1
EXHIBIT 1.1
1,500,000 SHARES
PRIMERA FOODS CORPORATION
COMMON STOCK
UNDERWRITING AGREEMENT
________________, 1998
CRUTTENDEN XXXX INCORPORATED
As Representative of the several Underwriters
00000 Xxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Primera Foods Corporation, a Delaware corporation (the "COMPANY"),
addresses you as the Representative of each of the parties listed in Schedule A
hereto (herein collectively called the "UNDERWRITERS") and hereby confirms its
agreement with the several Underwriters as follows:
1. DESCRIPTION OF SHARES. The Company proposes to issue and sell
1,500,000 shares of its authorized and unissued Common Stock, par value $0.001
per share (the "FIRM SHARES") to the several Underwriters. The Company also
proposes to grant to the Underwriters an option to purchase up to 225,000
additional shares of the Company's Common Stock, par value $0.001 per share
(the "OPTION SHARES"), as provided in SECTION 7. The Company also proposes to
sell to the Representatives, at a purchase price of $0.001 per warrant,
warrants exercisable for a period of five years commencing one year after the
effective date of the Registration Statement (as defined below) to purchase up
to an aggregate of shares of Common Stock at a price of $ per share (the
"REPRESENTATIVES' WARRANTS"), which exercise and purchase shall be effected in
accordance with the Representatives' Warrant Agreement in the form attached
hereto as Exhibit A and entered into between the Company and you concurrently
herewith (the "REPRESENTATIVES' WARRANT AGREEMENT"). As used in this
Agreement, the term "SHARES" shall include the Firm Shares and the Option
Shares. All shares of Common Stock, par value $0.001 per share, of the
Company, including the Shares, are hereinafter referred to as "COMMON STOCK."
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. The Company
represents and warrants to and agrees with each Underwriter that:
(a) A registration statement on Form S-1 (File No. 333- ) with
respect to the Shares, including a prospectus, has been prepared by the Company
in material conformity with the requirements of the Securities Act of 1933, as
amended (the "ACT"), and the applicable rules and regulations (the "RULES AND
REGULATIONS") of the Securities and Exchange
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Commission (the "COMMISSION") under the Act and has been filed with the
Commission; such amendments to such registration statement, such amended
prospectuses and such abbreviated registration statements pursuant to Rule
462(b) of the Rules and Regulations as may have been required prior to the date
hereof have been similarly prepared and filed with the Commission; and the
Company will file such additional amendments to such registration statement,
such amended prospectuses and such abbreviated registration statements as may
hereafter be required. Copies of such registration statement and amendments
together with each exhibit filed therewith, of each related prospectus (the
"PRELIMINARY PROSPECTUSES") and of any abbreviated registration statement
pursuant to Rule 462(b) of the Rules and Regulations have been delivered to
you.
If the registration statement relating to the Shares has been declared
effective under the Act by the Commission, the Company will prepare and
promptly file with the Commission, pursuant to Rule 424(b) of the Rules and
Regulations or as part of a post-effective amendment to the registration
statement (including a final form of prospectus), the information omitted from
the registration statement pursuant to Rule 430A(a) of the Rules and
Regulations or, if Cruttenden Xxxx Incorporated, on behalf of the several
Underwriters, shall agree to the utilization of Rule 434 of the Rules and
Regulations, the information required to be included in any term sheet filed
pursuant to Rule 434(b) or (c), as applicable, of the Rules and Regulations.
If the registration statement relating to the Shares has not been declared
effective under the Act by the Commission, the Company will prepare and
promptly file an amendment to the registration statement, including a final
form of prospectus, or, if Cruttenden Xxxx Incorporated, on behalf of the
several Underwriters, shall agree to the utilization of Rule 434 of the Rules
and Regulations, the information required to be included in any term sheet
filed pursuant to Rule 434(b) or (c), as applicable, of the Rules and
Regulations.
The term "REGISTRATION STATEMENT" as used in this Agreement shall mean
such registration statement, including financial statements, schedules and
exhibits (including exhibits incorporated by reference), in the form in which
it became or becomes, as the case may be, effective (including, if the Company
omitted information from the registration statement pursuant to Rule 430A(a) of
the Rules and Regulations or files a term sheet pursuant to Rule 434 of the
Rules and Regulations, the information deemed to be a part of the registration
statement at the time it became effective pursuant to Rule 430A(b) or Rule
434(d) of the Rules and Regulations) and, in the event of any amendment thereto
or the filing of any abbreviated registration statement pursuant to Rule 462(b)
of the Rules and Regulations relating thereto after the effective date of such
registration statement, shall also mean (from and after the effectiveness of
such amendment or the filing of such abbreviated registration statement) such
registration statement as so amended, together with any such abbreviated
registration statement. The term "PROSPECTUS" as used in this Agreement shall
mean the prospectus relating to the Shares as included in such Registration
Statement at the time it becomes effective (including, if the Company omitted
information from the Registration Statement pursuant to Rule 430A(a) of the
Rules and Regulations, the information deemed to be a part of the Registration
Statement at the time it became effective pursuant to Rule 430A(b) of the Rules
and Regulations); PROVIDED, HOWEVER, that if in reliance on Rule 434 of the
Rules and Regulations and with the consent of Cruttenden Xxxx Incorporated, on
behalf of the several Underwriters, the Company shall have provided to the
Underwriters a term sheet
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pursuant to Rule 434(b) or (c), as applicable, prior to the time that a
confirmation is sent or given for purposes of Section 2(10)(a) of the Act, the
term "Prospectus" shall mean the "prospectus subject to completion" (as defined
in Rule 434(g) of the Rules and Regulations) last provided to the Underwriters
by the Company and circulated by the Underwriters to all prospective purchasers
of the Shares and the information deemed to be a part of the Registration
Statement at the time it became effective pursuant to Rule 434(d) of the Rules
and Regulations, and such Prospectus will not be materially different from such
prospectus subject to completion. Notwithstanding the foregoing, if any revised
prospectus shall be provided to the Underwriters by the Company for use in
connection with the offering of the Shares that differs from the prospectus
referred to in the immediately preceding sentence (whether or not such revised
prospectus is required to be filed with the Commission pursuant to Rule 424(b)
of the Rules and Regulations), the term "Prospectus" shall refer to such
revised prospectus from and after the time it is first provided to the
Underwriters for such use.
(b) The Commission has not issued any order preventing or suspending the
use of any Preliminary Prospectus or instituted proceedings for that purpose,
and each such Preliminary Prospectus has conformed in all material respects to
the requirements of the Act and the Rules and Regulations and, as of its date,
has not included any untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and at the time the
Registration Statement became or becomes, as the case may be, effective and at
all times subsequent thereto up to and on the Closing Date (hereinafter
defined) and on any later date on which Option Shares are to be purchased, (i)
the Registration Statement and the Prospectus, and any amendments or
supplements thereto, contained and will contain all material 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, (ii) the Registration Statement, and any amendments or
supplements thereto, did not and will not include any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and (iii) the
Prospectus, and any amendments or supplements thereto, did not and will not
include any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; PROVIDED, HOWEVER,
that none of the representations and warranties contained in this subparagraph
(b) shall apply to information contained in or omitted from the Registration
Statement or Prospectus, or any amendment or supplement thereto, in reliance
upon, and in conformity with, written information relating to any Underwriter
furnished to the Company by such Underwriter specifically for use in the
preparation thereof.
(c) The Company is duly incorporated and validly existing as a corporation
in good standing under the laws of the State of Delaware with full power and
authority (corporate and other) to own, lease and operate its properties and
conduct its business as described in the Registration Statement and the
Prospectus; the Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the ownership
or leasing of its properties or the conduct of its business requires such
qualification, except where the failure to be so qualified or be in good
standing would not have a material adverse effect on the condition (financial
or otherwise), earnings, operations, business or business
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prospects of the Company; no proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing, or seeking to revoke, limit or
curtail, such power and authority or qualification; the Company is in
possession of and operating in compliance with all authorizations, licenses,
certificates, consents, orders and permits from state, federal and other
regulatory authorities that are material to the conduct of its business, all of
which are valid and in full force and effect; the Company is not in violation
of or breach of or default under (nor has any event occurred that with notice,
lapse of time or both would constitute a breach of or default under) its
charter or bylaws or any material obligation, agreement, covenant or condition
contained in any material bond, debenture, note or other evidence of
indebtedness, or in any material lease, contract, indenture, mortgage, deed of
trust, loan agreement, joint venture or other agreement or instrument to which
the Company is a party or by which its properties may be bound; and the Company
is not in material violation of any law, order, rule, regulation, writ,
injunction, judgment or decree of any court, government or governmental agency
or body, domestic or foreign, having jurisdiction over the Company or its
properties. Other than Primegg (Barbados) Ltd., which is inactive, the Company
does not directly or indirectly own any equity interest in or securities of, or
control, any corporation, association or other entity.
(d) The Company has full legal right, power and authority to enter into
this Agreement and the Representatives' Warrant Agreement and perform the
transactions contemplated hereby and thereby. This Agreement and the
Representatives' Warrant Agreement have been duly authorized, executed and
delivered by the Company and are valid and binding agreements on the part of
the Company, enforceable in accordance with their respective terms, except as
rights to indemnification hereunder may be limited by applicable law and except
as the enforcement hereof of thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable principles; the
making and performance of this Agreement and the Representatives' Warrant
Agreement by the Company and the consummation of the transactions herein and
therein contemplated will not result in a breach or violation of any of the
terms and provisions of, or constitute a default under,(i) any bond, debenture,
note or other evidence of indebtedness, or under any lease, contract,
indenture, mortgage, deed of trust, loan agreement, joint venture or other
agreement or instrument to which the Company is a party or by which its
properties may be bound, (ii) the charter or bylaws of the Company or (iii) any
law, order, rule, regulation, writ, injunction, judgment or decree of any
court, administrative agency, regulatory body, government or governmental
agency or body, domestic or foreign, having jurisdiction over the Company or
its properties. No consent, approval, authorization or order of or
qualification with any court, government or governmental agency or body,
domestic or foreign, having jurisdiction over the Company or its properties is
required for the execution and delivery of this Agreement and the consummation
by the Company of the transactions herein contemplated, except such as may be
required under the Act, by the National Association of Securities Dealers, Inc.
(the "NASD"), the rules of the Nasdaq National Market, or under state or other
securities or Blue Sky laws, all of which requirements have been satisfied in
all material respects.
(e) There is not any pending or, to the Company's knowledge, threatened,
any action, suit, claim or proceeding against the Company, any of its officers,
directors,
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employees, or agents or any of its properties or assets or rights, at law or in
equity, before any court, administrative agency, regulatory body, government or
governmental agency or body, domestic or foreign, which (i) might, individually
or in the aggregate, result in any material adverse change in the condition
(financial or otherwise), earnings, operations, business or business prospects
of the Company or might materially and adversely affect the Company's
properties, assets or rights, (ii) might prevent consummation of the
transactions contemplated hereby or (iii) is required to be disclosed in the
Registration Statement or Prospectus and is not so disclosed; and there are no
agreements, contracts, leases or documents of the Company of a character
required to be described or referred to in the Registration Statement or
Prospectus or to be filed as an exhibit to the Registration Statement by the
Act or the Rules and Regulations which have not been accurately described in
all material respects in the Registration Statement or Prospectus or filed as
exhibits to the Registration Statement. The Company is not a party or subject
to the provisions of any injunction, judgment, decree or order of any court,
regulatory body, administrative agency, government or governmental agency or
body domestic or foreign, that could be expected to result in a material
adverse change in the condition (financial or other), earnings, operations,
business or business prospects of the Company.
(f) All outstanding shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable, have been
issued in compliance with all federal and state securities laws, were not
issued in violation of or subject to any preemptive rights or other rights to
subscribe for or purchase securities, and the authorized and outstanding
capital stock of the Company is as set forth in the Prospectus under the
caption "CAPITALIZATION" and conform in all material respects to the statements
relating thereto contained in the Registration Statement and the Prospectus
(and such statements correctly state the substance of the instruments defining
the capitalization of the Company); the capital stock of the Company, including
the Shares, conforms in all material respects to the description thereof
contained in the Registration Statement and the Prospectus; the Shares and the
Representatives' Warrants and the shares of Common Stock issuable upon exercise
of the Representatives' Warrants have been duly authorized for issuance and
sale to the Underwriters pursuant to this Agreement, and, when issued and
delivered by the Company against payment therefor in accordance with the terms
of this Agreement or the Representatives' Warrant Agreement, as the case may
be, will be duly and validly issued and fully paid and nonassessable, and will
be sold free and clear of any pledge, lien, security interest, encumbrance,
claim or equitable interest; no preemptive right, co-sale right, registration
right, right of first refusal or other similar right of stockholders exists
with respect to any of the Shares or the issuance and sale thereof or the
Representatives' Warrants or the Common Stock issuable upon exercise thereof;
and the certificates for the Shares are in due and proper form and the holders
of the Shares and the Representatives' Warrants and the Common Stock issuable
upon exercise thereof, after making payment therefor will not be subject to
personal liability by reason of being such holders. No further approval or
authorization of any stockholder, the Board of Directors of the Company or
others is required for the issuance and sale or transfer of the Shares or the
Representatives' Warrants or the Common Stock issuable upon exercise thereof
except as may be required under the Act or under state or other securities or
Blue Sky laws. Except as disclosed in the Registration Statement, Prospectus
and the financial statements of the Company, and the related notes thereto
included in the Prospectus, the Company has no outstanding options to purchase,
or any preemptive rights or
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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 fairly and accurately
presents the information required to be shown with respect to such plans,
arrangements, options and rights.
(g) KPMG Peat Marwick LLP whose reports on the consolidated financial
statements of the Company and the Partnerships are included in the Registration
Statement and the Prospectus, are independent accountants within the meaning of
the Act and the Rules and Regulations; the audited consolidated financial
statements of the Company, together with the related schedules and notes, and
the unaudited financial information, forming part of the Registration Statement
and Prospectus, fairly present the financial position and the results of
operations and cash flows of the Company at the respective dates and for the
respective periods to which they apply and have been prepared in accordance
with generally accepted accounting principles consistently applied throughout
the periods involved except as may be otherwise stated therein. The selected
and summary financial and statistical data included in the Registration
Statement present fairly the information shown therein and have been compiled
on a basis consistent with the audited financial statements presented therein.
No other financial statements or schedules are required to be included in the
Registration Statement.
(h) Subsequent to the respective dates as of which information is given in
the Registration Statement and Prospectus, there has not been (i) any material
adverse change in the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company, (ii) any transaction
that is material to the Company, except transactions entered into in the
ordinary course of business consistent with past practices, (iii) any
obligation, direct or contingent, that is material to the Company, incurred by
the Company, except obligations incurred in the ordinary course of business
consistent with past practices, (iv) any change in the capital stock of the
Company, (v) any change in the outstanding indebtedness of the Company that is
material to the Company or is out of the ordinary course of business of the
Company, (vi) any dividend or distribution of any kind declared, paid or made
on the capital stock of the Company, (vii) any default in the payment of
principal of or interest on any outstanding debt obligations, or (viii) any
loss or damage (whether or not insured) to the property of the Company which
has been sustained or will have been sustained which has a material adverse
effect on the condition (financial or otherwise), earnings, operations,
business or business prospects of the Company.
(i) The Company has good and marketable title to all properties and assets
described in the Registration Statement and Prospectus as owned by it, and
valid and subsisting interests in all of the real property described in the
Registration Statement and Prospectus as leased by it, in each case free and
clear of any pledge, lien, security interest, encumbrance, claim or equitable
interest, other than as set forth in the Registration Statement and Prospectus
or as would not have a material adverse effect on the condition (financial or
otherwise), earnings, operations, business or business prospects of the
Company. The agreements to which the Company is a party described in, or filed
as exhibits to, the Registration Statement and Prospectus are valid agreements,
enforceable by the Company, except as the enforcement
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thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally or by general equitable principles and, to the Company's knowledge,
the other contracting party or parties thereto are not in material breach or
material default under any of such agreements, and the Company has valid and
enforceable leases for all properties described in the Registration Statement
and Prospectus as leased by it, except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights generally or by
general equitable principles. Except as set forth in the Registration Statement
and Prospectus, the Company owns or leases all such properties as are necessary
to its operations as now conducted or as proposed to be conducted, and all such
properties are free of contractual or legal restrictions that would impair the
Company's use of such properties in its business for the purposes described in
the Registration Statement and the Prospectus.
(j) The Company and its subsidiaries have timely filed all necessary
federal, state and foreign income and franchise tax returns and have paid all
taxes shown thereon as due, and there is no tax deficiency that has been or, to
the Company's knowledge, might be asserted against the Company that might have
a material adverse effect on the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company; and all tax
liabilities are adequately provided for on the books of the Company.
(k) The Company maintains insurance with insurers of recognized financial
responsibility of the types and in the amounts generally deemed prudent for its
business and consistent with insurance coverage maintained by similar companies
in similar businesses, including, but not limited to, insurance covering real
and personal property owned or leased by the Company against theft, damage,
destruction, acts of vandalism, products liability, errors and omissions, and
all other risks customarily insured against, all of which insurance is in full
force and effect; the Company has not been refused any insurance coverage
sought or applied for; and the Company does not have any reason to believe that
it will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not materially and
adversely affect the condition (financial or otherwise), earnings, operations,
business or business prospects of the Company.
(l) To the Company's knowledge, no labor disturbance by the employees of
the Company exists or is imminent, and the Company is not aware of any existing
or imminent labor disturbance by the employees of any of its principal
suppliers, subcontractors, authorized dealers or international distributors
that might be expected to result in a material adverse change in the condition
(financial or otherwise), earnings, operations, business or business prospects
of the Company.
(m) To the best of the Company's knowledge, the Company owns or possesses
exclusive rights to use all patents, patent rights, inventions, trade secrets,
know-how, trademarks, service marks, trade names and copyrights that are
necessary to conduct its business as now conducted and as described in the
Registration Statement and Prospectus; except as set forth in the Registration
Statement and the Prospectus, the expiration of any
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patents, patent rights, trade secrets, trademarks, service marks, trade names
or copyrights would not have a material adverse effect on the condition
(financial or otherwise), earnings, operations, business or business prospects
of the Company; the Company has not received any notice of, and has no
knowledge of, any infringement of or conflict with asserted rights of the
Company by others with respect to any patent, patent rights, inventions, trade
secrets, know-how, trademarks, service marks, trade names or copyrights; and
the Company has not received any notice of, and has no knowledge of, any
infringement of or conflict with asserted rights of others by the Company with
respect to any patent, patent rights, inventions, trade secrets, know-how,
trademarks, service marks, trade names or copyrights which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, might
have a material adverse effect on the condition (financial or otherwise),
earnings, operations, business or business prospects of the Company.
(n) The Common Stock is registered pursuant to Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and is
approved for quotation on the Nasdaq National Market, and the Company has taken
no action designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or delisting the Common
Stock from the Nasdaq National Market, nor has the Company received any
notification that the Commission or the NASD is contemplating terminating such
registration or listing.
(o) The Company has been advised concerning the Investment Company Act of
1940, as amended (the "1940 ACT"), and the rules and regulations thereunder,
and the Company has in the past conducted, and the Company intends in the
future to conduct, its affairs in such a manner as to ensure that it is not and
will not become an "investment company" or a company "controlled" by an
"investment company" within the meaning of the 1940 Act and such rules and
regulations.
(p) The Company has not distributed and will not distribute prior to the
later of (i) the Closing Date, or any date on which Option Shares are to be
purchased, as the case may be, and (ii) completion of the distribution of the
Shares, any offering material in connection with the offering and sale of the
Shares other than any Preliminary Prospectuses, the Prospectus, the
Registration Statement and other materials, if any, permitted by the Act.
(q) None of the Company, the Partnerships, or their officers, directors,
employees or agents has at any time during the last five (5) years made (i) any
unlawful contribution to any candidate for foreign office or failed to disclose
fully any contribution in violation of law, or (ii) any payment to any federal
or state governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or permitted by the
laws of the United States or any jurisdiction thereof, or (iii) any other
payment of funds of the Company or any of the Partnerships prohibited by law,
and no funds of the Company have been set aside for any payment prohibited by
law.
(r) The Company has not taken and will not take, directly or indirectly,
any action designed to or that might reasonably be expected to cause or result
in stabilization or
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manipulation of the price of the Common Stock to facilitate the sale or resale
of the Shares (except for any action taken by the Underwriters).
(s) Except as otherwise set forth in the Registration Statement and the
Prospectus, each officer, director and stockholder of the Company has agreed in
writing that such person will not, except as described below, for a period of
one year from the date of the final Prospectus (the "LOCK-UP PERIOD"), sell,
offer to sell, solicit an offer to buy, contract to sell, loan, pledge, grant
any option to purchase, or otherwise transfer or dispose of (collectively, a
"DISPOSITION"), any shares of Common Stock, or any securities convertible into
or exercisable or exchangeable for Common Stock (collectively, "SECURITIES"),
now owned or hereafter acquired by such person or with respect to which such
person has or hereafter acquires the power of disposition otherwise than (i) on
the transfer of shares of Common Stock or Securities during such person's
lifetime by BONA FIDE gift or upon death by will or intestacy, provided that
any transferee agrees to be bound by the Lock-Up Agreement, and (ii) on the
transfer or other disposition of shares of Common Stock or Securities as a
distribution to limited partners or stockholders of such person, provided that
the distributees thereof agree to be bound by the terms of the Lock-Up
Agreement. The foregoing restriction has been expressly agreed to preclude the
holder of the Securities from engaging in any hedging, pledge or other
transaction which is designed to or may reasonably be expected to lead to or
result in a Disposition by any stockholder or any other person of any
Securities, whether or not owned by a Stockholder, during the Lock-up Period,
even if such Securities would be disposed of by someone other than such
stockholder. Such prohibited hedging, pledge or other transactions would
include, without limitation, any short sale (whether or not against the box),
any pledge of shares covering an obligation that matures, or could reasonably
mature during the Lock-Up Period, or any purchase, sale or grant of any right
(including, without limitation, any put or call option) with respect to any
Securities or with respect to any security (other than a broad-based market
basket or index) that includes, relates to or derives any significant part of
its value from Securities. Furthermore, each such person has also agreed and
consented to the entry of stop transfer instructions with the Company's
transfer agent against the transfer of the Securities held by such person
except in compliance with this restriction. The Company has provided to counsel
for the Underwriters a complete and accurate list of all security holders of
the Company as of the date hereof and the number and type of securities held by
each security holder. The Company has provided to counsel for the Underwriters
true, accurate and complete copies of all of the agreements pursuant to which
its officers, directors and stockholders have agreed to such or similar
restrictions (the "LOCK-UP AGREEMENTS") presently in effect. The Company
hereby represents and warrants that it will not purport to release any of its
officers, directors or other stockholders from any Lock-up Agreements currently
existing or hereafter effected without the prior written consent of Cruttenden
Xxxx Incorporated.
(t) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded
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accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(u) There are no outstanding loans, advances (except normal advances for
business expenses in the ordinary course of business) or guarantees of
indebtedness by the Company to or for the benefit of any of the officers,
directors, employees, or consultants of the Company or any of the Partnerships
or any of the members of the families of any of them, except as disclosed in
the Registration Statement and the Prospectus.
(v) Other than Cruttenden Xxxx Incorporated, on behalf of the several
Underwriters, no person is or will be owed any finders fee or commission or
similar payment in connection with the transactions contemplated by this
Agreement.
(w) There are no persons with registration or other similar rights to have
any securities registered pursuant to the Registration Statement or otherwise
registered by the Company under the Act, except that the Underwriters have
registration rights with respect to the Underwriters' Warrants and the
underlying Common Stock as described in the Underwriters Warrant Agreement.
(x) The Company has conducted and is conducting its businesses, and the
Partnerships conducted their businesses, in compliance with all applicable
federal, state, local and foreign statutes, laws, rules, regulations,
ordinances, codes, decisions, decrees, directives and orders, except where the
failure to do so would not, singly or in the aggregate, have a material adverse
effect on the condition (financial or otherwise), earnings, operations,
business or business prospects of the Company.
(y) The Company has complied with all provisions of Florida H.B. 1771,
codified as Section 517.075 of the Florida statutes, and all regulations
promulgated thereunder relating to issuers doing business with Cuba.
(z) Except as described in the Prospectus, to the Company's knowledge,
there are no rulemaking or similar proceedings before any federal, state, local
or foreign government or regulatory bodies which involve or affect the Company
which, if the subject of an action unfavorable to the Company would have a
material adverse effect on the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company.
(aa) To the knowledge of the Company, no officer, director, employee, or
consultant of the Company is in violation of any non-competition,
non-disclosure, confidentiality or other similar agreement with any party other
than the Company, and no such person is expected to be in violation thereof as
a result of the business conducted or expected to be conducted by the Company
as described in the Prospectus or such person's performance of his obligations
to the Company.
(bb) The Company has not violated any foreign, federal, state or local law
or regulation relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL LAWS"), or
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11
any federal or state law relating to discrimination in the hiring, promotion or
pay of employees or any applicable federal or state wages and hours laws, or
any provisions of the Employee Retirement Income Security Act or the rules and
regulations promulgated thereunder, which in each case might result in any
material adverse effect on the properties, assets, operations, business,
business prospects or condition (financial or other) of the Company.
(cc) The Company has such permits, licenses, franchises and authorizations
of governmental or regulatory authorities ("permits"), including without
limitation under any applicable Environmental Laws, as are necessary to own,
lease and operate its properties and to conduct its business; the Company has
fulfilled and performed all of its material obligations with respect to such
permits and no event has occurred which allows, or after notice or lapse of
time would allow, revocation or termination thereof or results in any other
material impairment of the rights of the holder of any such permit; and, except
as described in the Prospectus, such permits contain no restrictions that are
materially burdensome to the Company.
(dd) In the ordinary course of its business, the Company conducts a
periodic review of the effect of Environmental Laws on the business, operations
and properties of the Company, in the course of which it identifies and
evaluates associated costs and liabilities (including without limitation any
capital or operating expenditure required for clean-up, closure of properties
or compliance with Environmental Laws or any permit, license or approval, any
related constraints on operating activities and any potential liabilities to
third parties). On the basis of such review, the Company reasonably has
concluded that such associated costs and liabilities, singly or in the
aggregate, would not have a material adverse effect on the properties, assets,
operations, business, business prospects or condition (financial or other) of
the Company.
3. PURCHASE, SALE AND DELIVERY OF SHARES. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the
Underwriters, and each Underwriter agrees, severally and not jointly, to
purchase from the Company, at a purchase price of $_______ per share, the
respective number of Firm Shares set forth opposite the name of such
Underwriter in Schedule A hereto (subject to adjustment as provided in SECTION
10).
Delivery of definitive certificates for the Firm Shares to be purchased by
the several Underwriters pursuant to this SECTION 3 shall be made against
payment of the purchase price therefor by the several Underwriters by certified
or official bank check or checks drawn in same day funds, payable to the order
of the Company, at the offices of Parcel, Xxxxx Xxxxxx & Xxxxxxxxx, P.C., 0000
Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000 (or at such other place
as may be agreed upon between the Representative and the Company), at 7:00 a.m.
California time, (a) on the third (3rd) full business day following the first
day that Shares are traded or (b) if this Agreement is executed and delivered
after 1:30 p.m. California time, the fourth (4th) full business day following
the day that this Agreement is executed and delivered or (c) at such other time
and date not later than seven (7) full business days following the first day
that Shares are traded as the Representative and the Company may determine (or
at such time and date to which payment and delivery shall have been postponed
pursuant to SECTION 10), such time and date of payment and delivery being
herein called the "CLOSING DATE";
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12
PROVIDED, HOWEVER, that if the Company has not made available to the
Representative copies of the Prospectus within the time provided in SECTION
4(d), the Representative may, in its sole discretion, postpone the Closing Date
until no later than two (2) full business days following delivery of copies of
the Prospectus to the Representative.
The certificates for the Firm Shares to be so delivered will be made
available to you at such office or such other location including, without
limitation, in New York City, as you may reasonably request for checking at
least one (1) full business day prior to the Closing Date and will be in such
names and denominations as you shall specify at least two (2) full business
days prior to the Closing Date. If the Representative so elects, delivery of
the Firm Shares may be made by credit through full fast transfer to the
accounts at The Depository Trust Company designated by the Representative.
It is understood that you, individually, and not as the Representative of
the several Underwriters, may (but shall not be obligated to) make payment of
the purchase price on behalf of any Underwriter or Underwriters whose check or
checks shall not have been received by you prior to the Closing Date for the
Firm Shares to be purchased by such Underwriter or Underwriters. Any such
payment by you shall not relieve any such Underwriter or Underwriters of any of
its or their obligations hereunder.
The Underwriters intend to make a public offering (as described in SECTION
11) of the Firm Shares at the public offering price of $________ per share.
After the public offering the Underwriters may from time to time, in their
discretion, vary t he public offering price.
The information set forth on the inside front cover page of the Prospectus
(insofar as such information relates to the Underwriters) concerning
stabilization, syndicate short covering transactions and penalty bids, and
under the first (including the table listing the Underwriters), second, third,
ninth and tenth paragraphs under the caption "Underwriting" in any Preliminary
Prospectus and in the Prospectus constitutes the only information furnished by
the Underwriters to the Company for inclusion in any Preliminary Prospectus,
the Prospectus or the Registration Statement, and you, on behalf of the
respective Underwriters, represent and warrant to the Company that the
statements made therein do not include any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
4. FURTHER AGREEMENTS OF THE COMPANY. The Company agrees with the several
Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement and any amendment thereof, if not effective at the time and date that
this Agreement is executed and delivered by the parties hereto, to become
effective as promptly as possible; the Company will use its best efforts to
cause any abbreviated registration statement pursuant to Rule 462(b) of the
Rules and Regulations as may be required subsequent to the date the
Registration Statement is declared effective to become effective as promptly as
possible; the Company will notify you, promptly after it shall receive notice
thereof, of the time when the Registration
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13
Statement, any subsequent amendment to the Registration Statement or any
abbreviated registration statement has become effective or any supplement to
the Prospectus has been filed; if the Company omitted information from the
Registration Statement at the time it was originally declared effective in
reliance upon Rule 430A(a) of the Rules and Regulations, the Company will
provide evidence satisfactory to you that the Prospectus contains such
information and has been filed, within the time period prescribed, with the
Commission pursuant to Rule 424(b) of the Rules and Regulations or as part of a
post-effective amendment to such Registration Statement as originally declared
effective which is declared effective by the Commission; if the Company files a
term sheet pursuant to Rule 434 of the Rules and Regulations, the Company will
provide evidence satisfactory to you that the Prospectus and term sheet meeting
the requirements of Rule 434(b) or (c), as applicable, of the Rules and
Regulations have been filed, within the time period prescribed, with the
Commission pursuant to Rule 424(b) of the Rules and Regulations; if for any
reason the filing of the final form of Prospectus is required under Rule
424(b)(3) of the Rules and Regulations, it will provide evidence satisfactory
to you that the Prospectus contains such information and has been filed with
the Commission within the time period prescribed; it will notify you promptly
of any request by the Commission for the amending or supplementing of the
Registration Statement or the Prospectus or for additional information;
promptly upon your request, it will prepare and file with the Commission any
amendments or supplements to the Registration Statement or Prospectus which, in
the opinion of counsel for the several Underwriters ("UNDERWRITERS' COUNSEL"),
may be necessary or advisable in connection with the distribution of the Shares
by the Underwriters; it will promptly prepare and file with the Commission, and
promptly notify you of the filing of, and provide you with copies of, any
amendments or supplements to the Registration Statement or Prospectus which may
be necessary to correct any statements or omissions, if, at any time when a
prospectus relating to the Shares is required to be delivered under the Act,
any event shall have occurred as a result of which the Prospectus or any other
prospectus relating to the Shares as then in effect would include any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; in case any Underwriter is required to deliver a
prospectus nine (9) months or more after the effective date of the Registration
Statement in connection with the sale of the Shares, it will prepare promptly
upon request, but at the expense of such Underwriter, 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; and it will file no amendment or supplement to the Registration
Statement or Prospectus which shall not previously have been submitted to you a
reasonable time prior to the proposed filing thereof or to which you shall
reasonably object in writing, subject, however, to compliance with the Act and
the Rules and Regulations and the provisions of this Agreement.
(b) The Company will advise you, promptly after it shall receive notice or
obtain knowledge, of the issuance of any stop order by the Commission
suspending the effectiveness of the Registration Statement, or suspension of
the qualification of the Shares for sale in any jurisdiction, or of the
initiation or threat of any proceeding for any such purpose; and it will
promptly use its best efforts to prevent the issuance of any stop order or to
obtain its withdrawal at the earliest possible moment if such stop order should
be issued.
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14
(c) The Company will use its best efforts (including by providing full
cooperation with your counsel, whose services in this matter are required and
which you and the Company will seek to expedite) to qualify the Shares for
offering and sale under the securities laws of such jurisdictions as you may
designate and to continue such qualifications in effect for so long as may be
required for purposes of the distribution of the Shares, except that the
Company shall not be required in connection therewith or as a condition thereof
to qualify as a foreign corporation or to execute a general consent to service
of process in any jurisdiction in which it is not otherwise required to be so
qualified or to so execute a general consent to service of process. In each
jurisdiction in which the Shares shall have been qualified as above provided,
the Company will make and file such statements and reports in each year as are
or may be required by the laws of such jurisdiction for such purpose.
(d) The Company will furnish to you, as soon as available, and, in the
case of the Prospectus and any term sheet or abbreviated term sheet under Rule
434, in no event later than the first full business day following the first day
that Shares are traded, copies of the Registration Statement (two of which will
be signed and which will include all exhibits), each Preliminary Prospectus,
the Prospectus and any amendments or supplements to such documents, including
any prospectus prepared to permit compliance with Section 10(a)(3) of the Act,
all in such quantities as you may from time to time reasonably request.
Notwithstanding the foregoing, if Cruttenden Xxxx Incorporated, on behalf of
the several Underwriters, shall agree to the utilization of Rule 434 of the
Rules and Regulations, the Company shall provide to you copies of a Preliminary
Prospectus updated in all respects through the date specified by you in such
quantities as you may from time to time reasonably request.
(e) The Company will make generally available to its security holders as
soon as practicable, but in any event not later than the forty-fifth (45th) day
following the end of the fiscal quarter first occurring after the first
anniversary of the effective date of the Registration Statement, an earnings
statement (which will be in reasonable detail but need not be audited)
complying with the provisions of Section 11(a) of the Act and covering a twelve
(12) month period beginning after the effective date of the Registration
Statement.
(f) During a period of five (5) years after the date hereof, the Company
will furnish to its stockholders as soon as practicable after the end of each
respective period, annual reports (including financial statements audited by
independent certified public accountants) and, upon request by a stockholder,
unaudited quarterly reports of operations for each of the first three quarters
of the fiscal year, and will furnish to you and the other several Underwriters
hereunder, upon request (i) concurrently with furnishing such reports to its
stockholders, statements of operations of the Company for each of the first
three (3) quarters in the form furnished to the Company's stockholders, (ii)
concurrently with furnishing to its stockholders, a balance sheet of the
Company as of the end of such fiscal year, together with statements of
operations, of stockholders' equity, and of cash flows of the Company for such
fiscal year, accompanied by a copy of the certificate or report thereon of
independent certified public accountants, (iii) as soon as they are available,
copies of all reports (financial or other) mailed to stockholders, (iv) as soon
as they are available, copies of all reports and financial statements furnished
to or filed with the Commission, any securities exchange or the NASD, (v) every
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15
material press release and every material news item or article in respect of
the Company or its affairs which was generally released to stockholders or
prepared by the Company, and (vi) any additional information of a public nature
concerning the Company, or its business which you may reasonably request.
During such five (5) year period, if the Company shall have active
subsidiaries, the foregoing financial statements shall be on a consolidated
basis to the extent that the accounts of the Company and such subsidiaries are
consolidated, and shall be accompanied by similar financial statements for any
significant subsidiary which is not so consolidated.
(g) The Company will apply the net proceeds from the sale of the Shares
being sold by it in the manner set forth under the caption "Use of Proceeds" in
the Prospectus.
(h) The Company will maintain a transfer agent and, if necessary under the
jurisdiction of incorporation of the Company, a registrar (which may be the
same entity as the transfer agent) for its Common Stock.
(i) The terms of Section 7 of that certain Letter Agreement dated
____________, 1997 between you and the Company (the "LETTER AGREEMENT") are
hereby incorporated by reference and made obligations of the Company and
Cruttenden Xxxx Incorporated as part of this Agreement notwithstanding that the
Letter Agreement shall have ceased to be of full force or effect for any other
purpose. If the transactions contemplated hereby are not consummated by reason
of any failure, refusal or inability on the part of the Company to perform any
agreement on its part to be performed hereunder or to fulfill any condition of
the Underwriters' obligations hereunder, or if the Company shall terminate this
Agreement pursuant to SECTION 11(a), or if the Underwriters shall terminate
this Agreement pursuant to SECTION 11(a) or 11(b), then the provisions of
Section 11 of the Letter Agreement shall govern payment and reimbursement
obligations of the parties notwithstanding that the Letter Agreement shall have
ceased to be in full force or effect for any other purpose.
(j) If at any time during the ninety (90) day period after the
Registration Statement becomes effective, any rumor, publication or event
relating to or affecting the Company shall occur as a result of which in your
opinion the market price of the Common Stock has been or is likely to be
materially affected (regardless of whether such rumor, publication or event
necessitates a supplement to or amendment of the Prospectus), the Company will,
after written notice from you advising the Company to the effect set forth
above, forthwith prepare, consult with you concerning the substance of and
disseminate a press release or other public statement, reasonably satisfactory
to you, responding to or commenting on such rumor, publication or event.
(k) During the Lock-up Period, the Company will not, without the prior
written consent of Cruttenden Xxxx Incorporated, effect the Disposition of,
directly or indirectly, any Securities other than the sale of the Firm Shares
and the Option Shares hereunder and the Company's issuance of options or Common
Stock under the Company's presently authorized stock option and stock purchase
plans described in the Registration Statement and the Prospectus.
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16
(l) The Company shall pay to Cruttenden Xxxx Incorporated a nonaccountable
expense allowance equal to three percent (2%) of the total Price to Public
shown on the front cover of the Prospectus, including, if exercised, with
respect to the over-allotment option. Cruttenden Xxxx Incorporated
acknowledges that $30,000 of the amount payable pursuant to this paragraph has
already been paid.
(m) The Company will use its best efforts to cause the Shares to be
included in the Nasdaq National Market.
(n) The company will refrain from investing the proceeds of the sale of
the Shares in such a manner as to cause the Company to become an "investment
company" within the meaning of the 0000 Xxx.
(o) The company will furnish to you as early as practicable before the
Closing Date and any later date on which Option Shares are to be purchased, as
the case may be, but not later than two business days prior thereto, a copy of
the latest available unaudited interim consolidated financial statements, if
any, of the Company that have been read by the Company's independent certified
public accountants as stated in their letter to be furnished pursuant to
SECTION 6(f).
(p) On the Closing Date, the Company will sell the Representatives'
Warrants to the Representatives.
5. EXPENSES.
(a) The Company agrees with each Underwriter that:
(i) The Company will pay and bear all costs and expenses in connection
with the preparation, printing and filing of the Registration Statement
(including financial statements, schedules and exhibits), Preliminary
Prospectuses and the Prospectus and any amendments or supplements thereto; the
printing of this Agreement, the Representatives' Warrant Agreement, the
Agreement Among Underwriters, the Selected Dealer Agreement, the Preliminary
Blue Sky Survey and any Supplemental Blue Sky Survey, the Underwriters'
Questionnaire and Power of Attorney, and any instruments related to any of the
foregoing; the issuance and delivery of the Shares hereunder to the several
Underwriters, including transfer taxes, if any; the cost of all certificates
representing the Shares and transfer agents' and registrars' fees; the fees and
disbursements of counsel for the Company; all fees and other charges of the
Company's independent certified public accountants; the cost of furnishing to
the several Underwriters copies of the Registration Statement (including
appropriate exhibits), Preliminary Prospectus and the Prospectus, and any
amendments or supplements to any of the foregoing; NASD filing fees and the
cost of qualifying the Shares under the laws of such jurisdictions as you may
designate (including fees up to a maximum of $30,000 and disbursements of
Underwriters' Counsel and filing fees in connection with such NASD filings and
Blue Sky qualifications); the cost of any listing of the Shares on any
securities exchange or qualification of the Share for inclusion in the Nasdaq
National Market; registration and other fees payable to the Commission; the
cost of preparing bound volumes of the public offering documents for the
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17
Representatives and Underwriters' Counsel; and all other expenses directly
incurred by the Company in connection with the performance of its obligations
hereunder. The provisions of this SECTION 5(a)(i) are intended to relieve the
Underwriters from the payment of the expenses and costs which the Company
hereby agrees to pay.
(ii) In addition to its other obligations under SECTION 8(a), the Company
agrees that, as an interim measure during the pendency of any claim, action,
investigation, inquiry or other proceeding described in SECTION 8(a), it will
reimburse the Underwriters on a monthly basis for all reasonable legal or other
expenses incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of the
Company's obligation to reimburse the Underwriters for such expenses and the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any such interim
reimbursement payment is so held to have been improper, the Underwriters shall
promptly return such payment to the Company together with interest, compounded
daily, determined on the basis of the prime rate (or other commercial lending
rate for borrowers of the highest credit standing) listed from time to time in
THE WALL STREET JOURNAL which represents the base rate on corporate loans
posted by a substantial majority of the nation's thirty (30) largest banks (the
"PRIME RATE"). Any such interim reimbursement payments which are not made to
the Underwriters within thirty (30) days of a request for reimbursement shall
bear interest at the Prime Rate from the date of such request.
(b) In addition to their other obligations under SECTION 8(b), the
Underwriters severally and not jointly agree that, as an interim measure during
the pendency of any claim, action, investigation, inquiry or other proceeding
described in SECTION 8(b), they will reimburse the Company on a monthly basis
for all reasonable legal or other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the Underwriters' obligation to reimburse
the Company for such expenses and the possibility that such payments might
later be held to have been improper by a court of competent jurisdiction. To
the extent that any such interim reimbursement payment is so held to have been
improper, the Company shall promptly return such payment to the Underwriters
together with interest, compounded daily, determined on the basis of the Prime
Rate. Any such interim reimbursement payments which are not made to the
Company within thirty (30) days of a request for reimbursement shall bear
interest at the Prime Rate from the date of such request.
(c) It is agreed that any controversy arising out of the operation of the
interim reimbursement arrangements set forth in SECTIONS 5(a)(ii) and 5(b),
including the amounts of any requested reimbursement payments, the method of
determining such amounts and the basis on which such amounts shall be
apportioned among the reimbursing parties, shall be settled by arbitration
conducted under the provisions of the Constitution and Rules of the Board of
Governors of the New York Stock Exchange, Inc. or pursuant to the Code of
Arbitration Procedure of the NASD. Any such arbitration must be commenced by
service of a written demand for arbitration or a written notice of intention to
arbitrate, therein electing the arbitration tribunal. In the event the party
demanding arbitration does not make such
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18
designation of an arbitration tribunal in such demand or notice, then the party
responding to said demand or notice is authorized to do so. Any such
arbitration will be limited to the operation of the interim reimbursement
provisions contained in SECTIONS 5(a)(ii) and 5(b) and will not resolve the
ultimate propriety or enforceability of the obligation to indemnify for
expenses that is created by the provisions of SECTIONS 8(a) and 8(b) or the
obligation to contribute to expenses that is created by the provisions of
SECTION 8(d).
6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
several Underwriters to purchase and pay for the Shares as provided herein
shall be subject to the accuracy, as of the date hereof and the Closing Date
and any later date on which Option Shares are to be purchased, as the case may
be, of the representations and warranties of the Company herein, to the
performance by the Company of its obligations hereunder, and to the following
additional conditions:
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19
(a) The Registration Statement shall have become effective not later than
2:00 p.m., California time, on the date following the date of execution and
delivery of this Agreement, or such later date and time as shall be consented
to in writing by you; and no stop order suspending the effectiveness thereof
shall have been issued, no suspension of the qualification of the Shares for
sale in any jurisdiction shall have occurred, and no proceedings for any such
purpose shall have been initiated or, to the knowledge of the Company or any
Underwriter, threatened by the Commission or any other regulatory authority of
appropriate jurisdiction, and any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to the satisfaction of Underwriters'
Counsel.
(b) All corporate proceedings and other legal matters in connection with
this Agreement, the form of Registration Statement and the Prospectus, and the
registration, authorization, issue, sale and delivery of the Shares, shall have
been reasonably satisfactory to the Underwriters' Counsel, and such counsel
shall have been furnished with such papers and information as they may
reasonably have requested to enable them to pass upon the matters referred to
in this Section.
(c) Subsequent to the execution and delivery of this Agreement and prior
to the Closing Date, or any later date on which Option Shares are to be
purchased, as the case may be, there shall not have been any (i) present or
prospective change in the condition (financial or otherwise), earnings,
operations, properties, assets, business or business prospects of the Company
from that set forth in the Registration Statement or Prospectus, which, in your
sole judgment, is material and adverse to the Company and that makes it, in
your sole judgment, impracticable or inadvisable to proceed with the public
offering of the Shares as contemplated by the Prospectus; (ii) any transaction
that is material to the Company entered into or committed to by the Company
other than as described in the Registration Statement and the Prospectus; or
(iii) any material obligation, contingent or otherwise, directly or indirectly,
incurred by the Company other than as described in the Registration Statement
and the Prospectus.
(d) You shall have received on the Closing Date and on any later date on
which Option Shares are to be purchased, as the case may be, the following
opinion of Xxxxxxxx & Xxxxxx P.A., counsel for the Company, dated the Closing
Date or such later date on which Option Shares are to be purchased addressed to
the Underwriters and with reproduced copies or signed counterparts thereof for
each of the Underwriters, to the effect that:
(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
(ii) To such counsel's knowledge, the Company is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction,
if any, in which the ownership or leasing of its properties or the conduct of
its business requires such qualification, except where the failure to be so
qualified or be in good standing would not have a material adverse effect on
the condition (financial or otherwise), earnings, operations, business or
business prospects of the Company.
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(iii) To such counsel's knowledge, other than Primegg (Barbados) Ltd.,
which is inactive, the Company does not own or control, directly or indirectly,
any stock or other equity or ownership interest in any corporation, association
or other entity.
(iv) The authorized, issued and outstanding capital stock of the Company
is as set forth in the Prospectus under the caption "Capitalization" as of the
dates stated therein; the issued and outstanding shares of capital stock of the
Company have been duly and validly issued and are fully paid and nonassessable,
and to such counsel's knowledge have not been issued in violation of any
registration right or in violation of or subject to any preemptive right,
co-sale right, right of first refusal or other similar right;
(v) The capital stock of the Company, including the Shares, conforms in
all material respects to the description thereof contained in the Registration
Statement and the Prospectus;
(vi) The Firm Shares or the Option Shares, as the case may be, to be
issued by the Company pursuant to the terms of this Agreement, the
Representatives' Warrants, and the Common Stock issuable upon exercise of the
Representatives' Warrants have been duly authorized and, upon issuance and
delivery against payment therefor in accordance with the terms hereof or the
Representatives' Warrant Agreement, as the case may be, will be duly and
validly issued and fully paid and nonassessable, free of any pledge, lien or
other encumbrance, and will not have been issued in violation of or subject to
any preemptive right, co-sale right, registration right, right of first refusal
or, to the best of such counsel's knowledge, other similar right contained in
the Company's charter or bylaws or in any other agreement or contract to which
the Company is a party; and the forms of certificates evidencing the Common
Stock comply with applicable law;
(vii) The Company has the corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus; and to enter into this Agreement and the Representatives' Warrant
Agreement and to issue, sell and deliver to the Underwriters the Shares to be
issued and sold by it hereunder, the Representatives' Warrants, and the Common
Stock issuable upon exercise of the Representatives' Warrants;
(viii) This Agreement and the Representatives' Warrant Agreement have been
duly authorized by all necessary corporate action on the part of the Company
and have been duly executed and delivered by the Company and, assuming due
authorization, execution and delivery by you, are valid and binding agreements
of the Company, enforceable in accordance with their respective terms, except
insofar as indemnification provisions may be limited by applicable law and
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting creditors'
rights generally or by general equitable principles;
(ix) The Registration Statement has become effective under the Act, any
required filing of the Prospectus, or any Term Sheet that constitutes a part
thereof, pursuant to Rules 434 and 424(b) has been made in the manner and
within the time period required by Rules 434
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21
and 424(b), and, to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending or threatened under the
Act;
(x) The Registration Statement and the Prospectus, and each amendment or
supplement thereto (other than the financial statements (including supporting
schedules), and financial data derived therefrom as to which such counsel need
express no opinion), as of the effective date of the Registration Statement,
comply as to form in all material respects with the requirements of the Act and
the applicable Rules and Regulations and if the company elects to rely on Rule
434, the Prospectus is "materially different," as such term is used in Rule
434, from the prospectus included in the Registration Statement at the time of
its effectiveness or a post-effective amendment thereto (including information
that is permitted to be omitted pursuant to Rule 430A);
(xi) The information in the Prospectus under the captions "Risk
Factors--Government Regulation," "Risk Factors--Shares Eligible for Future
Sale," "Risk Factors--Antitakeover Provisions" "Business--Government
Regulation," "Business--Employees," "Business--Properties, Facilities and
Systems," "Management--Benefit Plans Option Plan,"
"Management--Indemnification," "Management--Employment Agreements," "Certain
Transactions," "Description of Capital Stock," and "Shares Eligible For Future
Sale" to the extent that it describes laws, regulations, rules, legal or
governmental proceedings, or contracts, or constitutes matters of law or legal
conclusions, has been reviewed by such counsel and is a fair and accurate in
all material respects;
(xii) The descriptions in the Registration Statement and the Prospectus of
the charter and bylaws of the Company and of statutes are accurate and fairly
present the information required to be presented by the Act and the applicable
Rules and Regulations;
(xiii) To such counsel's knowledge, there are no agreements, contracts,
leases or documents to which the Company is a party of a character required to
be described or referred to in the Registration Statement or Prospectus or to
be filed as an exhibit to the Registration Statement which are not described or
referred to therein or filed as required;
(xiv) The performance of this Agreement and the Representatives' Warrant
Agreement and the consummation of the transactions contemplated herein and
therein (other than performance of the Company's indemnification obligations
hereunder, concerning which no opinion need be expressed) do not and will not
(a) result in any violation of the charter or bylaws of the Company or (b)
result in a material breach or violation of any of the terms and provisions of,
or constitute a default under, of any event that with notice, lapse of time or
both would constitute a breach of or default under, any material bond,
debenture, note or other evidence of indebtedness, or any material lease,
contract, indenture, mortgage, deed of trust, loan agreement, joint venture or
other agreement or instrument to which the Company is a party or by which its
properties are bound, or any applicable statute, rule or regulation or any
order, writ or decree of any court, government or governmental agency or body
having jurisdiction over the Company or any of its properties or operations;
provided, however, that
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22
such counsel need not express any opinion or belief with respect to state
securities or Blue Sky laws;
(xv) No consent, approval, authorization or order of or filing or
qualification with any court, government or governmental agency or body having
jurisdiction over the Company or any of its properties or operations is
necessary in connection with the consummation by the Company of the
transactions contemplated in this Agreement or the Representatives' Warrant
Agreement, except such as have been obtained under the Act or such as may be
required under state or other securities or Blue Sky laws in connection with
the purchase and the distribution of the Shares by the Underwriters;
(xvi) To such counsel's best knowledge, there are no legal or governmental
proceedings pending or threatened against the Company of a character required
to be disclosed in the Registration Statement or the Prospectus by the Act or
the Rules and Regulations, other than those described therein;
(xvii) To such counsel's knowledge, the Company is not in violation of its
respective charter or bylaws and is not in breach or violation of any of the
terms and provisions of, or in default under, and no event has occurred that,
with notice, lapse of time or both would constitute a breach of or default
under any material bond, debenture, note or other evidence of indebtedness, or
any material lease, contract, indenture, mortgage, deed of trust, loan
agreement, joint venture or other agreement or instrument to which the Company
is a party or by which its properties are bound, or any applicable statute,
rule or regulation or any order, writ or decree of any court, government or
governmental agency or body having jurisdiction over the Company or any of its
properties or operations;
(xviii) To such counsel's best knowledge, except as set forth in the
Registration Statement and Prospectus, no holders of Common Stock or other
securities of the Company have registration rights or preemptive rights with
respect to securities of the Company and, except as set forth in the
Registration Statement and Prospectus, all holders of securities of the Company
having rights to registration of such shares of Common Stock or other
securities, because of the filing of the Registration Statement by the Company
have, with respect to the offering contemplated thereby, waived such rights or
such rights have expired by reason of lapse of time following notification of
the Company's intent to file the Registration Statement.
(xix) The Company is not an "investment company" or a person "controlled"
by an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
(xx) The sales of securities by the Company described in Item 15 of the
Registration Statement were exempt from the registration requirements of the
Act.
In addition, such counsel shall state that such counsel has acted as
outside corporate legal counsel to the Company and participated in conferences
with officials and other representatives of the Company, the Representatives,
Underwriters' Counsel and the independent certified public accountants of the
Company, at which such conferences the
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23
contents of the Registration Statement and Prospectus and related matters were
discussed, and although they have not verified the accuracy or completeness of
the statements contained in the Registration Statement or the Prospectus,
nothing has come to the attention of such counsel which leads such counsel to
believe that, at the time the Registration Statement became effective and at
all times subsequent thereto up to and on the Closing Date and on any later
date on which Option Shares are to be purchased, the Registration Statement and
any amendment or supplement thereto (other than the financial statements
including supporting schedules and other financial information derived
therefrom, as to which such counsel need express no opinion) contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or at the Closing Date or any later date on which the Option Shares
are to be purchased, as the case may be, the Registration Statement, the
Prospectus and any amendment or supplement thereto (except as aforesaid)
contained 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.
Counsel rendering the foregoing opinion may rely as to questions of law
not involving the laws of the United States or the State of California upon
opinions of local counsel, and as to questions of fact upon representations or
certificates of officers of the Company, and of government officials, in which
case their opinion is to state that they are so relying and that they have no
knowledge of any material misstatement or inaccuracy in any such opinion,
representation or certificate. Copies of any opinion, representation or
certificate so relied upon shall be delivered to you, as Representative of the
Underwriters, and to Underwriters' Counsel.
(e) You shall have received on the Closing Date and on any later date on
which Option Shares are to be purchased, as the case may be, an opinion of
Parcel, Mauro, Xxxxxx & Xxxxxxxxx, P.C., in form and substance reasonably
satisfactory to you, with respect to the sufficiency of all such corporate
proceedings and other legal matters relating to this Agreement and the
transactions contemplated hereby as you may reasonably require, and the Company
shall have furnished to such counsel such documents as they may have requested
for the purpose of enabling them to pass upon such matters.
(f) You shall have received on the Closing Date and on any later date on
which Option Shares are to be purchased, as the case may be, a letter from KPMG
Peat Marwick LLP, Independent Auditors ("KPMG"), addressed to the
Underwriters, dated the Closing Date or such later date on which Option Shares
are to be purchased, as the case may be (in each case, the "BRING DOWN
LETTER"), confirming that they are independent certified public accountants
with respect to the Company within the meaning of the Act and the applicable
published Rules and Regulations and based upon the procedures described in a
letter delivered to you concurrently with the execution of this Agreement
(herein called the "ORIGINAL LETTER"), but carried out to a date not more than
five (5) business days prior to the Closing Date or such later date on which
Option Shares are to be purchased, as the case may be, (i) confirming, to the
extent true, that the statements and conclusions set forth in the Original
Letter are accurate as of the Closing Date or such later date on which Option
Shares are to be purchased, as the case may be, and (ii) setting forth any
revisions and additions to the
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24
statements and conclusions set forth in the Original Letter that are necessary
to reflect any changes in the facts described in the Original Letter since its
date, or to reflect the availability of more recent financial statements, data
or information. The Bring Down Letter shall not disclose any change in the
condition (financial or otherwise), earnings, operations, business or business
prospects of the Company from that set forth in the Registration Statement or
Prospectus, which, in your sole judgment, is material and adverse and that
makes it, in your sole judgment, impracticable or inadvisable to proceed with
the public offering of the Shares as contemplated by the Prospectus. The
Original Letter from KPMG shall be addressed to or for the use of the
Underwriters in form and substance satisfactory to the Underwriters and shall
(i) represent, to the extent true, that they are independent certified public
accountants with respect to the Company within the meaning of the Act and the
applicable published Rules and Regulations, (ii) set forth their opinion with
respect to their examination of the combined balance sheet of the Company as of
December 31, 1996 and related combined statements of operations, equity and
cash flows for the twelve (12) months ended December 31, 1996, (iii) state that
KPMG has performed the procedures set out in Statement on Auditing Standards
No. 71 ("SAS 71") for a review of interim financial information and providing
the report of KPMG as described in SAS 71 on the financial statements for the
three-quarter period ended September 30, 1997 (the "QUARTERLY FINANCIAL
STATEMENTS"), (iv) state that in the course of such review, nothing came to
their attention that leads them to believe that any material modifications need
to be made to any of the Quarterly Financial Statements in order for them to be
in compliance with generally accepted accounting principles consistently
applied across the periods presented, (v) state that nothing came to their
attention that caused them to believe that the financial statements included in
the Registration Statement and Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the Rules and
Regulations and that any adjustments thereto have not been properly applied to
the historical amounts in the compilation of such statements, and (vi) address
other matters agreed upon by KPMG and you. In addition, you shall have
received from KPMG a letter addressed to the Company and made available to you
for the use of the Underwriters stating that their review of the Company's
system of internal accounting controls, to the extent they deemed necessary in
establishing the scope of their examination of the Company's financial
statements as of December 31, 1996, did not disclose any weaknesses in internal
controls that they considered to be material weaknesses.
(g) You shall have received on the Closing Date and on any later date on
which Option Shares are to be purchased, as the case may be, a certificate of
the Company, dated the Closing Date or such later date on which Option Shares
are to be purchased, as the case may be, signed by the Chief Executive Officer
and Chief Financial Officer of the Company, to the effect that, and you shall
be satisfied that:
(i) The representations and warranties of the Company in this Agreement
and the Representatives' Warrant Agreement are true and correct, as if made on
and as of the Closing Date or any later date on which Option Shares are to be
purchased, 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 at or prior to the Closing Date or any later date on which Option
Shares are to be purchased, as the case may be;
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25
(ii) No stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or threatened under the Act;
(iii) When the Registration Statement became effective and at all times
subsequent thereto up to the delivery of such certificate, the Registration
Statement and the Prospectus, and any amendments or supplements thereto,
contained all material information required to be included therein by the Act
and the Rules and Regulations, and in all material respects conformed to the
requirements of the Act and the Rules and Regulations, the Registration
Statement, and any amendment or supplement thereto, did not and does not
include any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, the Prospectus, and any amendment or supplement thereto, did
not and does not include any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and, since the
effective date of the Registration Statement, there has occurred no event
required to be set forth in an amended or supplemented Prospectus which has not
been so set forth; and
(iv) Subsequent to the respective dates as of which information is given
in the Registration Statement and Prospectus, there has not been any (a)
present or prospective material adverse change in the condition (financial or
otherwise), earnings, operations, business or business prospects of the
Company, (b) any transaction that is material to the Company, except
transactions entered into in the ordinary course of business, (c) any
obligation, direct or contingent, that is material to the Company, entered into
or committed to by the Company other than as described in the Registration
Statement and the Prospectus, (d) any change in the capital stock of the
Company, (e) any change in the outstanding indebtedness of the Company that is
material to the Company or is out of the ordinary course of business of the
Company, (f) any dividend or distribution of any kind declared, paid or made on
the capital stock of the Company, other than as described in the Registration
Statement and the Prospectus, or (g) any loss or damage (whether or not
insured) to the property of the Company which has been sustained or will have
been sustained which has a material adverse effect on the condition (financial
or otherwise), earnings, operations, business or business prospects of the
Company.
(h) The Company shall have obtained and delivered to you an agreement from
each officer, director and stockholder of the Company in writing prior to the
date hereof that such person will not, except as described below, during the
Lock-up Period, effect the Disposition of any Securities now owned or hereafter
acquired by such person or with respect to which such person has or hereafter
acquires the power of disposition, otherwise than (i) on the transfer of shares
of Common Stock or Securities during such person's lifetime by BONA FIDE gift
or upon death by will or intestacy, provided that any transferee agrees to be
bound by the Lock-Up Agreement, and (ii) on the transfer or other disposition
of shares of Common Stock or Securities as a distribution to limited partners
or stockholders of such person, provided that the distributees thereof agree to
be bound by the terms of the Lock-Up Agreement. The foregoing restriction
shall have been expressly agreed to preclude the holder of the Securities from
engaging in any hedging, pledge or other transaction which is designed
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26
to or may reasonably be expected to lead to or result in a Disposition by any
stockholder or any other person of any Securities, whether or not owned by a
stockholder, during the Lock-Up Period, even if such Securities would be
disposed of by someone other than such holder. Such prohibited hedging, pledge
or other transactions would include, without limitation, any short sale
(whether or not against the box), any pledge of shares covering an obligation
that matures or could reasonably mature during the Lock-Up Period, or any
purchase, sale or grant of any right (including, without limitation, any put or
call option) with respect to any Securities or with respect to any security
(other than a broad- based market basket or index) that includes, relates to or
derives any significant part of its value from Securities. Furthermore, such
person will have also agreed and consented to the entry of stop transfer
instructions with the Company's transfer agent against the transfer of the
Securities held by such person except in compliance with this restriction.
(i) The Shares have been approved for inclusion in the Nasdaq National
Market.
(j) The Company shall have executed and delivered the Representatives'
Warrant Agreement and shall have tendered to the Representatives the
Representatives' Warrants.
(k) The Company shall have furnished to you such further certificates and
documents as you shall reasonably request (including certificates of officers
of the Company) as to the accuracy of the representations and warranties of the
Company herein, as to the performance by the Company of its obligations
hereunder and as to the other conditions concurrent and precedent to the
obligations of the Underwriters hereunder.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
to Underwriters' Counsel. The Company will furnish you with such number of
conformed copies of such opinions, certificates, letters and documents as you
shall reasonably request.
7. OPTION SHARES.
(a) On the basis of the representations, warranties and agreements herein
contained, but subject to the terms and conditions herein set forth, the
Company hereby grants to the several Underwriters, for the purpose of covering
over-allotments in connection with the distribution and sale of the Firm Shares
only, a nontransferable option to purchase up to an aggregate of Option Shares
at the purchase price per share for the Firm Shares set forth in SECTION 3.
Such option may be exercised by the Representative on behalf of the several
Underwriters on one (1) or more occasions in whole or in part during the period
of forty-five (45) days after the date on which the Firm Shares are initially
offered to the public by giving written notice (the "OPTION NOTICE") to the
Company. The number of Option Shares to be purchased by each Underwriter upon
the exercise of such option shall be the same proportion of the total number of
Option Shares to be purchased by the several Underwriters pursuant to the
exercise of such option as the number of Firm Shares purchased by such
Underwriter (set forth in Schedule A hereto) bears to the total number of Firm
Shares purchased by the several Underwriters (set forth in Schedule A hereto),
adjusted by the Representative in such manner
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27
as to avoid fractional shares.
Delivery of definitive certificates for the Option Shares to be purchased
by the several Underwriters pursuant to the exercise of the option granted by
this SECTION 7 shall be made against payment of the purchase price therefor by
the several Underwriters by certified or official bank check or checks drawn in
NEXT DAY SAME-DAY funds, payable to the order of the Company (and the Company
agrees not to deposit any such check in the bank on which it is drawn, and not
to take any other action with the purpose or effect of receiving immediately
available funds, until the business day following the date of its delivery to
the Company, and in the event of any breach of the foregoing the Company shall
reimburse the Underwriters for the interest lost and any other expenses borne
by them by reason of such breach). In the event of any breach of such
definitive certificate delivery obligations, the Company shall reimburse the
Underwriters for the interest lost and any other expenses borne by them by
reason of such breach. Such delivery and payment shall take place at the
offices of Xxxxxx, Xxxx & Xxxxxxxx LLP, 0 Xxxx Xxxxx, Xxxxx 0000, Xxxxxx,
Xxxxxxxxxx or at such other place as may be agreed upon between the
Representative and the Company (i) on the Closing Date, if written notice of
the exercise of such option is received by the Company at least two (2) full
business days prior to the Closing Date, or (ii) on a date which shall not be
later than the third (3rd) full business day following the date the Company
receives written notice of the exercise of such option, if such notice is
received by the Company after the date two (2) full business days prior to the
Closing Date.
The certificates for the Option Shares to be so delivered will be made
available to you at such office or such other location including, without
limitation, in New York City, as you may reasonably request for checking at
least one (1) full business day prior to the date of payment and delivery and
will be in such names and denominations as you shall specify at least two (2)
full business days prior to such date of payment and delivery. If the
Representative so elects, delivery of the Option Shares may be made by credit
through full fast transfer to the accounts at The Depository Trust Company
designated by the Representative.
It is understood that you, individually, and not as the Representative of
the several Underwriters, may (but shall not be obligated to) make payment of
the purchase price on behalf of any Underwriter or Underwriters whose check or
checks shall not have been received by you prior to the date of payment and
delivery for the Option Shares to be purchased by such Underwriter or
Underwriters. Any such payment by you shall not relieve any such Underwriter
or Underwriters of any of its or their obligations hereunder.
(b) Upon exercise of any option provided for in SECTION 7(a), the
obligations of the several Underwriters to purchase such Option Shares will be
subject (as of the date hereof and as of the date of payment and delivery for
such Option Shares) to the accuracy of and compliance with the representations,
warranties and agreements of the Company herein, to the accuracy of the
statements of the Company and officers of the Company made pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder, to the conditions set forth in SECTION 6, and to the condition that
all proceedings taken at or prior to the payment date in connection with the
sale and transfer of such Option Shares shall be satisfactory in form and
substance to you and to Underwriters' Counsel, and you shall have
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28
been furnished with all such documents, certificates and opinions as you may
request in order to evidence the accuracy and completeness of any of the
representations, warranties or statements, the performance of any of the
covenants or agreements of the Company or the satisfaction of any of the
conditions herein contained.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject (including, without limitation, in its
capacity as an Underwriter or as a "qualified independent underwriter" within
the meaning of Schedule E of the Bylaws of the NASD), under the Act, the
Exchange Act or otherwise, specifically including, but not limited to, losses,
claims, damages, judgments, liabilities and expenses (including the fees and
expenses of counsel and other expenses in connection with investigating,
defending or settling any such action or claim) (or actions in respect
thereof), as they are incurred and regardless of whether the Indemnitee is a
party to the litigation, if any, arising out of or based upon (i) any breach
of any representation, warranty, agreement or covenant of the Company herein
contained, (ii) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or any amendment or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (iii) any untrue statement or alleged untrue
statement of any material fact contained in any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and agrees to reimburse each
Underwriter for any legal or other expenses reasonably incurred by it in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred; PROVIDED, HOWEVER, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage, liability or action arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, such Preliminary Prospectus or the Prospectus, or
any such amendment or supplement thereto, in reliance upon, and in conformity
with, written information relating to any Underwriter furnished to the Company
by such Underwriter, directly or through you, specifically for use in the
preparation thereof and, PROVIDED FURTHER, that the indemnity agreement
provided in this SECTION 8(a) with respect to any Preliminary Prospectus shall
not inure to the benefit of any Underwriter from whom the person asserting any
losses, claims, damages, liabilities or actions based upon any untrue statement
or alleged untrue statement of material fact or omission or alleged omission to
state therein a material fact purchased Shares, if a copy of the Prospectus in
which such untrue statement or alleged untrue statement or omission or alleged
omission was corrected had not been sent or given to such person within the
time required by the Act and the Rules and Regulations, unless such failure is
the result of noncompliance by the Company with SECTION 4(d).
The indemnity agreement in this SECTION 8(a) shall extend upon the same
terms and conditions to, and shall inure to the benefit of, each person, if
any, who controls any Underwriter within the meaning of the Act or the Exchange
Act and each of the agents,
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29
employees, officers and directors of each Underwriter and person who so
controls any Underwriter. This indemnity agreement shall be in addition to any
liabilities which the Company may otherwise have.
(b) Each Underwriter, severally and not jointly, agrees to indemnify and
hold harmless the Company against any losses, claims, damages or liabilities,
joint or several, to which the Company may become subject under the Act or
otherwise, specifically including, but not limited to, losses, claims, damages,
judgments liabilities and expenses (including the fees and expenses of counsel
and other expenses in connection with investigating, defending or settling any
such action or claim) (or actions in respect thereof), as they are incurred and
regardless of whether the Indemnitee is a party to the litigation, if any,
arising out of or based upon (i) any breach of any representation, warranty,
agreement or covenant of such Underwriter herein contained, (ii) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement or any amendment or supplement thereto, or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or (iii)
any untrue statement or alleged untrue statement of any material fact contained
in any Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, or the omission or alleged omission to state therein a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, in the case of subparagraphs (ii)
and (iii) of this SECTION 8(b) to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information furnished
to the Company by such Underwriter, directly or through you, specifically for
use in the preparation thereof, and agrees to reimburse the Company for any
legal or other expenses reasonably incurred by the Company in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred.
The indemnity agreement in this SECTION 8(b) shall extend upon the same
terms and conditions to, and shall inure to the benefit of, each officer of the
Company who signed the Registration Statement and each director of the Company,
and each person, if any, who controls the Company within the meaning of the Act
or the Exchange Act. This indemnity agreement shall be in addition to any
liabilities which each Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this SECTION 8 of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against any indemnifying party under
this SECTION 8, notify the indemnifying party in writing of the commencement
thereof, but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under this SECTION 8 except to the extent that it has been prejudiced by such
omission. In case any such action is brought against any indemnified party,
and it notified the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it shall elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party; PROVIDED, HOWEVER, that if the defendants in any such action
include both the
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30
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
which are different from or additional to those available to the indemnifying
party, the indemnified party or parties shall have the right to select separate
counsel to assume such legal defenses and to otherwise participate in the
defense of such action on behalf of such indemnified party or parties. Upon
receipt of notice from the indemnifying party to such indemnified party of the
indemnifying party's election so to assume the defense of such action and
approval by the indemnified party of counsel, the indemnifying party will not
be liable to such indemnified party hereunder for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the next preceding sentence (it being
understood, however, that the indemnifying party shall not be liable for the
expenses of more than one separate counsel (together with appropriate local
counsel) approved by the indemnifying party representing all the indemnified
parties under SECTION 8(a) or 8(b) hereof who are parties to such action), (ii)
the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense
of the indemnifying party. In no event shall any indemnifying party be liable
in respect of any amounts paid in settlement of any action unless the
indemnifying party shall have approved the terms of such settlement; PROVIDED
that such consent shall not be unreasonably withheld. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnification could have
been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
on all claims that are the subject matter of such proceeding.
(d) In order to provide for just and equitable contribution in any action
in which a claim for indemnification is made pursuant to this SECTION 8 but it
is judicially determined (by the entry of a final judgment or decree by a court
of competent jurisdiction and the expiration of time to appeal or the denial of
the last right of appeal) that such indemnification may not be enforced in such
case notwithstanding the fact that this SECTION 8 provides for indemnification
in such case, all the parties hereto shall contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (after contribution
from others) in such proportion so that the Underwriters severally and not
jointly are responsible pro rata for the portion represented by the percentage
that the underwriting discount bears to the public offering price, and the
Company is responsible for the remaining portion, PROVIDED, HOWEVER, that (i)
no Underwriter shall be required to contribute any amount in excess of the
amount by which the underwriting discount applicable to the Shares purchased by
such Underwriter exceeds the amount of damages which such Underwriter has
otherwise been required to pay and (ii) no person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation. The contribution agreement in this SECTION 8(d) shall
extend upon the same terms and conditions to, and shall inure to the benefit
of, each person, if any, who controls any Underwriter or the Company within the
meaning of the Act or the Exchange Act and each officer of the Company who
signed the Registration Statement and
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31
each director of the Company.
(e) The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof including, without limitation, the
provisions of this SECTION 8, and are fully informed regarding said provisions.
They further acknowledge that the provisions of this SECTION 8 fairly allocate
the risks in light of the ability of the parties to investigate the Company and
its business in order to assure that adequate disclosure is made in the
Registration Statement and Prospectus as required by the Act and the Exchange
Act.
9. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties, covenants and agreements of the
Company and the Underwriters herein or in certificates delivered pursuant
hereto, and the indemnity and contribution agreements contained in SECTION 8
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter within the meaning of the Act or the Exchange Act, or by or on
behalf of the Company, or any of its officers, directors or controlling persons
within the meaning of the Act or the Exchange Act, and shall survive the
delivery of the Shares to the several Underwriters hereunder or termination of
this Agreement.
10. SUBSTITUTION OF UNDERWRITERS. If any Underwriter or Underwriters
shall fail to take up and pay for the number of Firm Shares agreed by such
Underwriter or Underwriters to be purchased hereunder upon tender of such Firm
Shares in accordance with the terms hereof, and if the aggregate number of Firm
Shares which such defaulting Underwriter or Underwriters so agreed but failed
to purchase does not exceed 10% of the Firm Shares, the remaining Underwriters
shall be obligated, severally in proportion to their respective commitments
hereunder, to take up and pay for the Firm Shares of such defaulting
Underwriter or Underwriters.
If any Underwriter or Underwriters so defaults and the aggregate number
of Firm Shares which such defaulting Underwriter or Underwriters agreed but
failed to take up and pay for exceeds 10% of the Firm Shares, the remaining
Underwriters shall have the right, but shall not be obligated, to take up and
pay for (in such proportions as may be agreed upon among them) the Firm Shares
which the defaulting Underwriter or Underwriters so agreed but failed to
purchase. If such remaining Underwriters do not, at the Closing Date, take up
and pay for the Firm Shares which the defaulting Underwriter or Underwriters so
agreed but failed to purchase, the Closing Date shall be postponed for
twenty-four (24) hours to allow the several Underwriters the privilege of
substituting within twenty-four (24) hours (including non-business hours)
another underwriter or underwriters (which may include any nondefaulting
Underwriter) satisfactory to the Company. If no such underwriter or
underwriters shall have been substituted as aforesaid by such postponed Closing
Date, the Closing Date may, at the option of the Company, be postponed for a
further twenty-four (24) hours, if necessary, to allow the Company the
privilege of finding another underwriter or underwriters, satisfactory to you,
to purchase the Firm Shares which the defaulting Underwriter or Underwriters so
agreed but failed to purchase. If it shall be arranged for the remaining
Underwriters or substituted underwriter or underwriters to take up the Firm
Shares of the defaulting Underwriter or
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Underwriters as provided in this SECTION 10, (i) the Company shall have the
right to postpone the time of delivery for a period of not more than seven (7)
full business days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Company agrees promptly to file any
amendments to the Registration Statement, supplements to the Prospectus or
other such documents which may thereby be made necessary, and (ii) the
respective number of Firm Shares to be purchased by the remaining Underwriters
and substituted underwriter or underwriters shall be taken as the basis of
their underwriting obligation. If the remaining Underwriters shall not take up
and pay for all such Firm Shares so agreed to be purchased by the defaulting
Underwriter or Underwriters or substitute another underwriter or underwriters
as aforesaid and the Company shall not find or shall not elect to seek another
underwriter or underwriters for such Firm Shares as aforesaid, then this
Agreement shall terminate.
In the event of any termination of this Agreement pursuant to the
preceding paragraph of this SECTION 10, then, other than as set forth in the
Letter Agreement, the Company shall not be liable to any Underwriter (except as
provided in SECTIONS 5 and 8 hereof) nor shall any Underwriter (other than an
Underwriter who shall have failed, otherwise than for some reason permitted
under this Agreement, to purchase the number of Firm Shares agreed by such
Underwriter to be purchased hereunder, which Underwriter shall remain liable to
the Company and the other Underwriters for damages, if any, resulting from such
default) be liable to the Company (except to the extent provided in SECTIONS 5
and 8 hereof).
The term "Underwriter" in this Agreement shall include any person
substituted for an Underwriter under this SECTION 10.
11. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION.
(a) This Agreement shall become effective at the earlier of (i) 6:30 A.M.,
California time, on the first full business day following the effective date of
the Registration Statement, or (ii) the time of the public offering of any of
the Shares by the Underwriters after the Registration Statement becomes
effective. The time of the public offering shall mean the time of the release
by you, for publication, of the first newspaper advertisement relating to the
Shares, or the time at which the Shares are first generally offered by the
Underwriters to the public by letter, telephone, telegram or telecopy,
whichever shall first occur. By giving notice as set forth in SECTION 12
before the time this Agreement becomes effective, you, as Representative of the
several Underwriters, or the Company, may prevent this Agreement from becoming
effective without liability of any party to any other party, except as provided
in SECTIONS 4(i) and 8.
(b) You, as Representative of the several Underwriters, shall have the
right to terminate this Agreement by giving notice as hereinafter specified at
any time on or prior to the Closing Date or on or prior to any later date on
which Option Shares are to be purchased, as the case may be, (i) if the Company
shall have failed, refused or been unable to perform any agreement on its part
to be performed, or because any other condition of the Underwriters'
obligations hereunder required to be fulfilled is not fulfilled, including,
without limitation, any change in the condition (financial or otherwise),
earnings, operations, business or business
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33
prospects of the Company from that set forth in the Registration Statement or
Prospectus, which, in your sole judgment, is material and adverse, or (ii) if
additional governmental restrictions, not in force and effect on the date
hereof, shall have been imposed upon trading in securities generally or minimum
or maximum prices shall have been generally established on the New York Stock
Exchange or on the American Stock Exchange or in the over the counter market by
the NASD, or trading in securities generally shall have been suspended on
either such exchange or in the over the counter market by the NASD, or if a
banking moratorium shall have been declared by federal, New York or California
authorities, or (iii) if the Company shall have sustained a loss by strike,
fire, flood, earthquake, accident or other calamity of such character as to
interfere materially with the conduct of the business and operations of the
Company regardless of whether or not such loss shall have been insured, or (iv)
if there shall have been a material adverse change in the general political or
economic conditions or financial markets as in your judgment makes it
inadvisable or impracticable to proceed with the offering, sale and delivery of
the Shares, or (v) if there shall have been an outbreak or escalation of
hostilities or of any other insurrection or armed conflict or the declaration
by the United States of a national emergency which, in the opinion of the
Representative, makes it impracticable or inadvisable to proceed with the
public offering of the Shares as contemplated by the Prospectus. In the event
of termination pursuant to subparagraph (i) above, the Company shall remain
obligated to pay costs and expenses pursuant to SECTIONS 4(i), 5 and 8 . Any
termination pursuant to any of subparagraphs (ii) through (v) above shall be
without liability of any party to any other party except as provided in
SECTIONS 4(i) and 8.
If you elect to prevent this Agreement from becoming effective or to
terminate this Agreement as provided in this Section 11, you shall promptly
notify the Company by telephone, telecopy or telegram, in each case confirmed
by letter. If the Company shall elect to prevent this Agreement from becoming
effective, the Company shall promptly notify you by telephone, telecopy or
telegram, in each case, confirmed by letter.
12. NOTICES. All notices or communications hereunder, except as herein
otherwise specifically provided, shall be in writing and if sent to you shall
be mailed, delivered, telegraphed (and confirmed by letter) or telecopied (and
confirmed by letter) to you c/o Cruttenden Xxxx Incorporated, 00000 Xxx Xxxxxx,
Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000, telecopier number (000) 000-0000,
Attention: General Counsel; if sent to the Company, such notice shall be
mailed, delivered, telegraphed (and confirmed by letter) or telecopied (and
confirmed by letter) to 000 Xxxxx 0xx Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000,
telecopier number (715) ____-______ Attention: President.
13. PARTIES. This Agreement shall inure to the benefit of and be binding
upon the several Underwriters and the Company and their respective executors,
administrators, successors and assigns. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person or entity, other
than the parties hereto and their respective executors, administrators,
successors and assigns, and the controlling persons within the meaning of the
Act or the Exchange Act, officers and directors referred to in SECTION 8, any
legal or equitable right, remedy or claim in respect of this Agreement or any
provisions herein
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34
contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of the parties
hereto and their respective executors, administrators, successors and assigns
and said controlling persons and said officers and directors, and for the
benefit of no other person or entity. No purchaser of any of the Shares from
any Underwriter shall be construed a successor or assign by reason merely of
such purchase.
In all dealings with the Company under this Agreement, you shall act on
behalf of each of the several Underwriters, and the Company shall be entitled
to act and rely upon any statement, request, notice or agreement made or given
by you jointly or by Cruttenden Xxxx Incorporated on behalf of you.
14. APPLICABLE LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California.
15. COUNTERPARTS. This Agreement may be signed in several counterparts,
each of which will constitute an original.
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If the foregoing correctly sets forth the understanding among the Company
and the several Underwriters, please so indicate in the space provided below
for that purpose, whereupon this letter shall constitute a binding agreement
between the Company and the several Underwriters.
Very truly yours,
PRIMERA FOODS CORPORATION
By:___________________________________
Accepted as of the date first above written:
CRUTTENDEN XXXX INCORPORATED
On their behalf and on behalf of each
of the several Underwriters named in
Schedule A hereto.
By:_________________________________
Authorized Signatory
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SCHEDULE A
Number of Firm Shares Underwriters
to be Purchased
----------------------------------
Cruttenden Xxxx Incorporated ...........
Total................................
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