfied at or prior to such Closing Date;
(ii) No stop order or other order suspending the
effectiveness of the
Registration Statement or any amendment thereof or the
qualification of the
Securities for offering or sale has been issued, and no
proceeding for that
purpose has been instituted or, to the best of their
knowledge, is
contemplated by the Commission or any state or regulatory
body; and
(iii) The signers of said certificate have
carefully examined the
Registration Statement and the Prospectus, and any
amendments thereof or
supplements thereto, and (A) such documents contain all
statements and
information required to be included therein, the
Registration Statement, or
any amendment thereof, does not contain any untrue statement
of a material
fact or omit to state any material fact required to be
stated therein or
necessary to make the statements therein not misleading, and
the
Prospectus, as amended or supplemented, does not include any
untrue
statement of material fact or omit to state a material fact
necessary to
make the statements therein, in light of the circumstances
under which they
were made, not misleading, (B) since the effective date of
the Registration
Statement there has occurred no event required to be set
forth in an
amended or supplemented prospectus which has not been so set
forth, (C)
subsequent to the respective dates as of which information
is given in the
Registration Statement and the Prospectus, neither the
Company nor any of
its subsidiaries has incurred any material liabilities or
obligations,
direct or contingent, or entered into any material
transactions, not in the
ordinary course of business, or declared or paid any
dividends or made any
distribution of any kind with
-17-
respect to its capital stock, and except as disclosed in the
Prospectus,
there has not been any change in the capital stock (other
than a change in
the number of outstanding shares of Common Stock due to the
issuance of
shares upon the exercise of outstanding options or
warrants), or any
material change in the short-term or long-term debt, or any
issuance of
options, warrants, convertible securities or other rights to
purchase the
capital stock, of the Company, or any of its subsidiaries,
or any material
adverse change or any development involving a prospective
material adverse
change (whether or not arising in the ordinary course of
business), in the
general affairs, condition (financial or otherwise),
business, key
personnel, property, prospects, net worth or results of
operations of the
Company and its subsidiaries, taken as a whole, and (D)
except as stated in
the Registration Statement and the Prospectus, there is not
pending, or, to
the knowledge of the Company, threatened or contemplated,
any action, suit
or proceeding to which the Company or any of its
subsidiaries is a party
before or by any court or governmental agency, authority or
body, or any
arbitrator, which might result in any material adverse
change in the
condition (financial or otherwise), business, prospects or
results of
operations of the Company and its subsidiaries, taken as a
whole.
(i) On each Closing Date, there shall have been
furnished to you, a
certificate or certificates, dated such Closing Date and
addressed to you,
signed by each of the Selling Stockholders or such Selling
Stockholder's
Attorney-in-Fact to the effect that the representations and
warranties of the
Selling Stockholder contained in this Agreement are true and
correct as if made
at and as of such Closing Date, and that the Selling Stockholder
has complied
with all the agreements and satisfied all the conditions on the
Selling
Stockholder's part to be performed or satisfied at or prior to
such Closing
Date.
(j) The Company shall have furnished to you and
counsel for the
Underwriter such additional documents, certificates and evidence
as you or they
may have reasonably requested.
All such opinions, certificates, letters and other
documents will be
in compliance with the provisions hereof only if they are
satisfactory in form
and substance to you and counsel for the Underwriters. The
Company will furnish
you with such conformed copies of such opinions, certificates,
letters and other
documents as you shall reasonably request.
6. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company and each of the Selling Stockholders,
jointly and
severally, agree to indemnify and hold harmless the Underwriter
against any
losses, claims, damages or liabilities, joint or several, to
which the
Underwriter may become subject, under the Act or otherwise
(including in
settlement of any litigation if such settlement is effected with
the written
consent of the Company and/or the Selling Stockholders, as the
case may be),
insofar as such losses, claims, damages or liabilities (or
actions in respect
thereof) arise out of or are based upon an untrue statement or
alleged untrue
statement of a material fact contained in the Registration
Statement, including
the information deemed to be a part of the Registration Statement
at the time of
effectiveness pursuant to Rule 430A, if applicable, any
Preliminary Prospectus,
the Prospectus, or any amendment or supplement thereto, or arise
out of or are
based upon the omission or alleged omission to state therein a
material fact
required to be stated therein or necessary to make the statements
therein not
misleading, and will reimburse you for any legal or other
expenses reasonably
incurred by it in connection with investigating or defending
against such loss,
claim, damage, liability or action; provided, however, that
neither the Company
nor the Selling Stockholders shall be liable in any such case to
the extent that
any such loss, claim, damage, liability or action arises out of
or is based upon
an untrue statement or alleged untrue statement or omission or
alleged omission
-18-
made in the Registration Statement, any Preliminary Prospectus,
the Prospectus,
or any such amendment or supplement, in reliance upon and in
conformity with
written information furnished to the Company by you specifically
for use in the
preparation thereof; and further provided, however, that in no
event shall any
such Selling Stockholder be liable under the provisions of this
Section 6 for
any amount in excess of the aggregate amount of proceeds the
Selling Stockholder
received from the sale of the Securities pursuant to this
Agreement; and further
provided, however, that neither the Company nor the Selling
Stockholders will be
liable to the Underwriter or any person controlling the
Underwriter with respect
to any such untrue statement or omission made in any Preliminary
Prospectus that
is corrected in the Prospectus (or any amendment or supplement
thereto) if the
person asserting any such loss, claim, damage or liability
purchased Securities
from the Underwriter but was not sent or given a copy of the
Prospectus (as
amended or supplemented) at or prior to the written confirmation
of the sale of
such Securities to such person in any case where such delivery of
the Prospectus
(as amended or supplemented) is required by the Act, unless such
failure to
deliver the Prospectus (as amended or supplemented) was a result
of
noncompliance by the Company with Section 4(a)(v) of this
Agreement.
In addition to their other obligations under this
Section 6(a), the
Company and the Selling Stockholders, jointly and severally,
agree that, as an
interim measure during the pendency of any claim, action,
investigation, inquiry
or other proceeding arising out of or based upon any statement or
omission, or
any alleged statement or omission, described in this Section
6(a), they will
reimburse you on a monthly basis for all reasonable legal fees 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
and/or the Selling Stockholders' obligation to reimburse the
Underwriters 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,
you shall
promptly return it to the party or parties that made such
payment, 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 Norwest Bank Minnesota, N.A. (the "Prime
Rate"). Any such
interim reimbursement payments which are not made to you within
30 days of a
request for reimbursement shall bear interest at the Prime Rate
from the date of
such request. This indemnity agreement shall be in addition to
any liabilities
which the Company or the Selling Stockholders may otherwise have.
(b) You will indemnify and hold harmless the Company
and each Selling
Stockholder against any losses, claims, damages or liabilities to
which the
Company and such Selling Stockholder may become subject, under
the Act or
otherwise (including in settlement of any litigation, if such
settlement is
effected with your written consent), insofar as such losses,
claims, damages or
liabilities (or actions in respect thereof) arise out of or are
based upon an
untrue statement or alleged untrue statement of a 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
such amendment or
supplement, in reliance upon and in conformity with written
information
furnished to the Company by you specifically for use in the
preparation thereof,
and will reimburse the Company and each Selling Stockholder for
any legal or
other expenses reasonably incurred by the Company or such Selling
Stockholder in
connection with investigating or defending against any such loss,
claim, damage,
liability or action.
-19-
(c) Promptly after receipt by an indemnified party
under subsection
(a) or (b) above of notice of the commencement of any action,
such indemnified
party shall, if a claim in respect thereof is to be made against
the
indemnifying party under such subsection, notify the indemnifying
party in
writing of the commencement thereof. No indemnification under
such subsection
(a) or (b), however, shall be available with respect to a
proceeding to any
party who shall fail to give such notice if the party to whom
notice was not
given was unaware of the proceeding to which the notice would
have related and
was materially prejudiced by the failure to give such notice. In
case any such
action shall be brought against any indemnified party, and it
shall notify the
indemnifying party of the commencement thereof, the indemnifying
party shall be
entitled to participate in, and, to the extent that it shall
wish, jointly with
any other indemnifying party similarly notified, to assume the
defense thereof,
with counsel reasonably satisfactory to such indemnified party,
and after notice
from the indemnifying party to such indemnified party of the
indemnifying
party's election so to assume the defense thereof, the
indemnifying party shall
not be liable to such indemnified party for any legal or other
expenses
subsequently incurred by such indemnified party in connection
with the defense
thereof other than reasonable costs of investigation; provided,
however, that if
the defendants in any such action include both the indemnified
party or parties
and the indemnifying party, and the indemnified party or parties
shall have
reasonably concluded that there may be legal defenses or claims
available to it
or them that are different from or additional to those available
to the
indemnifying party, or if there is a conflict of interest that
would prevent
counsel for the indemnifying party or parties from also
representing the
indemnified party or parties, and that it is advisable for the
indemnified party
or parties to be represented by separate counsel, then the
indemnified party or
parties shall have the right to employ a single counsel to
represent the
indemnified party or the indemnified parties as a group, in which
event the
reasonable fees and expenses of the separate counsel shall be
borne by the
indemnifying party or parties. An indemnifying party shall not
be obligated
under any settlement agreement relating to any action under this
Section 6 to
which it has not agreed in writing.
(d) If the indemnification provided for in this
Section 6 is
unavailable or insufficient to hold harmless an indemnified party
under
subsection (a) or (b) above, then each indemnifying party shall
contribute to
the amount paid or payable by such indemnified party as a result
of the losses,
claims, damages or liabilities referred to in subsection (a) or
(b) above,
(i) in such proportion as is appropriate to reflect the relative
benefits
received by the Company and the Selling Stockholders on the one
hand and you on
the other from the offering of the Securities, or (ii) if the
allocation
provided by clause (i) above is not permitted by applicable law,
in such
proportion as is appropriate to reflect not only the relative
benefits referred
to in clause (i) above but also the relative fault of the Company
and the
Selling Stockholders on the one hand and you on the other in
connection with the
statements or omissions that resulted in such losses, claims,
damages or
liabilities, as well as any other relevant equitable
considerations. The
relative benefits received by the Company and the Selling
Stockholders on the
one hand and you on the other shall be deemed to be in the same
proportion as
the total net proceeds from the offering (before deducting
expenses) received by
the Company and Selling Stockholders bear to the total
underwriting discounts
and commissions received by you, in each case as set forth in the
table on the
cover page of the Prospectus. The relative fault shall be
determined by
reference to, among other things, whether the untrue or alleged
untrue statement
of a material fact or the omission or alleged omission to state a
material fact
relates to information supplied by the Company, the Selling
Stockholders or you
and the parties' relevant intent, knowledge, access to
information and
opportunity to correct or prevent such untrue statement or
omission. The
Company, the Selling Stockholders and you agree that it would not
be just and
equitable if contributions pursuant to this subsection (d) were
to be determined
by pro rata allocation or by any other method of allocation which
does not take
account of the equitable considerations referred to in the first
sentence of
this subsection (d). The amount paid by an indemnified party as
a result of the
losses, claims, damages or liabilities referred to in the first
sentence of this
-20-
subsection (d) shall be deemed to include any legal or other
expenses reasonably
incurred by such indemnified party in connection with
investigating or defending
against any action or claim which is the subject of this
subsection (d).
Notwithstanding the provisions of this subsection (d), the
Underwriter shall not
be required to contribute any amount in excess of the amount by
which the total
price at which the Securities underwritten by it and distributed
to the public
were offered to the public exceeds the amount of any damages that
such
Underwriter has otherwise been required to pay by reason of such
untrue or
alleged untrue statement or omission or alleged omission. No
person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f)
of the Act)
shall be entitled to contribution from any person who was not
guilty of such
fraudulent misrepresentation.
(e) The obligations of the Company and the Selling
Stockholders under
this Section 6 shall be in addition to any liability which the
Company and the
Selling Stockholders may otherwise have and shall extend, upon
the same terms
and conditions, to each person, if any, who controls you within
the meaning of
the Act; and your obligations under this Section 6 shall be in
addition to any
liability that you may otherwise have and shall extend, upon the
same terms and
conditions, to each director of the Company (including any person
who, with his
consent, is named in the Registration Statement as about to
become a director of
the Company), to each officer of the Company who has signed the
Registration
Statement and to each person, if any, who controls the Company or
any Selling
Stockholder within the meaning of the Act.
7. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY.
All
representations, warranties, and agreements of the Company herein
or in
certificates delivered pursuant hereto, and the agreements of the
Company, the
Selling Stockholders and you contained in Section 6 hereof, shall
remain
operative and in full force and effect regardless of any
investigation made by
you or on your behalf or on behalf of any person controlling you,
or the Company
or any of its officers, directors, or controlling persons, or the
Selling
Stockholders or any controlling person thereof, and shall survive
delivery of,
and payment for, the Securities to and by you hereunder.
8. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION.
(a) This Agreement shall become effective at 10:00
a.m., Minneapolis
time, on the first full business day following the effective date
of the
Registration Statement, or at such earlier time after the
effective time of the
Registration Statement as you in your discretion shall first
release the
Securities for sale to the public; provided, that if the
Registration Statement
is effective at the time this Agreement is executed, this
Agreement shall become
effective at such time as you in your discretion shall first
release the
Securities for sale to the public. For the purpose of this
Section, the
Securities shall be deemed to have been released for sale to the
public upon
release by you of the publication of a newspaper advertisement
relating thereto
or upon release by you of telexes offering the Securities for
sale to securities
dealers, whichever shall first occur. By giving notice as
hereinafter specified
before the time this Agreement becomes effective, you or the
Company may prevent
this Agreement from becoming effective without liability of any
party to any
other party, except that the provisions of Section 4(a)(viii),
Section 4(b)(ii)
and Section 6 hereof shall at all times be effective.
(b) You shall have the right to terminate this
Agreement by giving
notice as hereinafter specified at any time at or prior to the
First Closing
Date, and the option referred to in Section 3(b), if exercised,
may be cancelled
at any time prior to the Second Closing Date, if (i) the Company
shall have
failed, refused or been unable, at or prior to such Closing Date,
to perform any
agreement on its part to be performed hereunder, (ii) any other
condition of
your obligations hereunder
-21-
is not fulfilled, (iii) trading on the New York Stock Exchange or
the American
Stock Exchange shall have been wholly suspended, (iv) minimum or
maximum prices
for trading shall have been fixed, or maximum ranges for prices
for securities
shall have been required, on the New York Stock Exchange or the
American Stock
Exchange, by such Exchange or by order of the Commission or any
other
governmental authority having jurisdiction, (v) a banking
moratorium shall have
been declared by Federal, New York, Minnesota or Colorado
authorities, or
(vi) there has occurred any material adverse change in the
financial markets in
the United States or an outbreak of major hostilities (or an
escalation thereof)
in which the United States is involved, a declaration of war by
Congress, any
other substantial national or international calamity or any other
event or
occurrence of a similar character shall have occurred since the
execution of
this Agreement that, in your judgment, makes it impractical or
inadvisable to
proceed with the completion of the sale of and payment for the
Securities. Any
such termination shall be without liability of any party to any
other party
except that the provisions of Section 4(a)(viii), Section
4(b)(ii) and Section 6
hereof shall at all times be effective.
(c) If you elect to prevent this Agreement from
becoming effective or
to terminate this Agreement as provided in this Section, the
Company and the
Selling Stockholders or an Attorney-in-Fact on behalf of the
Selling
Stockholders, shall be notified promptly by you by telephone or
telegram,
confirmed by letter. If the Company elects to prevent this
Agreement from
becoming effective, you and the Selling Stockholders, or an
Attorney-in-Fact on
behalf of the Selling Stockholders, shall be notified by the
Company by
telephone or telegram, confirmed by letter.
9. DEFAULT BY THE SELLING STOCKHOLDERS OR THE COMPANY. If
one or more of
the Selling Stockholders shall fail at the First Closing Date to
sell and
deliver the number of Securities which such Selling Stockholder
is obligated to
sell hereunder, and the remaining Selling Stockholders do not
exercise the right
hereby granted to increase, pro rata or otherwise, the number of
Securities to
be sold by them hereunder to the total number of Securities to be
sold by the
Selling Stockholders as set forth in Schedule I hereto, then you
may at your
option, by notice from you to the Company and the non-defaulting
Selling
Stockholders, either (a) terminate this Agreement without any
liability on the
part of any non-defaulting party, or (b) elect to purchase the
Securities which
the Company and the non-defaulting Selling Stockholders have
agreed to sell
hereunder.
In the event of a default by any Selling Stockholder as
referred to in
this Section, either you or the Company shall have the right to
postpone the
First Closing Date for a period not exceeding seven days in order
to effect any
required changes in the Registration Statement or Prospectus or
in any other
documents or arrangements.
If the Company shall fail at the First Closing Date to
sell and
deliver the number of Securities which it is obligated to sell
hereunder, then
this Agreement shall terminate without any liability on the part
of any
non-defaulting party.
No action taken pursuant to this Section shall relieve
the Company or
any Selling Stockholder so defaulting from liability, if any, in
respect of such
default.
10. INFORMATION FURNISHED BY UNDERWRITER. The statements
set forth in the
last paragraph of the cover page and under the caption
"Underwriting" in any
Preliminary Prospectus and in the Prospectus constitute the
written information
furnished by you or on your behalf referred to in Section 2 and
Section 6
hereof.
-22-
11. NOTICES. Except as otherwise provided herein, all
communications
hereunder shall be in writing or by telegraph and, if to you,
shall be mailed,
telegraphed or delivered to Xxxxx Xxxxxxx Inc., Xxxxx Xxxxxxx
Tower, 000 Xxxxx
Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000; if to the Company,
shall be mailed,
telegraphed or delivered to it at Rocky Mountain Chocolate
Factory, Inc., 000
Xxxxxx Xxxxx, Xxxxxxx, XX 00000, Attention: Xxxxx X. Xxxxxxxx;
if to the
Selling Stockholders, at the address of the Attorneys-in-Fact (if
applicable) as
set forth in the Powers of Attorney, or in each case to such
other address as
the person to be notified may have requested in writing. All
notices given by
telegram shall be promptly confirmed by letter. Any party to
this Agreement may
change such address for notices by sending to the parties to this
Agreement
written notice of a new address for such purpose.
12. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This
Agreement shall inure
to the benefit of and be binding upon the parties hereto and
their respective
successors and assigns and the controlling persons, officers and
directors
referred to in Section 6. Nothing in this Agreement is intended
or shall be
construed to give to any other person, firm or corporation any
legal or
equitable remedy or claim under or in respect of this Agreement
or any provision
herein contained. The term "successors and assigns" as herein
used shall not
include any purchaser, as such purchaser, of any of the
Securities from you.
13. GOVERNING LAW. This Agreement shall be governed by and
construed in
accordance with the laws of the State of Minnesota.
-23-
Please sign and return to the Company the enclosed
duplicates of this
letter whereupon this letter will become a binding agreement
between the
Company, the Selling Stockholders and you in accordance with its
terms.
Very truly yours,
ROCKY MOUNTAIN CHOCOLATE
FACTORY, INC.
By:
-----------------------------------------
Xxxxxxxx X. Xxxxx,
President
SELLING STOCKHOLDERS
By
-----------------------------------------
Attorney-in-Fact
CORONET INSURANCE COMPANY
By
--------------------------
Its
-------------------------
Confirmed as of the date first
above mentioned
XXXXX XXXXXXX INC.
By
-----------------------------
Managing Director
-24-
SCHEDULE I
SELLING STOCKHOLDERS
Maximum
Number of
Number of Option
Shares
Name Firm Shares Subject to
Option
---- -----------
-----------------
Coronet Insurance Company. . . . . 500,000 84,375
Xxxxxxxx X. Xxxxx. . . . . . . . . 100,000 0
------- ------
Total. . . . . . . . . . . . . . 600,000 84,375
------- ------
------- ------
-25-
