Exhibit 1.1
3,066,667 Shares/1/
Buffalo Wild Wings, Inc.
Common Stock
(No Par Value)
UNDERWRITING AGREEMENT
----------------------
November __, 2003
RBC Xxxx Xxxxxxxx Inc.
XX Xxxxx Securities Corporation
McDonald Investments Inc.
As the Representatives of the several
underwriters named in Schedule I hereto
c/o RBC Capital Markets
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Ladies and Gentlemen:
Buffalo Wild Wings, Inc., a Minnesota corporation (the "Company") proposes
to sell to the several underwriters (the "Underwriters") named in Schedule I
hereto for whom you are acting as representatives (the "Representatives") an
aggregate of 2,666,667 shares of the Company's common stock, no par value (the
"Firm Shares"). The respective amounts of the Firm Shares to be so purchased by
the several Underwriters are set forth opposite their names in Schedule I
hereto. In addition, the Company and certain stockholders of the Company (the
"Selling Stockholders") propose to sell at the Underwriters' option an aggregate
of up to 400,000 additional shares of the Company's common stock of which
200,000 shares will be sold by the Company and 200,000 shares will be sold by
the Selling Stockholders (the "Option Shares"). The respective amounts to be
sold by the Selling Stockholders are set forth opposite their names in Schedule
II hereto.
As the Representatives, you have advised the Company and the Selling
Stockholders (a) that you are authorized to enter into this agreement (this
"Agreement") on behalf of the several Underwriters, and (b) that the several
Underwriters are willing, acting severally and not jointly, to purchase the
numbers of Firm Shares set forth opposite their respective names in Schedule I,
plus
--------------
/1/ Includes up to 400,000 additional shares to cover over-allotments.
their pro rata portion of the Option Shares if you elect to exercise the
over-allotment option in whole or in part for the accounts of the several
Underwriters. The Firm Shares and the Option Shares (to the extent the
aforementioned option is exercised) are herein collectively called the "Shares."
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Underwriters as follows:
(a) A registration statement on Form S-1 (File No. 333-108695) with
respect to the 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. Copies of such registration statement, including any amendments
thereto, the preliminary prospectuses (meeting the requirements of the Rules and
Regulations) contained therein and the exhibits, financial statements and
schedules, as finally amended and revised, have heretofore been delivered by the
Company to you. Such registration statement, together with any registration
statement filed by the Company pursuant to Rule 462(b) of the Act, herein
referred to as the "Registration Statement," which shall be deemed to include
all information omitted therefrom in reliance upon Rule 430A and contained in
the Prospectus referred to below, has become effective under the Act and no
post-effective amendment to the Registration Statement has been filed as of the
date of this Agreement. "Prospectus" means the form of prospectus first filed
with the Commission pursuant to Rule 424(b). Each preliminary prospectus
included in the Registration Statement prior to the time it becomes effective is
herein referred to as a "Preliminary Prospectus."
(b) The Commission has not issued an order preventing or suspending
the use of any Prospectus relating to the proposed offering of the Shares nor
instituted proceedings for that purpose. As of the applicable effective date as
to the Registration Statement and any amendment thereto, and as of the
applicable filing date as to the Prospectus and any amendment or supplement
thereto, and as of the time of delivery as to the Prospectus as amended or
supplemented, the Registration Statement contains, and the Prospectus and any
amendments or supplements to the Registration Statement and the Prospectus will
contain, all statements which are required to be stated therein by, and will
conform to, the requirements of the Act and the Rules and Regulations. On the
Effective Date and when any post-effective amendment to the Registration
Statement becomes effective, the Registration Statement and any amendment
thereto do not contain, and will not contain, any untrue statement of a material
fact, and do not omit, and will not omit, to state any material fact required to
be stated therein or necessary to make the statements therein not misleading. At
the Effective Date, the date the Prospectus or any amendment or supplement to
the Prospectus is filed with the Commission and at the Closing Date and, if
later, the Option Closing Date, the Prospectus and any amendments and
supplements thereto do not contain, and will not contain, any untrue statement
of material fact; and do not omit, and will not omit, to state any material fact
required to be stated therein or necessary to
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make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the Company makes no
representations or warranties as to information contained in or omitted from the
Registration Statement or 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 through the Representatives,
specifically for use in the preparation thereof. There are no contracts or
documents that are required to be filed as exhibits to the Registration
Statement or described in the Registration Statement or the Prospectus which are
not so filed or described as required, and such contracts and documents as are
summarized in the Registration Statement or the Prospectus are fairly summarized
in all material respects.
(c) This Agreement been duly authorized, executed and delivered by the
Company, and constitutes a valid, legal, and binding obligation of the Company,
enforceable in accordance with its terms, except as rights to indemnity
hereunder may be limited by federal or state securities laws and except as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting the rights of creditors generally, and subject to general
principles of equity. The Company has full corporate power and authority to
enter into this Agreement and to authorize, issue and sell the Shares as
contemplated by this Agreement.
(d) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Minnesota, with
corporate power and authority to own or lease its properties and conduct its
business as described in the Registration Statement. Each of the subsidiaries of
the Company, as listed in Exhibit A hereto (collectively, the "Subsidiaries"),
has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, with corporate
power and authority to own or lease its properties and conduct its business as
described in the Registration Statement. The Subsidiaries are the only
subsidiaries, direct or indirect, of the Company. Each of the Company and the
Subsidiaries is duly qualified to transact business and is in good standing as a
foreign corporation in all jurisdictions in which the conduct of its business
requires such qualification; except where the failure to be so qualified or to
be in good standing would not have a material adverse effect on the condition
(financial or otherwise), properties, assets, liabilities, rights, operations,
earnings, business, management or prospects of the Company and its Subsidiaries
taken as a whole, whether or not arising from transactions in the ordinary
course of business (a "Material Adverse Effect"). The outstanding shares of
capital stock of each of the Subsidiaries have been duly authorized and validly
issued, are fully paid and non-assessable and are wholly owned by the Company or
another Subsidiary free and clear of all liens, encumbrances and equities and
claims; and no options, warrants or other rights to purchase, agreements or
other obligations to issue or other rights to convert any obligations into
shares of capital stock or ownership interests in the Subsidiaries are
outstanding.
(e) The outstanding shares of common stock of the Company, including
all shares to be sold by the Selling Stockholders, ("Common Shares") have been
duly authorized and validly issued and are fully paid and non-assessable; the
portion of the Shares to be issued and sold by the Company have been duly
authorized and when issued and paid for as contemplated herein will be validly
issued, fully paid and non-assessable, and no preemptive rights, rights of first
refusal, rights of co-sale or similar rights in favor of stockholders of the
Company ("Stockholders") with respect
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to any of the Shares, exist with respect to any of the Shares or the issue and
sale thereof. Neither the filing of the Registration Statement nor the offering
or sale of the Shares as contemplated by this Agreement gives rise to any
rights, other than those which have been described in the Registration Statement
and waived or satisfied, for or relating to the registration of any shares of
Common Shares.
(f) The information set forth under the caption "Capitalization" in the
Prospectus is true and correct. All of the Shares conform to the description
thereof contained in the Registration Statement. The form of certificates for
the Shares conforms to the corporate law of the jurisdiction of the Company's
incorporation. Immediately after the issuance and sale of the Shares to the
Underwriters, no shares of preferred stock of the Company ("Preferred Stock")
shall be issued and outstanding and no holder of any shares of capital stock,
securities convertible into or exchangeable or exercisable for capital stock or
options, warrants or other rights to purchase capital stock or any other
securities of the Company shall have any existing or future right to acquire any
shares of Preferred Stock of the Company. No holders of securities of the
Company have rights to the registration of such securities under the
Registration Statement that have not been waived.
(g) The Shares have been approved for inclusion on the Nasdaq National
Market, subject only to official notice of issuance.
(h) The Company has delivered to each of the Representatives one complete
manually signed copy of the Registration Statement and of each consent and
certificate of experts filed as a part thereof, and conformed copies of the
Registration Statement (without exhibits) and preliminary prospectuses and the
Prospectus, as amended or supplemented, in such quantities and at such places as
the Representatives have reasonably requested for each of the Underwriters.
(i) The Company has not distributed and will not distribute any prospectus
or other offering material (including, without limitation, content on the
Company's website that may be deemed to be a prospectus or other offering
material) in connection with the offering and sale of the Shares other than any
Preliminary Prospectus or the Prospectus or other materials permitted by the Act
to be distributed by the Company.
(j) The consolidated financial statements of the Company and the
Subsidiaries, together with related notes and schedules as set forth in the
Registration Statement, present fairly the financial position and the results of
operations and cash flows of the Company and the consolidated Subsidiaries, at
the indicated dates and for the indicated periods. Such financial statements and
related schedules have been prepared in accordance with U.S. generally accepted
principles of accounting, consistently applied throughout the periods involved,
except as disclosed therein, and all adjustments necessary for a fair
presentation of results for such periods have been made. The summary financial
and statistical data included in the Registration Statement presents fairly the
information shown therein and such data has been compiled on a basis consistent
with the financial statements presented therein and the books and records of the
Company. The statistical and market-related data included in the Prospectus are
based on or derived from sources which the Company reasonably and in good faith
believes are reliable and accurate.
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(k) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(l) The Company has designed and established, and is maintaining, (a)
"disclosure controls and procedures" (as defined below) adequate to ensure that
material information relating to the Company is made known to the Company's
principal executive officer and principal financial officer by others within the
Company, and (b) "internal controls and procedures for financial reporting"
which provide reasonable assurance that the Company's financial statements are
fairly presented in conformity with generally accepted accounting principles.
For the purposes of the foregoing sentence, (a) the phrase "disclosure controls
and procedures" means controls and other procedures of the Company that are
designed to ensure that information required to be disclosed by the issuer in
registration statements under the Act or reports that it files or submits under
the Securities Exchange Act of 1934, as amended, and the rules and regulations
of the Commission thereunder (the "Exchange Act") is recorded, processed,
summarized and reported, within the time periods specified in the Commission's
rules and forms; "disclosure controls and procedures" include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in such registration statements and reports that
it files or submits is accumulated and communicated to the Company's management,
including its principal executive officer or officers and principal financial
officer or officers, or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure; and (b) the phrase
"internal controls and procedures for financial reporting" means controls that
pertain to the preparation of financial statements for external purposes that
are fairly presented in conformity with generally accepted accounting principals
as addressed by the Codification of Statements on Auditing Standards ss. 319 or
any superseding definition or other literature that is adopted by the Public
Company Accounting Oversight Board.
(m) KPMG LLP, which has certified certain financial statements of the
Company and delivered its opinion with respect to the audited financial
statements and schedules included in the Registration Statement and the
Prospectus, is a firm of independent public accountants with respect to the
Company within the meaning of the Act and the Rules and Regulations (including
without limitation the Xxxxxxxx-Xxxxx Act of 2002 and all rules and regulations
of the Commission thereunder).
(n) There is no action, suit, claim or proceeding pending or, to the
knowledge of the Company, threatened against the Company or any of the
Subsidiaries before any court or administrative agency or otherwise which if
determined adversely to the Company or any of its Subsidiaries might have a
Material Adverse Effect or prevent the consummation of the transactions
contemplated hereby, except as set forth in the Registration Statement and the
Prospectus. To the knowledge of the Company, there is no action, suit, claim or
proceeding pending against any of the Company's franchisees (the "Franchisees")
which if determined adversely to the Franchisee might have
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a Material Adverse Effect or prevent the consummation of the transactions
contemplated hereby, except as set forth in the Registration Statement and the
Prospectus. With respect to references to Franchisees in the foregoing
representations and warranties, each such representation and warranty as to
Franchisees is made only as to the Company's knowledge.
(o) No labor problem or dispute with the employees of the Company, its
Subsidiaries or its Franchisees exists or, to the Company's knowledge, is
threatened or imminent, and the Company is not aware of any existing or imminent
labor disturbance by the employees of any of its, its Subsidiaries' or its
Franchisees' principal suppliers, contractors or customers, that could have a
Material Adverse Effect. With respect to references to Franchisees in the
foregoing representations and warranties, each such representation and warranty
as to Franchisees is made only as to the Company's knowledge.
(p) The Company and the Subsidiaries have good and marketable title to all
of the properties and assets reflected in the financial statements (or as
described in the Registration Statement) hereinabove described, subject to no
lien, mortgage, pledge, charge or encumbrance of any kind except those reflected
in such financial statements (or as described in the Registration Statement) or
which are not material in amount to the business of the Company and its
Subsidiaries taken as a whole. The Company and the Subsidiaries occupy their
leased properties under valid and binding leases conforming in all material
respects to the description thereof set forth in the Registration Statement and
the Prospectus. The Company has not received any notice of any claim adverse to
its ownership of any property or any claim against the continued possession of
any property, whether owned or held under lease or sublease by the Company.
(q) The Company and the Subsidiaries have filed all federal, state, local,
foreign and franchise tax returns which have been required to be filed and have
paid all taxes indicated by said returns and all assessments received by them or
any of them to the extent that such taxes have become due and are not being
contested in good faith and for which an adequate reserve for accrual has been
established in accordance with U.S. generally accepted accounting principles.
All tax liabilities have been adequately provided for in the financial
statements of the Company, and the Company does not know of any actual or
proposed additional material tax assessments. There are no transfer taxes or
other similar fees or charges under federal law or the laws of any state, or any
political subdivision thereof, required to be paid in connection with the
execution and delivery of this Agreement or the issuance by the Company or sale
by the Company of the Shares.
(r) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, as it may be amended or supplemented,
and prior to or on the Closing Date and, if later, the Option Closing Date,
there has not been any material adverse change or any development involving a
prospective change which has had or is reasonably likely to have a Material
Adverse Effect, whether or not occurring in the ordinary course of business, and
there has not been any material transaction entered into or any material
transaction that is probable of being entered into by the Company or the
Subsidiaries, other than transactions in the ordinary course of business and
changes and transactions described in the Registration Statement and the
Prospectus, as it may be amended or supplemented. The Company and the
Subsidiaries have no material contingent obligations that are not disclosed in
the Company's financial statements in the Registration Statement and the
Prospectus.
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(s) Neither the Company nor any of the Subsidiaries is or with the
giving of notice or lapse of time or both, will be, in violation of or in
default under its articles of incorporation ("Charter") or by-laws ("By-Laws")
or under any agreement, lease, contract, indenture or other instrument or
obligation to which it is a party or by which it, or any of its properties, is
bound and which default has had or is reasonably likely to have a Material
Adverse Effect. The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated and the fulfillment of the
terms hereof will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, (i) any contract, indenture,
mortgage, deed of trust or other agreement or instrument to which the Company or
any of the Subsidiaries is a party, or (ii) the Charter or By-Laws of the
Company, or (iii) any order, rule or regulation applicable to the Company or any
of the Subsidiaries of any court or of any regulatory body or administrative
agency or other governmental body having jurisdiction, except in the case of
clauses (i) and (iii) for any conflict, breach, or default that would not have a
Material Adverse Effect or would not prevent or adversely affect the
consummation of the transactions herein contemplated or the fulfillment of the
terms hereof.
(t) Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body necessary in connection with the execution and delivery by the
Company of this Agreement and the consummation of the transactions herein
contemplated (except such additional steps as may be required by the Commission,
the National Association of Securities Dealers, Inc. (the "NASD") or such
additional steps as may be necessary to qualify the Shares for public offering
by the Underwriters under state securities or blue sky laws) has been obtained
or made and is in full force and effect.
(u) The Company and each of the Subsidiaries has all licenses,
certifications, permits, franchises, approvals, clearances and other regulatory
authorizations ("Permits") from governmental authorities as are necessary to
conduct its businesses as currently conducted and to own, lease and operate its
properties in the manner described in the Prospectus, except where the failure
to have such Permits would not have a Material Adverse Effect. There is no
claim, proceeding or controversy, pending or, to the knowledge of the Company or
any of the Subsidiaries, threatened, involving the status of or sanctions under
any of the Permits, except where such claim, proceeding or controversy would not
have a Material Adverse Effect. The Company and each of the Subsidiaries has
fulfilled and performed all of its obligations with respect to the Permits, and
no event has occurred which allows, or after notice or lapse of time would
allow, the revocation, termination, modification or other impairment of the
rights of the Company or any of the Subsidiaries under such Permit, except where
such revocation, termination, modification or other impairment would not have a
Material Adverse Effect. None of the Permits contains any restriction that is
materially burdensome on the Company or any of its Subsidiaries.
(v) To the Company's knowledge, there are no affiliations or
associations between any member of the NASD and any of the Company's officers or
directors, except as set forth in the Registration Statement.
(w) Neither the Company, nor to the Company's knowledge, any of its
affiliates, has taken or may take, directly or indirectly, any action designed
to cause or result in, or which
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has constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the shares of Common Shares to
facilitate the sale or resale of the Shares.
(x) Neither the Company nor any of the Subsidiaries is an "investment
company" within the meaning of such term under the Investment Company Act of
1940, and the rules and regulations of the Commission thereunder (the "1940
Act").
(y) The Company and each of the Subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as is reasonable for the
conduct of their respective businesses and the value of their respective
properties and, to the Company's knowledge, as is customary for companies
engaged in similar industries. All policies of insurance insuring the Company or
any Subsidiary or any of their respective businesses, assets, employees,
officers and directors are in full force and effect, and the Company and the
Subsidiaries are in compliance with the terms of such policies in all material
respects.
(z) The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in ERISA) for which the Company
would have any liability; the Company has not incurred and does not expect to
incur liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Internal
Revenue Code of 1986, as amended, including the regulations and published
interpretations thereunder (the "Code"); and each "pension plan" for which the
Company would have any liability that is intended to be qualified under Section
401(a) of the Code is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which would cause the loss of
such qualification.
(aa) Other than as contemplated by this Agreement, the Company has not
incurred any liability for any finder's or broker's fee, or agent's commission
in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
(bb) The Company does not own, directly or indirectly, any shares of
capital stock and does not have any other equity or ownership or proprietary
interest in any corporation, partnership, association, trust, limited liability
company, joint venture or other entity, other than (i) the Subsidiaries, and
(ii) equity securities representing less than 20% of the outstanding amount of
such class of securities of any entity and debt securities neither of which,
when combined with any other relationship between the Company and the issuer of
such equity or debt securities, would cause the Company to be an affiliate (as
such term is defined under the Act and the Rules and Regulations) of the issuer
of such securities, or would require the Company to account for any such equity
or debt securities other than as an investment under generally accepted
accounting principles.
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(cc) Neither the Company nor any of the Subsidiaries has sent or
received any notice indicating the termination of or intention to terminate any
of the contracts or agreements referred to or described in the Registration
Statement or the Prospectus, or filed as an exhibit to the Registration
Statement, and no such termination has been threatened by the Company, any
Subsidiary or any other party to any such contract or agreement.
(dd) Neither the Company nor any Subsidiary is in violation of any
statute, any rule, regulation, decision or order of any governmental agency or
body or any court, domestic or foreign, relating to the use, disposal or release
of hazardous chemicals, toxic substances or radioactive and biological materials
or relating to the protection or restoration of the environment or human
exposure to hazardous chemicals, toxic substances or radioactive and biological
materials (collectively, "Environmental Laws") which individually or in the
aggregate would have a Material Adverse Effect. Neither the Company nor the
Subsidiaries own or operate any real property contaminated with any substance
that is subject to any Environmental Laws, is liable for any off-site disposal
or contamination pursuant to any Environmental Laws, or is subject to any claim
relating to any Environmental Laws, which violation, contamination, liability or
claim would individually or in the aggregate have a Material Adverse Effect; and
the Company is not aware of any pending investigation which might lead to such a
claim.
(ee) No payments or inducements have been made or given, directly or
indirectly, to any federal or local official or candidate for, any federal or
state office in the United States or foreign offices by the Company or any
Subsidiary, by any of their officers, directors, employees or agents or, to the
knowledge of the Company, by any other person in connection with any
opportunity, contract, permit, certificate, consent, order, approval, waiver or
other authorization relating to the business of the Company or any Subsidiary,
except for such payments or inducements as were lawful under applicable laws,
rules and regulations. Neither the Company nor any Subsidiary, nor, to the best
knowledge of the Company, any director, officer, agent, employee or other person
associated with or acting on behalf of the Company or any Subsidiary, (i) has
used any corporate funds for any unlawful contribution, gift, entertainment or
other unlawful expense relating to political activity; (ii) made any direct or
indirect unlawful payment to any government official or employee from corporate
funds; (iii) violated or is in violation of any provision of the Foreign Corrupt
Practices Act of 1977; or (iv) made any bribe, unlawful rebate, payoff,
influence payment, kickback or other unlawful payment in connection with the
business of the Company or any Subsidiary.
(ff) The Company and each of the Subsidiaries owns, licenses, or
otherwise has rights in all United States and foreign patents, trademarks,
service marks, tradenames, copyrights, trade secrets and other proprietary
rights necessary for the conduct of its respective business as currently carried
on and as proposed to be carried on as described in the Registration Statement
and the Prospectus (collectively and together with any applications or
registrations for the foregoing, the "Intellectual Property"). Except as
specifically described in the Registration Statement or the Prospectus, (i) no
third parties have obtained rights to any such Intellectual Property from the
Company, other than licenses granted in the ordinary course and those that would
not have a Material Adverse Effect; (ii) to the Company's knowledge, there is no
infringement or misappropriation by third parties of any such Intellectual
Property; (iii) there is no pending or, to the Company's knowledge, threatened
action, suit, proceeding or claim by others
9
challenging the Company's or any Subsidiary's rights in or to any such
Intellectual Property, and the Company is unaware of any facts which would form
a basis for any such claim; (iv) there is no pending or, to the Company's
knowledge, threatened action, suit, proceeding or claim by others challenging
the validity, enforceability, or scope of any such Intellectual Property, and
the Company is unaware of any facts which would form a basis for any such claim;
(v) there is no prior, pending or, to the Company's knowledge, threatened
action, suit, proceeding or claim by others that the Company any of the
Subsidiaries, or any of the Company's or its Subsidiaries' products, product
candidates, or services infringes, misappropriates, or otherwise violates, or
would infringe upon, misappropriate or otherwise violate the development or
commercialization of its products, product candidates, or services described in
the Prospectus, any patent, trademark, copyright, trade secret or other
proprietary right of others, and the Company is unaware of any facts which would
form a basis for any such claim; and (vi) neither Company nor its Subsidiaries
have committed any act or omitted to undertake any act the effect of such
commission or omission would render the Intellectual Property invalid or
unenforceable in whole or in part. None of the technology employed by the
Company has been obtained or, to the Company's knowledge, is being used by the
Company in violation of the rights of any person or third party. The Company
knows of no infringement or misappropriation by others of Intellectual Property
that would be reasonably likely to have a Material Adverse Effect.
(gg) The conduct of business by the Company and each of the
Subsidiaries complies in all material respects, with federal, state, local and
foreign laws, statutes, ordinances, rules, regulations, decrees, orders, Permits
and other similar items ("Laws") applicable to its business, including, without
limitation, (a) the Occupational Safety and Health Act, the Environmental
Protection Act, the Toxic Substance Control Act and similar federal, state,
local and foreign Laws applicable to hazardous or regulated substances and
radioactive or biologic materials, (b) all applicable effective provisions of
the Xxxxxxxx-Xxxxx Act of 2002 and all rules and regulations of the Commission
thereunder and (c) licensing and certification Laws covering any aspect of the
business of the Company or any of the Subsidiaries. Neither the Company nor any
of the Subsidiaries has received any notification asserting, or has knowledge
of, any present or past failure to comply with or violation of any such Laws
which would, individually or in the aggregate, have a Material Adverse Effect.
(hh) The information contained in the Registration Statement and the
Prospectus regarding the Company's expectations, plans and intentions, and any
other information that constitutes "forward-looking" information within the
meaning of the Act and the Exchange Act were made by the Company on a reasonable
basis and reflect the Company's good faith belief and/or estimate of the matters
described therein.
(ii) Any certificate signed by any officer of the Company and
delivered to the Representatives or counsel for the Underwriters in connection
with the offering of the Shares contemplated hereby pursuant to Section 8 hereof
shall be deemed a representation and warranty by the Company to each Underwriter
and shall be deemed to be a part of this Section 1 and incorporated herein by
this reference.
(jj) Except as disclosed in the Prospectus, there are no
relationships, direct or indirect, or related-party transactions involving the
Company, any Subsidiary or any other person
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that are required to be described in the Registration Statement or the
Prospectus. The Company is not, directly or indirectly, extending or maintaining
credit, arranging for the extension of credit or renewing an extension of
credit, in the form of a personal loan to or for any director or executive
officer (or equivalent thereof) of the Company. There are no outstanding loans,
advances (except normal advances for business expenses in the ordinary course of
business) or guarantees of indebtedness by the Company to or for the benefit of
any of the officers or directors of the Company or any of the members of any of
them, except as disclosed in the Prospectus.
(kk) There are no transactions, arrangements and other relationships
between and/or among the Company, any of its affiliates (as such term is defined
in Rule 405 under the Act) and any unconsolidated entity, including, but not
limited to, any structural finance, special purpose or limited purpose entity
(each, an "Off Balance Sheet Transaction") that could reasonably be expected to
affect materially the Company's liquidity or the availability of or requirements
for its capital resources, including those Off Balance Sheet Transactions
described in the Commission's Statement about Management's Discussion and
Analysis of Financial Condition and Results of Operations (Release Nos. 33-8056;
34-45321; FR-61), required to be described in the Prospectus which have not been
described as required.
(ll) To the Company's knowledge, none of the Franchisees are in
default under, or in breach of, any franchise agreement to which any Franchisee
is a party or by which any Franchisee may be bound or to which any property or
assets of any Franchisee is subject, except for any default or breach that would
not have a Material Adverse Effect.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS.
Each of the Selling Stockholders severally represents and warrants to
each of the Underwriters as follows:
(a) Such Selling Stockholder now has and at the Option Closing Date,
if any, will have title to the Option Shares to be sold by such Selling
Stockholder, free and clear of any liens, encumbrances, equities and claims, and
full right, power and authority to effect the sale and delivery of such Option
Shares; and upon the delivery of, against payment for, such Option Shares
pursuant to this Agreement, the Underwriters will acquire title thereto, free
and clear of any liens, encumbrances, equities and claims.
(b) Such Selling Stockholder has full right, power and authority to
execute and deliver this Agreement, the Power of Attorney, and the Custodian
Agreement referred to below and to perform its obligations under such
Agreements. The execution and delivery of this Agreement and the consummation by
such Selling Stockholder of the transactions herein contemplated and the
fulfillment by such Selling Stockholder of the terms hereof will not require any
consent, approval, authorization, or other order of any court, regulatory body,
administrative agency or other governmental body (except as may be required
under the Act, state securities laws or blue sky laws) and will not result in a
breach of any of the terms and provisions of, or constitute a default under,
organizational documents of such Selling Stockholder, if not an individual, or
any indenture, mortgage, deed of trust or other agreement or instrument to which
such Selling Stockholder is a party, or of any order, rule or regulation
applicable to such Selling
11
Stockholder of any court or of any regulatory body or administrative agency or
other governmental body having jurisdiction.
(c) Such Selling Stockholder 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 the stabilization or manipulation
of the price of the Common Shares of the Company and, other than as permitted by
the Act, the Selling Stockholder will not distribute any prospectus or other
offering material in connection with the offering of the Shares.
(d) Such Selling Stockholder has reviewed the Registration Statement
and the Prospectus and to the best knowledge of such Selling Stockholder neither
the Registration Statement nor the Prospectus contains any untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading regarding such
Selling Stockholder.
(e) Such Selling Stockholder does not have any registration or other
similar rights to have any equity or debt securities registered for sale by the
Company under the Registration Statement or included in the offering
contemplated by this Agreement, except for such rights pursuant to the
Registration Rights Agreement, dated December 2, 1999, by and among the Company
and the other parties named therein.
(f) Such Selling Stockholder does not have any preemptive rights or
other rights to any securities of the Company or any of its subsidiaries in
connection with the offering contemplated by this Agreement, or any other
offering or issuance of securities by the Company or any Subsidiary prior to or
on or after the date hereof; such Selling Stockholder has not granted or
assigned any preemptive rights or other rights to any securities of the Company
or any Subsidiary to any person or entity.
(g) All information furnished by or on behalf of such Selling
Stockholder in writing expressly for use in the Registration Statement and
Prospectus is, and on the Option Closing Date will be, true, correct, and
complete in all material respects, and does not, and on the Option Closing
Date will not, contain any untrue statement of a material fact or omit to
state any material fact necessary to make such information not misleading.
Such Selling Stockholder confirms as accurate the number of shares of
Common Shares set forth opposite such Selling Stockholder's name in the
Prospectus under the caption "Principal and Selling Stockholders" (both
prior to and after giving effect to the sale of the Common Shares).
(h) Any certificate signed by or on behalf of any Selling Stockholder
and delivered to the Representatives or counsel for the Underwriters in
connection with the offering of the Shares contemplated hereby pursuant to
Section 8 hereof shall be deemed a representation and warranty by such Selling
Stockholder to each Underwriter and shall be deemed to be a part of this Section
2 and incorporated herein by this reference.
12
3. Purchase, Sale and Delivery of the Firm Shares.
(a) On the basis of the representations, warranties and covenants
herein contained, and subject to the conditions herein set forth, the Company
agrees to sell to the Underwriters and each Underwriter agrees, severally and
not jointly, to purchase, at a price of $_____ per share, the number of Firm
Shares set forth opposite the name of each Underwriter in Schedule I hereof,
subject to adjustments in accordance with Section 10 hereof.
(b) Payment for the Firm Shares to be sold hereunder is to be made in
New York Clearing House funds by wire transfer of immediately available funds
against delivery of certificates therefor to the Representatives for the several
accounts of the Underwriters. Such payment and delivery are to be made through
the facilities of the Depository Trust Company, New York, New York at 10:00
a.m., New York time, on the third business day after the date of this Agreement
or at such other time and date not later than five business days thereafter as
you and the Company shall agree upon, such time and date being herein referred
to as the "Closing Date." As used herein, "business day" means a day on which
the New York Stock Exchange is open for trading and on which banks in New York
are open for business and are not permitted by law or executive order to be
closed.
(c) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company and the Selling Stockholders hereby grant an option to the several
Underwriters to purchase the Option Shares at the price per share as set forth
in the first paragraph of this Section. The number of Option Shares to be
purchased by each Underwriter from each Selling Stockholder shall be as nearly
as practicable in the same proportion to the total number of Option Shares being
sold by each Selling Stockholder as the number of Option Shares being purchased
by each Underwriter bears to the total number of Option Shares to be sold
hereunder. The obligations of the Company and of each of the Selling
Stockholders shall be several and not joint. The option granted hereby may be
exercised in whole or in part by giving written notice (i) at any time before
the Closing Date and (ii) only once thereafter within 30 days after the date of
this Agreement, by you, as the Representatives of the several Underwriters, to
the Company, the Attorney-in-Fact, and the Custodian setting forth the number of
Option Shares as to which the several Underwriters are exercising the option,
the names and denominations in which the Option Shares are to be registered and
the time and date at which such certificates are to be delivered. If the option
granted hereby is exercised in part, the respective number of Option Shares to
be sold by the Company and each of the Selling Stockholders shall be in the same
proportion to the total number of Option Shares being sold as the number of
Option Shares being sold by the Company and each of the Selling Stockholders
would have borne to the total number of Option Shares had the option granted
hereby been exercised in full, adjusted by you in such manner as to avoid
fractional shares. The time and date at which certificates for Option Shares are
to be delivered shall be determined by the Representatives but shall not be
earlier than three nor later than 10 full business days after the exercise of
such option, nor in any event prior to the Closing Date (such time and date
being herein referred to as the "Option Closing Date"). If the date of exercise
of the option is three or more days before the Closing Date, the notice of
exercise shall set the Closing Date as the Option Closing Date. The number of
Option Shares to be purchased by each Underwriter shall be in the same
proportion to the total number of Option Shares being purchased as the
13
number of Firm Shares being purchased by such Underwriter bears to the total
number of Firm Shares, adjusted by you in such manner as to avoid fractional
shares. The option with respect to the Option Shares granted hereunder may be
exercised only to cover over-allotments in the sale of the Firm Shares by the
Underwriters. You, as the Representatives of the several Underwriters, may
cancel such option at any time prior to its expiration by giving written notice
of such cancellation to the Company and the Attorney-in-Fact. To the extent, if
any, that the option is exercised, payment for the Option Shares shall be made
on the Option Closing Date in Federal (same day) funds drawn to the order of the
Company for the Option Shares to be sold by it and to the order of "Continental
Stock Transfer & Trust Company, as Custodian" for the Option Shares to be sold
by the Selling Stockholders against delivery of certificates therefor through
the facilities of the Depository Trust Company, New York, New York.
(d) Certificates in negotiable form for the total number of the Shares
to be sold hereunder by the Selling Stockholders have been placed in custody
with Continental Stock Transfer & Trust Company as custodian (the "Custodian")
pursuant to a Custodian Agreement executed by each Selling Stockholder (the
"Custodian Agreement"), a copy of which has been delivered to you, for delivery
of any Option Shares to be sold hereunder by the Selling Stockholders. Each of
the Selling Stockholders specifically agrees that any Option Shares represented
by the certificates held in custody for the Selling Stockholders under the
Custodian Agreement are subject to the interests of the Underwriters hereunder,
that the arrangements made by the Selling Stockholders for such custody are to
that extent irrevocable, and that the obligations of the Selling Stockholders
hereunder shall not be terminable by any act or deed of the Selling Stockholders
(or by any other person, firm or corporation including the Company, the
Custodian or the Underwriters) or by operation of law (including the death of an
individual Selling Stockholder or the dissolution of a corporate Selling
Stockholder) or by the occurrence of any other event or events, except as set
forth in the Custodian Agreement. If any such event should occur prior to the
delivery to the Underwriters of the Option Shares hereunder, certificates for
the Option Shares shall be delivered by the Custodian in accordance with the
terms and conditions of this Agreement as if such event has not occurred. The
Custodian is authorized to receive and acknowledge receipt of the proceeds of
sale of the Shares held by it against delivery of such Shares.
(e) If on the Option Closing Date, if any, any Selling Stockholder
fails to sell the Option Shares which such Selling Stockholder has agreed to
sell on such date as set forth in Schedule II hereto, the Company agrees that it
will sell or arrange for the sale of that number of shares of Common Shares to
the Underwriters which represents the Option Shares which such Selling
Stockholder has failed to so sell, as set forth in Schedule II hereto, or such
lesser number as may be requested by the Representatives.
4. OFFERING BY THE UNDERWRITERS.
It is understood that the several Underwriters are to make a public
offering of the Firm Shares as soon as the Representatives deem it advisable to
do so. The Firm Shares are to be initially offered to the public at the initial
public offering price set forth in the Prospectus. The Representatives may from
time to time thereafter change the public offering price and other
14
selling terms. To the extent, if at all, that any Option Shares are purchased
pursuant to Section 3 hereof, the Underwriters will offer them to the public on
the foregoing terms.
It is further understood that you will act as the Representatives for
the Underwriters in the offering and sale of the Shares in accordance with a
Master Agreement Among Underwriters entered into by you and the several other
Underwriters.
5. COVENANTS OF THE COMPANY.
The Company covenants and agrees with the several Underwriters
that:
(a) The Company will (i) use its best efforts to cause the
Registration Statement to become effective or, if the procedure in Rule 430A of
the Rules and Regulations is followed, to prepare and timely file with the
Commission, under Rule 424(b) of the Rules and Regulations, a Prospectus in a
form approved by the Representatives containing information previously omitted
at the time of effectiveness of the Registration Statement in reliance on Rule
430A of the Rules and Regulations; and (ii) not file any amendment to the
Registration Statement or supplement to the Prospectus of which the
Representatives shall not previously have been advised and furnished with a copy
or to which the Representatives shall have reasonably objected in writing or
which is not in compliance with the Rules and Regulations.
(b) The Company will not take, directly or indirectly, any action
designed to cause or result in, or that has constituted or might reasonably be
expected to constitute, the stabilization or manipulation of the price of any
securities of the Company.
(c) The Company will advise the Representatives promptly (i) when the
Registration Statement or any post-effective amendment thereto shall have become
effective; (ii) of the receipt of any comments from the Commission; (iii) of any
request of the Commission for amendment of the Registration Statement or for
supplement to the Prospectus or for any additional information; and (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the use of the Prospectus or of the institution of any
proceedings for that purpose. The Company will use its best efforts to prevent
the issuance of any such stop order preventing or suspending the use of the
Prospectus and to obtain as soon as possible the lifting thereof, if issued.
(d) The Company will cooperate with the Representatives in endeavoring
to qualify the Shares for sale under (or obtain exemptions from the application
of) the securities laws of such jurisdictions as the Representatives may
reasonably have designated in writing and will make such applications, file such
documents, and furnish such information as may be reasonably required for that
purpose, provided the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction where it is not now so qualified or required to file such a
consent. The Company will, from time to time, prepare and file such statements,
reports, and other documents, as are or may be required to continue such
qualifications in effect for so long a period as the Representatives may
reasonably request for distribution of the Shares. The Company will advise the
Representatives promptly of the suspension of the qualification or registration
of (or any such exemption relating to) the Common
15
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 shall use its best efforts to obtain the withdrawal thereof at the
earliest possible moment.
(e) The Company will deliver to, or upon the order of, the
Representatives, from time to time, as many copies of any Preliminary Prospectus
as the Representatives may reasonably request. The Company will deliver to, or
upon the order of, the Representatives during the period when delivery of a
Prospectus is required under the Act, as many copies of the Prospectus in final
form, or as thereafter amended or supplemented, as the Representatives may
reasonably request. The Company will deliver to the Representatives at or before
the Closing Date, four signed copies of the Registration Statement and all
amendments thereto including all exhibits filed therewith, and will deliver to
the Representatives such number of copies of the Registration Statement
(including such number of copies of the exhibits filed therewith that may
reasonably be requested) and of all amendments thereto, as the Representatives
may reasonably request.
(f) The Company will comply with the Act and the Rules and
Regulations, and the Exchange Act, and the rules and regulations of the
Commission thereunder, so as to permit the completion of the distribution of the
Shares as contemplated in this Agreement and the Prospectus. If during the
period in which a prospectus is required by law to be delivered by an
Underwriter or dealer, any event shall occur as a result of which, in the
judgment of the Company or in the reasonable opinion of the Underwriters, it
becomes necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances existing at the time the
Prospectus is delivered to a purchaser, not misleading, or, if it is necessary
at any time to amend or supplement the Prospectus to comply with any law, the
Company promptly will prepare and file with the Commission an appropriate
amendment to the Registration Statement or supplement to the Prospectus so that
the Prospectus as so amended or supplemented will not, in the light of the
circumstances when it is so delivered, be misleading, or so that the Prospectus
will comply with the law.
(g) The Company will make generally available to its security holders,
as soon as it is practicable to do so, but in any event not later than 15 months
after the effective date of the Registration Statement, an earning statement
(which need not be audited) in reasonable detail, covering a period of at least
12 consecutive months beginning after the effective date of the Registration
Statement, which earning statement shall satisfy the requirements of Section
11(a) of the Act and Rule 158 of the Rules and Regulations and will advise you
in writing when such statement has been so made available.
(h) Prior to the Closing Date, the Company will furnish to the
Underwriters, as soon as they have been prepared by or are available to the
Company, a copy of any unaudited interim financial statements of the Company for
any period subsequent to the period covered by the most recent financial
statements appearing in the Registration Statement and the Prospectus.
(i) No offering, sale, short sale or other disposition of any shares
of Common Shares of the Company or other securities convertible into or
exchangeable or exercisable for shares of Common Shares or derivative of Common
Shares (or agreement for such) will be made
16
for a period of 180 days after the date of this Agreement, directly or
indirectly, by the Company otherwise than hereunder or with the prior written
consent of RBC Xxxx Xxxxxxxx Inc. and XX Xxxxx Securities Corporation; provided,
that this provision will not restrict the Company from awarding options to
purchase its Common Shares or restricted stock grants pursuant to employee
benefit plans as described in the Prospectus, issuing Common Shares upon
exercise of options granted under employee benefit plans, or otherwise awarding
or issuing Common Shares pursuant to employee benefit plans.
(j) The Company will use its best efforts to list, subject to notice
of issuance, the Shares on the Nasdaq National Market. The Company will promptly
deliver to the Underwriters copies of all correspondence to and from, and all
documents issued to and by, the Commission in connection with the registration
of the Shares under the 1933 Act and listing of the Shares on the Nasdaq
National Market.
(k) The Company has caused each officer, director and principal
stockholder of the Company listed on Schedule II hereto to furnish to you, on or
prior to the date of this agreement, a letter or letters, in form and substance
satisfactory to the Underwriters, pursuant to which each such person shall agree
not to offer, sell, sell short or otherwise dispose of any shares of Common
Shares of the Company or other capital stock of the Company, or any other
securities convertible, exchangeable or exercisable for Common Shares or
derivative of Common Shares owned by such person or request the registration for
the offer or sale of any of the foregoing (or as to which such person has the
right to direct the disposition of) for a period of 180 days after the date of
this Agreement, directly or indirectly, except with the prior written consent of
RBC Xxxx Xxxxxxxx Inc. and XX Xxxxx Securities Corporation ("Lockup
Agreements"). The Company will enforce such Lockup Agreements and will direct
the Company's transfer agent to place stop transfer restrictions upon any such
securities of the Company that are bound by such Lockup Agreements for the
duration of the period contemplated in such agreements.
(l) The Company shall apply the net proceeds of its sale of the Shares
as described under the heading "Use of Proceeds" in the Prospectus and shall
report with the Commission with respect to the sale of the Shares and the
application of the proceeds therefrom as may be required in accordance with Rule
463 under the Act.
(m) The Company shall not invest, or otherwise use the proceeds
received by the Company from its sale of the Shares in such a manner as would
require the Company or any of the Subsidiaries to register as an investment
company under the 1940 Act.
(n) The Company will maintain a transfer agent and, if necessary
under the jurisdiction of incorporation of the Company, a registrar for the
Common Shares.
(o) The Company will comply with all registration, filing and
reporting requirements of the Exchange Act and the Nasdaq National Market System
which from time to time may be applicable to the Company and will file with the
Commission such information on Form 10-Q or Form 10-K as may be required by Rule
463.
17
6. COVENANTS OF THE SELLING STOCKHOLDERS.
Each of the Selling Stockholders covenants and agrees with the several
Underwriters that:
(a) No offering, sale, short sale or other disposition of any shares
of Common Shares of the Company or other capital stock of the Company or other
securities convertible, exchangeable or exercisable for Common Shares or
derivative of Common Shares owned by the Selling Stockholder or request the
registration for the offer or sale of any of the foregoing (or as to which the
Selling Stockholder has the right to direct the disposition of) will be made for
a period of 180 days after the date of this Agreement, directly or indirectly,
by such Selling Stockholder otherwise than hereunder or with the prior written
consent of RBC Xxxx Xxxxxxxx Inc. and XX Xxxxx Securities Corporation.
(b) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal Responsibility
Act of 1982 and the Interest and Dividend Tax Compliance Act of 1983 with
respect to the transactions herein contemplated, each of the Selling
Stockholders agrees to deliver to you prior to or at the Closing Date a properly
completed and executed United States Treasury Department Form W-8 or W-9 (or
other applicable form or statement specified by Treasury Department regulations
in lieu thereof).
(c) Such Selling Stockholder will not take, directly or indirectly,
any action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any securities of the Company.
7. COSTS AND EXPENSES.
Whether or not the transactions contemplated hereunder are consummated
or this Agreement becomes effective as to all of its provisions or is
terminated, and except for the seven percent (7%) underwriters' discount charged
to the Selling Stockholders upon the sale of the Option Shares, the Company
agrees to pay (i) all costs, expenses and fees incident to the performance of
the obligations of the Company and the Selling Stockholders under this
Agreement, including, without limiting the generality of the foregoing, all fees
and expenses of legal counsel for the Company and the Selling Stockholders and
of the Company's independent accountants, all costs and expenses incurred in
connection with the preparation, printing, filing and distribution of the
Registration Statement, Preliminary Prospectuses and the Prospectus; (ii) the
filing fees of the Commission and all costs, fees and expenses (including legal
fees and disbursements of counsel for the Underwriters) incurred by the
Underwriters in connection with qualifying or registering all or any part of the
Shares for offer and sale under applicable state and foreign securities laws and
blue sky laws, including the preparation of a blue sky memorandum relating to
the Shares and clearance of such offering with the National Association of
Securities Dealers, Inc. (the "NASD") of the terms of the sale of the Shares;
(iii) the fees of the Custodian and other fees and expenses related to the
offering of Shares by the Selling Stockholders; (iv) all fees and expenses of
the Company's transfer agent, printing of the certificates for the Shares and
all transfer taxes, if any, with respect to the sale and delivery of the Shares
to the several Underwriters, (v) all fees and expenses in connection with
qualification and inclusion of the
18
Shares and the other then outstanding shares of Common Stock on the Nasdaq
National Market, (vi) the cost of printing or producing any agreement among
underwriters, this Agreement, closing documents (including compilations thereof)
and any other documents in connection with the offering, purchase, sale and
delivery of the Shares. The provisions of this Section shall not affect any
agreement which the Company and the Selling Stockholders may make for the
allocation or sharing of such expenses and costs. To the extent, if at all, that
any of the Selling Stockholders engage special legal counsel to represent them
in connection with this offering, the fees and expenses of such counsel shall be
borne by such Selling Stockholder.
The Company and the Selling Stockholders shall not, however, be
required to pay for any of the Underwriters expenses (other than those related
to qualification under NASD regulation and State securities or blue sky laws)
except that, if this Agreement shall not be consummated because the conditions
in Section 8 hereof are not satisfied, or because this Agreement is terminated
by the Representatives pursuant to Section 13 hereof, or by reason of any
failure, refusal or inability on the part of the Company or the Selling
Stockholders to perform any undertaking or satisfy any condition of this
Agreement or to comply with any of the terms hereof on its part to be performed,
unless such failure to satisfy said condition or to comply with said terms be
due to the default or omission of any Underwriter, then the Company shall
reimburse the several Underwriters for reasonable out-of-pocket expenses,
including all fees and disbursements of counsel, reasonably incurred in
connection with investigating, marketing and proposing to market the Shares or
in contemplation of performing their obligations hereunder; but the Company and
the Selling Stockholders shall not in any event be liable to any of the several
Underwriters for damages on account of loss of anticipated profits from the sale
by it them of the Shares.
8. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of the Underwriters to purchase the Firm
Shares on the Closing Date and the Option Shares, if any, on the Option Closing
Date are subject to the accuracy, as of the Closing Date and the Option Closing
Date, if any, of the representations and warranties of the Company and the
Selling Stockholders contained herein, and to the performance by the Company and
the Selling Stockholders of their covenants and obligations hereunder and to
each of the following additional conditions:
(a) The Registration Statement and all post-effective amendments
thereto shall have become effective and any and all filings required by Rule 424
and Rule 430A of the Rules and Regulations shall have been made, and any request
of the Commission for additional information (to be included in the Registration
Statement or otherwise) shall have been disclosed to the Representatives and
complied with to their reasonable satisfaction. No stop order suspending the
effectiveness of the Registration Statement, as amended from time to time, shall
have been issued and no proceedings for that purpose shall have been taken or,
to the knowledge of the Company or the Selling Stockholders, shall be
contemplated by the Commission and no injunction, restraining order, or order of
any nature by a federal or state court of competent jurisdiction shall have been
issued as of the Closing Date which would prevent the issuance of the Shares.
The NASD shall have raised no objection to the fairness and reasonableness of
the underwriting terms and arrangements.
19
(b) The Representatives shall have received on the Closing Date and the
Option Closing Date, if any, the opinion of Xxxxxxxxxx & Xxxxx, P.A., counsel
for the Company , the Subsidiaries and the Selling Stockholders, dated the
Closing Date or the Option Closing Date, if any, addressed to the Underwriters
(and stating that it may be relied upon by Xxxxxx & Whitney LLP, counsel for the
Underwriters) to the effect that:
(i) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Minnesota with
corporate power and authority to own or lease its properties and conduct its
business as described in the Registration Statement; each of the Subsidiaries
has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, with corporate
power and authority to own or lease its properties and conduct its business as
described in the Registration Statement; the Company and each of the
Subsidiaries are duly qualified to transact business in all jurisdictions in
which the conduct of their business requires such qualification, or in which the
failure to qualify would have a Material Adverse Effect upon the business of the
Company and the Subsidiaries taken as a whole. To the knowledge of such counsel,
based upon a review of the applicable corporate records provided to such counsel
by the Company, the outstanding shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued and are fully paid and
non-assessable and are owned by the Company or any of any of the Subsidiaries;
and, to the best of such counsel's knowledge, the outstanding shares of capital
stock of each of the Subsidiaries is owned free and clear of all liens,
encumbrances and equities and claims, and no options, warrants or other rights
to purchase, agreements or other obligations to issue or other rights to convert
any obligations into any shares of capital stock or of ownership interests in
the Subsidiaries are outstanding.
(ii) As of September 28, 2003, the Company had authorized and, to the
knowledge of such counsel, outstanding capital stock as set forth under the
caption "Capitalization" in the Prospectus; the authorized shares of the
Company's Common Shares have been duly authorized; the outstanding shares of the
Company's Common Shares, including the Shares to be sold by the Selling
Stockholders, have been duly authorized and validly issued and are fully paid
and non-assessable; all of the Shares conform to the description thereof
contained in the Prospectus; the certificates for the Shares, assuming they are
in the form filed with the Commission, are in due and proper form; the shares of
Common Shares, including the Option Shares, if any, to be sold by the Company
and the Selling Stockholders pursuant to this Agreement have been duly
authorized and will be validly issued, fully paid and non-assessable when issued
and paid for as contemplated by this Agreement; to the knowledge of such
counsel, no preemptive rights of stockholders exist with respect to any of the
Shares or the issue or sale thereof; and the Shares sold hereunder have been
duly and validly authorized and qualified for inclusion on the Nasdaq National
Market, subject to notice of issuance.
(iii) Except as described in or contemplated by the Prospectus, to the
knowledge of such counsel, there are no outstanding securities of the Company
convertible or exchangeable into or evidencing the right to purchase or
subscribe for any shares of capital stock of the Company and there are no
outstanding or authorized options, warrants or rights of any character
obligating the Company to issue any shares of its capital stock or any
securities convertible or exchangeable into or evidencing the right to purchase
or subscribe for any shares of
20
such stock; and except as described in the Prospectus, to the knowledge of such
counsel, no holder of any securities of the Company or any other person has the
right, contractual or otherwise, which has not been satisfied or effectively
waived, to cause the Company to sell or otherwise issue to them, or to permit
them to underwrite the sale of, any of the Shares or the right to have any
Common Shares or other securities of the Company included in the Registration
Statement or the right, as a result of the filing of the Registration Statement,
to require registration under the Act of any shares of Common Shares or other
securities of the Company.
(iv) The Registration Statement has become effective under the Act
and, to the knowledge of such counsel, no stop order proceedings with respect
thereto have been instituted or are pending or threatened under the Act.
(v) The Registration Statement, the Prospectus and each amendment or
supplement thereto is responsive to the requirements of the Act and the
applicable rules and regulations thereunder in all material respects (except
that such counsel need express no opinion as to the financial statements and
related schedules therein).
(vi) The statements under the captions `Management," "Related Party
Transactions," "Description of Securities," "Shares Eligible for Future Sale"
and "U.S. Federal Tax Considerations for Non-U.S. Holders" in the Prospectus,
insofar as such statements constitute a summary of documents referred to therein
or matters of law, fairly summarize in all material respects the information
called for with respect to such documents and matters.
(vii) To such counsel's knowledge, there is no document or contract of
a character required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement which is
not described or filed or incorporated by reference as required, and each
description of the contracts and documents that are contained in the
Registration Statement and Prospectus fairly presents in all material respects
the information required under the Act and the Rules and Regulations.
(viii) Such counsel knows of no material legal or governmental
proceedings pending or threatened against the Company or any of the Subsidiaries
except as set forth in the Prospectus.
(ix) The execution and delivery of this Agreement and the consummation
of the transactions herein contemplated do not and will not conflict with or
result in a breach of any of the terms or provisions of, or constitute a default
under, the Charter or By-Laws of the Company, or any agreement or instrument
listed on Schedule III hereto to such counsel to which the Company or any of the
Subsidiaries is a party or by which the Company or any of the Subsidiaries may
be bound.
(x) This Agreement has been duly authorized, executed and delivered by
and on behalf of the Company, and is a legal, valid and binding agreements of
the Company, except as rights to indemnity hereunder may be limited by federal
or state securities laws and except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting the rights of
creditors generally, and subject to general principles of equity.
21
(xi) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body is necessary in connection with the execution and delivery of
this Agreement and the consummation of the transactions herein contemplated
(other than as may be required by the NASD or as required by State securities
and blue sky laws as to which such counsel need express no opinion) except such
as have been obtained or made under the Act and the Rules and Regulations.
(xii) To such counsel's knowledge after due inquiry and investigation,
all offers and sales of the Company's capital stock during the three years prior
to the date hereof were at all relevant times exempt from the registration
requirements of the Act and were duly registered or the subject of an available
exemption from the registration requirements of the applicable state and foreign
securities laws and blue sky laws;
(xiii) The Company is not required to register as an investment
company under the 1940 Act.
(xiv) This Agreement has been duly authorized, executed and delivered
on behalf of the Selling Stockholders.
(xv) Each Selling Stockholder has full legal right, power and
authority, and any approval required by law (other than as required by State
securities and blue sky laws as to which such counsel need express no opinion),
to sell, assign, transfer and deliver the portion of the Shares to be sold by
such Selling Stockholder.
(xvi) The Custodian Agreement and the Power of Attorney executed and
delivered by each Selling Stockholder constitute valid, legal, and binding
obligations of such Selling Stockholder, enforceable in accordance with its
terms, except as rights to indemnity hereunder may be limited by federal or
state securities laws and except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting the rights of
creditors generally, and subject to general principles of equity.
(xvii) The Underwriters (assuming that they are protected purchasers
within the meaning of the Uniform Commercial Code) have acquired all rights of
each Selling Stockholder in the Shares being sold by such Selling Stockholder on
the Closing Date, and the Option Closing Date, if any, free of any adverse
claim.
In rendering such opinion, Xxxxxxxxxx & Xxxxx, P.A. may rely as to matters
governed by the laws of states other than Minnesota or Federal laws, on local
counsel in such jurisdictions and as to the matters set forth in subparagraphs
(xiii), (xiv) and (xv) on opinions of other counsel representing the respective
Selling Stockholders, provided that in each case Xxxxxxxxxx & Xxxxx, P.A. shall
state that they believe that they and the Underwriters are justified in relying
on such other counsel. In addition to the matters set forth above, such opinion
shall also include a statement to the effect that nothing has come to the
attention of such counsel which causes them to conclude that (i) the
Registration Statement,and Prospectus as amended or supplemented were not
responsive in all material respects with the requirements of the Act and the
rules and regulations of the Commission thereunder; (ii) the Registration
Statement, at the
22
time it became effective under the Act (but after giving effect to any
modifications incorporated therein pursuant to Rule 430A under the Act) and as
of the Closing Date or the Option Closing Date, if any, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
(iii) the Prospectus, or any supplement thereto, on the date it was filed
pursuant to the Rules and Regulations and as of the Closing Date or the Option
Closing Date, if any, contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements, in
the light of the circumstances under which they are made, not misleading (except
that such counsel need express no view as to financial statements and related
schedules therein). With respect to such statement, Xxxxxxxxxx & Xxxxx, P.A. may
state that their belief is based upon the procedures set forth therein, but is
without independent check and verification.
(c) The Representatives shall have received from Xxxxxx & Whitney LLP,
counsel for the Underwriters, an opinion dated the Closing Date and the Option
Closing Date, if any, with respect to the formation of the Company, the validity
of the Shares and other related matters as the Representatives reasonably may
request, and such counsel shall have received such papers and information as
they request to enable them to pass upon such matters.
(d) The Representatives shall have received at or prior to the Closing Date
from Xxxxxx & Xxxxxxx LLP a memorandum or summary, in form and substance
satisfactory to the Representatives, with respect to the qualification for
offering and sale by the Underwriters of the Shares under the State securities
or blue sky laws of such jurisdictions as the Representatives may reasonably
have designated to the Company.
(e) You shall have received, on each of the dates hereof, the Closing Date
and the Option Closing Date, if any, a letter dated the date hereof, the Closing
Date or the Option Closing Date, if any, in form and substance satisfactory to
you, of KPMG LLP confirming that they are independent public accountants within
the meaning of the Act and the applicable published Rules and Regulations
thereunder and stating that in their opinion the financial statements and
schedules examined by them and included in the Registration Statement comply in
form in all material respects with the applicable accounting requirements of the
Act and the related published Rules and Regulations; and containing such other
statements and information as is ordinarily included in accountants' "comfort
letters" to Underwriters with respect to the financial statements and certain
financial and statistical information contained in the Registration Statement
and the Prospectus, delivered according to Statement of Auditing Standards No.
72 (or any successor bulletin).
(f) The Representatives shall have received on the Closing Date and the Op
tion Closing Date, if any, a certificate or certificates of the Company's
ChiefExecutive Officer and Chief Financial Officer, in their capacity as
officers ofthe Company, to the effect that, as of the Closing Date or the Option
ClosingDate, if any, each of them severally represents as follows:
(i) The Registration Statement has become effective under the Act and
no stop order suspending the effectiveness of the Registrations Statement has
been issued, and no proceedings for such purpose have been taken or are, to his
knowledge, contemplated by the Commission;
23
(ii) The representations and warranties of the Company contained in
Section 1 hereof are true and correct as of the Closing Date or the Option
Closing Date, if any;
(iii) All filings required to have been made pursuant to Rules 424 or
430A under the Act have been made;
(iv) They have carefully examined the Registration Statement and the
Prospectus and, in their opinion, as of the effective date of the Registration
Statement, the statements contained in the Registration Statement were true and
correct, and such Registration Statement and Prospectus did not omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, and since the effective date of the
Registration Statement, no event has occurred which should have been set forth
in a supplement to or an amendment of the Prospectus which has not been so set
forth in such supplement or amendment; and
(v) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any material
adverse change or any development involving a prospective change, which has had
or is reasonably likely to have a Material Adverse Effect, whether or not
arising in the ordinary course of business.
(g) The Company and the Selling Stockholders shall have furnished to the
Representatives such further certificates and documents confirming the
representations and warranties, covenants and conditions contained herein and
related matters as the Representatives may reasonably have requested.
(h) The Firm Shares and Option Shares, if any, have been approved for
designation upon notice of issuance on the Nasdaq National Market.
(i) The Lockup Agreements described in Section 5(k) are in full force and
effect.
The opinions and certificates mentioned in this Agreement shall be deemed
to be in compliance with the provisions hereof only if they are in all material
respects satisfactory to the Representatives and to Xxxxxx & Whitney LLP,
counsel for the Underwriters.
If any of the conditions hereinabove provided for in this Section shall not
have been fulfilled when and as required by this Agreement to be fulfilled, the
obligations of the Underwriters hereunder may be terminated by the
Representatives by notifying the Company and the Selling Stockholders of such
termination in writing on or prior to the Closing Date or the Option Closing
Date, if any.
In such event, the Company, the Selling Stockholders and the Underwriters
shall not be under any obligation to each other (except to the extent provided
in Sections 7 and10 hereof).
24
9. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY AND THE SELLING
STOCKHOLDERS.
The obligations of the Company and the Selling Stockholders to sell and
deliver the portion of the Shares required to be delivered as and when specified
in this Agreement are subject to the conditions that at the Closing Date or the
Option Closing Date, if any, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and in effect or proceedings
therefor initiated or threatened.
10. INDEMNIFICATION.
(a) The Company agrees:
(i) 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 or liabilities to which such Underwriter or
any such controlling person may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon (i) 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, (ii) the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (iii) any alleged act or failure to act by
any Underwriter in connection with, or relating in any manner to, the Shares or
the offering contemplated hereby, and which is included as part of or referred
to in any loss, claim, damage, liability or action arising out of or based upon
matters covered by clause (i) or (ii) above (provided, however, that (x) the
Company shall not be liable under this clause (iii) to the extent that it is
determined in a final judgment by a court of competent jurisdiction that such
loss, claim, damage, liability or action resulted primarily from any such acts
or failures to act undertaken or omitted to be taken by such Underwriter through
its gross negligence or willful misconduct); provided, however, that (y) the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability 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 such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by or through the Representatives
specifically for use in the preparation thereof, and (z) the foregoing indemnity
agreement with respect to any Preliminary Prospectus shall not inure to the
benefit of any Underwriter if (I) a loss, claim, liability, expense or damage
results solely from an untrue statement of a material fact contained in, or the
omission of a material fact from, such Preliminary Prospectus, which untrue
statement or omission was completely corrected in the Prospectus (as then
amended or supplemented) and (II) the Company sustains the burden of proving
that the Underwriters sold Shares to the person alleging such loss, claim,
liability, expense or damage without sending or giving, at or prior to the
written confirmation of such sale, a copy of the Prospectus (as then amended or
supplemented) and (III) the Company had previously furnished copies thereof to
the Underwriters within a reasonable amount of time prior to such sale or such
confirmation and (IV) the Underwriters failed to deliver the corrected
Prospectus, if required by
25
law to have so delivered it and if delivered would have been a complete defense
against the person asserting such loss, claim, liability, expense or damage.
(ii) to reimburse each Underwriter and each such controlling
person upon demand for any legal or other out-of-pocket expenses reasonably
incurred by such Underwriter or such controlling person in connection with
investigating or defending any such loss, claim, damage or liability, action or
proceeding or in responding to a subpoena or governmental inquiry related to the
offering of the Shares, whether or not such Underwriter or controlling person is
a party to any action or proceeding. In the event that it is finally judicially
determined that the Underwriters were not entitled to receive payments for legal
and other expenses pursuant to this subparagraph, the Underwriters will promptly
return all sums that had been advanced pursuant hereto.
(b) Each Underwriter severally and not jointly will indemnify and
hold harmless the Company, each of its directors, each of its officers who have
signed the Registration Statement, the Selling Stockholders and each person, if
any, who controls the Company or the Selling Stockholders within the meaning of
the Act, against any losses, claims, damages or liabilities to which the Company
or any such director, officer, Selling Stockholder or controlling person may
become subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise out
of or are based upon (i) 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 (ii) the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made; and will reimburse any
legal or other expenses reasonably incurred by the Company or any such director,
officer, Selling Stockholder or controlling person in connection with
investigating or defending any such loss, claim, damage, liability, action or
proceeding; provided, however, that each Underwriter will be liable in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission has been made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by or through the Representatives
specifically for use in the preparation thereof.
(c) The Selling Stockholders agree to indemnify the Underwriters and
each person, if any, who controls any Underwriter within the meaning of the Act,
against any losses, claims, damages or liabilities to which such Underwriter or
controlling person may become subject under the Act or otherwise, insofar as
such loss, claim, damage or liability arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, Registration Statement or the Prospectus, or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state in any Preliminary Prospectus, Registration Statement or the Prospectus,
or in any amendment or supplement thereto, any material fact required to be
stated therein or necessary to make the statements therein not misleading,
provided, however, that a Selling Stockholder shall be liable only to the extent
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company or the
26
Underwriters by such Selling Stockholder, specifically for use in the
preparation thereof. In no event, however, shall the liability of any Selling
Stockholder for indemnification under this Section 10(c) exceed the proceeds
received by such Selling Stockholder from the Underwriters in the offering. This
indemnity obligation will be in addition to any liability that the Company may
otherwise have.
(d) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to this Section, such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing. No indemnification provided for in Section
10(a) or (b) shall be available to any party who shall fail to give notice as
provided in this Subsection if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related and was
materially prejudiced by the failure to give such notice, but the failure to
give such notice shall not relieve the indemnifying party or parties from any
liability which it or they may have to the indemnified party for contribution or
otherwise than on account of the provisions of Section 10(a) or (b). In case any
such proceeding shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party and
shall pay as incurred the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel at its own expense. Notwithstanding the foregoing, the
indemnifying party shall pay as incurred (or within 30 days of presentation) the
fees and expenses of the counsel retained by the indemnified party in the event
(i) the indemnifying party and the indemnified party shall have mutually agreed
to the retention of such counsel, (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them or
(iii) the indemnifying party shall have failed to assume the defense and employ
counsel acceptable to the indemnified party within a reasonable period of time
after notice of commencement of the action.
It is understood that the indemnifying party shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the reasonable fees and expenses of more than one separate firm for all such
indemnified parties. Such firm shall be designated in writing by you in the case
of parties indemnified pursuant to Section 10(a) and by the Company and the
Selling Stockholders in the case of parties indemnified pursuant to Section
10(b). The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent but if settled with such consent
or if there be a final judgment for the plaintiff, the indemnifying party agrees
to indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment. In addition, the indemnifying party will
not, without the prior written consent of the indemnified party, settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action or proceeding of which indemnification may be sought hereunder
(whether or not any indemnified party is an actual or potential party to such
claim, action or proceeding) unless such settlement, compromise or
27
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action or proceeding.
(e) If the indemnification provided for in this Section is unavailable
to or insufficient to hold harmless an indemnified party under Section 10(a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
or proceedings in respect thereof) referred to therein, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) in such proportion as is appropriate to reflect
the relative benefits received by the Company and the Selling Stockholders on
the one hand and the Underwriters on the other from the offering of the Shares.
If, however, the allocation provided by the immediately preceding sentence is
not permitted by applicable law then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and the Selling Stockholders on the one hand and the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, (or actions or
proceedings in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Stockholders on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company and the Selling Stockholders bear to
the total underwriting discounts and commissions received by the Underwriters,
in each case as set forth in the table on the cover page of the Prospectus. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or the Selling Stockholders on the one hand or the Underwriters on the
other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company, the Selling Stockholders and the Underwriters agree that
it would not be just and equitable if contributions pursuant to this Subsection
were determined 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 above in this
Subsection. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) referred to above in this Subsection shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Subsection, (i) no Underwriter shall be
required to contribute any amount in excess of the underwriting discounts and
commissions applicable to the Shares purchased by such Underwriter and (ii) 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 in
this Subsection to contribute are several in proportion to their respective
underwriting obligations and not joint.
(f) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment thereto,
each party against whom
28
contribution may be sought under this Section hereby consents to the
jurisdiction of any court having jurisdiction over any other contributing party,
agrees that process issuing from such court may be served upon him or it by any
other contributing party and consents to the service of such process and agrees
that any other contributing party may join him or it as an additional defendant
in any such proceeding in which such other contributing party is a party.
(g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section shall be paid by the indemnifying party to the indemnified party as such
losses, claims, damages, liabilities or expenses are incurred. The indemnity and
contribution agreements contained in this Section and the representations and
warranties of the Company set forth in this Agreement shall remain operative and
in full force and effect, regardless of (i) any investigation made by or on
behalf of any Underwriter or any person controlling any Underwriter, the
Company, its directors or officers or any persons controlling the Company, (ii)
acceptance of any Shares and payment therefor hereunder, and (iii) any
termination of this Agreement. A successor to any Underwriter, or to the
Company, its directors or officers, or any person controlling the Company, shall
be entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section.
11. DEFAULT BY UNDERWRITERS.
If on the Closing Date or the Option Closing Date, if any, any
Underwriter shall fail to purchase and pay for the portion of the Shares which
such Underwriter has agreed to purchase and pay for on such date (otherwise than
by reason of any default on the part of the Company or a Selling Stockholder),
you, as the Representatives of the Underwriters, shall use your reasonable
efforts to procure within 36 hours thereafter one or more of the other
Underwriters, or any others, to purchase from the Company and the Selling
Stockholders such amounts as may be agreed upon and upon the terms set forth
herein, the Firm Shares or Option Shares, as the case may be, which the
defaulting Underwriter or Underwriters failed to purchase. If during such 36
hours you, as such Representatives, shall not have procured such other
Underwriters, or any others, to purchase the Firm Shares or Option Shares, as
the case may be, agreed to be purchased by the defaulting Underwriter or
Underwriters, then (a) if the aggregate number of shares with respect to which
such default shall occur does not exceed 10% of the Firm Shares or Option
Shares, as the case may be, covered hereby, the other Underwriters shall be
obligated, severally, in proportion to the respective numbers of Firm Shares or
Option Shares, as the case may be, which they are obligated to purchase
hereunder, to purchase the Firm Shares or Option Shares, as the case may be,
which such defaulting Underwriter or Underwriters failed to purchase, or (b) if
the aggregate number of shares of Firm Shares or Option Shares, as the case may
be, with respect to which such default shall occur exceeds 10% of the Firm
Shares or Option Shares, as the case may be, covered hereby, the Company and the
Selling Stockholders or you as the Representatives of the Underwriters will have
the right, by written notice given within the next 36-hour period to the parties
to this Agreement, to terminate this Agreement without liability on the part of
the non-defaulting Underwriters or of the Company or of the Selling Stockholders
except to the extent provided in Section 10 hereof. In the event of a default by
any Underwriter or Underwriters, as set forth in this Section, the Closing Date
or Option Closing Date, if any, may be postponed for such period, not exceeding
seven days, as you, as Representatives, may determine in order that the required
changes in the Registration Statement or in the Prospectus or
29
in any other documents or arrangements may be effected. The term "Underwriter"
includes any person substituted for a defaulting Underwriter. Any action taken
under this Section shall not relieve any defaulting Underwriter from liability
in respect of any default of such Underwriter under this Agreement.
12. NOTICES.
All communications hereunder shall be in writing and, except as
otherwise provided herein, will be mailed, delivered, or faxed and confirmed as
follows:
if to the Underwriters, to RBC Xxxx Xxxxxxxx Inc.
c/o RBC Capital Markets
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Syndicate Manager
Fax: (000) 000-0000
if to the Company or
the Selling Stockholders, to Buffalo Wild Wings, Inc.
0000 Xxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx
Chief Executive Officer
Fax: (000) 000-0000
13. TERMINATION.
(a) This Agreement may be terminated by you by notice to the Company
and the Selling Stockholders at any time prior to the Closing Date if any of the
following has occurred: (i) since the respective dates as of which information
is given in the Registration Statement and the Prospectus, any material adverse
change or any development involving a prospective change that has, had, or is
reasonably likely to have, a Material Adverse Effect, (ii) any outbreak or
escalation of hostilities or declaration of war or national emergency or other
national or international calamity or crisis or change in economic or political
conditions if the effect of such outbreak, escalation, declaration, emergency,
calamity, crisis or change on the financial markets of the United States would,
in your reasonable judgment, make it impracticable or inadvisable to market the
Shares or to enforce contracts for the sale of the Shares, or (iii) suspension
of trading in securities generally on the New York Stock Exchange or the
American Stock Exchange or limitation on prices (other than limitations on hours
or numbers of days of trading) for securities on either such Exchange, (iv) the
enactment, publication, decree or other promulgation of any statute, regulation,
rule or order of any court or other governmental authority which in your opinion
materially and adversely affects or may materially and adversely affect the
business or operations of the Company, (v) declaration of a banking moratorium
by United States or New York State authorities, (vi) any downgrading, or
placement on any watch list for possible downgrading, in the rating of the
Company's debt securities by any "nationally recognized
30
statistical rating organization" (as defined for purposes of Rule 436(g) under
the Exchange Act); (vii) the suspension of trading of the Company's Common
Shares by the Nasdaq National Market, the Commission, or any other governmental
authority or, (viii) the taking of any action by any governmental body or agency
in respect of its monetary or fiscal affairs which in your reasonable opinion
has a material adverse effect on the securities markets in the United States; or
(b) as provided in Sections 8 and 11 of this Agreement.
14. SUCCESSORS.
This Agreement has been and is made solely for the benefit of
the Company, the Selling Stockholders and Underwriters and their respective
successors, executors, administrators, heirs and assigns, and the officers,
directors and controlling persons referred to herein, and no other person will
have any right or obligation hereunder. No purchaser of any of the Shares from
any Underwriter shall be deemed a successor or assign merely because of such
purchase.
15. INFORMATION PROVIDED BY UNDERWRITERS.
The Company, the Selling Stockholders and the Underwriters acknowledge
and agree that the only information furnished or to be furnished by any
Underwriter to the Company for inclusion in any Prospectus or the Registration
Statement consists of the information contained in the Prospectus (a) in the
first paragraph under the caption "Underwriting - Commissions and Expenses" and
(b) under the caption "Underwriting - Electronic Distribution."
16. MISCELLANEOUS.
The reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties and covenants in
this Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of any
Underwriter or controlling person thereof, or by or on behalf of the Company or
its directors or officers and (c) delivery of and payment for the Shares under
this Agreement.
This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York.
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 only be amended or modified in writing, signed by
all of the parties hereto, and no condition herein (express or implied) may be
waived unless waived in writing by each party whom the condition is meant to
benefit.
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32
If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company, the Selling
Stockholders and the several Underwriters in accordance with its terms.
Any person executing and delivering this Agreement as attorney-in-fact
for a Selling Stockholder represents by so doing that he has been duly appointed
as attorney-in-fact by such Selling Stockholder pursuant to a validly existing
and binding power of attorney which authorizes such attorney-in-fact to take
such action.
Very truly yours,
BUFFALO WILD WINGS, INC.
By _______________________________
Xxxxx Xxxxx
Chief Executive Officer
Selling Stockholders listed on Schedule II
By _______________________________
Attorney-in-Fact
The foregoing Underwriting Agreement is hereby confirmed
and accepted as of the date first above written.
RBC XXXX XXXXXXXX INC.
XX XXXXX SECURITIES CORPORATION
MCDONALD INVESTMENTS INC.
As the Representatives of the several
Underwriters listed on Schedule I
By: RBC Xxxx Xxxxxxxx Inc.
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
33
Exhibit 1.1
By: XX Xxxxx Securities Corporation
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
By: McDonald Investments Inc.
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
Exhibit 1.1
SCHEDULE I
SCHEDULE OF UNDERWRITERS
Number of Firm Shares
Underwriter to be Purchased
----------- ---------------------
RBC Xxxx Xxxxxxxx Inc.
XX Xxxxx Securities Corporation
McDonald Investments Inc.
others
Total
----------------------
======================
Exhibit 1.1
SCHEDULE II
SCHEDULE OF SELLING STOCKHOLDERS
Number of Firm Shares
Underwriter to be Purchased
----------- ---------------------
Selling Stockholder #1
Selling Stockholder #2
Selling Stockholder #3
Total
----------------------
======================
Exhibit 1.1
Schedule III
LIST OF INSTRUMENTS AND AGREEMENTS
Exhibit 1.1
EXHIBIT A
LIST OF SUBSIDIARIES
