1
EXHIBIT 1.1
K&S DRAFT -- OCTOBER 3, 1997
3,000,000 Shares
SUBURBAN LODGES OF AMERICA, INC.
Common Stock
UNDERWRITING AGREEMENT
_______________, 1997
NATIONSBANC XXXXXXXXXX SECURITIES, INC.
XXXXX XXXXXX INC.
X.X. XXXXXXXX & CO.
LEGACY SECURITIES CORP.
As Representatives of the several Underwriters
c/o NATIONSBANC XXXXXXXXXX SECURITIES, INC.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Dear Sirs:
SECTION 1. Introductory. Suburban Lodges of America, Inc., a Georgia
corporation (the "Company") and the general partner of Suburban Holdings, L.P.
(the "Partnership"), proposes to issue and sell 3,000,000 shares of its
authorized but unissued Common Stock (the "Common Stock") to the several
underwriters named in Schedule A annexed hereto (the "Underwriters"), for whom
you are acting as Representatives. Said aggregate of 3,000,000 shares are herein
called the "Firm Common Shares." In addition, the Company proposes to grant to
the Underwriters an option to purchase up to 450,000 additional shares of Common
Stock (the "Optional Common Shares"), as provided in Section 4 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 that the Underwriters propose to make a
public offering of the Common Shares on the effective date of the registration
statement hereinafter referred to, or as soon thereafter as in your judgment is
advisable.
2
The Company hereby confirms its agreement with respect to the purchase
of the Common Shares by the Underwriters as follows:
SECTION 2. Representations and Warranties of the Company and the
Partnership. The Company and the Partnership, jointly and severally, hereby
represent and warrant to the several Underwriters that:
(a) A registration statement on Form S-3 (File No.
333-35871) 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 four signed copies of such registration statement and
amendments, together with four 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 (as
hereinafter defined) 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 all documents incorporated or deemed to
be incorporated by reference therein and, in the event any
post-effective amendment thereto becomes effective prior to the First
Closing Date (as hereinafter defined), shall also mean such
registration statement as so amended; provided, however, that such term
shall also include (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, (ii) all information deemed to be included in such
registration statement at the time of effectiveness, pursuant to Rule
434 of the Rules and Regulations and pursuant to the Securities
Exchange Act of 1934 and the
-2-
3
rules and regulations promulgated thereunder (the "Exchange Act") and
(iii) any registration statement filed pursuant to Rule 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 either (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, (ii) if a Term
Sheet is not used and no filing pursuant to Rule 424(b) of the Rules
and Regulations is required, shall mean the form of final prospectus
included in the Registration Statement at the time such Registration
statement becomes effective, 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.
All references in this Agreement to financial statements and
schedules and other information which is "contained," "included" or
"stated" in the Registration Statement or the Prospectus (and all other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is or is
deemed to be incorporated by reference in the Registration Statement or
the Prospectus, as the case may be; and all references in this
Agreement to amendments or supplements to the Registration Statement or
the Prospectus shall be deemed to mean and include the filing of any
document under the Exchange Act which is or is deemed to be
incorporated by reference in the Registration Statement or the
Prospectus, as the case may be.
(b) The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus, and
each Preliminary Prospectus has conformed in all material respects to
the requirements of the Act and the Rules and Regulations and, as of
its date, has not included any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; and at the time the Registration Statement becomes
effective, and at all times subsequent thereto up to and including each
Closing Date hereinafter mentioned, the Registration Statement and the
Prospectus, and any amendments or supplements thereto, will contain all
material statements and information required to be included therein by
the Act and the Rules and Regulations and will in all material respects
conform to the requirements of the Act and the Rules and Regulations,
and neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, will include any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
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
-3-
4
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 the
subsidiaries (individually, a "Subsidiary" and collectively, the
"Subsidiaries") listed in Exhibit 21 to the Registration Statement. The
Company and each of its Subsidiaries have been duly organized and are
validly existing as corporations or limited partnerships, as
applicable, in good standing under the laws of their respective
jurisdictions of organization, with full power and authority (corporate
or partnership, as applicable and other) to own and lease their
properties and conduct their respective businesses as described in the
Prospectus; the Company, directly or indirectly, owns all of the
outstanding capital stock and partnership interests, as applicable, of
its 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; the Company and each of its Subsidiaries are
duly qualified to do business and in good standing as foreign
corporations or limited partnerships, as applicable, in each
jurisdiction in which the ownership or leasing of properties or the
conduct of their respective businesses requires such qualification,
except for jurisdictions in which the failure to so qualify would not
have a material adverse effect upon the Company or the Subsidiary; and
no proceeding has been instituted in any such jurisdiction, revoking,
limiting or curtailing, or seeking to revoke, limit or curtail, such
power and authority or qualification.
(d) The Company has an authorized and outstanding
capital stock as set forth under the heading "Capitalization" in the
Prospectus; the issued and outstanding shares of Common Stock have been
duly authorized and validly issued, are fully paid and nonassessable,
have been issued in compliance with all federal and state securities
laws, were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase securities, and
conform to the description thereof contained in the Prospectus. All
issued and outstanding shares of capital stock or partnership
interests, as applicable, of each Subsidiary have been duly authorized
and validly issued and are fully paid and (with respect to subsidiaries
that are corporations) 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 partnership interests, as applicable, or any such options, rights,
convertible securities or obligations. 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
-4-
5
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 to the
description thereof contained in the Prospectus. No preemptive rights
or other rights to subscribe for or purchase exist with respect to the
issuance and sale of the Common Shares by the Company pursuant to this
Agreement. No shareholder 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 shareholder under the Act in the public offering
contemplated by this Agreement. No further approval or authority of the
shareholders or the Board of Directors of the Company will be required
for the issuance and sale of the Common Shares to be sold by the
Company as contemplated herein.
(f) Each of the Company and the Partnership 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 the
Partnership and constitutes a valid and binding obligation of the
Company and the Partnership in accordance with its terms, except to the
extent enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganization or other laws affecting the rights of
creditors generally and by principles of equity, whether considered at
law or equity. The making and performance of this Agreement by the
Company and the Partnership and the consummation of the transactions
herein contemplated will not violate any provisions of the articles 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
their 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. 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 contemplated by this Agreement, except for compliance with
the Act, the Blue Sky or Canadian securities 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
-5-
6
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 combined financial statements and schedules
of the Company and the Affiliated Entities, the financial statements of
Gulf Coast Associates, Ltd. d/b/a Suburban Lodge of Forest Park ("Gulf
Coast"), and the related notes thereto included in the Registration
Statement and the Prospectus present fairly in all material respects
the financial position of the Company and the Affiliated Entities and
Gulf Coast, respectively, as of the respective dates of such financial
statements and schedules, and the results of operations and changes in
financial position of the Company and the Affiliated Entities and Gulf
Coast, respectively, 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 Deloitte & Touche, LLP. No other
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 Historical Financial Data" fairly present the information
set forth therein on the basis stated in the Registration Statement.
The pro forma financial information (including the related notes)
included in the Prospectus or any Preliminary Prospectus complies as to
form in all material respects to the applicable accounting requirements
of the Act and the Rules and Regulations and the Exchange Act and
management of the Company believes that the assumptions underlying the
pro forma adjustments are reasonable. Such pro forma adjustments have
been properly applied to the historical amounts in the compilation of
the information and such information fairly represents with respect to
the Company the financial position, results of operations and other
information purported to be shown therein at the respective dates and
for the respective periods specified.
(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, neither the Company nor any of its
Subsidiaries is in violation or default of any provision of its
articles 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.
(j) There are no contracts or other documents
required to be described in the Registration Statement or to be filed
as exhibits to the Registration Statement by the Act, by the Rules and
Regulations or by the Exchange Act which have not been described or
filed as required. The contracts so described in the Prospectus are in
full force and effect on the date hereof; and neither the Company nor
any of its Subsidiaries, nor to the best of the Company's knowledge,
any other party is in breach of or default under any of such contracts.
-6-
7
(k) The documents, as amended, incorporated or deemed
to be incorporated by reference in the Prospectus, at the time they
were or hereafter are filed with the Commission, complied and will
comply in all material respects with the requirements of the Exchange
Act, and, when read together with the other information in the
Prospectus, at the time the Registration Statement and any amendments
thereto become effective and at the First Closing Date and the Second
Closing Date, as the case may be, will 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 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.
(l) 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 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 or any of its Subsidiaries, and no labor
disturbance by the employees of the Company or any of its Subsidiaries
exists or is imminent which might be expected to affect adversely 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.
(m) 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) (collectively, the "Properties"), and such
properties and assets are not subject to any 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 adversely affect the
use made and proposed to be made of such property and assets 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 or its Subsidiaries owns or leases all such properties as are
necessary to its operations as now conducted or as proposed to be
conducted.
(n) Since the respective dates as of which
information is given in the Registration Statement and Prospectus, and
except as described in or specifically contemplated by the Prospectus:
(i) the Company and its Subsidiaries have not incurred any material
liabilities or obligations, indirect, direct or contingent, or entered
into any material
-7-
8
verbal or written 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 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 and upon the exercise of options and
warrants described in the Registration Statement) 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 or any
Subsidiary.
(o) 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 and as proposed to be
conducted as described in the Prospectus; the contemplated 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 or any
Subsidiary; 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 there is no claim being made against the
Company or any Subsidiary 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.
(p) The Company has not been advised, and has no
reason to believe, that the Company or any of its Subsidiaries is not
conducting business in compliance with all applicable laws, rules and
regulations of the jurisdictions in which it is conducting business,
including, without limitation, all applicable local, state and federal
environmental laws and regulations; except where failure to be so in
compliance would not materially adversely affect the condition
(financial or otherwise), business, properties, results of operations
or prospects of the Company or any Subsidiary.
(q) The Company and its Subsidiaries have filed all
necessary federal, state and foreign income and franchise tax returns
and have paid all taxes shown as due thereon; and the Company has no
knowledge of any tax deficiency which has been or might be asserted or
threatened against the Company and its Subsidiaries which could
materially adversely affect the condition (financial or otherwise),
business, properties, results of operations or prospects of the Company
and its Subsidiaries.
-8-
9
(r) Neither the Company nor any of its Subsidiaries
is an "investment company," or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as
amended.
(s) 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 Prospectus, the Registration Statement and other materials
permitted by the Act.
(t) Each of the Company and its Subsidiaries
maintains insurance of the types and in the amounts generally deemed
adequate for their respective businesses, 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.
(u) 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 or any
jurisdiction thereof.
(v) 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.
(w) No person (other than the Company) has an option
or right of first refusal to purchase all or part of any of the
Properties or any interest therein. Each of the Properties complies
with all applicable codes, laws and regulations (including, without
limitation, building and zoning codes, laws and regulations and laws
relating to access to the Properties), except if and to the extent
disclosed in the Prospectus and except for such failures to comply that
would not individually or in the aggregate have a material adverse
effect on the condition (financial or otherwise), business, properties,
results of operations or prospects of the Company and its Subsidiaries,
taken as a whole. The Company has no knowledge of any pending or
threatened condemnation proceedings, zoning changes, or other
proceeding or action that will in any manner affect the size of, use
of, improvements on, construction on or access to the Properties,
except such proceedings or actions that would not have a material
adverse effect on the condition (financial or otherwise), business,
properties, results of operations or prospects of the Company and its
Subsidiaries, taken as a whole.
(x) To the best of the Company's knowledge, no
dispute exists or is imminent with any franchisee (individually, a
"Franchisee" and collectively, the "Franchisees")
-9-
10
or with the Franchisees of the Company and its Subsidiaries that could
have a material adverse effect on the condition (financial or
otherwise), business, properties, results of operations or prospects of
the Company and its Subsidiaries, taken as a whole.
(y) Each Franchisee is such by virtue of being a
party to a franchise agreement with either the Company or a Subsidiary
and assuming each such agreement has been duly authorized, executed and
delivered by the parties thereto, other than the Company or a
Subsidiary, each such contract constitutes a valid, legal and binding
obligation of each party thereto, enforceable against the Company or a
Subsidiary in accordance with its terms, except (i) for any one or more
of such franchise agreements as would not have a material adverse
effect on the condition (financial or otherwise), business, properties,
results of operations or prospects of the Company and its Subsidiaries,
taken as a whole, and (ii) to the extent that enforceability may be
limited by general equitable principles, bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights
generally. The Company and each Subsidiary have complied with and are
currently complying in all material respects with the rules and
regulations of the United States Federal Trade Commission and the
comparable laws, rules and regulations of each state or state agency
applicable to the franchising business of the Company and such
Subsidiary in each state in which the Company or such Subsidiary is
doing business.
(z) The Company and each of its Subsidiaries
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.
(aa) No Subsidiary is currently prohibited, directly
or indirectly, (i) from paying any dividends to the Company and SLA
Properties, Inc., (ii) from making any other distributions to the
Company or SLA Properties, Inc., or (iii) from repaying to the Company
and SLA Properties, Inc. any loans or advances, except as disclosed in
the Prospectus.
For purposes of this Section 2, "the best of the Company's knowledge"
or a similar phrase means the knowledge of each of Xxxxx X. Xxxxxxxx, Xxx X.
Xxxxxx, Xxxx X. Xxxxxxxxx and Xxxxx X. Xxxxxxx, after diligent inquiry of
persons who should have knowledge of the facts relevant to such representations.
SECTION 3. Representations and Warranties of the Underwriters. The
Representatives, on behalf of the several Underwriters, represent and warrant to
the Company that the information set
-10-
11
forth (i) on the cover page of the Prospectus with respect to price,
underwriting discounts and terms of offering and (ii) under "Underwriting" in
the Prospectus was furnished to the Company by and on behalf of the Underwriters
for use in connection with the preparation of the Registration Statement and 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 4. Purchase, Sale and Delivery of Common Shares. On the basis
of the representations, warranties and agreements herein contained, but subject
to the terms and conditions herein set forth, the Company agrees to issue and
sell to the Underwriters the Firm Common Shares. The Underwriters agree,
severally and not jointly, to purchase from the Company the number of Firm
Common Shares set forth opposite the name of each such Underwriter in Schedule A
hereto. The purchase price per share to be paid by the several Underwriters to
the Company respectively, shall be $________ per share.
Delivery of certificates for the Firm Common Shares to be purchased by
the Underwriters and payment therefor shall be made at the offices of
NationsBanc Xxxxxxxxxx Securities, Inc. ("NationsBanc Xxxxxxxxxx"), 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 third or fourth, as the case may be, 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 to you, for the respective accounts of the Underwriters
with respect to the Firm Common Shares to be sold by the Company against payment
by you, for the accounts of the several Underwriters, of the purchase price
therefor by wire transfer of immediately available funds to the Company. 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
-11-
12
several Underwriters to purchase, severally and not jointly, up to an aggregate
of 450,000 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 3,000,000
(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 cancellation
to the Company. If the option is canceled 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 that each Underwriter has authorized you
to accept delivery, and receipt for, and to make payment of the purchase price
for, the Firm Common Shares and the Optional Common Shares the Underwriters have
agreed to purchase. 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.
No later than 12:00 P.M. on the second business day following the date
the Common Shares are released by the Underwriters for sale to the public, the
Company shall deliver or cause to be
-12-
13
delivered copies of the Prospectus in such quantities and at such places as the
Representatives shall request.
SECTION 5. 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, 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 or which is not in compliance with the Act
and the Rules and Regulations.
(b) The Company will prepare and file with the
Commission, promptly upon 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.
The Company will fully and completely comply with the provisions of
Rule 430A of the Rules and Regulations with respect to information
omitted from the Registration Statement in reliance upon such Rule.
(c) If at any time within the nine-month period
referred to in Section 10(a) (3) of the Act during which a prospectus
relating to the Common Shares is required to be delivered under the Act
any event occurs, as a result of which the Prospectus, including any
amendments or supplements, would include an untrue statement of a
material fact, or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, or
if it is necessary at any time to amend the Prospectus, including any
amendments or supplements, to comply with the Act or the Rules and
Regulations, the Company will promptly advise you thereof and will
promptly prepare and file with the
-13-
14
Commission, at its own expense, an amendment or supplement which will
correct such statement or omission or an amendment or supplement which
will effect such compliance and will use its best efforts to cause the
same to become effective as soon as possible; and, in case any
Underwriter is required to deliver a prospectus after such nine-month
period, the Company upon request, but at the expense of such
Underwriter, will promptly prepare such amendment or amendments to the
Registration Statement and such Prospectus or Prospectuses as may be
necessary to permit compliance with the requirements of Section 10(a)
(3) of the Act.
(d) The Company will timely file such reports
pursuant to the Exchange Act as are necessary in order to make
generally available to its security holders as soon as practicable an
earnings statement for the purposes of, and to provide the benefits
contemplated by, 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 "Prospectus Delivery Period"), 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 or mail to your order copies of the
Registration Statement, the Prospectus, the Preliminary Prospectus and
all amendments and supplements to any such documents in each case as
soon as available and in such quantities as you may 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 or
Canadian securities laws of such jurisdictions as you designate, will
comply with such laws and will continue such qualifications,
registrations and exemptions in effect so long as reasonably required
for the distribution of the Common Shares. The Company shall not be
required to qualify as a foreign corporation or to file a general
consent to service of process in any such jurisdiction where it is not
presently qualified or where it would be subject to taxation as a
foreign corporation. The Company will advise 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 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 balance sheet of the Company as of
the close of such fiscal year and statements of income, shareholders'
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
-14-
15
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 date of
the Prospectus, without the prior written consent of NationsBanc
Xxxxxxxxxx (which consent may be withheld at the sole discretion of
NationsBanc Xxxxxxxxxx), the Company will not other than pursuant to
outstanding stock options and warrants disclosed in the Prospectus
issue, offer, sell, grant options to purchase or otherwise dispose of
any of the Company's equity securities or any other securities
convertible into or exchangeable with its Common Stock or other equity
security; provided, however, that during such 90 day period the
Company may grant options to purchase Common Stock to its employees
under its stock option plans so long as such employees cannot exercise
such options within such 90 day period.
(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.
(k) The Company will provide all applicable notices
and pay all necessary fees to The Nasdaq Stock Market in connection
with the issuance of the Common Shares.
(l) During the Prospectus Delivery Period, the
Company will file all documents required to be filed with the
Commission pursuant to Section 13, 14 or 15 of the Exchange Act in the
manner and within the time periods required by the Exchange Act.
You, on behalf of the Underwriters, may, in your sole discretion, waive
in writing the performance by the Company of any one or more of the foregoing
covenants or extend the time for their performance.
SECTION 6. Payment of Expenses. Whether or not the transactions
contemplated hereunder are consummated or this Agreement becomes effective or is
terminated, the Company agrees to pay all costs, fees and expenses incurred in
connection with the performance of its obligations hereunder 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
-00-
00
xxxxx xx xxx Xxxxxx Xxxxx, (xxx) 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 or the securities laws of Canada, (vii) the
filing fee of the NASD, 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. Except as provided in this Section 6, Section 8 and
Section 10 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 and Canadian
securities laws and the Blue Sky memorandum referred to above).
SECTION 7. 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 Partnership herein set forth as of
the date hereof and as of the First Closing Date, to the accuracy of the
statements of Company officers and Partnership officers made pursuant to the
provisions hereof, to the performance by the Company and the Partnership 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 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 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) there shall not have
-16-
17
been any change in the capital stock (other than pursuant to the
exercise of outstanding options and warrants disclosed in the
Prospectus) of the Company or any of its Subsidiaries 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 or contemplated by the Registration Statement or the Prospectus,
no material verbal or written agreement or other transaction shall have
been entered into by the Company or 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 or any of 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 or any of its Subsidiaries, (iv) no legal or
governmental action, suit or proceeding affecting the Company or any of
its Subsidiaries which is material to the Company or any of its
Subsidiaries or which affects or may affect the transactions
contemplated by this Agreement shall have been instituted or
threatened, and (v) there shall not have been any material change in
the condition (financial or otherwise), business, management, results
of operations or prospects of the Company or any of its Subsidiaries
which makes it impractical 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 Xxxxxxxxxx Xxxxxxxx
LLP, counsel for the Company, addressed to the Underwriters
and dated the First Closing Date, or the Second Closing Date,
as the case may be, to the effect that:
(1) Each of the Company and its
Subsidiaries has been duly incorporated and is
validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation,
is duly qualified to do business as a foreign
corporation and is in good standing in all other
jurisdictions where the ownership or leasing of
properties or the conduct of its business requires
such qualification, except for jurisdictions in which
the failure to so qualify would not have a material
adverse effect on the Company and its Subsidiaries,
and has full corporate power and authority to own its
properties and conduct its business as described in
the Registration Statement;
(2) The Partnership is a limited
partnership formed and validly existing under the
Georgia Uniform Limited Partnership Act with the
partnership power to own and lease its properties and
to conduct its business as now conducted. The
Partnership is qualified to transact business as a
foreign partnership and is in good standing in all
other jurisdictions where the
-17-
18
ownership or leasing of properties or the conduct of
its business requires such qualification, except for
jurisdictions in which the failure to so qualify
would not have a material adverse effect on the
Company, its Subsidiaries and the Partnership;
(3) 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 capital stock, all
outstanding shares of capital stock have been duly
and validly issued, are fully paid and nonassessable,
and were not issued in violation of or subject to any
preemptive rights; without limiting the foregoing,
there are no preemptive or other rights to subscribe
for or purchase shares of capital stock of the
Company, arising by operation of law or under the
Company's Articles of Incorporation or bylaws or
under any agreement known to such counsel to which
the Company is a party, and conform to the
description thereof contained in the Prospectus; all
offers and sales of the Company's Common Stock prior
to the date hereof were at all relevant times duly
registered under the Act or exempt from the
registration requirements of the Act by reason of
Sections 3(b), 4(2) or 4(6) thereof and were duly
registered or the subject of an available exemption
from the registration requirements of the applicable
state securities or blue sky laws;
(4) All of the issued and
outstanding shares of the Company's corporate
Subsidiaries have been duly and validly authorized
and issued, are fully paid and nonassessable and, to
the best of such counsel's knowledge, based solely on
a review of stock records and minute books, are owned
beneficially by the Company free and clear of all
liens, encumbrances, equities, claims, security
interests, voting trusts or other defects of title
whatsoever; all of the issued and outstanding
interests in the Partnership have been duly and
validly authorized and issued, and are owned,
directly or indirectly, to the best of such counsel's
knowledge, by the Company free and clear of all
liens, encumbrances, equities, claims, security
interests, voting trusts or other defects of title
whatsoever. The outstanding limited partnership
interests in the Partnership are fully paid.
(5) The certificates evidencing the
Common Shares to be delivered hereunder are in due
and proper form under Georgia 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
-18-
19
or subject to any preemptive rights or other rights
to subscribe for or purchase shares of capital stock
of the Company arising by operation of law, under the
Company's Articles of Incorporation or bylaws or
under any agreement known to such counsel to which
the Company is a party and will conform in all
respects to the description thereof contained in the
Prospectus;
(6) 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, and no commitments, plans or
arrangements to issue, any shares of capital stock of
the Company or any of its Subsidiaries or any
security convertible into or exchangeable for capital
stock of the Company or any of its Subsidiaries;
(7) (a) 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 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,
as amended, the Prospectus and each amendment or
supplement thereto (except for the financial
statements and schedules and other financial
information and data included therein as to which
such counsel need not express any opinion) comply as
to form 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 franchises, leases,
contracts, agreements or documents of a character
required to be disclosed in the Registration
Statement or Prospectus or to be filed as exhibits to
the Registration Statement which are not disclosed or
filed, as required; and
(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 or any of its
Subsidiaries which are required to be described in
the Prospectus which are not described as required.
(8) 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; the Partnership has
full right, power and
-19-
20
authority to enter into this Agreement; this
Agreement has been duly and validly authorized by all
necessary corporate action by the Company and the
Partnership, has been duly and validly executed and
delivered by and on behalf of the Company and the
Partnership, and is a valid and binding agreement of
the Company and the Partnership in accordance with
its terms, except as enforceability may be limited by
general equitable principles, bankruptcy, insolvency,
reorganization, moratorium or other laws affecting
creditors' rights generally and except as to those
provisions relating to indemnity or contribution for
liabilities arising under the Act, as to which no
opinion need be expressed; 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 and the
Partnership 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 in connection with the purchase and
distribution of the Common Shares by the Underwriters
and the clearance of such offering with the NASD;
(9) The execution and performance
of this Agreement 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, mortgage, deed
of trust, lease, franchise, license, indenture,
permit or other instrument that is described or
referred to in the Registration Statement or the
Prospectus or filed as an exhibit to the Registration
Statement, or violate any of the provisions of the
articles of incorporation or bylaws, or other
organizational documents, of the Company or any of
its 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 Subsidiaries or any of their
properties, except where the failure to comply would
not have a material adverse effect on the condition
(financial or otherwise), business, properties,
results of operations or prospects of the Company and
its Subsidiaries, taken as a whole;
(10) Neither the Company nor any of
its Subsidiaries is in violation of its articles of
incorporation or bylaws, or other organizational
documents, or to the best of such counsel's
knowledge, in breach of or default with respect to
any provision of any agreement, mortgage, deed of
trust, lease, franchise, license, indenture, permit
or other instrument that is described or referred to
in the Registration Statement or the Prospectus or
filed as an exhibit to the Registration Statement,
except where such default would not materially
adversely affect the Company and its Subsidiaries,
taken as a whole;
-20-
21
and, to the best of such counsel's knowledge, the
Company and its Subsidiaries are in compliance with
all laws, rules, regulations, judgments, decrees,
orders and statutes of any court or jurisdiction to
which they are subject, except where noncompliance
would not materially adversely affect the Company and
its Subsidiaries, taken as a whole;
(11) 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; and
(12) Neither the Company nor any of
its Subsidiaries is an "investment company," or a
company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of
1940, as amended.
(13) Each document, as amended,
filed pursuant to the Act or the Exchange Act (other
than the financial statements and supporting
schedules included therein, as to which no opinion
need be rendered) and incorporated or deemed to be
incorporated by reference in the Prospectus complied
when so filed as to form in all material respects
with the Act or the Exchange Act, as the case may be;
and such counsel has no reason to believe that any of
such documents, when they were so filed, contained an
untrue statement of a material fact or omitted to
state a material fact necessary in order to make the
statements therein, in the light of the circumstances
under which they were made when such documents were
filed, not misleading.
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 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 and
copies of said opinions or certificates are to be attached to
the opinion. For purposes of such opinion, "knowledge" shall
mean the current awareness of lawyers in such firm involved in
the representation of the Company of factual matters such
lawyers recognize as relevant to the opinion so qualified.
Such counsel shall also include a statement to the
effect that nothing has come to such counsel's attention that
would lead such counsel to believe that either at the
effective date of the Registration Statement or at the
applicable Closing Date (i) the Registration Statement or any
amendment or supplement thereto, contains any untrue statement
of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements
therein not misleading and (ii) the
-21-
22
Prospectus contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the
statements, in light of the circumstances under which they
were made, not misleading;
(ii) Such opinion of Paul, Hastings,
Xxxxxxxx & Xxxxxx, special franchising counsel for the
Company, addressed to the Underwriters and dated as of the
First Closing Date, or the Second Closing Date, as the case
may be, with respect to certain franchising matters of the
Company, as you may reasonably require, and the Company shall
have furnished to such counsel such documents and shall have
exhibited to them such papers and records as they 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) Such opinion or opinions of King &
Spalding, counsel for the Underwriters dated the First Closing
Date or the Second Closing Date, as the case may be, with
respect to the incorporation of the Company, the 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 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.
(iv) 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 and the Partnership 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
-22-
23
proceedings for that purpose have been instituted 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 a material fact or omits to state any
material fact required to be stated therein or
necessary to make the statements therein not
misleading;
(4) Since the initial date on which
the Registration Statement was filed, no agreement,
written or oral, transaction or event has occurred
which should have been set forth in an amendment to
the Registration Statement or in a supplement to or
amendment of any prospectus which has not been
disclosed in such a supplement or amendment;
(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 or any of its Subsidiaries; 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 or any
of its Subsidiaries, whether or not arising from
transactions in the ordinary course of business, or
which may adversely affect the transactions
contemplated by this Agreement; since such dates and
except as so disclosed, neither the Company nor any
of its Subsidiaries has entered into any verbal or
written 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 the Company has not declared or paid any
dividend, or made any other distribution, upon its
outstanding capital stock payable to shareholders 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 and the Prospectus and except as
-23-
24
disclosed in or contemplated by the Prospectus,
neither the Company nor any of its Subsidiaries have
sustained a material loss or damage by strike, fire,
flood, windstorm, accident or other calamity (whether
or not insured).
(v) On the date of this Agreement 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, 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 director and executive officer of the
Company, in form and substance satisfactory to you, confirming
that for a period of 90 days after the date of the final
Prospectus, such person will not directly or indirectly sell,
offer, contract, grant any option to sell, 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
without the prior written consent of NationsBanc Xxxxxxxxxx
which consent may be withheld at the sole discretion of
NationsBanc Xxxxxxxxxx.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to you and
to King & Spalding, counsel for the Underwriters. The Company shall furnish you
with such manually signed or conformed copies of such opinions, certificates,
letters and documents as you 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 without liability on the part of any Underwriter
or the Company, except for the expenses to be paid or reimbursed by the Company
pursuant to Sections 6 and 8 hereof and except to the extent provided in Section
10 hereof.
SECTION 8. Reimbursement of Underwriters' Expenses. Notwithstanding any
other provisions hereof, if this Agreement shall be terminated by you pursuant
to Section 7, 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 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
-24-
25
to 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 8, Section 6 and Section 10 shall at all times be effective and shall
apply.
SECTION 9. Effectiveness of Registration Statement. You and the Company
will use your and its 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 10. Indemnification.
(a) The Company and the Partnership, jointly and
severally, agree to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of
the Act against any losses, claims, damages, liabilities or expenses,
joint or several, to which such Underwriter or such controlling person
may become subject, under the Act, the Exchange Act or other federal or
state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is
effected with the written consent of the Company), 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 Partnership contained herein or any
failure of the Company or the Partnership to perform their respective
obligations hereunder or under law; and will reimburse each Underwriter
and each such controlling person for any legal and other expenses as
such expenses are reasonably incurred by such Underwriter or such
controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage,
liability, expense or action; provided, however, that neither the
Company nor the Partnership 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 in reliance upon and in conformity with the information
furnished to the Company pursuant to Section 3 hereof. In addition to
their other obligations under this Section 10(a), the Company and the
Partnership 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 Partnership herein or failure to
perform their obligations hereunder, all as described in this Section
10(a), they will reimburse each Underwriter on a quarterly basis for
all reasonable legal or other expenses
-25-
26
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 obligation of the Company or the Partnership 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 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 Partnership may
otherwise have.
(b) Each Underwriter will severally indemnify and
hold harmless the Company, the Partnership, each of the Company's
directors, each of the Company's officers who signed the Registration
Statement, and each person, if any, who controls the Company or the
Partnership within the meaning of the Act, against any losses, claims,
damages, liabilities or expenses to which the Company, the Partnership,
or any such director, officer or controlling person may become subject,
under the Act, the Exchange Act, or other federal or state statutory
law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the
written consent of such Underwriter), insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon any untrue or
alleged untrue statement of any material fact contained in, the
Registration Statement, any Preliminary Prospectus, the Prospectus, or
any amendment or supplement thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in the Registration Statement,
any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, in reliance upon and in conformity with the
information furnished to the Company pursuant to Section 3 hereof; and
will reimburse the Company, the Partnership, or any such director,
officer or controlling person for any legal and other expense
reasonably incurred by the Company, the Partnership, or any such
director, officer 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 10(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 10(b) which relates to information
furnished to the Company pursuant to Section 3 hereof, it will
reimburse the Company (and, to the extent applicable, each officer,
director, or controlling person or the Partnership) on a quarterly
basis for all reasonable legal or other expenses incurred in connection
with investigating or
-26-
27
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 the Partnership) for such expenses and
the possibility that such payments might later be held to have been
improper by a court of competent jurisdiction. To the extent that any
such interim reimbursement payment is so held to have been improper,
the Company (and, to the extent applicable, each officer, director,
controlling person or the Partnership) 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
contribution or otherwise than under the indemnity agreement contained
in this Section or to the extent it is not prejudiced as a proximate
result of such failure. In case any such action is brought against any
indemnified party and such indemnified party seeks or intends to seek
indemnity from an indemnifying party, the indemnifying party will be
entitled to participate in, and, to the extent that it may wish,
jointly with all other indemnifying parties similarly notified, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party; provided, however, if the defendants in any such
action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there
may be a conflict between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or
that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of its election
so to assume the defense of such action and approval by the indemnified
party of counsel, the indemnifying party will not be liable to such
indemnified party under this Section for any legal 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 action), or (ii) the
indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified
-27-
28
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 10 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 Partnership 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
Partnership 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 Partnership
and the Underwriters shall be deemed to be in the same proportion, in
the case of the Company and the Partnership as the total price paid to
the Company 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
received by the Underwriters as underwriting commissions. The relative
fault of the Company, the Partnership 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 Partnership 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 10, any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending
any action or claim. The provisions set forth in subparagraph (c) of
this Section 10 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 Partnership and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 10 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 the immediately preceding paragraph. Notwithstanding the
provisions of this Section 10, no Underwriter shall be required to
contribute any amount in
-28-
29
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 10 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 10(a) and 10(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 10(a) and 10(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 10(a) and
10(b) hereof.
SECTION 11. Default of Underwriters. It shall be a condition to this
Agreement and the obligation of the Company 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 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 except
for the expenses to be paid by the Company pursuant to Section 6 hereof and
except to the extent provided in Section 10 hereof.
-29-
30
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 12. Effective Date. This Agreement shall become effective
immediately as to Sections 6, 8, 10, 13 and 14 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 Section 12, 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 13. 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 or by you by notice to the Company 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 Partnership to any Underwriter (except for
the expenses to be paid or reimbursed by the Company and the
Partnership pursuant to Sections 6 and 8 hereof and except to the
extent provided in Section 10 hereof) or of any Underwriter to the
Company or the Partnership (except to the extent provided in Section 10
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
-30-
31
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 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 on the part of the Company to any
Underwriter (except for expenses to be paid or reimbursed by the
Company pursuant to Sections 6 and 8 hereof and except to the extent
provided in Section 10 hereof).
(c) This Agreement shall also terminate at 5:00 P.M.,
California Time, on the tenth full business day after the Registration
Statement shall have become effective if the initial public offering
price of the Common Shares shall not then as yet have been determined
as provided in Section 4 hereof. Any termination pursuant to this
subsection (c) shall be without liability on the part of any
Underwriter to the Company or on the part of the Company to any
Underwriter (except for expenses to be paid or reimbursed by the
Company pursuant to Sections 6 and 8 hereof and except to the extent
provided in Section 10 hereof).
SECTION 14. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company and the Partnership, of the Company's officers 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, the Company or the Partnership or any of its or their
partners, officers or directors or any controlling person, as the case may be,
and will survive delivery of and payment for the Common Shares sold hereunder
and any termination of this Agreement.
SECTION 15. 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. Xxxxx, with a copy to King & Spalding, 000 Xxxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxx 00000, Attention: Xxxx X. Xxxxxx; and if sent to the Company or
the Partnership shall be mailed, delivered or telegraphed and confirmed to the
Company at 0000 Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000, Attention:
Xxxxx X. Xxxxxxxx with a copy to Xxxxxxxxxx Xxxxxxxx LLP, 0000 Xxxxxxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxxx. The Company,
the Partnership or you may change the address for receipt of communications
hereunder by giving notice to the others.
-31-
32
SECTION 16. Successors. This Agreement will inure to the benefit of and
be binding upon the parties hereto, including any substitute Underwriters
pursuant to Section 11 hereof, and to the benefit of the officers and directors
and controlling persons referred to in Section 10, 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 17. 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 NationsBanc Xxxxxxxxxx, as Representatives, will be binding upon
all the Underwriters.
SECTION 18. 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 19. 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 20. General. This Agreement constitutes the entire agreement of
the parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof. This Agreement may be executed in several
counterparts, each one of which shall be an original, and all of which shall
constitute one and the same document.
In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company and you.
-32-
33
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 Partnership and the
several Underwriters including you, all in accordance with its terms.
Very truly yours,
SUBURBAN LODGES OF AMERICA, INC.
By:
-----------------------------------------
Xxxxx X. Xxxxxxxx,
President
SUBURBAN HOLDINGS, L.P.
By: Suburban Lodges of America, Inc.
its General Partner
By:
-----------------------------------------
Xxxxx X. Xxxxxxxx,
President
-33-
34
The foregoing Underwriting Agreement
is hereby confirmed and accepted by us
in San Francisco, California as of the
date first above written.
NATIONSBANC XXXXXXXXXX SECURITIES, INC.
XXXXX XXXXXX INC.
X.X. XXXXXXXX & CO.
LEGACY SECURITIES CORP.
Acting as Representatives of the
several Underwriters named in
the attached Schedule A.
By NATIONSBANC XXXXXXXXXX SECURITIES, INC.
By:
---------------------------------------
Name:
----------------------------------
Title:
----------------------------------
-34-
35
SCHEDULE A
Number of Firm
Common Shares
Name of Underwriter to be Purchased
------------------- ---------------
NationsBanc Xxxxxxxxxx Securities, Inc............
Xxxxx Xxxxxx Inc..................................
X.X. Xxxxxxxx & Co................................
Legacy Securities Corp............................
Total.................................... 3,000,000
=========
