1
EXHIBIT 1.1
3,000,000 Shares
SUBURBAN LODGES OF AMERICA, INC.
Common Stock
UNDERWRITING AGREEMENT
November 19, 1996
XXXXXXXXXX SECURITIES
XXXXX XXXXXX INC.
X.X. XXXXXXXX & CO.
LEGACY SECURITIES CORP.
As Representatives of the several Underwriters
c/x XXXXXXXXXX SECURITIES
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Dear Sirs:
SECTION 1. Introductory. Suburban Lodges of America, Inc., a
Georgia corporation (the "Company") and the general partner of Suburban
Holdings, L.P. (the "Partnership"), proposes to issue and sell 2,977,983 shares
of its authorized but unissued Common Stock (the "Common Stock") and certain
shareholders of the Company named in Schedule B annexed hereto (the "Selling
Shareholders") propose to sell an aggregate of 22,017 shares of the Company's
issued and outstanding Common Stock to the several underwriters named in
Schedule A annexed hereto (the "Underwriters"), for whom you are acting as
Representatives. Said aggregate of 3,000,000 shares are herein called the
"Firm Common Shares." In addition, the Company proposes to grant to the
Underwriters an option to purchase up to 450,000 additional shares of Common
Stock (the "Optional Common Shares"), as provided in Section 5 hereof. The
Firm Common Shares and, to the extent such option is exercised, the Optional
Common Shares are hereinafter collectively referred to as the "Common Shares."
You have advised the Company and the Selling Shareholders that
the Underwriters propose to make a public offering of their respective portions
of the Common Shares on the effective date of the registration statement
hereinafter referred to, or as soon thereafter as in your judgment is
advisable.
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The Company and each of the Selling Shareholders hereby
confirm their respective agreements with respect to the purchase of the Common
Shares by the Underwriters as follows:
SECTION 2. Representations and Warranties of the Company and
the Selling Shareholders. The Company, the Partnership and each of the Selling
Shareholders hereby represent and warrant to the several Underwriters that:
(a) A registration statement on Form S-1 (File
No. 33-_____) with respect to the Common Shares has been prepared by
the Company in conformity with the requirements of the Securities Act
of 1933, as amended (the "Act"), and the rules and regulations (the
"Rules and Regulations") of the Securities and Exchange Commission
(the "Commission") thereunder, and has been filed with the Commission.
The Company has prepared and has filed or proposes to file prior to
the effective date of such registration statement an amendment or
amendments to such registration statement, which amendment or
amendments have been or will be similarly prepared. There have been
delivered to you three signed copies of such registration statement
and amendments, together with three copies of each exhibit filed
therewith. Conformed copies of such registration statement and
amendments (but without exhibits) and of the related preliminary
prospectus have been delivered to you in such reasonable quantities as
you have requested for each of the Underwriters. The Company will
next file with the Commission one of the following: (i) prior to
effectiveness of such registration statement, a further amendment
thereto, including the form of final prospectus, (ii) a final
prospectus in accordance with Rules 430A and 424(b) of the Rules and
Regulations, or (iii) a term sheet (the "Term Sheet") as described in
and in accordance with Rules 434 and 424(b) of the Rules and
Regulations. As filed, the final prospectus, if one is used, or the
Term Sheet and Preliminary Prospectus, if a final prospectus is not
used, shall include all Rule 430A Information (as hereinafter defined)
and, except to the extent that you shall agree in writing to a
modification, shall be in all substantive respects in the form
furnished to you prior to the date and time that this Agreement was
executed and delivered by the parties hereto, or, to the extent not
completed at such date and time, shall contain only such specific
additional information and other changes (beyond that contained in the
latest preliminary prospectus) as the Company shall have previously
advised you in writing would be included or made therein.
The term "Registration Statement" as used in this Agreement
shall mean such registration statement at the time such registration
statement becomes effective and, in the event any post-effective
amendment thereto becomes effective prior to the First Closing Date
(as hereinafter defined), shall also mean such registration statement
as so amended; provided, however, that such term shall also include
(i) all Rule 430A Information deemed to be included in such
registration statement at the time such registration statement becomes
effective as provided by Rule 430A of the Rules and Regulations and
(ii) any registration statement filed pursuant to Rule 462(b) of the
Rules and Regulations relating to the Common Shares. The term
"Preliminary Prospectus" shall mean any preliminary
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prospectus referred to in the preceding paragraph and any preliminary
prospectus included in the Registration Statement at the time it
becomes effective that omits Rule 430A Information. The term
"Prospectus" as used in this Agreement shall mean either (i) the
prospectus relating to the Common Shares in the form in which it is
first filed with the Commission pursuant to Rule 424(b) of the Rules
and Regulations, (ii) if a Term Sheet is not used and no filing
pursuant to Rule 424(b) of the Rules and Regulations is required,
shall mean the form of final prospectus included in the Registration
Statement at the time such Registration statement becomes effective,
or (iii) if a Term Sheet is used, the Term Sheet in the form in which
it is first filed with the Commission pursuant to Rule 424(b) of the
Rules and Regulations, together with the Preliminary Prospectus
included in the Registration Statement at the time it becomes
effective. The term "Rule 430A Information" means information with
respect to the Common Shares and the offering thereof permitted to be
omitted from the Registration Statement when it becomes effective
pursuant to Rule 430A of the Rules and Regulations.
(b) The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus, and
each Preliminary Prospectus has conformed in all material respects to
the requirements of the Act and the Rules and Regulations and, as of
its date, has not included any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; and at the time the Registration Statement becomes
effective, and at all times subsequent thereto up to and including
each Closing Date hereinafter mentioned, the Registration Statement
and the Prospectus, and any amendments or supplements thereto, will
contain all material statements and information required to be
included therein by the Act and the Rules and Regulations and will in
all material respects conform to the requirements of the Act and the
Rules and Regulations, and neither the Registration Statement nor the
Prospectus, nor any amendment or supplement thereto, will include any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; provided, however, no representation or
warranty contained in this subsection 2(b) shall be applicable to
information contained in or omitted from any Preliminary Prospectus,
the Registration Statement, the Prospectus or any such amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Underwriter, directly
or through the Representatives, specifically for use in the
preparation thereof.
(c) The Company does not own or control, directly
or indirectly, any corporation, association or other entity other than
the subsidiaries (individually, a "Subsidiary" and collectively, the
"Subsidiaries") listed in Exhibit [21] to the Registration Statement.
The Company and each of its Subsidiaries have been duly organized and
are validly existing as corporations or limited partnerships, as
applicable, in good standing under the laws of their respective
jurisdictions of organization, with full power and authority
(corporate or partnership, as applicable and other) to own and lease
their
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properties and conduct their respective businesses as described in the
Prospectus; the Company, directly or indirectly, owns all of the
outstanding capital stock and partnership interests, as applicable, of
its Subsidiaries free and clear of all claims, liens, charges and
encumbrances; the Company and each of its Subsidiaries are in
possession of and operating in compliance with all authorizations,
licenses, permits, consents, certificates and orders material to the
conduct of their respective businesses, all of which are valid and in
full force and effect; the Company and each of its Subsidiaries are
duly qualified to do business and in good standing as foreign
corporations or limited partnerships, as applicable, in each
jurisdiction in which the ownership or leasing of properties or the
conduct of their respective businesses requires such qualification,
except for jurisdictions in which the failure to so qualify would not
have a material adverse effect upon the Company or the Subsidiary; and
no proceeding has been instituted in any such jurisdiction, revoking,
limiting or curtailing, or seeking to revoke, limit or curtail, such
power and authority or qualification.
(d) The Company has an authorized and outstanding
capital stock as set forth under the heading "Capitalization" in the
Prospectus; the issued and outstanding shares of Common Stock have
been duly authorized and validly issued, are fully paid and
nonassessable, are duly listed on The Nasdaq Stock Market, have been
issued in compliance with all federal and state securities laws, were
not issued in violation of or subject to any preemptive rights or
other rights to subscribe for or purchase securities, and conform to
the description thereof contained in the Prospectus. All issued and
outstanding shares of capital stock or partnership interests, as
applicable, of each Subsidiary have been duly authorized and validly
issued and are fully paid and nonassessable. Except as disclosed in
or contemplated by the Prospectus and the financial statements of the
Company and the related notes thereto included in the Prospectus,
neither the Company nor any Subsidiary has outstanding any options to
purchase, or any preemptive rights or other rights to subscribe for or
to purchase, any securities or obligations convertible into, or any
contracts or commitments to issue or sell, shares of its capital stock
or partnership interests, as applicable, or any such options, rights,
convertible securities or obligations. The description of the
Company's stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted and exercised
thereunder, set forth in the Prospectus accurately and fairly presents
the information required to be shown with respect to such plans,
arrangements, options and rights.
(e) The Common Shares to be sold by the Company
have been duly authorized and, when issued, delivered and paid for in
the manner set forth in this Agreement, will be duly authorized,
validly issued, fully paid and nonassessable, and will conform to the
description thereof contained in the Prospectus. No preemptive rights
or other rights to subscribe for or purchase exist with respect to the
issuance and sale of the Common Shares by the Company pursuant to this
Agreement. No shareholder of the Company has any right which has not
been waived to require the Company to register the sale of any shares
owned by such shareholder under the Act in the public offering
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contemplated by this Agreement. No further approval or authority of
the shareholders or the Board of Directors of the Company will be
required for the issuance and sale of the Common Shares to be sold by
the Company as contemplated herein.
(f) Each of the Company and the Partnership has
full legal right, power and authority to enter into this Agreement and
perform the transactions contemplated hereby. This Agreement has been
duly authorized, executed and delivered by the Company and the
Partnership and constitutes a valid and binding obligation of the
Company and the Partnership in accordance with its terms, except to
the extent enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganization or other laws affecting the rights of
creditors generally and by principles of equity, whether considered at
law or equity. The making and performance of this Agreement by the
Company and the Partnership and the consummation of the transactions
herein contemplated will not violate any provisions of the articles of
incorporation or bylaws, or other organizational documents, of the
Company or any of its Subsidiaries, and will not conflict with, result
in the breach or violation of, or constitute, either by itself or upon
notice or the passage of time or both, a default under any agreement,
mortgage, deed of trust, lease, franchise, license, indenture, permit
or other instrument to which the Company or any of its Subsidiaries is
a party or by which the Company or any of its Subsidiaries or any of
their respective properties may be bound or affected, any statute or
any authorization, judgment, decree, order, rule or regulation of any
court or any regulatory body, administrative agency or other
governmental body applicable to the Company or any of its Subsidiaries
or any of their respective properties. No consent, approval,
authorization or other order of any court, regulatory body,
administrative agency or other governmental body is required for the
execution and delivery of this Agreement or the consummation of the
transactions contemplated by this Agreement, except for compliance
with the Act, the Blue Sky or Canadian securities laws applicable to
the public offering of the Common Shares by the several Underwriters
and the clearance of such offering with the National Association of
Securities Dealers, Inc. (the "NASD").
(g) Deloitte & Touche, LLP, who have expressed
their opinion with respect to the financial statements and schedules
filed with the Commission as a part of the Registration Statement and
included in the Prospectus and in the Registration Statement, are
independent accountants as required by the Act and the Rules and
Regulations.
(h) The combined financial statements and
schedules of the Company and the Affiliated Entities, the financial
statements of Gulf Coast Associates, Ltd. d/b/a Suburban Lodge of
Forest Park ("Gulf Coast"), and the related notes thereto included in
the Registration Statement and the Prospectus present fairly the
financial position of the Company and the Affiliated Entities and Gulf
Coast, respectively, as of the respective dates of such financial
statements and schedules, and the results of operations and changes in
financial position of the Company and the Affiliated Entities and Gulf
Coast, respectively, for the respective periods covered thereby. Such
statements, schedules and
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related notes have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis as certified by
Deloitte & Touche, LLP. No other financial statements or schedules
are required to be included in the Registration Statement. The
selected financial data set forth in the Prospectus under the captions
"Capitalization" and "Selected Combined Historical Financial Data"
fairly present the information set forth therein on the basis stated
in the Registration Statement. The pro forma financial information
(including the related notes) included in the Prospectus or any
Preliminary Prospectus complies as to form in all material respects to
the applicable accounting requirements of the Act and the Rules and
Regulations and management of the Company believes that the
assumptions underlying the pro forma adjustments are reasonable. Such
pro forma adjustments have been properly applied to the historical
amounts in the compilation of the information and such information
fairly represents with respect to the Company the financial position,
results of operations and other information purported to be shown
therein at the respective dates and for the respective periods
specified.
(i) Except as disclosed in the Prospectus, and
except as to defaults which individually or in the aggregate would not
be material to the Company, neither the Company nor any of its
Subsidiaries is in violation or default of any provision of its
certificate of incorporation or bylaws, or other organizational
documents, or is in breach of or default with respect to any provision
of any agreement, judgment, decree, order, mortgage, deed of trust,
lease, franchise, license, indenture, permit or other instrument to
which it is a party or by which it or any of its properties are bound;
and there does not exist any state of facts which constitutes an event
of default on the part of the Company or any such Subsidiary as
defined in such documents or which, with notice or lapse of time or
both, would constitute such an event of default.
(j) There are no contracts or other documents
required to be described in the Registration Statement or to be filed
as exhibits to the Registration Statement by the Act or by the Rules
and Regulations which have not been described or filed as required.
The contracts so described in the Prospectus are in full force and
effect on the date hereof; and neither the Company nor any of its
Subsidiaries, nor to the best of the Company's knowledge, any other
party is in breach of or default under any of such contracts.
(k) Except as disclosed in the Prospectus, there
are no legal or governmental actions, suits or proceedings pending or,
to the best of the Company's knowledge, threatened to which the
Company or any of its Subsidiaries is or may be a party or of which
property owned or leased by the Company or any of its Subsidiaries is
or may be the subject, or related to environmental or discrimination
matters, which actions, suits or proceedings might, individually or in
the aggregate, prevent or adversely affect the transactions
contemplated by this Agreement or result in a material adverse change
in the condition (financial or otherwise), properties, business,
results of operations or prospects of the Company or any of its
Subsidiaries, and no labor disturbance by the employees of the Company
or any of its Subsidiaries exists or is imminent which might be
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expected to affect adversely such condition, properties, business,
results of operations or prospects. Neither the Company nor any of
its Subsidiaries is a party or subject to the provisions of any
material injunction, judgment, decree or order of any court,
regulatory body, administrative agency or other governmental body.
(l) The Company or the applicable Subsidiary has
good and marketable title to all the properties and assets reflected
as owned in the financial statements hereinabove described (or
elsewhere in the Prospectus), and such properties and assets are not
subject to any lien, mortgage, pledge, charge or encumbrance of any
kind except (i) those, if any, reflected in such financial statements
(or elsewhere in the Prospectus), or (ii) those which are not material
in amount and do not adversely affect the use made and proposed to be
made of such property and assets by the Company and its Subsidiaries.
The Company or the applicable Subsidiary holds its leased properties
under valid and binding leases, with such exceptions as are not
materially significant in relation to the business of the Company.
Except as disclosed in the Prospectus, the Company or its Subsidiaries
owns or leases all such properties as are necessary to its operations
as now conducted or as proposed to be conducted.
(m) Since the respective dates as of which
information is given in the Registration Statement and Prospectus, and
except as described in or specifically contemplated by the Prospectus:
(i) the Company and its Subsidiaries have not incurred any material
liabilities or obligations, indirect, direct or contingent, or entered
into any material verbal or written agreement or other transaction
which is not in the ordinary course of business or which could result
in a material reduction in the future earnings of the Company or its
Subsidiaries; (ii) the Company and its Subsidiaries have not sustained
any material loss or interference with their respective businesses or
properties from fire, flood, windstorm, accident or other calamity,
whether or not covered by insurance; (iii) the Company has not paid or
declared any dividends or other distributions with respect to its
capital stock and the Company and its Subsidiaries are not in default
in the payment of principal or interest on any outstanding debt
obligations; (iv) there has not been any change in the capital stock
(other than upon the sale of the Common Shares hereunder and upon the
exercise of options and warrants described in the Registration
Statement) or indebtedness material to the Company and its
Subsidiaries (other than in the ordinary course of business); and (v)
there has not been any material adverse change in the condition
(financial or otherwise), business, properties, results of operations
or prospects of the Company or any Subsidiary.
(n) Except as disclosed in or specifically
contemplated by the Prospectus, the Company and its Subsidiaries have
sufficient trademarks, trade names, patent rights, mask works,
copyrights, licenses, approvals and governmental authorizations to
conduct their businesses as now conducted and as proposed to be
conducted as described in the Prospectus; the contemplated expiration
of any trademarks, trade names, patent rights, mask works, copyrights,
licenses, approvals or governmental
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authorizations would not have a material adverse effect on the
condition (financial or otherwise), business, results of operations or
prospects of the Company or any Subsidiary; and the Company has no
knowledge of any material infringement by it or its Subsidiaries of
trademark, trade name rights, patent rights, mask works, copyrights,
licenses, trade secret or other similar rights of others, and there is
no claim being made against the Company or any Subsidiary regarding
trademark, trade name, patent, mask work, copyright, license, trade
secret or other infringement which could have a material adverse
effect on the condition (financial or otherwise), business, results of
operations or prospects of the Company and its Subsidiaries.
(o) The Company has not been advised, and has no
reason to believe, that the Company or any of its Subsidiaries is not
conducting business in compliance with all applicable laws, rules and
regulations of the jurisdictions in which it is conducting business,
including, without limitation, all applicable local, state and federal
environmental laws and regulations; except where failure to be so in
compliance would not materially adversely affect the condition
(financial or otherwise), business, properties, results of operations
or prospects of the Company or any Subsidiary.
(p) The Company and its Subsidiaries have filed
all necessary federal, state and foreign income and franchise tax
returns and have paid all taxes shown as due thereon; and the Company
has no knowledge of any tax deficiency which has been or might be
asserted or threatened against the Company and its Subsidiaries which
could materially adversely affect the condition (financial or
otherwise), business, properties, results of operations or prospects
of the Company and its Subsidiaries.
(q) Neither the Company nor any of its
Subsidiaries is an "investment company," or a company "controlled" by
an "investment company," within the meaning of the Investment Company
Act of 1940, as amended.
(r) The Company has not distributed and will not
distribute prior to the First Closing Date any offering material in
connection with the offering and sale of the Common Shares other than
the Prospectus, the Registration Statement and other materials
permitted by the Act.
(s) Each of the Company and its Subsidiaries
maintains insurance of the types and in the amounts generally deemed
adequate for their respective businesses, including, but not limited
to, insurance covering real and personal property owned or leased by
the Company and its Subsidiaries against theft, damage, destruction,
acts of vandalism and all other risks customarily insured against, all
of which insurance is in full force and effect.
(t) Neither the Company nor any of its
Subsidiaries has at any time during the last five years (i) made any
unlawful contribution to any candidate for foreign
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office, or failed to disclose fully any contribution in violation of
law, or (ii) made any payment to any federal or state governmental
officer or official, or other person charged with similar public or
quasi-public duties, other than payments required or permitted by the
laws of the United States or any jurisdiction thereof.
(u) The Company has not taken and will not take,
directly or indirectly, any action designed to or that might be
reasonably expected to cause or result in stabilization or
manipulation of the price of the Common Stock to facilitate the sale
or resale of the Common Shares.
(v) No person (other than the Company) has an
option or right of first refusal to purchase all or part of any of the
Properties or any interest therein. Each of the Properties complies
with all applicable codes, laws and regulations (including, without
limitation, building and zoning codes, laws and regulations and laws
relating to access to the Properties), except if and to the extent
disclosed in the Prospectus and except for such failures to comply
that would not individually or in the aggregate have a material
adverse effect on the condition (financial or otherwise), business,
properties, results of operations or prospects of the Company and its
Subsidiaries, taken as a whole. The Company has no knowledge of any
pending or threatened condemnation proceedings, zoning changes, or
other proceeding or action that will in any manner affect the size of,
use of, improvements on, construction on or access to the Properties,
except such proceedings or actions that would not have a material
adverse effect on the condition (financial or otherwise), business,
properties, results of operations or prospects of the Company and its
Subsidiaries, taken as a whole.
(w) To the best of the Company's knowledge, no
dispute exists or is imminent with any franchisee (individually, a
"Franchisee" and collectively, the "Franchisees") or with the
Franchisees of the Company and its Subsidiaries that could have a
material adverse effect on the condition (financial or otherwise),
business, properties, results of operations or prospects of the
Company and its Subsidiaries, taken as a whole.
(x) Each Franchisee is such by virtue of being a
party to a franchise agreement with either the Company or a Subsidiary
and assuming each such agreement has been duly authorized, executed
and delivered by the parties thereto, other than the Company or a
Subsidiary, each such contract constitutes a valid, legal and binding
obligation of each party thereto, enforceable against the Company or a
Subsidiary in accordance with its terms, except (i) for any one or
more of such franchise agreements as would not have a material adverse
effect on the condition (financial or otherwise), business,
properties, results of operations or prospects of the Company and its
Subsidiaries, taken as a whole, and (ii) to the extent that
enforceability may be limited by general equitable principles,
bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally. The Company and each
Subsidiary have
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complied with and are currently complying in all material respects
with the rules and regulations of the United States Federal Trade
Commission and the comparable laws, rules and regulations of each
state or state agency applicable to the franchising business of the
Company and such Subsidiary in each state in which the Company or such
Subsidiary is doing business.
(y) The Company and each of its Subsidiaries
maintains a system of internal accounting controls sufficient to
provide reasonable assurances that (i) transactions are executed in
accordance with management's general or specific authorization, (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets, (iii) access to
assets is permitted only in accordance with management's general or
specific authorization, and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(z) No Subsidiary is currently prohibited,
directly or indirectly, (i) from paying any dividends to the Company
and SLA Properties, Inc., (ii) from making any other distributions to
the Company or SLA Properties, Inc., or (iii) from repaying to the
Company and SLA Properties, Inc. any loans or advances, except as
disclosed in the Prospectus.
For purposes of this Section 2, "the best of the Company's knowledge"
or a similar phrase means the knowledge of each of Xxxxx X. Xxxxxxxx, Xxx X.
Xxxxxx, Xxxx X. Xxxxxxxxx and Xxxxx X. Xxxxxxx, after diligent inquiry of
persons who should have knowledge of the facts relevant to such
representations.
SECTION 3. Representations, Warranties and Covenants of the
Selling Shareholders.
(a) Each of the Selling Shareholders represents
and warrants to, and agrees with, the several Underwriters
that:
(i) Such Selling Shareholder has, and on
the First Closing Date hereinafter mentioned will
have, good and marketable title to the Common Shares
proposed to be sold by such Selling Shareholder
hereunder on such Closing Date and full right, power
and authority to enter into this Agreement and to
sell, assign, transfer and deliver such Common Shares
hereunder, free and clear of all voting trust
arrangements, liens, encumbrances, equities,
securities interests, restrictions and claims
whatsoever; and upon delivery of and payment for such
Common Shares hereunder, the Underwriters will
acquire good and marketable title thereto,
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free and clear of all liens, encumbrances, equities,
claims, restrictions, security interests, voting
trusts or other defects of title whatsoever.
(ii) Such Selling Shareholder has
executed and delivered a Power of Attorney and caused
to be executed and delivered on his behalf a Custody
Agreement (hereinafter collectively referred to as
the "Shareholders Agreement") and in connection
herewith such Selling Shareholder further represents,
warrants and agrees that such Selling Shareholder has
deposited in custody, under the Shareholders
Agreement, with the agent named therein (the "Agent")
as custodian, certificates in negotiable form for the
Common Shares to be sold hereunder by such Selling
Shareholder, for the purpose of further delivery
pursuant to this Agreement. Such Selling Shareholder
agrees that the Common Shares to be sold by such
Selling Shareholder on deposit with the Agent are
subject to the interests of the Company and the
Underwriters, that the arrangements made for such
custody are to that extent irrevocable, and that the
obligations of such Selling Shareholder hereunder
shall not be terminated, except as provided in this
Agreement or in the Shareholders Agreement, by any
act of such Selling Shareholder, by operation of law,
by the death or incapacity of such Selling
Shareholder or by the occurrence of any other event.
If the Selling Shareholder should die or become
incapacitated, or if any other event should occur,
before the delivery of the Common Shares hereunder,
the documents evidencing Common Shares then on
deposit with the Agent shall be delivered by the
Agent in accordance with the terms and conditions of
this Agreement as if such death, incapacity or other
event had not occurred, regardless of whether or not
the Agent shall have received notice thereof. This
Agreement and the Shareholders Agreement have been
duly executed and delivered by or on behalf of such
Selling Shareholder and the form of such Shareholders
Agreement has been delivered to you.
(iii) The performance of this Agreement
and the Shareholders Agreement and the consummation
of the transactions contemplated hereby and by the
Shareholders Agreement will not result in a breach or
violation by such Selling Shareholder of any of the
terms or provisions of, or constitute a default by
such Selling Shareholder under, any indenture,
mortgage, deed of trust, trust (constructive or
other), loan agreement, lease, franchise, license or
other agreement or instrument to which such Selling
Shareholder is a party or by which such Selling
Shareholder or any of its properties is bound, any
statute, or any judgment, decree, order, rule or
regulation of any court or governmental agency or
body applicable to such Selling Shareholder or any of
its properties.
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(iv) Such Selling Shareholder has not
taken and will not take, directly or indirectly, any
action designed to or which has constituted or which
might reasonably be expected to cause or result in
stabilization or manipulation of the price of any
security of the Company to facilitate the sale or
resale of the Common Shares.
(v) Each Preliminary Prospectus and the
Prospectus, insofar as it has related to such Selling
Shareholder, has conformed in all material respects
to the requirements of the Act and the Rules of
Regulations and has not included any untrue statement
of a material fact or omitted to state a material
fact necessary to make the statements therein not
misleading in light of the circumstances under which
they were made; and neither the Registration
Statement nor the Prospectus, nor any amendment or
supplement thereto, as it relates to such Selling
Shareholder, will include any untrue statement of a
material fact or omit to state any material fact
required to be stated therein or necessary to make
the statements therein not misleading.
(vi) Such Selling Shareholder is not
aware that any of the representations and warranties
set forth in Section 2 above is untrue or inaccurate
in any material respect.
(b) Each of the Selling Shareholders agrees with
the Company and the Underwriters not to offer to sell, sell or
contract to sell or otherwise dispose of any shares of Common
Stock or securities convertible into or exchangeable for any
shares of Common Stock, for a period of 180 days after the
first date that any of the Common Shares are released by you
for sale to the public, without the prior written consent of
either Xxxxxxxxxx Securities or each of the Representatives,
which consent may be withheld at the sole discretion of
Xxxxxxxxxx Securities or each of the Representatives, as the
case may be.
SECTION 4. Representations and Warranties of the
Underwriters. The Representatives, on behalf of the several Underwriters,
represent and warrant to the Company and the Selling Shareholders that the
information set forth (i) on the cover page of the Prospectus with respect to
price, underwriting discounts and commissions and terms of offering and (ii)
under "Underwriting" in the Prospectus was furnished to the Company by and on
behalf of the Underwriters for use in connection with the preparation of the
Registration Statement and the Prospectus and is correct in all material
respects. The Representatives represent and warrant that they have been
authorized by each of the other Underwriters as the Representatives to enter
into this Agreement on its behalf and to act for it in the manner herein
provided.
SECTION 5. Purchase, Sale and Delivery of Common Shares. On
the basis of the representations, warranties and agreements herein contained,
but subject to the terms and
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conditions herein set forth, (i) the Company agrees to issue and sell to the
Underwriters 2,977,983 of the Firm Common Shares, and (ii) the Selling
Shareholders agree, severally and not jointly, to sell to the Underwriters in
the respective amounts set forth in Schedule B hereto, an aggregate of 22,017
of the Firm Common Shares. The Underwriters agree, severally and not jointly,
to purchase from the Company and the Selling Shareholders, respectively, the
number of Firm Common Shares set forth opposite the name of each such
Underwriter in Schedule A hereto. The purchase price per share to be paid by
the several Underwriters to the Company and to the Selling Shareholders,
respectively, shall be $17.79 per share.
Delivery of certificates for the Firm Common Shares to be
purchased by the Underwriters and payment therefor shall be made at the offices
of Xxxxxxxxxx Securities, 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx (or
such other place as may be agreed upon by the Company and the Representatives)
at such time and date, not later than the third (or, if the Firm Common Shares
are priced, as contemplated by Rule 15c6-1(c) under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), after 4:30 P.M. Washington D.C. time,
the fourth) full business day following the first date that any of the Common
Shares are released by you for sale to the public, as you shall designate by at
least 48 hours prior notice to the Company (or at such other time and date, not
later than one week after such third or fourth, as the case may be, full
business day as may be agreed upon by the Company and the Representatives) (the
"First Closing Date"); provided, however, that if the Prospectus is at any time
prior to the First Closing Date recirculated to the public, the First Closing
Date shall occur upon the later of the third or fourth, as the case may be,
full business day following the first date that any of the Common Shares are
released by you for sale to the public or the date that is 48 hours after the
date that the Prospectus has been so recirculated.
Delivery of certificates for the Firm Common Shares shall be
made by or on behalf of the Company and the Selling Shareholders to you, for
the respective accounts of the Underwriters with respect to the Firm Common
Shares to be sold by the Company and by the Selling Shareholders against
payment by you, for the accounts of the several Underwriters, of the purchase
price therefor by wire transfer of immediately available funds to the Company
and to the Agent in proportion to the number of Firm Common Shares to be sold
by the Company and the Selling Shareholders, respectively. The certificates
for the Firm Common Shares shall be registered in such names and denominations
as you shall have requested at least two full business days prior to the First
Closing Date, and shall be made available for checking and packaging on the
business day preceding the First Closing Date at a location in New York, New
York, as may be designated by you. Time shall be of the essence, and delivery
at the time and place specified in this Agreement is a further condition to the
obligations of the Underwriters.
In addition, on the basis of the representations, warranties
and agreements herein contained, but subject to the terms and conditions herein
set forth, the Company hereby grants an option to the several Underwriters to
purchase, severally and not jointly, up to an aggregate of 450,000 Optional
Common Shares at the purchase price per share to be paid for the Firm Common
Shares, for use solely in covering any over-allotments made by you for the
account of
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the Underwriters in the sale and distribution of the Firm Common Shares. The
option granted hereunder may be exercised at any time (but not more than once)
within 30 days after the first date that any of the Common Shares are released
by you for sale to the public, upon notice by you to the Company setting forth
the aggregate number of Optional Common Shares as to which the Underwriters are
exercising the option, the names and denominations in which the certificates
for such shares are to be registered and the time and place at which such
certificates will be delivered. Such time of delivery (which may not be earlier
than the First Closing Date), being herein referred to as the "Second Closing
Date," shall be determined by you, but if at any time other than the First
Closing Date shall not be earlier than three nor later than five full business
days after delivery of such notice of exercise. The number of Optional Common
Shares to be purchased by each Underwriter shall be determined by multiplying
the number of Optional Common Shares to be sold by the Company pursuant to such
notice of exercise by a fraction, the numerator of which is the number of Firm
Common Shares to be purchased by such Underwriter as set forth opposite its
name in Schedule A and the denominator of which is 3,000,000 (subject to such
adjustments to eliminate any fractional share purchases as you in your
discretion may make). Certificates for the Optional Common Shares will be made
available for checking and packaging on the business day preceding the Second
Closing Date at a location in New York, New York, as may be designated by you.
The manner of payment for and delivery of the Optional Common Shares shall be
the same as for the Firm Common Shares purchased from the Company as specified
in the two preceding paragraphs. At any time before lapse of the option, you
may cancel such option by giving written notice of such cancellation to the
Company. If the option is canceled or expires unexercised in whole or in part,
the Company will deregister under the Act the number of Option Shares as to
which the option has not been exercised.
You have advised the Company and the Selling Shareholders that
each Underwriter has authorized you to accept delivery of its Common Shares, to
make payment and to receipt therefor. You, individually and not as the
Representatives of the Underwriters, may (but shall not be obligated to) make
payment for any Common Shares to be purchased by any Underwriter whose funds
shall not have been received by you by the First Closing Date or the Second
Closing Date, as the case may be, for the account of such Underwriter, but any
such payment shall not relieve such Underwriter from any of its obligations
under this Agreement.
Subject to the terms and conditions hereof, the Underwriters
propose to make a public offering of their respective portions of the Common
Shares as soon after the effective date of the Registration Statement as in the
judgment of the Representatives is advisable and at the public offering price
set forth on the cover page of and on the terms set forth in the final
prospectus, if one is used, or on the first page of the Term Sheet, if one is
used.
SECTION 6. Covenants of the Company. The Company covenants
and agrees that:
(a) The Company will use its best efforts to cause the
Registration Statement and any amendment thereof, if not effective at
the time and date that this Agreement is
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executed and delivered by the parties hereto, to become effective. If
the Registration Statement has become or becomes effective pursuant to
Rule 430A of the Rules and Regulations, or the filing of the
Prospectus is otherwise required under Rule 424(b) of the Rules and
Regulations, the Company will file the Prospectus, properly completed,
pursuant to the applicable paragraph of Rule 424(b) of the Rules and
Regulations within the time period prescribed and will provide
evidence satisfactory to you of such timely filing. The Company will
promptly advise you in writing (i) of the receipt of any comments of
the Commission, (ii) of any request of the Commission for amendment of
or supplement to the Registration Statement (either before or after it
becomes effective), any Preliminary Prospectus or the Prospectus or
for additional information, (iii) when the Registration Statement
shall have become effective, and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or of the institution of any proceedings for
that purpose. If the Commission shall enter any such stop order at
any time, the Company will use its best efforts to obtain the lifting
of such order at the earliest possible moment. The Company will not
file any amendment or supplement to the Registration Statement (either
before or after it becomes effective), any Preliminary Prospectus or
the Prospectus of which you have not been furnished with a copy a
reasonable time prior to such filing or to which you reasonably object
or which is not in compliance with the Act and the Rules and
Regulations.
(b) The Company will prepare and file with the
Commission, promptly upon your request, any amendments or supplements
to the Registration Statement or the Prospectus which in your judgment
may be necessary or advisable to enable the several Underwriters to
continue the distribution of the Common Shares and will use its best
efforts to cause the same to become effective as promptly as possible.
The Company will fully and completely comply with the provisions of
Rule 430A of the Rules and Regulations with respect to information
omitted from the Registration Statement in reliance upon such Rule.
(c) If at any time within the nine-month period referred
to in Section 10(a) (3) of the Act during which a prospectus relating
to the Common Shares is required to be delivered under the Act any
event occurs, as a result of which the Prospectus, including any
amendments or supplements, would include an untrue statement of a
material fact, or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading, or if it is necessary at any time to amend the Prospectus,
including any amendments or supplements, to comply with the Act or the
Rules and Regulations, the Company will promptly advise you thereof
and will promptly prepare and file with the Commission, at its own
expense, an amendment or supplement which will correct such statement
or omission or an amendment or supplement which will effect such
compliance and will use its best efforts to cause the same to become
effective as soon as possible; and, in case any Underwriter is
required to deliver a prospectus after such nine-month period, the
Company upon request, but at the expense of such Underwriter, will
promptly prepare such amendment or amendments to the Registration
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Statement and such Prospectus or Prospectuses as may be necessary to
permit compliance with the requirements of Section 10(a) (3) of the
Act.
(d) The Company will timely file such reports pursuant to
the Exchange Act as are necessary in order to make generally available
to its security holders as soon as practicable an earnings statement
for the purposes of, and to provide the benefits contemplated by, the
last paragraph of Section 11(a) of the Act.
(e) During such period as a prospectus is required by law
to be delivered in connection with sales by an Underwriter or dealer,
the Company, at its expense, but only for the nine-month period
referred to in Section 10(a) (3) of the Act, will furnish to you or
mail to your order copies of the Registration Statement, the
Prospectus, the Preliminary Prospectus and all amendments and
supplements to any such documents in each case as soon as available
and in such quantities as you may request, for the purposes
contemplated by the Act.
(f) The Company shall cooperate with you and your counsel
in order to qualify or register the Common Shares for sale under (or
obtain exemptions from the application of) the Blue Sky or Canadian
securities laws of such jurisdictions as you designate, will comply
with such laws and will continue such qualifications, registrations
and exemptions in effect so long as reasonably required for the
distribution of the Common Shares. The Company shall not be required
to qualify as a foreign corporation or to file a general consent to
service of process in any such jurisdiction where it is not presently
qualified or where it would be subject to taxation as a foreign
corporation. The Company will advise you promptly of the suspension
of the qualification or registration of (or any such exemption
relating to) the Common Shares for offering, sale or trading in any
jurisdiction or any initiation or threat of any proceeding for any
such purpose, and in the event of the issuance of any order suspending
such qualification, registration or exemption, the Company, with your
cooperation, will use its best efforts to obtain the withdrawal
thereof.
(g) During the period of five years hereafter, the
Company will furnish to the Representatives and, upon request of the
Representatives, to each of the other Underwriters: (i) as soon as
practicable after the end of each fiscal year, copies of the Annual
Report of the Company containing the balance sheet of the Company as
of the close of such fiscal year and statements of income,
shareholders' equity and cash flows for the year then ended and the
opinion thereon of the Company's independent public accountants; (ii)
as soon as practicable after the filing thereof, copies of each proxy
statement, Annual Report on Form 10-K, Quarterly Report on Form 10-Q,
Report on Form 8-K or other report filed by the Company with the
Commission, the NASD or any securities exchange; and (iii) as soon as
available, copies of any report or communication of the Company mailed
generally to holders of its Common Stock.
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(h) During the period of 180 days after the first date
that any of the Common Shares are released by you for sale to the
public, without the prior written consent of Xxxxxxxxxx Securities
(which consent may be withheld at the sole discretion of Xxxxxxxxxx
Securities), the Company will not other than pursuant to outstanding
stock options and warrants disclosed in the Prospectus issue, offer,
sell, grant options to purchase or otherwise dispose of any of the
Company's equity securities or any other securities convertible into
or exchangeable with its Common Stock or other equity security.
(i) The Company will apply the net proceeds of the sale
of the Common Shares sold by it substantially in accordance with its
statements under the caption "Use of Proceeds" in the Prospectus.
(j) The Company will use its best efforts to qualify or
register its Common Stock for sale in non- issuer transactions under
(or obtain exemptions from the application of) the Blue Sky laws of
the State of California (and thereby permit market making transactions
and secondary trading in the Company's Common Stock in California),
will comply with such Blue Sky laws and will continue such
qualifications, registrations and exemptions in effect for a period of
five years after the date hereof.
(k) The Company will use its best efforts to designate
the Common Stock for quotation as a national market system security on
The Nasdaq Stock Market.
You, on behalf of the Underwriters, may, in your sole
discretion, waive in writing the performance by the Company of any one or more
of the foregoing covenants or extend the time for their performance.
SECTION 7. Payment of Expenses. Whether or not the
transactions contemplated hereunder are consummated or this Agreement becomes
effective or is terminated, the Company and, unless otherwise paid by the
Company, the Selling Shareholders agree to pay in such proportions as they may
agree among themselves all costs, fees and expenses incurred in connection with
the performance of their obligations hereunder and in connection with the
transactions contemplated hereby, including without limiting the generality of
the foregoing, (i) all expenses incident to the issuance and delivery of the
Common Shares (including all printing and engraving costs), (ii) all fees and
expenses of the registrar and transfer agent of the Common Stock, (iii) all
necessary issue, transfer and other stamp taxes in connection with the issuance
and sale of the Common Shares to the Underwriters, (iv) all fees and expenses
of the Company's counsel and the Company's independent accountants, (v) all
costs and expenses incurred in connection with the preparation, printing,
filing, shipping and distribution of the Registration Statement, each
preliminary Prospectus and the Prospectus (including all exhibits and financial
statements) and all amendments and supplements provided for herein, this
Agreement, the Agreement Among Underwriters, the Selected Dealers Agreement,
the Underwriters' Questionnaire, the Underwriters' Power of Attorney and the
Blue Sky memorandum, (vi) all filing
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fees, attorneys' fees and expenses incurred by the Company or the Underwriters
in connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Common Shares for
offer and sale under the Blue Sky laws or the securities laws of Canada, (vii)
the filing fee of the NASD, and (viii) all other fees, costs and expenses
referred to in Item [13] of the Registration Statement. The Underwriters may
deem the Company to be the primary obligor with respect to all costs, fees and
expenses to be paid by the Company and by the Selling Shareholders. Except as
provided in this Section 7, Section 9 and Section 11 hereof, the Underwriters
shall pay all of their own expenses, including the fees and disbursements of
their counsel (excluding those relating to qualification, registration or
exemption under the Blue Sky and Canadian securities laws and the Blue Sky
memorandum referred to above). This Section 7 shall not affect any agreements
relating to the payment of expenses between the Company and the Selling
Shareholders.
The Selling Shareholders will pay (directly or by
reimbursement) all fees and expenses incident to the performance of their
obligations under this Agreement which are not otherwise specifically provided
for herein, including but not limited to (i) any fees and expenses of counsel
for such Selling Shareholders, (ii) any fees and expenses of the Agent, and
(iii) all expenses and taxes incident to the sale and delivery of the Common
Shares to be sold by such Selling Shareholders to the Underwriters hereunder.
SECTION 8. Conditions of the Obligations of the Underwriters.
The obligations of the several Underwriters to purchase and pay for the Firm
Common Shares on the First Closing Date and the Optional Common Shares on the
Second Closing Date shall be subject to the accuracy of the representations and
warranties on the part of the Company, the Partnership and the Selling
Shareholders herein set forth as of the date hereof and as of the First Closing
Date, to the accuracy of the statements of Company officers, Partnership
officers and the Selling Shareholders made pursuant to the provisions hereof,
to the performance by the Company, the Partnership and the Selling Shareholders
of their respective obligations hereunder, and to the following additional
conditions:
(a) The Registration Statement shall have become
effective not later than 5:00 P.M., (or, in the case of a registration
statement filed pursuant to 462(b) of the Rules and Regulations
relating to the Common Shares, not later than 10 P.M.), Washington,
D.C. Time, on the date of this Agreement, or at such later time as
shall have been consented to by you; if the filing of the Prospectus,
or any supplement thereto, is required pursuant to Rule 424(b) of the
Rules and Regulations, the Prospectus shall have been filed in the
manner and within the time period required by Rule 424(b) of the Rules
and Regulations; and prior to such Closing Date, no stop order
suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been
instituted or shall be pending or, to the knowledge of the Company,
the Selling Shareholders, or you, shall be contemplated by the
Commission; and any request of the Commission for inclusion of
additional information in the Registration Statement, or otherwise,
shall have been complied with to your satisfaction.
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(b) You shall be satisfied that since the respective
dates as of which information is given in the Registration Statement
and Prospectus, (i) there shall not have been any change in the
capital stock (other than pursuant to the exercise of outstanding
options and warrants disclosed in the Prospectus) of the Company or
any of its Subsidiaries or any material change in the indebtedness
(other than in the ordinary course of business) of the Company or any
of its Subsidiaries, (ii) except as set forth or contemplated by the
Registration Statement or the Prospectus, no material verbal or
written agreement or other transaction shall have been entered into by
the Company or any of its Subsidiaries, which is not in the ordinary
course of business or which could result in a material reduction in
the future earnings of the Company or any of its Subsidiaries, (iii)
no loss or damage (whether or not insured) to the property of the
Company or any of its Subsidiaries shall have been sustained which
materially and adversely affects the condition (financial or
otherwise), business, results of operations or prospects of the
Company or any of its Subsidiaries, (iv) no legal or governmental
action, suit or proceeding affecting the Company or any of its
Subsidiaries which is material to the Company or any of its
Subsidiaries or which affects or may affect the transactions
contemplated by this Agreement shall have been instituted or
threatened, and (v) there shall not have been any material change in
the condition (financial or otherwise), business, management, results
of operations or prospects of the Company or any of its Subsidiaries
which makes it impractical or inadvisable in the judgment of the
Representatives to proceed with the public offering or purchase the
Common Shares as contemplated hereby.
(c) There shall have been furnished to you, as
Representatives of the Underwriters, on each Closing Date, in form and
substance satisfactory to you, except as otherwise expressly provided
below:
(i) An opinion of Xxxxxxxxxx & Xxxx, counsel for
the Company and the Selling Shareholders, addressed
to the Underwriters and dated the First Closing Date,
or the Second Closing Date (in the latter case with
respect to the Company only), as the case may be, to
the effect that:
(1) Each of the Company and its
Subsidiaries has been duly incorporated and
is validly existing as a corporation in good
standing under the laws of its jurisdiction
of incorporation, is duly qualified to do
business as a foreign corporation and is in
good standing in all other jurisdictions
where the ownership or leasing of properties
or the conduct of its business requires such
qualification, except for jurisdictions in
which the failure to so qualify would not
have a material adverse effect on the Company
and its Subsidiaries, and has full corporate
power and authority to own its properties and
conduct its business as described in the
Registration Statement;
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(2) The Partnership is a limited
partnership formed and validly existing under
the Georgia Uniform Limited Partnership Act
with the partnership power to own and lease
its properties and to conduct its business as
now conducted. The Partnership is qualified
to transact business as a foreign partnership
and is in good standing in all other
jurisdictions where the ownership or leasing
of properties or the conduct of its business
requires such qualification, except for
jurisdictions in which the failure to so
qualify would not have a material adverse
effect on the Company, its Subsidiaries and
the Partnership;
(3) The authorized, issued and
outstanding capital stock of the Company is
as set forth under the caption
"Capitalization" in the Prospectus; all
necessary and proper corporate proceedings
have been taken in order to authorize validly
such authorized capital stock, all
outstanding shares of capital stock have been
duly and validly issued, are fully paid
and nonassessable, were not issued in
violation of or subject to any preemptive
rights; without limiting the foregoing, there
are no preemptive or other rights to
subscribe for or purchase any securities,
arising by operation of law or under the
Company's Articles of Incorporation or bylaws
or under any agreement known to such counsel
to which the Company or any of its
Subsidiaries is a party, and conform to the
description thereof contained in the
Prospectus, all offers and sales of the
Company's Common Stock prior to the date
hereof were at all relevant times either
registered with the Commission under the
Registration Statement or exempt from the
registration requirements of the Act by
reason of Sections 3(b), 4(2) or 4(6) thereof
and were the subject of an available
exemption from the registration requirements
of the applicable state securities or blue
sky laws of the Common Stock to be sold by
the Company hereunder;
(4) All of the issued and
outstanding shares of the Company's
Subsidiaries have been duly and validly
authorized and issued, are fully paid and
nonassessable and, to the best of such
counsel's knowledge, based solely on a review
of stock records and minute books, are owned
beneficially by the Company free and clear of
all liens, encumbrances, equities, claims,
security interests, voting trusts or other
defects of title whatsoever; all of the
issued and outstanding interests in the
Partnership have been duly and validly
authorized and issued, are fully paid and are
owned, directly or indirectly, to the best of
such counsel's knowledge, by the Company free
and clear of all liens, encumbrances,
equities, claims, security interests, voting
trusts or other defects of title whatsoever;
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(5) The certificates evidencing the
Common Shares to be delivered hereunder are
in due and proper form under Georgia law, and
when duly countersigned by the Company's
transfer agent and registrar, and delivered
to you or upon your order against payment of
the agreed consideration therefor in
accordance with the provisions of this
Agreement, the Common Shares represented
thereby will be duly authorized and validly
issued, fully paid and nonassessable, will
not have been issued in violation of or
subject to any preemptive rights or other
rights to subscribe for or purchase
securities arising by operation of law, under
the Company's Articles of Incorporation or
bylaws or under any agreement known to such
counsel to which the Company or any of its
Subsidiaries is a party and will conform in
all respects to the description thereof
contained in the Prospectus;
(6) Except as disclosed in or
specifically contemplated by the Prospectus,
to the best of such counsel's knowledge,
there are no outstanding options, warrants or
other rights calling for the issuance of, and
no commitments, plans or arrangements to
issue, any shares of capital stock of the
Company or any of its Subsidiaries or any
security convertible into or exchangeable for
capital stock of the Company or any of its
Subsidiaries;
(7)(a) The Registration Statement has
become effective under the Act, and, to the
best of such counsel's knowledge, no stop
order suspending the effectiveness of the
Registration Statement or preventing the use
of the Prospectus has been issued and no
proceedings for that purpose have been
instituted or are pending or contemplated by
the Commission; any required filing of the
Prospectus and any supplement thereto
pursuant to Rule 424(b) of the Rules and
Regulations has been made in the manner and
within the time period required by such Rule
424(b);
(b) The Registration Statement, the
Prospectus and each amendment or supplement thereto
(except for the financial statements and schedules
and other financial information and data included
therein as to which such counsel need not express any
opinion) comply as to form in all material respects
with the requirements of the Act and the Rules and
Regulations;
(c) To the best of such counsel's
knowledge, there are no franchises, leases,
contracts, agreements or documents of a character
required to be disclosed in the Registration
Statement or Prospectus or to
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be filed as exhibits to the Registration Statement
which are not disclosed or filed, as required; and
(d) To the best of such counsel's
knowledge, there are no legal or governmental
actions, suits or proceedings pending or threatened
against the Company or any of its Subsidiaries which
are required to be described in the Prospectus which
are not described as required.
(8) The Company has full right, power
and authority to enter into this Agreement and to
sell and deliver the Common Shares to be sold by it
to the several Underwriters; the Partnership has full
right, power and authority to enter into this
Agreement; this Agreement has been duly and validly
authorized by all necessary corporate action by the
Company and the Partnership, has been duly and
validly executed and delivered by and on behalf of
the Company and the Partnership, and is a valid and
binding agreement of the Company and the Partnership
in accordance with its terms, except as
enforceability may be limited by general equitable
principles, bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights
generally and except as to those provisions relating
to indemnity or contribution for liabilities arising
under the Act, as to which no opinion need be
expressed; and no approval, authorization, order,
consent, registration, filing, qualification, license
or permit of or with any court, regulatory,
administrative or other governmental body is required
for the execution and delivery of this Agreement by
the Company and the Partnership or the consummation
of the transactions contemplated by this Agreement,
except such as have been obtained and are in full
force and effect under the Act and such as may be
required under applicable Blue Sky laws in connection
with the purchase and distribution of the Common
Shares by the Underwriters and the clearance of such
offering with the NASD;
(9) The execution and performance of
this Agreement and the consummation of the
transactions herein contemplated will not conflict
with, result in the breach of, or constitute, either
by itself or upon notice or the passage of time or
both, a default under, any agreement, mortgage, deed
of trust, lease, franchise, license, indenture,
permit or other instrument that is described or
referred to in the Registration Statement or the
Prospectus or filed as an exhibit to the Registration
Statement, or violate any of the provisions of the
certificate of incorporation or bylaws, or other
organizational documents, of the Company or any of
its Subsidiaries or, so far as is known to such
counsel, violate any statute, judgment, decree,
order, rule or regulation of any court or
governmental body having jurisdiction over the
Company or any of its Subsidiaries or any of their
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properties, except where the failure to comply would
not have a material adverse effect on the condition
(financial or otherwise), business, properties,
results of operation or prospects of the Company and
its Subsidiaries, taken as a whole;
(10) Neither the Company nor any of its
Subsidiaries is in violation of its certificates of
incorporation or bylaws, or other organizational
documents, or to the best of such counsel's
knowledge, in breach of or default with respect to
any provision of any agreement, mortgage, deed of
trust, lease, franchise, license, indenture, permit
or other instrument that is described or referred to
in the Registration Statement or the Prospectus or
filed as an exhibit to the Registration Statement,
except where such default would not materially
adversely affect the Company and its Subsidiaries,
taken as a whole; and, to the best of such counsel's
knowledge, the Company and its Subsidiaries are in
compliance with all laws, rules, regulations,
judgments, decrees, orders and statutes of any court
or jurisdiction to which they are subject, except
where noncompliance would not materially adversely
affect the Company and its Subsidiaries, taken as a
whole;
(11) To the best of such counsel's
knowledge, this Agreement and the Shareholders
Agreement have been duly authorized, executed and
delivered by or on behalf of each of the Selling
Shareholders; the Agent has been duly and validly
authorized to act as the custodian of the Common
Shares to be sold by each such Selling Shareholder;
and the performance of this Agreement and the
Shareholders Agreement and the consummation of the
transactions herein contemplated by the Selling
Shareholders will not result in a breach of, or
constitute a default under, any indenture, mortgage,
deed of trust, trust (constructive or other), loan
agreement, lease, franchise, license or other
agreement or instrument known to such counsel after
reasonable investigation to which any of the Selling
Shareholders is a party or by which any of their
properties may be bound, or violate any statute,
judgment, decree, order, rule or regulation known to
such counsel of any court or governmental body having
jurisdiction over any of the Selling Shareholders or
any of their properties; and to the best of such
counsel's knowledge, no approval, authorization,
order or consent of any court, regulatory body,
administrative agency or other governmental body is
required for the execution and delivery of this
Agreement or the Shareholders Agreement or the
consummation by the Selling Shareholders of the
transactions contemplated by this Agreement, except
such as have been obtained and are in full force and
effect under the Act and such as may be required
under the rules of the NASD and applicable Blue Sky
laws;
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(12) To the best of such counsel's
knowledge, the Selling Shareholders have full right,
power and authority to enter into this Agreement and
the Shareholders Agreement and to sell, transfer and
deliver the Common Shares to be sold on such Closing
Date by such Selling Shareholders hereunder and good
and marketable title to such Common Shares so sold,
free and clear of all liens, encumbrances, equities,
claims, restrictions, security interests, voting
trusts, or other defects of title whatsoever, has
been transferred to the Underwriters (whom counsel
may assume to be bona fide purchasers) who have
purchased such Common Shares hereunder;
(13) To the best of such counsel's
knowledge, this Agreement and the Shareholders
Agreement are valid and binding agreements of each of
the Selling Shareholders in accordance with their
terms except as enforceability may be limited by
general equitable principles, bankruptcy, insolvency,
reorganization, moratorium or other laws affecting
creditors' rights generally and except with respect
to those provisions relating to indemnities or
contributions for liabilities under the Act, as to
which no opinion need be expressed;
(14) To the best of such counsel's
knowledge, no holders of securities of the Company
have rights which have not been waived to the
registration of shares of Common Stock or other
securities, because of the filing of the Registration
Statement by the Company or the offering contemplated
hereby; and
(15) Neither the Company nor any of its
Subsidiaries is an "investment company," or a company
"controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as
amended.
In rendering such opinion, such counsel may rely as
to the matters set forth in paragraphs (12) and (13), on
opinions of other counsel retained by the Selling
Shareholders, as to matters of local law, on opinions of local
counsel, and as to matters of fact, on certificates of the
Selling Shareholders and of officers of the Company and of
governmental officials, in which case their opinion is to
state that they are so doing and that the Underwriters are
justified in relying on such opinions and copies of said
opinions or certificates are to be attached to the opinion.
For purposes of such opinion, "knowledge" shall mean the
current awareness of lawyers in such firm involved in the
representation of the Company and the Selling Shareholders of
factual matters such lawyers recognize as relevant to the
opinion so qualified.
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Such counsel shall also include a statement to the
effect that nothing has come to such counsel's attention that
would lead such counsel to believe that either at the
effective date of the Registration Statement or at the
applicable Closing Date (i) the Registration Statement or any
amendment or supplement thereto, contains any untrue statement
of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements
therein not misleading and (ii) the Prospectus contains any
untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements, in
light of the circumstances under which they were made, not
misleading;
(ii) Such opinion of Paul, Hastings, Xxxxxxxx &
Xxxxxx, special franchising counsel for the Company, addressed
to the Underwriters and dated as of the First Closing Date, or
the Second Closing Date, as the case may be, with respect to
certain franchising matters of the Company, as you may
reasonably require, and the Company shall have furnished to
such counsel such documents and shall have exhibited to them
such papers and records as they may reasonably request for the
purpose of enabling them to pass upon such matters. In
connection with such opinions, such counsel may rely on
representations or certificates of officers of the Company and
governmental officials.
(iii) Such opinion or opinions of King & Spalding,
counsel for the Underwriters dated the First Closing Date or
the Second Closing Date, as the case may be, with respect to
the incorporation of the Company, the sufficiency of all
corporate proceedings and other legal matters relating to this
Agreement, the validity of the Common Shares, the Registration
Statement and the Prospectus and other related matters as you
may reasonably require, and the Company shall have furnished
to such counsel such documents and shall have exhibited to
them such papers and records as they may reasonably request
for the purpose of enabling them to pass upon such matters.
In connection with such opinions, such counsel may rely on
representations or certificates of officers of the Company and
governmental officials.
(iv) A certificate of the Company executed by the
Chairman of the Board or President and the chief financial or
accounting officer of the Company, dated the First Closing
Date or the Second Closing Date, as the case may be, to the
effect that:
(1) The representations and warranties
of the Company, the Partnership and the Selling
Shareholders set forth in Section 2 of this Agreement
are true and correct as of the date of this Agreement
and as of the First Closing Date or the Second
Closing Date, as the case may be, and the Company has
complied with all the agreements and satisfied all
the
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conditions on its part to be performed or satisfied
on or prior to such Closing Date;
(2) The Commission has not issued any
order preventing or suspending the use of the
Prospectus or any Preliminary Prospectus filed as a
part of the Registration Statement or any amendment
thereto; no stop order suspending the effectiveness
of the Registration Statement has been issued; and to
the best of the knowledge of the respective signers,
no proceedings for that purpose have been instituted
or are pending or contemplated under the Act;
(3) Each of the respective signers of
the certificate has carefully examined the
Registration Statement and the Prospectus; in his
opinion and to the best of his knowledge, the
Registration Statement and the Prospectus and any
amendments or supplements thereto contain all
statements required to be stated therein regarding
the Company and its Subsidiaries; and neither the
Registration Statement nor the Prospectus nor any
amendment or supplement thereto includes any untrue
statement of a material fact or omits to state any
material fact required to be stated therein or
necessary to make the statements therein not
misleading;
(4) Since the initial date on which the
Registration Statement was filed, no agreement,
written or oral, transaction or event has occurred
which should have been set forth in an amendment to
the Registration Statement or in a supplement to or
amendment of any prospectus which has not been
disclosed in such a supplement or amendment;
(5) Since the respective dates as of
which information is given in the Registration
Statement and the Prospectus, and except as disclosed
in or contemplated by the Prospectus, there has not
been any material adverse change or a development
involving a material adverse change in the condition
(financial or otherwise), business, properties,
results of operations, management or prospects of the
Company or any of its Subsidiaries; and no legal or
governmental action, suit or proceeding is pending or
threatened against the Company or any of its
Subsidiaries which is material to the Company or any
of its Subsidiaries, whether or not arising from
transactions in the ordinary course of business, or
which may adversely affect the transactions
contemplated by this Agreement; since such dates and
except as so disclosed, neither the Company nor any
of its Subsidiaries has entered into any verbal or
written agreement or other transaction which is not
in the ordinary course of business or which could
result in a material reduction in the future earnings
of the Company or incurred any material liability or
obligation, direct, contingent or indirect,
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made any change in its capital stock, made any
material change in its short-term debt or funded debt
or repurchased or otherwise acquired any of the
Company's capital stock; and the Company has not
declared or paid any dividend, or made any other
distribution, upon its outstanding capital stock
payable to shareholders of record on a date prior to
the First Closing Date or Second Closing Date; and
(6) Since the respective dates as of
which information is given in the Registration
Statement and the Prospectus and except as disclosed
in or contemplated by the Prospectus, neither the
Company nor any of its Subsidiaries have sustained a
material loss or damage by strike, fire, flood,
windstorm, accident or other calamity (whether or not
insured).
(v) On the First Closing Date a certificate,
dated such Closing Date and addressed to you, signed by or on
behalf of each of the Selling Shareholders to the effect that
the representations and warranties of such Selling Shareholder
in this Agreement are true and correct, as if made at and as
of the First Closing Date or the Second Closing Date, as the
case may be, and such Selling Shareholder has complied with
all the agreements and satisfied all the conditions on his
part to be performed or satisfied prior to the First Closing
Date or the Second Closing Date, as the case may be.
(vi) On the date before this Agreement is executed
and also on the First Closing Date and the Second Closing Date
a letter addressed to you, as Representatives of the
Underwriters, from Deloitte & Touche, independent accountants,
the first one to be dated the day before the date of this
Agreement, the second one to be dated the First Closing Date
and the third one (in the event of a Second Closing) to be
dated the Second Closing Date, in form and substance
satisfactory to you.
(vii) On or before the First Closing Date, letters
from each director and executive officer of the Company, in
form and substance satisfactory to you, confirming that for a
period of 180 days after the date of the final Prospectus,
such person will not directly or indirectly sell, offer,
contract, grant any option to sell, pledge, transfer,
establish an open "put equivalent position" within the meaning
of Rule 16a-1(h) under the Exchange Act, or otherwise dispose
of any shares of Common Stock, options or warrants to acquire
shares of Common Stock or securities exchangeable or
exercisable for or convertible into shares of Common Stock
without the prior written consent of Xxxxxxxxxx Securities,
which consent may be withheld at the sole discretion of
Xxxxxxxxxx Securities.
All such opinions, certificates, letters and documents shall
be in compliance with the provisions hereof only if they are satisfactory to
you and to King & Spalding, counsel for the
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Underwriters. The Company and the Selling Shareholders shall furnish you with
such manually signed or conformed copies of such opinions, certificates,
letters and documents as you request. Any certificate signed by any officer of
the Company and delivered to the Representatives or to counsel for the
Underwriters shall be deemed to be a representation and warranty by the Company
to the Underwriters as to the statements made therein.
If any condition to the Underwriters' obligations hereunder to
be satisfied prior to or at the First Closing Date is not so satisfied, this
Agreement at your election will terminate upon notification by you as
Representatives to the Company and the Selling Shareholders without liability
on the part of any Underwrite, the Company or the Selling Shareholders, except
for the expenses to be paid or reimbursed by the Company and by the Selling
Shareholders pursuant to Sections 7 and 9 hereof and except to the extent
provided in Section 11 hereof.
SECTION 9. Reimbursement of Underwriters' Expenses.
Notwithstanding any other provisions hereof, if this Agreement shall be
terminated by you pursuant to Section 8, or if the sale to the Underwriters of
the Common Shares at the First Closing is not consummated because of any
refusal, inability or failure on the part of the Company or the Selling
Shareholders to perform any agreement herein or to comply with any provision
hereof, the Company agrees to reimburse you and the other Underwriters upon
demand for all out-of-pocket expenses that shall have been reasonably incurred
by you and them in connection with the proposed purchase and the sale of the
Common Shares, including but not limited to fees and disbursements of counsel,
printing expenses, travel expenses, postage, telegraph charges and telephone
charges relating directly to the offering contemplated by the Prospectus. Any
such termination shall be without liability of any party to any other party
except that the provisions of this Section, Section 7 and Section 11 shall at
all times be effective and shall apply.
SECTION 10. Effectiveness of Registration Statement. You,
the Company and the Selling Shareholders will use your, its and their best
efforts to cause the Registration Statement to become effective, to prevent the
issuance of any stop order suspending the effectiveness of the Registration
Statement and, if such stop order be issued, to obtain as soon as possible the
lifting thereof.
SECTION 11. Indemnification. (a) The Company, the
Partnership and each of the Selling Shareholders, jointly and severally, agree
to indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of the Act against any losses,
claims, damages, liabilities or expenses, joint or several, to which such
Underwriter or such controlling person may become subject, under the Act, the
Exchange Act or other federal or state statutory law or regulation, or at
common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of the Company), insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof as contemplated below) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based
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upon the omission or alleged omission to state in any of them a material fact
required to be stated therein or necessary to make the statements in any of
them not misleading, or arise out of or are based in whole or in part on any
inaccuracy in the representations and warranties of the Company, the
Partnership or the Selling Shareholders contained herein or any failure of the
Company, the Partnership or the Selling Shareholders to perform its or their
respective obligations hereunder or under law; and will reimburse each
Underwriter and each such controlling person for any legal and other expenses
as such expenses are reasonably incurred by such Underwriter or such
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action; provided, however, that neither the Company, the Partnership nor the
Selling Shareholders will be liable in any such case to the extent that any
such loss, claim, damage, liability or expense arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, any Preliminary Prospectus, the Prospectus
or any amendment or supplement thereto in reliance upon and in conformity with
the information furnished to the Company pursuant to Section 4 hereof. The
Company and the Selling Shareholders may agree, as among themselves and without
limiting the rights of the Underwriters under this Agreement, as to their
respective amounts of such liability for which they each shall be responsible.
In addition to their other obligations under this Section 11(a), the Company,
the Partnership and the Selling Shareholders agree that, as an interim measure
during the pendency of any claim, action, investigation, inquiry or other
proceeding arising out of or based upon any statement or omission, or any
alleged statement or omission, or any inaccuracy in the representations and
warranties of the Company, the Partnership or the Selling Shareholders herein
or failure to perform their obligations hereunder, all as described in this
Section 11(a), they will reimburse each Underwriter on a quarterly basis for
all reasonable legal or other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the obligation of the Company, the
Partnership or the Selling Shareholders to reimburse each Underwriter for such
expenses and the possibility that such payments might later be held to have
been improper by a court of competent jurisdiction. To the extent that any
such interim reimbursement payment is so held to have been improper, each
Underwriter shall promptly return it to the Company together with interest,
compounded daily, determined on the basis of the prime rate (or other
commercial lending rate for borrowers of the highest credit standing) announced
from time to time by Bank of America NT&SA, San Francisco, California (the
"Prime Rate"). Any such interim reimbursement payments which are not made to
an Underwriter within 30 days of a request for reimbursement, shall bear
interest at the Prime Rate from the date of such request. This indemnity
agreement will be in addition to any liability which the Company, the
Partnership or the Selling Shareholders may otherwise have.
(b) Each Underwriter will severally indemnify and hold
harmless the Company, the Partnership, each of the Company's directors, each of
the Company's officers who signed the Registration Statement, the Selling
Shareholders and each person, if any, who controls the Company, the Partnership
or any Selling Shareholder within the meaning of the Act, against any losses,
claims, damages, liabilities or expenses to which the Company, the Partnership,
or any
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such director, officer, Selling Shareholder or controlling person may become
subject, under the Act, the Exchange Act, or other federal or state statutory
law or regulation, or at common law or otherwise (including in settlement of
any litigation, if such settlement is effected with the written consent of such
Underwriter), insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof as contemplated below) arise out of or are based
upon any untrue or alleged untrue statement of any material fact contained in,
the Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, in reliance upon and in conformity with the information
furnished to the Company pursuant to Section 4 hereof; and will reimburse the
Company, the Partnership, or any such director, officer, Selling Shareholder or
controlling person for any legal and other expense reasonably incurred by the
Company, the Partnership, or any such director, officer, Selling Shareholder or
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action. In addition to its other obligations under this Section 11(b), each
Underwriter severally agrees that, as an interim measure during the pendency of
any claim, action, investigation, inquiry or other proceeding arising out of or
based upon any statement or omission, or any alleged statement or omission,
described in this Section 11(b) which relates to information furnished to the
Company pursuant to Section 4 hereof, it will reimburse the Company (and, to
the extent applicable, each officer, director, or controlling person, the
Partnership or Selling Shareholder) on a quarterly basis for all reasonable
legal or other expenses incurred in connection with investigating or defending
any such claim, action, investigation, inquiry or other proceeding,
notwithstanding the absence of a judicial determination as to the propriety and
enforceability of the Underwriters' obligation to reimburse the Company (and,
to the extent applicable, each officer, director, controlling person, the
Partnership or Selling Shareholder) for such expenses and the possibility that
such payments might later be held to have been improper by a court of competent
jurisdiction. To the extent that any such interim reimbursement payment is so
held to have been improper, the Company (and, to the extent applicable, each
officer, director, controlling person, the Partnership or Selling Shareholder)
shall promptly return it to the Underwriters together with interest, compounded
daily, determined on the basis of the Prime Rate. Any such interim
reimbursement payments which are not made to the Company within 30 days of a
request for reimbursement, shall bear interest at the Prime Rate from the date
of such request. This indemnity agreement will be in addition to any liability
which such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under
this Section of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying
party under this Section, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
for contribution or otherwise than
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under the indemnity agreement contained in this Section or to the extent it is
not prejudiced as a proximate result of such failure. In case any such action
is brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it may wish,
jointly with all other indemnifying parties similarly notified, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be a conflict between the positions of
the indemnifying party and the indemnified party in conducting the defense of
any such action or that there may be legal defenses available to it and/or
other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall
have the right to select separate counsel to assume such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of its election so to assume the defense of
such action and approval by the indemnified party of counsel, the indemnifying
party will not be liable to such indemnified party under this Section for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless (i) the indemnified party shall have
employed such counsel in connection with the assumption of legal defenses in
accordance with the proviso to the next preceding sentence (it being
understood, however, that the indemnifying party shall not be liable for the
expenses of more than one separate counsel, approved by the Representatives in
the case of paragraph (a), representing the indemnified parties who are parties
to such action), or (ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of the action, in
each of which cases the fees and expenses of counsel shall be at the expense of
the indemnifying party.
(d) If the indemnification provided for in this Section
11 is required by its terms but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an indemnified party under paragraphs
(a), (b) or (c) in respect of any losses, claims, damages, liabilities or
expenses referred to herein, then each applicable indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of any losses, claims, damages, liabilities or expenses referred to herein (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Company, the Selling Shareholders and the Underwriters from the offering
of the Common Shares or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company, the Partnership, the Selling Shareholders
and the Underwriters in connection with the statements or omissions or
inaccuracies in the representations and warranties herein which resulted
in-such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The respective relative benefits received
by the Company, the Partnership, the Selling Shareholders and the Underwriters
shall be deemed to be in the same proportion, in the case of the Company, the
Partnership and the Selling Shareholders as the total price paid to the Company
and to the Selling Shareholders, respectively, for the Common Shares sold by
them to the Underwriters (net
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of underwriting commissions but before deducting expenses), and in the case of
the Underwriters as the underwriting commissions received by them bears to the
total of such amounts paid to the Company and to the Selling Shareholders and
received by the Underwriters as underwriting commissions. The relative fault
of the Company, the Partnership, the Selling Shareholders and the Underwriters
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact or the inaccurate or the alleged inaccurate
representation and/or warranty relates to information supplied by the Company,
the Partnership, the Selling Shareholders or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
subparagraph (c) of this Section 11, any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim. The provisions set forth in subparagraph (c) of this
Section 11 with respect to notice of commencement of any action shall apply if
a claim for contribution is to be made under this subparagraph (d); provided,
however, that no additional notice shall be required with respect to any action
for which notice has been given under subparagraph (c) for purposes of
indemnification. The Company, the Partnership, the Selling Shareholders and
the Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 11 were determined solely by pro rata allocation (even
if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 11, no Underwriter shall be
required to contribute any amount in excess of the amount of the total
underwriting commissions received by such Underwriter in connection with the
Common Shares underwritten by it and distributed to the public. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 11 are several in proportion to their
respective underwriting commitments and not joint.
(e) It is agreed that any controversy arising out of the
operation of the interim reimbursement arrangements set forth in Sections 11(a)
and 11(b) hereof, including the amounts of any requested reimbursement payments
and the method of determining such amounts, shall be settled by arbitration
conducted under the provisions of the Constitution and Rules of the Board of
Governors of the New York Stock Exchange, Inc. or pursuant to the Code of
Arbitration Procedure of the NASD. Any such arbitration must be commenced by
service of a written demand for arbitration or written notice of intention to
arbitrate, therein electing the arbitration tribunal. In the event the party
demanding arbitration does not make such designation of an arbitration tribunal
in such demand or notice, then the party responding to said demand or notice is
authorized to do so. Such an arbitration would be limited to the operation of
the interim reimbursement provisions contained in Sections 11(a) and 11(b)
hereof and would not resolve the ultimate propriety or enforceability of the
obligation to reimburse expenses which is created by the provisions of such
Sections 11(a) and 11(b) hereof.
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SECTION 12. Default of Underwriters. It shall be a condition
to this Agreement and the obligation of the Company and the Selling
Shareholders to sell and deliver the Common Shares hereunder, and of each
Underwriter to purchase the Common Shares in the manner as described herein,
that, except as hereinafter in this paragraph provided, each of the
Underwriters shall purchase and pay for all the Common Shares agreed to be
purchased by such Underwriter hereunder upon tender to the Representatives of
all such shares in accordance with the terms hereof. If any Underwriter or
Underwriters default in their obligations to purchase Common Shares hereunder
on either the First or Second Closing Date and the aggregate number of Common
Shares which such defaulting Underwriter or Underwriters agreed but failed to
purchase on such Closing Date does not exceed 10% of the total number of Common
Shares which the Underwriters are obligated to purchase on such Closing Date,
the non-defaulting Underwriters shall be obligated severally, in proportion to
their respective commitments hereunder, to purchase the Common Shares which
such defaulting Underwriters agreed but failed to purchase on such Closing
Date. If any Underwriter or Underwriters so default and the aggregate number
of Common Shares with respect to which such default occurs is more than the
above percentage and arrangements satisfactory to the Representatives and the
Company for the purchase of such Common Shares by other persons are not made
within 48 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Underwriter or the Company or the
Selling Shareholders except for the expenses to be paid by the Company and the
Selling Shareholders pursuant to Section 7 hereof and except to the extent
provided in Section 11 hereof.
In the event that Common Shares to which a default relates are
to be purchased by the non-defaulting Underwriters or by another party or
parties, the Representatives or the Company shall have the right to postpone
the First or Second Closing Date, as the case may be, for not more than five
business days in order that the necessary changes in the Registration
Statement, Prospectus and any other documents, as well as any other
arrangements, may be effected. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section. Nothing herein will relieve a defaulting Underwriter from liability
for its default.
SECTION 13. Effective Date. This Agreement shall become
effective immediately as to Sections 7, 9, 11, 14 and 15 and, as to all other
provisions, (i) if at the time of execution of this Agreement the Registration
Statement has not become effective, at 2:00 P.M., California time, on the first
full business day following the effectiveness of the Registration Statement, or
(ii) if at the time of execution of this Agreement the Registration Statement
has been declared effective, at 2:00 P.M., California time, on the first full
business day following the date of execution of this Agreement; but this
Agreement shall nevertheless become effective at such earlier time after the
Registration Statement becomes effective as you may determine on and by notice
to the Company or by release of any of the Common Shares for sale to the
public. For the purposes of this Section 13, the Common Shares shall be deemed
to have been so released upon the release for publication of any newspaper
advertisement relating to the Common Shares or upon the release by you of
telegrams (i) advising Underwriters that the Common Shares are
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released for public offering, or (ii) offering the Common Shares for sale to
securities dealers, whichever may occur first.
SECTION 14. Termination. Without limiting the right to
terminate this Agreement pursuant to any other provision hereof:
(a) This Agreement may be terminated by the
Company by notice to you and the Selling Shareholders or by
you by notice to the Company and the Selling Shareholders at
any time prior to the time this Agreement shall become
effective as to all its provisions, and any such termination
shall be without liability on the part of the Company, the
Partnership or the Selling Shareholders to any Underwriter
(except for the expenses to be paid or reimbursed by the
Company, the Partnership and the Selling Shareholders pursuant
to Sections 7 and 9 hereof and except to the extent provided
in Section 11 hereof) or of any Underwriter to the Company,
the Partnership or the Selling Shareholders (except to the
extent provided in Section 11 hereof).
(b) This Agreement may also be terminated by you
prior to the First Closing Date by notice to the Company (i)
if additional material governmental restrictions, not in force
and effect on the date hereof, shall have been imposed upon
trading in securities generally or minimum or maximum prices
shall have been generally established on the New York Stock
Exchange or on the American Stock Exchange or in the over the
counter market by the NASD, or trading in securities generally
shall have been suspended on either such Exchange or in the
over the counter market by the NASD, or a general banking
moratorium shall have been established by federal, New York or
California authorities, (ii) if an outbreak of major
hostilities or other national or international calamity or any
substantial change in political, financial or economic
conditions shall have occurred or shall have accelerated or
escalated to such an extent, as, in the judgment of the
Representatives, to affect adversely the marketability of the
Common Shares, (iii) if any adverse event shall have occurred
or shall exist which makes untrue or incorrect in any material
respect any statement or information contained in the
Registration Statement or Prospectus or which is not reflected
in the Registration Statement or Prospectus but should be
reflected therein in order to make the statements or
information contained therein not misleading in any material
respect, or (iv) if there shall be any action, suit or
proceeding pending or threatened; or there shall have been any
development or prospective development involving particularly
the business or properties or securities of the Company or any
of its Subsidiaries or the transactions contemplated by this
Agreement which, in the reasonable judgment of the
Representatives, may materially and adversely affect the
Company's business or earnings and makes it impracticable or
inadvisable to offer or sell the Common Shares. Any
termination pursuant to this subsection (b) shall be without
liability on the part of any Underwriter to the Company or the
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Selling Shareholders or on the part of the Company or the
Selling Shareholders to any Underwriter (except for expenses
to be paid or reimbursed by the Company and the Selling
Shareholders pursuant to Sections 7 and 9 hereof and except to
the extent provided in Section 11 hereof).
(c) This Agreement shall also terminate at 5:00
P.M., California Time, on the tenth full business day after
the Registration Statement shall have become effective if the
initial public offering price of the Common Shares shall not
then as yet have been determined as provided in Section 5
hereof. Any termination pursuant to this subsection (c) shall
be without liability on the part of any Underwriter to the
Company or the Selling Shareholders or on the part of the
Company or the Selling Shareholders to any Underwriter (except
for expenses to be paid or reimbursed by the Company and the
Selling Shareholders pursuant to Sections 7 and 9 hereof and
except to the extent provided in Section 11 hereof ).
SECTION 15. Representations and Indemnities to Survive
Delivery. The respective indemnities, agreements, representations, warranties
and other statements of the Company, the Partnership and the Selling
Shareholders, of the Company's officers and of the several Underwriters set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of any Underwrite,
the Company, the Partnership, the Selling Shareholders or any of its or their
partners, officers or directors or any controlling person, as the case may be,
and will survive delivery of and payment for the Common Shares sold hereunder
and any termination of this Agreement.
SECTION 16. Notices. All communications hereunder shall be
in writing and, if sent to the Representatives shall be mailed, delivered or
telegraphed and confirmed to you at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx 00000, Attention: Xxxx X. Xxxxx, with a copy to Xxxx X. Xxxxxx, Xxxx
& Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxxxxxx, XX 00000; and if sent to the
Company, the Partnership or the Selling Shareholders shall be mailed, delivered
or telegraphed and confirmed to the Company at 000 Xxxxxxxxxx Xxxxx Xxxxxxx
Xxxx, Xxxxx 000, Xxxxxxx, XX 00000, Attention: Xxxxx X. Xxxxxxxx with a copy to
Xxxxxxxxxx & Xxxx, 0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, XX 00000,
Attention: Xxxxxxx X. Xxxxxxx. The Company, the Partnership, the Selling
Shareholders or you may change the address for receipt of communications
hereunder by giving notice to the others.
SECTION 17. Successors. This Agreement will inure to the
benefit of and be binding upon the parties hereto, including any substitute
Underwriters pursuant to Section 12 hereof, and to the benefit of the officers
and directors and controlling persons referred to in Section 11, and in each
case their respective successors, personal representatives and assigns, and no
other person will have any right or obligation hereunder. No such assignment
shall relieve any party of its obligations hereunder. The term "successors"
shall not include any purchaser of the Common Shares as such from any of the
Underwriters merely by reason of such purchase.
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SECTION 18. Representation of Underwriters. You will act as
Representatives for the several Underwriters in connection with all dealings
hereunder, and any action under or in respect of this Agreement taken by you
jointly or by Xxxxxxxxxx Securities, as Representatives, will be binding upon
all the Underwriters.
SECTION 19. Partial Unenforceability. The invalidity or
unenforceability of any Section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
SECTION 20. Applicable Law. This Agreement shall be governed
by and construed in accordance with the internal laws (and not the laws
pertaining to conflicts of laws) of the State of California.
SECTION 21. General. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written or
oral and all contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may be executed in
several counterparts, each one of which shall be an original, and all of which
shall constitute one and the same document.
In this Agreement, the masculine, feminine and neuter genders
and the singular and the plural include one another. The section headings in
this Agreement are for the convenience of the parties only and will not affect
the construction or interpretation of this Agreement. This Agreement may be
amended or modified, and the observance of any term of this Agreement may be
waived, only by a writing signed by the Company, the Selling Shareholders and
you.
Any person executing and delivering this Agreement as
Attorney-in-fact for the Selling Shareholders represents by so doing that he
has been duly appointed as Attorney-in-fact by each such Selling Shareholder
pursuant to a validly existing and binding Power of Attorney which authorizes
such Attorney-in-fact to take such action. Any action taken under this
Agreement by any of the Attorneys-in-fact will be binding on all the Selling
Shareholders.
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If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us the enclosed copies hereof,
whereupon it will become a binding agreement among the Company, the
Partnership, the Selling Shareholders and the several Underwriters including
you, all in accordance with its terms.
Very truly yours,
SUBURBAN LODGES OF AMERICA, INC.
By:______________________________
President
SUBURBAN HOLDINGS, L.P.
By: Suburban Lodges of America, Inc.
its General Partner
By:______________________________
President
SELLING SHAREHOLDERS
By:_______________________________
(Attorney-in-fact)
By:_______________________________
(Attorney-in-fact)
The foregoing Underwriting Agreement
is hereby confirmed and accepted by
us in San Francisco, California as of
the date first above written.
XXXXXXXXXX SECURITIES
XXXXX XXXXXX INC.
X.X. XXXXXXXX & CO.
LEGACY SECURITIES CORP.
Acting as Representatives of the
several Underwriters named in
the attached Schedule A.
By XXXXXXXXXX SECURITIES
By:____________________________
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SECHEDULE A
Number of Firm
Common Shares
Name of Underwriter to be Purchased
------------------- ---------------
Xxxxxxxxxx Securities................................ 962,291
Xxxxx Xxxxxx Inc. ................................... 962,291
X.X. Xxxxxxxx & Co. ................................. 962,291
Legacy Securities Corp. ............................. 113,127
Total........................................ 3,000,000
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SECHEDULE A
Number of Firm
Common Shares
to be Sold by Selling
Name of Selling Shareholder Shareholders
--------------------------- ---------------------
K&K Holdings, LLC.................................... 17,741
Xxxxxxx X. Xxxxx..................................... 792
Xxxxxxx X. Xxxx...................................... 2,191
Pine Land Greyhawk, Inc. ............................ 1,293
Total........................................ 22,017
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SCHEDULE A
Number of Firm
Common Shares
Name of Underwriter to be Purchased
------------------- ---------------
Xxxxxxxxxx Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Xxxxx Xxxxxx Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
X.X. Xxxxxxxx & Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legacy Securities Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,243,000
=========
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SCHEDULE B
Number of Firm
Common Shares
to be Sold by Selling
Name of Selling Shareholder Shareholders
--------------------------- ------------------------
Xxxxx X. Xxxxxxxx 199,983
Xxx X. Xxxxxx 10,500
Xxxx X. Xxxxxxxxx 10,500
K&K Holdings, LLC 17,741
Xxxxxxx X. Xxxxx 792
Xxxxxxx X. Xxxx 2,191
Pine Land Greyhawk, Inc. 1,293
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243,000
========
