Exhibit 1.1
2,087,580 Shares
WILD OATS MARKETS, INC.
Common Stock
UNDERWRITING AGREEMENT
----------------------
December , 1997
XXXXX XXXXXX INC.
PAINEWEBBER INCORPORATED
XXXXX XXXXXXX INC.
XXXX XXXXXXXX INCORPORATED
As Representatives of the Several Underwriters
c/o XXXXX XXXXXX INC.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Wild Oats Markets, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell an aggregate of 1,200,000 shares of its common stock,
$0.001 par value per share, to the several Underwriters named in Schedule II
hereto (the "Underwriters"), and the persons named in Part A1 of Schedule I
hereto (the "Principal Selling Stockholders") and the persons named in Part A2
of Schedule I hereto (the "Other Selling Stockholders," and together with the
Principal Selling Stockholders, the "Selling Stockholders") propose to sell to
the several Underwriters an aggregate of 887,580 shares of common stock of the
Company. The Company and the Selling Stockholders are hereinafter sometimes
referred to as the "Sellers." The Company's common stock, $0.001 par value, is
hereinafter referred to as the "Common Stock" and the 1,200,000 shares of Common
Stock to be issued and sold to the Underwriters by the Company and the 887,580
shares of Common Stock to be sold to the Underwriters by the Selling
Stockholders are hereinafter referred to as the "Firm Shares." The Company also
proposes to sell to the Underwriters, upon the terms and conditions set forth in
Section 2 hereof, up to an additional 313,137 shares (the "Additional Shares")
of Common Stock. The Firm Shares and the Additional Shares are hereinafter
collectively referred to as the "Shares."
1.
The Company and the Selling Stockholders wish to confirm as follows
their respective agreements with you (the "Representatives") and the other
several Underwriters on whose behalf you are acting, in connection with the
several purchases of the Shares by the Underwriters.
1. Registration Statement and Prospectus. The Company has prepared and
-------------------------------------
filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively, the
"Act"), a registration statement on Form S-3 under the Act (the "registration
statement"), including a prospectus subject to completion relating to the
Shares. The term "Registration Statement" as used in this Agreement means the
registration statement (including all financial schedules and exhibits), as
amended at the time it becomes effective, or, if the registration statement
became effective prior to the execution of this Agreement, as supplemented or
amended prior to the execution of this Agreement. If it is contemplated, at the
time this Agreement is executed, that a post-effective amendment to the
registration statement will be filed and must be declared effective before the
offering of the Shares may commence, the term "Registration Statement" as used
in this Agreement means the registration statement as amended by said
post-effective amendment. If an abbreviated registration statement is prepared
and filed with the Commission in accordance with Rule 462(b) under the Act ("an
Abbreviated Registration Statement"), the term "Registration Statement" as used
in this Agreement includes the Abbreviated Registration Statement. The term
"Prospectus" as used in this Agreement means the prospectus in the form included
in the Registration Statement, or, if the prospectus included in the
Registration Statement omits information in reliance on Rule 430A under the Act
and such information is included in a prospectus filed with the Commission
pursuant to Rule 424(b) under the Act, the term "Prospectus" as used in this
Agreement means the prospectus in the form included in the Registration
Statement as supplemented by the addition of the Rule 430A information contained
in the prospectus filed with the Commission pursuant to Rule 424(b). The term
"Prepricing Prospectus" as used in this Agreement means the prospectus subject
to completion in the form included in the registration statement at the time of
the initial filing of the registration statement with the Commission, and as
such prospectus shall have been amended from time to time prior to the date of
the Prospectus. Any reference in this Agreement to the registration statement,
the Registration Statement, any Prepricing Prospectus or the Prospectus shall be
deemed to refer to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Act, as of the date of the
registration statement, the Registration Statement, such Prepricing Prospectus
or the Prospectus, as the case may be, and any reference to any amendment or
supplement to the registration statement, the Registration Statement, any
Prepricing Prospectus or the Prospectus shall be deemed to refer to and include
any documents filed after such date under the Securities Exchange Act of 1934,
as amended (the "Exchange Act") which, upon filing, are incorporated by
reference therein, as required by paragraph (b) of Item 12 of Form S-3. As used
herein, the term
2.
"Incorporated Documents" means the documents which at the time are incorporated
by reference in the registration statement, the Registration Statement, any
Prepricing Prospectus, the Prospectus, or any amendment or supplement thereto.
2. Agreements to Sell and Purchase. Subject to such adjustments as you
-------------------------------
may determine in order to avoid fractional shares, the Company hereby agrees,
subject to all the terms and conditions set forth herein, to issue and sell to
each Underwriter and, upon the basis of the representations, warranties and
agreements of the Company and the Selling Stockholders herein contained and
subject to all the terms and conditions set forth herein, each Underwriter
agrees, severally and not jointly, to purchase from the Company, at a purchase
price of $_____ per Share (the "purchase price per share"), the number of Firm
Shares which bears the same proportion to the aggregate number of Firm Shares to
be issued and sold by the Company as the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule II hereto (or such number of
Firm Shares increased as set forth in Section 12 hereof) bears to the aggregate
number of Firm Shares to be sold by the Company and the Selling Stockholders.
Subject to such adjustments as you may determine in order to avoid
fractional shares, each Selling Stockholder agrees, subject to all the terms and
conditions set forth herein, to sell to each Underwriter and, upon the basis of
the representations, warranties and agreements of the Company and the Selling
Stockholders herein contained and subject to all the terms and conditions set
forth herein, each Underwriter, severally and not jointly, agrees to purchase
from each Selling Stockholder at the purchase price per share that number of
Firm Shares which bears the same proportion to the number of Firm Shares set
forth opposite the name of such Selling Stockholder in Schedule I hereto as the
number of Firm Shares set forth opposite the name of such Underwriter in
Schedule II hereto (or such number of Firm Shares increased as set forth in
Section 12 hereof) bears to the aggregate number of Firm Shares to be sold by
the Company and the Selling Stockholders.
The Company also agrees, subject to all the terms and conditions set
forth herein, to sell to the Underwriters, and, upon the basis of the
representations, warranties and agreements of the Company and the Selling
Stockholders herein contained and subject to all the terms and conditions set
forth herein, the Underwriters shall have the right to purchase from the
Company, at the purchase price per share, pursuant to an option (the
"over-allotment option") which may be exercised at any time and from time to
time prior to 9:00 P.M., New York City time, on the 30th day after the date of
the Prospectus (or, if such 30th day shall be a Saturday or Sunday or a holiday,
on the next business day thereafter when the New York Stock Exchange is open for
trading), up to an aggregate of 320,788 Additional Shares from the Company.
Additional Shares may be purchased only for the purpose of covering
over-allotments made in connection with the offering of the Firm Shares. The
number of Additional Shares which the Underwriters elect to purchase upon any
exercise of the over-allotment option shall be provided by the Company in
proportion to the respective maximum numbers of Additional Shares which
3.
the Company has agreed to sell. Upon any exercise of the over-allotment option,
each Underwriter, severally and not jointly, agrees to purchase from the Company
the number of Additional Shares (subject to such adjustments as you may
determine in order to avoid fractional shares) which bears the same proportion
to the number of Additional Shares to be sold by the Company as the number of
Firm Shares set forth opposite the name of such Underwriter in Schedule II
hereto (or such number of Firm Shares increased as set forth in Section 12
hereof) bears to the aggregate number of Firm Shares to be sold by the Company
and the Selling Stockholders.
Certificates in transferable form for the Shares which each of the Selling
Stockholders agrees to sell pursuant to this Agreement have been placed in
custody with ____________________________ (the "Custodian") for delivery under
this Agreement pursuant to a Custody Agreement and Power of Attorney (the
"Custody Agreement") executed by each of the Selling Stockholders appointing
_________________ and __________________________ as agents and attorneys-in-fact
(the "Attorneys-in-Fact"). Each Selling Stockholder agrees that (i) the
Shares represented by the certificates held in custody pursuant to the Custody
Agreement are subject to the interests of the Underwriters, the Company and each
other Selling Stockholder, (ii) the arrangements made by the Selling
Stockholders for such custody are, except as specifically provided in the
Custody Agreement, irrevocable, and (iii) the obligations of the Selling
Stockholders hereunder and under the Custody Agreement shall not be terminated
by any act of such Selling Stockholder or by operation of law, whether by the
death or incapacity of any Selling Stockholder or the occurrence of any other
event. If any Selling Stockholder shall die or be incapacitated or if any other
event shall occur before the delivery of the Shares hereunder, certificates for
the Shares of such Selling Stockholder shall be delivered to the Underwriters by
the Attorneys-in-Fact in accordance with the terms and conditions of this
Agreement and the Custody Agreement as if such death or incapacity or other
event had not occurred, regardless of whether or not the Attorneys-in-Fact or
any Underwriter shall have received notice of such death, incapacity or other
event. Each Attorney-in-Fact is authorized, on behalf of each of the Selling
Stockholders, to execute this Agreement and any other documents necessary or
desirable in connection with the sale of the Shares to be sold hereunder by such
Selling Stockholder, to make delivery of the certificates for such Shares, to
receive the proceeds of the sale of such Shares, to give receipts for such
proceeds, to pay therefrom any expenses to be borne by such Selling Stockholder
in connection with the sale and public offering of such Shares, to distribute
the balance thereof to such Selling Stockholder, and to take such other action
as may be necessary or desirable in connection with the transactions
contemplated by this Agreement. Each Attorney-in-Fact agrees to perform his
duties under the Custody Agreement.
3. Terms of Public Offering. The Sellers have been advised by you that
------------------------
the Underwriters propose to make a public offering of their respective portions
of the Shares as soon after the Registration Statement and this Agreement have
become effective as
4
in your judgment is advisable and initially to offer the Shares upon the terms
set forth in the Prospectus.
4. Delivery of the Shares and Payment Therefor. Delivery to the
-------------------------------------------
Underwriters of and payment for the Firm Shares shall be made at the office of
Xxxxx Xxxxxx Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, at 10:00 A.M., New
York City time, on __________, 1997 (the "Closing Date"). The place of
closing for the Firm Shares and the Closing Date may be varied by agreement
among you, the Company and the Attorneys-in-Fact.
Delivery to the Underwriters of and payment for any Additional Shares to be
purchased by the Underwriters shall be made at the aforementioned office of
Xxxxx Xxxxxx Inc. at such time on such date (the "Option Closing Date"), which
may be the same as the Closing Date but shall in no event be earlier than the
Closing Date nor earlier than two nor later than ten business days after the
giving of the notice hereinafter referred to, as shall be specified in a written
notice from you on behalf of the Underwriters to the Company and the Attorneys-
in-Fact of the Underwriters' determination to purchase a number, specified in
such notice, of Additional Shares. The place of closing for any Additional
Shares and the Option Closing Date for such Shares may be varied by agreement
among you, the Company and the Attorneys-in-Fact.
Certificates for the Firm Shares and for any Additional Shares to be
purchased hereunder shall be registered in such names and in such denominations
as you shall request prior to 9:30 A.M., New York City time, on the second
business day preceding the Closing Date or any Option Closing Date, as the case
may be. Such certificates shall be made available to you in New York City for
inspection and packaging not later than 9:30 A.M., New York City time, on the
business day next preceding the Closing Date or the Option Closing Date, as the
case may be. The certificates evidencing the Firm Shares and any Additional
Shares to be purchased hereunder shall be delivered to you on the Closing Date
or the Option Closing Date, as the case may be, against payment of the purchase
price therefor in immediately available funds.
5. Covenants of the Company. The Company agrees with the Several
------------------------
Underwriters as follows:
(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
5
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 Prepricing 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 Prepricing 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 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 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
Commission, at its own expense, an amendment or supplement which will correct
such statement or omission or an amendment or supplement which will effect such
compliance and will use its best efforts to cause the same to become effective
as soon as possible; and, in case any Underwriter is required to deliver a
prospectus after such nine-month period, the Company upon request, but at the
expense of such Underwriter, will promptly prepare such amendment or amendments
to the Registration Statement and such Prospectus or Prospectuses as may be
necessary to permit compliance with the requirements of Section 10(a)(3) of the
Act.
(d) As soon as practicable, but not later than 45 days after the end of
the first quarter ending after one year following the effective date of the
Registration Statement (as defined in Rule 158(c) of the Rules and Regulations)
the Company will
6
make generally available to its security holders an earnings statement (which
need not be audited) covering a period of 12 consecutive months beginning after
the effective date of the Registration Statement which will satisfy the
provisions of the last paragraph of Section 11(a) of the Act.
(e) During such period as a prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer, the Company, at
its expense, but only for the nine-month period referred to in Section 10(a)(3)
of the Act, will furnish to you and the Selling Stockholders or mail to your
order copies of the Registration Statement, the Prospectus, the Prepricing
Prospectus and all amendments and supplements to any such documents in each case
as soon as available and in such quantities as you and the Selling Stockholders
may request, for the purposes contemplated by the Act.
(f) During the period of five years hereafter, the Company will furnish
to the Representatives and, upon request of any Representative, 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,
stockholders' equity and cash flows for the year then ended and the opinion
thereon of the Company's independent public accountants; (ii) as soon as
practicable after the filing thereof, copies of each proxy statement, Annual
Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K
or other report filed by the Company with the Commission, the National
Association of Securities Dealers, Inc. (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.
(g) During the period of 90 days after the first date that any of the
Shares are released by you for sale to the public, without the prior written
consent of Xxxxx Xxxxxx Inc. (which consent may be withheld at the sole
discretion of Xxxxx Xxxxxx Inc.), the Company will not sell, contract to sell or
otherwise dispose of any Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock. The foregoing sentence shall not
apply to (A) shares of Common Stock issued by the Company upon the exercise of
options granted, or to be granted in the ordinary course, under stock option
plans of the Company or upon the exercise of outstanding warrants, all as
described in footnote (1) to the table under the caption "Capitalization" in the
Prepricing Prospectus, (B) shares of Common Stock purchased pursuant to the
Company's employee stock purchase plan or (C) a maximum aggregate of _______
shares of Common Stock issued by the Company in connection with the acquisition
of assets owned by another Company.
(h) The Company will apply the net proceeds of the sale of the Shares
sold by it substantially in accordance with its statements under the caption Use
of Proceeds in the Prospectus.
7
(i) 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.
(j) The Company will use its best efforts to maintain (i) the Common
Stock as a national market system security on the Nasdaq National Market or (ii)
the listing of the Common Stock on the New York Stock Exchange or the American
Stock Exchange.
(k) The Company will furnish to you, without charge (i) one copy of the
registration statement as originally filed with the Commission and of each
amendment thereto, including financial statements and all exhibits to the
registration statement, (ii) such number of conformed copies of the registration
statement as originally filed and of each amendment thereto, but without
exhibits, as you may request, (iii) such number of copies of the Incorporated
Documents, without exhibits, as you may request, and (iv) three copies of the
exhibits to the Incorporated Documents.
(l) Prior to the execution and delivery of this Agreement, the Company
has delivered to you, without charge, in such quantities as you have requested,
copies of each form of the Prepricing Prospectus. The Company consents to the
use, in accordance with the provisions of the Act and with the securities or
Blue Sky laws of the jurisdictions in which the Shares are offered by the
several Underwriters and by dealers, prior to the date of the Prospectus, of
each Prepricing Prospectus so furnished by the Company.
(m) Notwithstanding any other provisions hereof, if this Agreement
shall be terminated by you pursuant to Section 10, or if the sale to the
Underwriters of the Shares on the Closing Date is not consummated because of any
refusal, inability or failure on the part of the Company or the Selling
Stockholders to perform any agreement herein or to comply with any provision
hereof, the Company agrees to reimburse 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
Shares, including but not limited 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 5(m), Section 9 and Section 11 shall at all
times be effective and shall apply.
(n) Except as stated in this Agreement and in the Prepricing Prospectus
and Prospectus, the Company has not taken, nor will it take, directly or
indirectly, any action in violation of law designed to or that might reasonably
be expected to cause or
8
result in stabilization or manipulation of the price of the Common Stock to
facilitate the sale or resale of the Shares.
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.
6. Agreements of the Selling Stockholders. Each of the Selling
--------------------------------------
Stockholders severally agrees with the several Underwriters as follows:
(a) Such Selling Stockholder will cooperate to the extent necessary to
cause the registration statement or any post-effective amendment thereto to
become effective at the earliest possible time.
(b) Such Selling Stockholder will pay all federal and other taxes, if
any on the transfer or sale of the Shares being sold by the Selling Stockholder
to the Underwriters.
(c) Such Selling Stockholder will do or perform all things required to
be done or performed by the Selling Stockholder prior to the Closing Date to
satisfy all conditions precedent to the delivery of the Shares pursuant to this
Agreement.
(d) Such Selling Stockholder has executed or will execute a "lock-up"
letter as provided in Section 10(c)(vii).
(e) Except as stated in this Agreement and in the Prepricing Prospectus
and the Prospectus, such Selling Stockholder will not take, directly or
indirectly, any action in violation of law designed to or that might reasonably
be expected to cause or result in stabilization or manipulation of the price of
the Common Stock to facilitate the sale or resale of the Shares.
(f) Such Selling Stockholder will advise you promptly, and if requested
by you, will confirm such advice in writing, as expeditiously as possible, of
any change in the Company's condition (financial or other), business, prospects,
properties, net worth or results of operations or of any change in information
relating to such Selling Stockholder or the Company or any new information
relating to the Company or relating to any matter stated in the Prospectus or
any amendment or supplement thereto which comes to the attention of such Selling
Stockholder that suggests that any statement made in the Registration Statement
or the Prospectus (as then amended or supplemented, if amended or supplemented)
is or may be untrue in any material respect or that the Registration Statement
or Prospectus (as then amended or supplemented, if amended or supplemented)
omits or may omit to state a material fact or a fact necessary to be stated
therein in order to make the statements therein not misleading in any material
respect, or of the necessity to amend or supplement the Prospectus (as
9
then amended or supplemented, if amended or supplemented) in order to comply
with the Act or any other law; provided, however, that the foregoing shall not
apply to any change or new information which the Company has previously
communicated in writing to you.
7. Representations and Warranties of the Company and the Principal Selling
-----------------------------------------------------------------------
Stockholders. The Company and each of the Principal Selling Stockholders
------------
represents and warrants to each Underwriter that:
(a) A registration statement on Form S-3 (File No. 333-40305) with
respect to the Shares has been prepared by the Company in conformity with the
requirements of the Act, and the Rules and Regulations of 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 one copy of such registration statement and amendments,
together with one copy of each exhibit filed therewith. Conformed copies of such
registration statement and amendments (but without exhibits) and of the related
Prepricing 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 Prepricing Prospectus, if a final prospectus is not used, shall include all
Rule 430A Information and, except to the extent that you shall agree in writing
to a modification, shall be in all substantive respects in the form furnished to
you prior to the date and time that this Agreement was executed and delivered by
the parties hereto, or, to the extent not completed at such date and time, shall
contain only such specific additional information and other changes (beyond that
contained in the latest Prepricing Prospectus as the Company shall have
previously advised you in writing would be included or made therein.
(b) The Company and the transactions contemplated by this Agreement
meet the requirements for using Form S-3 under the Act. The Commission has not
issued any order preventing or suspending the use of any Prepricing Prospectus,
and each Prepricing 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
10
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 7(b) shall be applicable
to information contained in or omitted from any Prepricing Prospectus, the
Registration Statement, the Prospectus or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of any Underwriter, directly or through the
Representatives, specifically for use in the preparation thereof.
(c) The Incorporated Documents heretofore filed, when they were filed
(or, if any amendment with respect to any such document was filed, when such
amendment was filed), conformed in all material respects with the requirements
of the Exchange Act and the rules and regulations thereunder, any further
Incorporated Documents so filed will, when they are filed, conform in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder; no such document when it was filed (or, if an amendment
with respect to any such document was filed, when such amendment was filed),
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading; and no such further document, when it is filed, will
contain an untrue statement of a material fact or will omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading.
(d) The Company does not own or control, directly or indirectly, any
corporation, association or other entity other than the subsidiaries listed in
Exhibit 21.1 to the Registration Statement. The Company and each of its
subsidiaries have been duly incorporated and are validly existing as
corporations in good standing under the laws of their respective jurisdictions
of incorporation, with full power and authority (corporate and other) to own and
lease their properties and conduct their respective businesses as described in
the Prospectus; the Company owns all of the outstanding capital stock of its
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 taken as a
whole, 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 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, to
the best of the Company's and each of the Principal Selling
11
Stockholder's knowledge, 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.
(e) 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, to the best of the Company's and each of the
Principal Selling Stockholder's knowledge have been issued in material
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 of each
subsidiary of the Company have been duly authorized and validly issued and are
fully paid and nonassessable. Except as disclosed in or contemplated by the
Prospectus and the financial statements of the Company, and the related notes
thereto, included in the Prospectus, neither the Company nor any subsidiary has
outstanding any options to purchase, or any preemptive rights or other rights to
subscribe for or to purchase, any securities or obligations convertible into, or
any contracts or commitments to issue or sell, shares of its capital stock or
any such options, rights, convertible securities or obligations. 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 or incorporated by reference therein accurately and
fairly presents the information with respect to such plans, arrangements,
options and rights.
(f) The 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 Shares by the Company pursuant to this Agreement. No
stockholder of the Company has any right which has not been waived to require
the Company to register the sale of any shares owned by such stockholder under
the Act in the public offering contemplated by this Agreement. No further
approval or authority of the stockholders or the Board of Directors of the
Company will be required for the transfer and sale of the Shares to be sold by
the Selling Stockholders or the issuance and sale of the Shares to be sold by
the Company as contemplated herein.
(g) The Company has full legal right, power and authority to enter into
this Agreement and perform the transactions contemplated hereby. This Agreement
has been duly authorized, executed and delivered by the Company and constitutes
a valid and binding obligation of the Company in accordance with its terms. The
making and performance of this Agreement by the Company and the consummation of
the transactions herein contemplated will not violate any provisions of the
certificate of incorporation or bylaws, or other organizational documents, of
the Company or any of
12
its subsidiaries, and will not conflict with, result in the breach or violation
of, or constitute, either by itself or upon notice or the passage of time or
both, a default under any agreement, mortgage, deed of trust, lease, franchise,
license, indenture, permit or other instrument to which the Company or any of
its subsidiaries is a party or by which the Company or any of its subsidiaries
or any of its respective properties may be bound or affected, any statute or any
authorization, judgment, decree, order, rule or regulation of any court or any
regulatory body, administrative agency or other governmental body applicable to
the Company or any of its subsidiaries or any of their respective properties,
which breach, violation or default would result in a material adverse effect as
to the Company and its subsidiaries taken as a whole. No consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body is required for the execution and delivery of
this Agreement or the consummation of the transactions contemplated by this
Agreement, except for compliance with the Act, the Blue Sky laws applicable to
the public offering of the Shares by the several Underwriters and the clearance
of such offering with the NASD.
(h) Price Waterhouse LLP, who have expressed their opinion with respect
to the financial statements and schedules filed with the Commission as a part of
the Registration Statement and included in the Prospectus and in the
Registration Statement, are independent accountants as required by the Act and
the Rules and Regulations.
(i) The financial statements of the Company incorporated by reference
into the Registration Statement and the Prospectus from the Company's Annual
Report on Form 10-K for the year ended December 28, 1996; the consolidated
financial statements of Alfalfa's, Inc. as of June 30, 1996 and for the year
then ended and the combined financial statements of New Frontiers as of December
31, 1995 and 1994 and for each of the three years in the period ended December
31, 1995 incorporated by reference into the Registration Statement and the
Prospectus from pages F-17 through F-30 and pages F-36 through F-45,
respectively, of the Company's Prospectus dated October 22, 1996; and the
consolidated financial statements of Alfalfa's, Inc. and its subsidiaries as of
June 25, 1995 and for the years ended June 25, 1995 and June 26, 1994
incorporated by reference into the Registration Statement and the Prospectus
from the Registration Statement No. 333-11261 on Form S-1 of the Company,
present fairly the financial position of Wild Oats Markets, Inc. as of the
respective dates of such financial statements and schedules, and present fairly
the results of operations and changes in financial position of Wild Oats
Markets, Inc. 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
Price Waterhouse LLP or Deloitte & Touche LLP, as applicable. The selected
financial data set forth in the Prospectus under the captions "Capitalization"
and "Selected Financial and Operating Data" fairly present the information set
forth therein on the basis stated in the Registration Statement. The pro forma
financial information included in the Prospectus present fairly the information
13
shown therein, have been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial statements, have been properly
compiled on the pro forma basis described therein, and, in the opinion of the
Company, the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions or
circumstances referred to therein. No other financial statements or schedules
of the Company or any other entity are required to be included in, or
incorporated into, the Registration Statement pursuant to any requirement of the
Act or any Rules and Regulations, including Rule 3-05 of Regulation S-X.
(j) Except as disclosed in the Prospectus, and except as to violations,
breaches and defaults which individually or in the aggregate would not be
material to the Company and its subsidiaries taken as a whole, neither the
Company nor any of its subsidiaries is in violation or default of any provision
of its certificate of incorporation or bylaws, or other organizational
documents, or is in breach of or default with respect to any provision of any
agreement, judgment, decree, order, mortgage, deed of trust, lease, franchise,
license, indenture, permit or other instrument to which it is a party or by
which it or any of its properties are bound; and there does not exist any state
of facts which constitutes an event of default on the part of the Company or any
such subsidiary as defined in such documents or which, with notice or lapse of
time or both, would constitute such an event of default.
(k) There are no contracts or other documents required to be described
in the Registration Statement or to be filed as exhibits to the Registration
Statement by the Act or by the Rules and Regulations which have not been
described or filed as required. The contracts required to be described in the
Registration Statement are in full force and effect on the date hereof; and
neither the Company nor any of its subsidiaries, nor to the best of the
Company's and each of the Principal Selling Stockholder's knowledge, any other
party is in material breach of or default under any of such contracts.
(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 and each of the Principal Selling Stockholder'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 and 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
14
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), subject to no
lien, mortgage, pledge, charge or encumbrance of any kind except (i) those, if
any, reflected in such financial statements (or elsewhere in the Prospectus), or
(ii) those which are not material in amount and do not adversely affect the use
made and proposed to be made of such property by the Company and its
subsidiaries. The Company or the applicable subsidiary holds its leased
properties under valid and binding leases, with such exceptions as are not
materially significant in relation to the business of the Company. Except as
disclosed in the Prospectus, the Company owns or leases all such properties as
are necessary to its operations as now conducted 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 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 and its subsidiaries; (ii) the Company and its subsidiaries have not
sustained any material loss or interference with their respective businesses or
properties from fire, flood, windstorm, accident or other calamity, whether or
not covered by insurance; (iii) the Company has not paid or declared any
dividends or other distributions with respect to its capital stock and the
Company and its subsidiaries are not in default in the payment of principal or
interest on any outstanding debt obligations; (iv) there has not been any change
in the capital stock (other than upon the sale of the Shares hereunder and upon
the exercise of options or 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 and its subsidiaries.
(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; the
expiration of any trademarks, trade names, patent rights, mask works,
copyrights, licenses, approvals or governmental authorizations would not have a
material adverse effect on the condition (financial or otherwise), business,
results of operations or prospects of the Company or its subsidiaries; 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
15
against the Company or its subsidiaries regarding trademark, trade name, patent,
mask work, copyright, license, trade secret or other infringement which could
have a material adverse effect on the condition (financial or otherwise),
business, results of operations or prospects of the Company and its subsidiaries
taken as a whole.
(p) The Company has not been advised, and has no reason to believe,
that either it or any of its subsidiaries is not conducting business in
compliance with all applicable laws, rules and regulations of the jurisdictions
in which it is conducting business, including, without limitation, all
applicable local, state and federal environmental laws and regulations; except
where failure to be so in compliance would not materially adversely affect the
condition (financial or otherwise), business, results of operations or prospects
of the Company and its subsidiaries taken as a whole.
(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
or its subsidiaries which could materially and adversely affect the business,
operations or properties of the Company and its subsidiaries taken as a whole.
(r) The Company is not 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 Closing Date any offering material in connection with the offering and
sale of the Shares other than the Prospectus, the Registration Statement and the
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 its business,
including, but not limited to, insurance covering real and personal property
owned or leased by the Company and its subsidiaries against theft, damage,
destruction, acts of vandalism and all other risks customarily insured against,
all of which insurance is in full force and effect.
(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 of
any jurisdiction thereof.
(v) The Company has not taken and will not take, directly or
indirectly, any action in violation of law designed to or that might be
reasonably expected to cause
16
or result in stabilization or manipulation of the price of the Common Stock to
facilitate the sale or resale of the Shares.
(w) The Common Stock has been approved for quotation as a national
market system security on the Nasdaq National Market, and the Company has taken
the actions required by the published rules of the Nasdaq Stock Market to
qualify the Shares for inclusion in the Nasdaq National Market.
8. Representations and Warranties of the Selling Stockholders. Each
----------------------------------------------------------
Selling Stockholder severally represents and warrants to each Underwriter that:
(a) Such Selling Stockholder has, and on the Closing Date will
have, good and marketable title to the Shares proposed to be sold by such
Selling Stockholder hereunder on the Closing Date and full right, power and
authority to enter into this Agreement and to sell, assign, transfer and deliver
such Shares hereunder, free and clear of all voting trust arrangements, liens,
encumbrances, equities, security interests, restrictions and claims whatsoever;
and upon delivery of and payment for such Shares hereunder, the Underwriters
will acquire good and marketable title thereto, free and clear of all liens,
encumbrances, equities, claims, restrictions, security interests, voting trusts
or other defects of title whatsoever.
(b) Such Selling Stockholder has executed and delivered a Custody
Agreement and in connection herewith such Selling Stockholder further
represents, warrants and agrees that such Selling Stockholder has deposited in
custody, under the Custody Agreement with the Agent named therein (the "Agent"),
as custodian, certificates in negotiable form for the Shares to be sold
hereunder by such Selling Stockholder, for the purpose of further delivery
pursuant to this Agreement. Such Selling Stockholder agrees that the Shares to
be sold by such Selling Stockholder on deposit with the Agent are subject to the
interests of the Company and the Underwriters, that the arrangements made for
such custody are to that extent irrevocable, and that the obligations of such
Selling Stockholder hereunder shall not be terminated, except as provided in
this Agreement or in the Custody Agreement, by any act of such Selling
Stockholder, by operation of law, by the death or incapacity of such Selling
Stockholder or by the occurrence of any other event. If the Selling Stockholder
should die or become incapacitated, or if any other event should occur, before
the delivery of the Shares hereunder, the documents evidencing Shares then on
deposit with the Agent shall be delivered by the Agent in accordance with the
terms and conditions of this Agreement as if such death, incapacity or other
event had not occurred, regardless of whether or not the Agent shall have
received notice thereof. This Agreement and the Custody Agreement have been duly
executed and delivered by or on behalf of such Selling Stockholder and the form
of such Custody Agreement has been delivered to you.
(c) The performance of this Agreement and the Custody Agreement and
the consummation of the transactions contemplated hereby and by the Custody
17
Agreement will not result in a breach or violation by such Selling Stockholder
of any of the terms or provisions of, or constitute a default by such Selling
Stockholder under, any indenture, mortgage, deed of trust, trust (constructive
or other), loan agreement, lease, franchise, license or other agreement or
instrument to which such Selling Stockholder is a party or by which such Selling
Stockholder or any of its properties is bound, any statute, or any judgment,
decree, order, rule or regulation of any court or governmental agency or body
applicable to such Selling Stockholder or any of its properties.
(d) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action in violation of law designed to or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
(e) Each Prepricing Prospectus and the Prospectus, insofar as it
has related to such Selling Stockholder, has conformed in all material respects
to the requirements of the Act and the Rules and Regulations and has not
included any untrue statement of a material fact or omitted to state a material
fact necessary to make the statements therein not misleading in light of the
circumstances under which they were made; and neither the Registration Statement
nor the Prospectus, nor any amendment or supplement thereto, as it relates to
such Selling Stockholder, will include any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading.
Each of the Other Selling Stockholders severally represents and warrants
to, and agrees with, the several Underwriters that it is not aware that any of
the representations and warranties set forth in Section 7 above is untrue or
inaccurate in any material respect.
9. Indemnification and Contribution.
--------------------------------
(a) The Company and each of the Principal Selling Stockholders,
jointly and severally, agree to indemnify and hold harmless each of you and each
other Underwriter and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act from
and against any and all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation) arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in any
Prepricing Prospectus or in the Registration Statement or the Prospectus or in
any amendment or supplement thereto, or arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses arise
out of or are based upon any untrue statement or omission or alleged untrue
statement or omission which has been made therein or omitted therefrom in
reliance upon and in conformity with the information furnished to the Company
pursuant to Section 14 hereof;
18
provided, however, that the indemnification contained in this paragraph (a) with
respect to any Prepricing Prospectus shall not inure to the benefit of any
Underwriter (or to the benefit of any person controlling such Underwriter) on
account of any such loss, claim, damage, liability or expense arising from the
sale of the Shares by such Underwriter to any person if a copy of the Prospectus
shall not have been delivered or sent to such person within the time required by
the Act and the regulations thereunder, and the untrue statement or alleged
untrue statement or omission or alleged omission of a material fact contained in
such Prepricing Prospectus was corrected in the Prospectus, provided that the
Company has delivered the Prospectus to the several Underwriters in requisite
quantity on a timely basis to permit such delivery or sending. The foregoing
indemnity agreement shall be in addition to any liability which the Company or
any Principal Selling Stockholder may otherwise have. The Company and the
Principal Selling Stockholders may agree, as among themselves and without
limiting the rights of the Underwriters under this Agreement, as to their
respective amounts of such liability for which they each shall be responsible.
In no event shall the liability of any Principal Selling Stockholder for
indemnification under this Section 9(a) or for breach of representations and
warranties under this Agreement exceed the proceeds received by such Principal
Selling Stockholder from the Underwriters in the offering.
(b) If any action, suit or proceeding shall be brought against any
Underwriter or any person controlling any Underwriter in respect of which
indemnity may be sought against the Company or any Selling Stockholder, such
Underwriter or such controlling person shall promptly notify the parties against
whom indemnification is being sought (the "indemnifying parties"), and such
indemnifying parties shall assume the defense thereof, including the employment
of counsel and payment of all fees and expenses. Such Underwriter or any such
controlling person shall have the right to employ separate counsel in any such
action, suit or proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such Underwriter or
such controlling person unless (i) the indemnifying parties have agreed in
writing to pay such fees and expenses, (ii) the indemnifying parties have failed
to assume the defense and employ counsel, or (iii) the named parties to any such
action, suit or proceeding (including any impleaded parties) include both such
Underwriter or such controlling person and the indemnifying parties and such
Underwriter or such controlling person shall have been advised by its counsel
that representation of such indemnified party and any indemnifying party by the
same counsel would be inappropriate under applicable standards of professional
conduct (whether or not such representation by the same counsel has been
proposed) due to actual or potential differing interests between them (in which
case the indemnifying party shall not have the right to assume the defense of
such action, suit or proceeding on behalf of such Underwriter or such
controlling person). It is understood, however, that the indemnifying parties
shall, in connection with any one such action, suit or proceeding or separate
but substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys at any time for all such
19
Underwriters and controlling persons when entitled under the immediately
preceding sentence, which firm shall be designated in writing by Xxxxx Xxxxxx
Inc., and that all such fees and expenses shall be reimbursed as they are
incurred. To the extent that any such reimbursement is held to have been
improper by a court of competent jurisdiction, each Underwriter shall promptly
return such reimbursement to the Company and the Principal Selling Stockholders
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 _____________. The indemnifying
parties shall not be liable for any settlement of any such action, suit or
proceeding effected without their written consent, but if settled with such
written consent, or if there be a final judgment for the plaintiff in any such
action, suit or proceeding, the indemnifying parties agree to indemnify and hold
harmless any Underwriter, to the extent provided in the preceding paragraph, and
any such controlling person from and against any loss, claim, damage, liability
or expense by reason of such settlement or judgment.
(c) Each Other Selling Stockholder agrees, severally and not
jointly, to indemnify and hold harmless each of you and each Other Underwriter
and each person, if any, who controls any Underwriter within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, the Company, its
directors, its officers who sign the Registration Statement, and any person who
controls the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act to the same extent as the foregoing indemnity from the
Company and the Principal Selling Stockholders to each Underwriter, but only
with respect to the information furnished in writing by or on behalf of such
Other Selling Stockholder expressly for use in the Registration Statement, the
Prospectus or any Prepricing Prospectus, or any amendment or supplement thereto.
If any action, suit or proceeding shall be brought against any Underwriter, any
such controlling person of any Underwriter, the Company, any of its directors,
any such officer, or any such controlling person of the Company, based on the
Registration Statement, the Prospectus or any Prepricing Prospectus or any
amendment or supplement thereto, and in respect of which indemnity may be sought
against any Other Selling Stockholder pursuant to this paragraph (c), such Other
Selling Stockholder shall have the rights and duties given to the Company by
paragraph (b) above (except that if the Company shall have assumed the defense
thereof such Other Selling Stockholder shall not be required to do so, but may
employ separate counsel therein and participate in the defense thereof, but the
fees and expenses of such counsel shall be at such Other Selling Stockholder's
expense), and each Underwriter, each such controlling person of any Underwriter,
the Company, its directors, any such officer, and any such controlling person of
the Company shall have the rights and duties given to the Underwriters by
paragraph (b) above. The foregoing indemnity agreement shall be in addition to
any liability which any Selling Stockholder may otherwise have. In addition, in
no event shall the liability of any Other Selling Stockholder for
indemnification under this Section 9(c) or for breach of representation and
warranties under this Agreement exceed the
20
proceeds received by such Other Selling Stockholder from the Underwriters in the
offering.
(d) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement, each Selling Stockholder, and any person who
controls the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, to the same extent as the foregoing indemnities from
the Company and the Selling Stockholders to each Underwriter, but only with
respect to information relating to such Underwriter furnished pursuant to
Section 14 hereof. If any action, suit or proceeding shall be brought against
the Company, any of its directors, any such officer, any Selling Stockholder, or
any such controlling person based on the Registration Statement, the Prospectus
or any Prepricing Prospectus, or any amendment or supplement thereto, and in
respect of which indemnity may be sought against any Underwriter pursuant to
this paragraph (d), such Underwriter shall have the rights and duties given to
the Company by paragraph (b) above (except that if the Company shall have
assumed the defense thereof such Underwriter shall not be required to do so, but
may employ separate counsel therein and participate in the defense thereof, but
the fees and expenses of such counsel shall be at such Underwriter's expense),
and the Company, its directors, any such officer, the Selling Stockholders, and
any such controlling person shall have the rights and duties given to the
Underwriters by paragraph (b) above. The foregoing indemnity agreement shall be
in addition to any liability which any Underwriter may otherwise have.
(e) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under paragraphs (a),(c) or (d) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Stockholders on the one hand and the Underwriters on the
other hand from the offering of the 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 and the Selling Stockholders on
the one hand and the Underwriters on the other in connection with the statements
or omissions that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Selling Stockholders on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Company and the Selling Stockholders bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus; provided that, in the
event that the Underwriters shall have purchased any Additional Shares
hereunder, any
21
determination of the relative benefits received by the Company, the Selling
Stockholders or the Underwriters from the offering of the Shares shall include
the net proceeds (before deducting expenses) received by the Company and the
Selling Stockholders, and the underwriting discounts and commissions received by
the Underwriters, from the sale of such Additional Shares, in each case computed
on the basis of the respective amounts set forth in the notes to the table on
the cover page of the Prospectus. The relative fault of the Company and the
Selling Stockholders on the one hand and the Underwriters on the other hand
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or the
Selling Stockholders on the one hand or by the Underwriters on the other hand
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(f) The Company, the Selling Stockholders and the Underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 9 were determined by a pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations referred
to in paragraph (e) above. The amount paid or payable by an indemnified party as
a result of the losses, claims, damages, liabilities and expenses referred to in
paragraph (e) above shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating any claim or defending any such action,
suit or proceeding. Notwithstanding the provisions of this Section 9, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price of the Shares underwritten by it and distributed to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 9 are several in proportion to the respective numbers of Firm Shares set
forth opposite their names in Schedule II hereto (or such numbers of Firm Shares
increased as set forth in Section 12 hereof) and not joint.
(g) No indemnifying party shall, without the prior written consent
of the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such action, suit or proceeding.
(h) Any losses, claims, damages, liabilities or expenses for which
an indemnified party is entitled to indemnification or contribution under this
Section 9 shall
22
be paid by the indemnifying party to the indemnified party as such losses,
claims, damages, liabilities or expenses are incurred. To the extent that any
such indemnification is held to have been improper by a court of competent
jurisdiction, each indemnified party shall promptly return such indemnified
amounts to the indemnifying party 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
_____________. The indemnity and contribution agreements contained in this
Section 9 and the representations and warranties of the Company and the Selling
Stockholders set forth in this Agreement shall remain operative and in full
force and effect, regardless of (i) any investigation made by or on behalf of
any Underwriter or any person controlling any Underwriter, the Company, its
directors or officers or the Selling Stockholders or any person controlling the
Company, (ii) acceptance of any Shares and payment therefor hereunder, and (iii)
any termination of this Agreement. A successor to any Underwriter or any person
controlling any Underwriter, or to the Company, its directors or officers, any
person controlling the Company or any Selling Stockholder, shall be entitled to
the benefits of the indemnity, contribution and reimbursement agreements
contained in this Section 9.
10. Conditions of the Obligations of the Underwriters. The obligations
-------------------------------------------------
of the several Underwriters to purchase and pay for the Firm Shares on the
Closing Date and the Additional Shares on the Option Closing Date shall be
subject to the accuracy of the representations and warranties on the part of the
Company and the Selling Stockholders herein set forth as of the date hereof and
as of the Closing Date or the Option Closing Date, as the case may be, to the
accuracy of the statements of Company's officers and the Selling Stockholders
made pursuant to the provisions hereof, to the performance by the Company and
the Selling Stockholders of their respective obligations hereunder, and to the
following additional conditions:
(a) The Registration Statement shall have become effective not
later than 5:00 P.M. (or, in the case of a registration statement filed pursuant
to Rule 462(b) of the Rules and Regulations relating to the Shares, not later
than 10:00 P.M.), Washington, D.C. Time, on the date of this Agreement, or at
such later time as shall have been consented to by you; if the filing of the
Prospectus, or any supplement thereto, is required pursuant to Rule 424(b) of
the Rules and Regulations, the Prospectus shall have been filed in the manner
and within the time period required by Rule 424(b) of the Rules and Regulations;
and prior to such Closing Date, no stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or shall be pending or, to the knowledge of
the Company, the Selling Stockholders or you, shall be contemplated by the
Commission; and any request of the Commission for inclusion of additional
information in the Registration Statement, or otherwise, shall have been
complied with to your satisfaction.
23
(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 been any change in the capital stock other than pursuant to
the exercise of outstanding options or 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
and its subsidiaries, (iii) no loss or damage (whether or not insured) to the
property of the Company or any of its subsidiaries shall have been sustained
which materially and adversely affects the condition (financial or otherwise),
business, results of operations or prospects of the Company and its
subsidiaries, (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 except as disclosed
in the Prospectus 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 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 Holme Xxxxxxx & Xxxx LLP, counsel for the
Company and the Selling Stockholders, addressed to the Underwriters and dated
the Closing Date, or the Option 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 taken as a whole, and has full corporate
power and authority to own its properties and conduct its business as
described in the Registration Statement;
(2) The authorized, issued and outstanding capital
stock of the Company is as set forth under the caption "Capitalization" in
the Prospectus as of the date set forth therein and conforms as to legal
matters in all
24
material respects to the description thereof incorporated by reference into
the Company's Registration Statement on Form 8-A (File no. 00-21577) (the
"Form 8-A"); all necessary and proper corporate proceedings have been
taken in order to authorize validly such authorized Stock; all outstanding
shares of Capital Stock (including the Firm Shares and any Additional
Shares) have been duly and validly issued, are fully paid and
nonassessable, were not issued in violation of or to the best of such
counsel's knowledge, subject to any preemptive rights or other rights to
subscribe for or purchase any securities and conform to the description
thereof incorporated by reference into the Form 8-A; without limiting the
foregoing, there are no preemptive or to the best of such counsel's
knowledge, other rights to subscribe for or purchase any of the Shares to
be sold by the Company hereunder;
(3) All of the issued and outstanding shares of capital
stock of the Company's subsidiaries have been duly and validly authorized
and issued, are fully paid and nonassessable and 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;
(4) The certificate evidencing the Shares of the
Company incorporated by reference as an exhibit to the Registration
Statement is in due and proper form under Delaware law, and when duly
countersigned by the Company's transfer agent and registrar, and delivered
to you or upon your order against payment of the agreed consideration
therefor in accordance with the provisions of this Agreement, the Shares
represented thereby will be duly authorized and validly issued, fully paid
and nonassessable, will not have been issued in violation of or subject to
any preemptive rights or to the best of such counsel's knowledge, other
rights to subscribe for or purchase securities and will conform in all
respects to the description thereof incorporated by reference into the Form
8-A;
(5) Except as disclosed in or specifically contemplated
by the Prospectus, to the best of such counsel's knowledge, there are no
outstanding options, warrants or other rights calling for the issuance of,
and no commitments, plans or arrangements to issue, any shares of capital
stock of the Company or any security convertible into or exchangeable for
capital stock of the Company;
(6) (a) The Registration Statement has become
effective under the Act, and, to the best of such counsel's knowledge, no
stop order proceeding 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
threatened by the Commission; any required filing of the Prospectus and any
supplement thereto pursuant to Rule
25
424(b) of the Rules and Regulations has been made in the manner and within
the time period required by such Rule 424(b);
(b) The Registration Statement, the Prospectus and each
amendment or supplement thereto and the Incorporated Documents (except for
the financial statements and schedules and financial and statistical data
included therein as to which such counsel need express no opinion) comply
as to form in all material respects with the requirements of the Act and
the Rules and Regulations or the Exchange Act, as the case may be;
(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 by the Act and the Rules and Regulations; 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 which are required to be described in the Prospectus
which are not described as required by the Act and the Rules and
Regulations.
(7) The Company has full corporate right, power and authority to
enter into this Agreement and to sell and deliver the Shares to be sold by
it to the several Underwriters; this Agreement has been duly and validly
authorized by all necessary corporate action by the Company, has been duly
and validly executed and delivered by and on behalf of the Company, and is
a valid and binding agreement of the Company 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 or agency
is required for the execution and delivery of this Agreement by the Company
or the consummation of the transactions contemplated by this Agreement,
except such as have been obtained and are in full force and effect under
the Act and such as may be required under applicable Blue Sky laws in
connection with the purchase and distribution of the Shares by the
Underwriters and the clearance of such offering with the NASD;
(8) 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 such execution,
performance or consummation or upon notice or the passage of time or both,
a default under, any
26.
agreement, mortgage, deed of trust, lease, franchise, license, indenture,
permit or other instrument known to such counsel which is incorporated by
reference as an exhibit to the Registration Statement and to which the
Company or any of its subsidiaries is a party or by which the Company or
any of its subsidiaries or any of its or their property may be bound or
affected which is material to the Company and its subsidiaries taken as a
whole, or violate any of the provisions of the certificate of incorporation
or bylaws, of the Company or any of its subsidiaries or, to the best of
such counsel's knowledge, 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 its or their
property;
(9) Neither the Company nor any subsidiary is in violation of its
certificate of incorporation or bylaws, 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 known to such counsel to which the Company or
any such subsidiary is a party or by which it or any of its properties may
be bound or affected, except where such default would not materially
adversely affect the Company and its subsidiaries taken as a whole; 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;
(10) 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;
(11) To the best of such counsel's knowledge: this Agreement and
the Custody Agreement have been duly authorized, executed and delivered by
or on behalf of each of the Selling Stockholders; has been
------------
duly and validly authorized to act as the custodian of the Shares to be
sold by each such Selling Stockholder in accordance with the terms and
provisions of the Custody Agreement; and the performance of this Agreement
and the Custody Agreement and the consummation of the transactions herein
contemplated by the Selling Stockholders will not result in a breach of, or
constitute a default under, any indenture, mortgage, deed of trust, trust
(constructive or other), loan agreement, lease, franchise, license or other
agreement or instrument to which any of the Selling Stockholders is a party
or by which any of the Selling Stockholders or any of their properties may
be bound, or violate any statute, judgment, decree, order, rule or
regulation known to such counsel of any court or governmental body having
jurisdiction over any of the Selling Stockholders or any
27.
of their properties; and, no approval, authorization, order or consent of
any court, regulatory body, administrative agency or other governmental
body is required for the execution and delivery of this Agreement or the
Custody Agreement or the consummation by the Selling Stockholders of the
transactions contemplated by this Agreement, except such as have been
obtained and are in full force and effect under the Act and such as may be
required under the rules of the NASD and applicable Blue Sky laws;
(12) To the best of such counsel's knowledge, each of the Selling
Stockholders has good and marketable title to such Shares so sold, free and
clear of all liens, encumbrances, equities, claims, restrictions, security
interests, voting trusts, or other defects of title whatsoever, has been
transferred to the Underwriters (whom counsel may assume to be bona fide
purchasers) (assuming payment in full therefor by such Underwriters) who
have purchased such Shares hereunder; and
(13) To the best of such counsel's knowledge, this Agreement and
the Custody Agreement are valid and binding agreements of each of the
Selling Stockholders in accordance with their terms except as
enforceability may be limited by general equitable principles, bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors'
rights generally and except with respect to those provisions relating to
indemnities or contributions for liabilities under the Act, as to which no
opinion need be expressed.
(14) No transfer taxes are required to be paid in connection with
the sale and delivery of the Shares to the Underwriters hereunder.
In rendering such opinion, such counsel may rely (i) as to the matters set
forth in paragraphs (11), (12) and (13), on opinions of other counsel retained
by the Selling Stockholders, (ii) as to matters of local law, on opinions of
local counsel, and (iii) as to matters of fact, on certificates of the Selling
Stockholders and of officers of the Company and of governmental officials, in
which case their opinion is to state that they are so doing and their belief
that the Underwriters are justified in relying on such opinions or certificates
and copies of said opinions are to be attached to the opinion. 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
the Registration Statement or the Prospectus, or any such amendment or
supplement, 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.
(ii) Such opinion or opinions of Xxxxxxx, Phleger & Xxxxxxxx LLP,
counsel for the Underwriters, dated the Closing Date or the Option Closing Date,
as the case may be, with respect to the incorporation of the Company, the
sufficiency of all
28.
corporate proceedings and other legal matters relating to this Agreement, the
validity of the Shares, the Registration Statement and the Prospectus and other
related matters as you may reasonably require, and the Company and the Selling
Stockholders shall have furnished to such counsel such documents and shall have
exhibited to them such papers and records as they may reasonably request for the
purpose of enabling them to pass upon such matters. In connection with such
opinions, such counsel may rely on representations or certificates of officers
of the Company and governmental officials.
(iii) A certificate of the Company executed by the Chairman of the
Board, the Chief Executive Officer or President and the chief financial or
accounting officer of the Company, dated the Closing Date or the Option Closing
Date, as the case may be, to the effect that:
(1) The representations and warranties of the Company set forth
in Section 7 of this Agreement are true and correct as of the date of this
Agreement and as of the Closing Date or the Option 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 Prepricing Prospectus filed as
a part of the Registration Statement or any amendment thereto; no stop
order suspending the effectiveness of the Registration Statement has been
issued; and to the best of the knowledge of the respective signers, no
proceedings for that purpose have been instituted or are pending or
contemplated under the Act;
(3) Each of the respective signers of the certificate has
carefully examined the Registration Statement and the Prospectus; in such
officers' opinion and to the best of such officers' 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;
29.
(5) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, and except as disclosed
in or contemplated by the Prospectus, there has not been any material
adverse change or a development involving a material adverse change in the
condition (financial or otherwise), business, properties, results of
operations, management or prospects of the Company and its subsidiaries;
and, except as disclosed in or contemplated by the Prospectus, no legal or
governmental action, suit or proceeding is pending or threatened against
the Company or any of its subsidiaries which is material to the Company and
its subsidiaries taken as a whole, 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
stockholders of record on a date prior to the Closing Date or Option
Closing Date; and
(6) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus and except as disclosed in
or contemplated by the Prospectus, the Company and its subsidiaries have
not sustained a material loss or damage by strike, fire, flood, windstorm,
accident or other calamity (whether or not insured).
(iv) On the Closing Date or the Option Closing Date, as the case may
be, a certificate, dated such Closing Date and addressed to you, signed by or on
behalf of each of the Selling Stockholders to the effect that the
representations and warranties of such Selling Stockholder in this Agreement are
true and correct, as if made at and as of the Closing Date or the Option Closing
Date, as the case may be, and such Selling Stockholder has complied with all the
agreements and satisfied all the conditions on his or her part to be performed
or satisfied prior to the Closing Date or the Option Closing Date, as the case
may be.
(v) On the date before this Agreement is executed and also on the
Closing Date and the Option Closing Date a letter addressed to you, as
Representatives of the Underwriters, from Price Waterhouse LLP, independent
accountants, the first one to be dated the day before the date of this
Agreement, the second one to be dated the Closing Date and the third one (in the
event of the exercising of the Underwriters' over-allotment option in part or in
full), to be dated the Option Closing Date, in form and substance satisfactory
to you.
30.
(vi) On or before the Closing Date, letters from each of the Selling
Stockholders, each holder of five percent (5%) or more of the Company's Common
Stock and each director and officer of the Company, in form and substance
satisfactory to you, confirming that for a period of 90 days after the first
date that any of the Shares are released by you for sale to the public, such
person will not directly or indirectly offer to sell, pledge, sell or contract
to sell or otherwise dispose of any shares of Common Stock or any right to
acquire such shares or securities convertible into or exchangeable for any
shares of Common Stock without the prior written consent of Xxxxx Xxxxxx Inc.,
which consent may be withheld at the sole discretion of Xxxxx Xxxxxx Inc [to be
conformed to final lockup].
(vii) The Company shall have taken the actions required by the
published rules of the Nasdaq Stock Market to qualify the Shares for inclusion
in the Nasdaq National Market.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to you and
to Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, 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 Closing Date is not so satisfied, this Agreement at your
election will terminate upon notification by you as Representatives to the
Company and the Selling Stockholders without liability on the part of any
Underwriter, the Company or the Selling Stockholders except for the expenses to
be paid or reimbursed by the Company and by the Selling Stockholders pursuant to
Sections 2(m) and 11 hereof and except to the extent provided in Section 9
hereof.
11. Expenses. The Sellers (in such proportions as they may agree) agree
--------
pay the following costs and expenses and all other costs and expenses incident
to the performance by the Sellers of their obligations hereunder: (i) the
preparation, printing or reproduction, and filing with the Commission of the
registration statement (including financial statements and exhibits thereto),
each Prepricing Prospectus, the Prospectus, and each amendment or supplement to
any of them; (ii) the printing (or reproduction) and delivery (including
postage, air freight charges and charges for counting and packaging) of such
copies of the registration statement, each Prepricing Prospectus, the
Prospectus, the Incorporated Documents, and all amendments or supplements to any
of them, as may be reasonably requested for use in connection with the offering
and sale of the Shares; (iii) the preparation, printing, authentication,
issuance and delivery of
31.
certificates for the Shares, including any stamp taxes in connection with the
original issuance and sale of the Shares; (iv) the printing (or reproduction)
and delivery of this Agreement, the Blue Sky Memorandum and all other agreements
or documents printed (or reproduced) and delivered in connection with the
offering of the Shares; (v) the listing of the Shares to be issued and sold by
the Company on the Nasdaq National Market; (vi) the registration or
qualification of the Shares for offer and sale under the securities or Blue Sky
laws of the several states (including the reasonable fees, expenses and
disbursements of counsel for the Underwriters relating to the preparation,
printing or reproduction, and delivery of the Blue Sky Memorandum and such
registration and qualification); (vii) the filing fee of the NASD; (viii) the
transportation and other expenses incurred by or on behalf of Company
representatives in connection with presentations to prospective purchasers of
the Shares; and (ix) the fees and expenses of the Company's accountants and the
fees and expenses of counsel (including local and special counsel) for the
Company and the Selling Stockholders. Except as provided in this Section 11,
Section 2(m) and Section 9 hereof, the Underwriters shall pay all their own
expenses, including the fees and disbursements of their counsel (excluding those
related to qualification, registration or exemption under the Blue Sky Laws and
the Blue Sky Memorandum referred to above). This Section 11 shall not affect
any agreements relative to the payment of expenses between the Company and the
Selling Stockholders.
12. Effective Date of Agreement. This Agreement shall become effective
---------------------------
immediately as to Sections 9, 11 and 13, 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 Shares for sale to the public. For the purposes of
this Section 12, the Shares shall be deemed to have been so released upon the
release for publication of any newspaper advertisement relating to the Shares or
upon the release by you of telegrams (i) advising Underwriters that the Shares
are released for public offering, or (ii) offering the Shares for sale to
securities dealers, whichever may occur first.
If any one or more of the Underwriters shall fail or refuse to purchase
Shares which it or they are obligated to purchase hereunder on the Closing Date,
and the aggregate number of Shares which such defaulting Underwriter or
Underwriters are obligated but fail or refuse to purchase is not more than one-
tenth of the aggregate number of Shares which the Underwriters are obligated to
purchase on the Closing Date, each non-defaulting Underwriter shall be
obligated, severally, in the proportion which the number of Firm Shares set
forth opposite its name in Schedule II hereto bears to the aggregate number of
Firm Shares set forth opposite the names of all non-defaulting
32.
Underwriters or in such other proportion as you may specify in accordance with
Section 20 of the Master Agreement Among Underwriters of Xxxxx Xxxxxx Inc., to
purchase the Shares which such defaulting Underwriter or Underwriters are
obligated, but fail or refuse, to purchase. If any one or more of the
Underwriters shall fail or refuse to purchase Shares which it or they are
obligated to purchase on the Closing Date and the aggregate number of Shares
with respect to which such default occurs is more than one-tenth of the
aggregate number of Shares which the Underwriters are obligated to purchase on
the Closing Date and arrangements satisfactory to you and the Company for the
purchase of such Shares by one or more non-defaulting Underwriters or other
party or parties approved by you and the Company are not made within 36 hours
after such default, this Agreement will terminate without liability on the part
of any non-defaulting Underwriter or the Company. In any such case which does
not result in termination of this Agreement, either you or the Company shall
have the right to postpone the Closing Date, but in no event for longer than
seven days, in order that the required changes, if any, in the Registration
Statement and the Prospectus or any other documents or arrangements may be
effected. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any such default of any such
Underwriter under this Agreement. The term ``Underwriter'' as used in this
Agreement includes, for all purposes of this Agreement, any party not listed in
Schedule II hereto who, with your approval and the approval of the Company,
purchases Shares which a defaulting Underwriter is obligated, but fails or
refuses, to purchase.
Any notice under this Section 12 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
13. Termination of Agreement. This Agreement shall be subject to
------------------------
termination in your absolute discretion, without liability on the part of any
Underwriter to the Company or any Selling Stockholder, by notice to the Company,
if prior to the Closing Date or any Option Closing Date (if different from the
Closing Date and then only as to the Additional Shares), as the case may be, (i)
trading in securities generally on the New York Stock Exchange, the American
Stock Exchange or the Nasdaq National Market shall have been suspended or
materially limited, (ii) a general moratorium on commercial banking activities
in New York or Colorado shall have been declared by either federal or state
authorities, or (iii) there shall have occurred any outbreak or escalation of
hostilities or other international or domestic calamity, crisis or change in
political, financial or economic conditions, the effect of which on the
financial markets of the United States is such as to make it, in your judgment,
impracticable or inadvisable to commence or continue the offering of the Shares
at the offering price to the public set forth on the cover page of the
Prospectus or to enforce contracts for the resale of the Shares by the
Underwriters. Notice of such termination may be given to the Company by
telegram, telecopy or telephone and shall be subsequently confirmed by letter.
14. Representations and Warranties of the Underwriters. The
--------------------------------------------------
Representatives, on behalf of the several Underwriters, represent and warrant to
the Company and to the
33.
Selling Stockholders that the information set forth (i) on the cover page of the
Prospectus with respect to price, underwriting discounts and commissions and
terms of 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.
15. Miscellaneous. Except as otherwise provided in Sections 5, 12 and 13
-------------
hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Company or the Selling
Stockholders, at the office of the Company at 0000 Xxxxxxxx, Xxxxxxx, Xxxxxxxx
00000, Attention: Xxxxxxx X. Xxxxxxxxx, with a copy to Holme Xxxxxxx & Xxxx
LLP, 0000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000, Attention:
Xxxxxxx Xxxxxxx, Esq.; or (ii) if to you, as Representatives of the several
Underwriters, care of Xxxxx Xxxxxx Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Manager, Investment Banking Division with a copy to
Xxxxxxx, Phleger & Xxxxxxxx LLP, Two Embarcadero Plaza, 0000 Xxxx Xxxx, Xxxx
Xxxx, Xxxxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxx, Esq.
This Agreement has been and is made solely for the benefit of the several
Underwriters, the Company, its directors and officers, and the other controlling
persons referred to in Section 9 hereof and their respective successors and
assigns, to the extent provided herein, and no other person shall acquire or
have any right under or by virtue of this Agreement. Neither the term
``successor'' nor the term ``successors and assigns'' as used in this Agreement
shall include a purchaser from any Underwriter of any of the Shares in his
status as such purchaser.
16. Applicable Law; Counterparts. This Agreement shall be governed by and
----------------------------
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
34.
Please confirm that the foregoing correctly sets forth the agreement among
the Company, the Selling Stockholders and the several Underwriters.
Very truly yours,
WILD OATS MARKETS, INC.
By
-------------------------------
Xxxxxxx X. Xxxxxxxxx
Chief Executive Officer
Each of the Selling Stockholders
named in Schedule I hereto
By
-------------------------------
Attorney-in-Fact
Confirmed as of the date first above
mentioned on behalf of themselves and
the other several Underwriters named in
Schedule II hereto.
XXXXX XXXXXX INC.
PAINEWEBBER INCORPORATED
XXXXX XXXXXXX INC.
XXXX XXXXXXXX INCORPORATED
As Representatives of the Several Underwriters
By XXXXX XXXXXX INC.
By
----------------------------------
Managing Director
35.
SCHEDULE I
WILD OATS MARKETS, INC.
Part A1 - Firm Shares
---------------------
Number of
Principal Selling Stockholders Firm Shares
------------------------------ -----------
Xxxxxxx X. Xxxxxxxxx & Xxxxxxxxx X. Xxxx
-----------
Total......................
-----------
Part A2 - Firm Shares
---------------------
Number of
Other Selling Stockholders Firm Shares
-------------------------- -----------
Xxxxxxx X. Xxxxxxxxx 1997 Charitable Remainder Trust
Xxxxxxxxx X. Xxxx 1997 Charitable Remainder Trust
Wild Oats Community Foundation
Xxxx X. Xxxxx 1997 Charitable Remainder Unitrust
Xxxx X. Xxxxx
Weston Presidio Offshore Capital, C.V.
Xxxxx Xxxxx
Xxxxxx Xxxxx
Xxxxxxx Xxxxxxx
Xxxxxx Xxxxxx
-----------
Total......................
-----------
-----------
Total......................
-----------
SCHEDULE II
WILD OATS MARKETS, INC.
Number of
Underwriter Firm Shares
----------- -----------
Xxxxx Xxxxxx Inc. ................................
PaineWebber Incorporated..........................
Xxxxx Xxxxxxx Inc.
Xxxx Xxxxxxxx Incorporated
---------- -----------
Total..........
---------- -----------
