COLOR SPOT NURSERIES, INC.
$40,000,000
40,000 UNITS CONSISTING OF
13% SERIES A CUMULATIVE PREFERRED STOCK AND
WARRANTS TO PURCHASE COMMON STOCK
UNDERWRITING AGREEMENT
----------------------
December 22, 1997
BT Xxxx. Xxxxx Incorporated
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Color Spot Nurseries, Inc., a Delaware corporation (the "Company"),
hereby confirms its agreement with you (the "Underwriter"), as set forth below.
1. THE SECURITIES. Subject to the terms and conditions herein
contained, the Company proposes to issue and sell to the Underwriter 40,000
units (the "Units"), consisting in the aggregate of 40,000 shares of its 13%
Series A Cumulative Preferred Stock (the "Series A Preferred Stock") and 825,000
warrants (the "Warrants") to purchase an aggregate of 825,000 shares of common
stock, par value $.001 per share (the "Common Stock"), of the Company. The
terms of the Series A Preferred Stock shall be set forth in the Certificate of
Designation, Preferences and Relative, Participating Optional and Other Special
Rights of Preferred Stock and Qualifications, Limitations and Restrictions of
Series A Preferred Stock (the "Certificate of Designation") of the Company. The
Warrants are to be issued pursuant to a Warrant Agreement (the "Warrant
Agreement") to be dated as of December 22, 1997 between the Company and American
Stock Transfer and Trust Company, as warrant agent (the "Warrant Agent").
Shares of the Common Stock issuable upon exercise of the Warrants are
collectively referred to herein as the "Warrant Shares." The Units, Series A
Preferred Stock and the Warrants are collectively referred to herein as the
"Securities."
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to and agrees with the Underwriter that:
(a) A registration statement on Form S-1 (File No. 333-37335)
with respect to the Securities 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 (a) the form of prospectus first
filed with the Commission pursuant to Rule 424(b) with respect to the Securities
or (b) the last preliminary prospectus included in the Registration Statement
filed prior to the time it becomes effective or filed pursuant to Rule 424(a)
under the Act that is delivered by the Company to the Underwriter for delivery
to purchasers of the Securities, together with the term sheet or abbreviated
term sheet filed with the Commission pursuant to Rule 424(b)(7) under the Act.
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 Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own or lease its properties and
conduct its business as described in the Registration Statement. The Company
does not own or control, directly or indirectly, any corporation, association or
other entity other than the subsidiaries listed in Exhibit 21 to Item 16(a) of
the Registration Statement. Each of the subsidiaries of the Company as listed
in Exhibit 21 to Item 16(a) of the Registration Statement (collectively, the
"Subsidiaries") has been duly organized 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 the jurisdictions
set forth opposite their names in Schedule I hereto and, to the best of the
Company's knowledge, in all other jurisdictions in which the conduct of their
business requires such qualification. 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 owned by the Company or another Subsidiary
free and clear of all liens, encumbrances and equities and claims, except as
described in the Registration Statement; 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. On or prior to the Closing Date, CSN, Inc., a
Delaware corporation, shall be merged with and into the Company and all of the
business operations of the Company are conducted through the Company and its
subsidiaries.
(c) The information set forth under "Capitalization" in the
Prospectus is true and correct. The outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
non-assessable and were not issued in violation of any preemptive or similar
rights; and except as disclosed in the Prospectus or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus, all of the
outstanding shares of capital stock of the Company and each of the
Subsidiaries are free and clear of all liens, encumbrances, equities and
claims or restrictions on transferability (other than those imposed by the
Act and the securities or "Blue Sky" laws of certain jurisdictions) or
voting. Except for the capital stock of the Subsidiaries, the Company does
not own, directly or indirectly, any shares of
2
stock or any other equity or long-term debt securities or have any equity
interest in any firm, partnership, joint venture or other entity. No holders of
securities of the Company are entitled to have such securities registered under
the Registration Statement.
(d) The Commission has not issued an order preventing or
suspending the use of any Prospectus relating to the proposed offering of the
Securities nor instituted proceedings for that purpose. The Registration
Statement contains, and the Prospectus and any amendments or supplements thereto
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. 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. 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 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
the Underwriter specifically for use in the preparation thereof.
(e) The consolidated financial statements of the Company and
the Subsidiaries, together with related notes and schedules as set forth in the
Registration Statement, as well as the financial statements, together with
related notes and schedules, of Oda Nursery, Inc., Lone Star Growers Co.,
Summersun Greenhouse Co., Xxxxx Greenhouses, LLC, Signature Trees, Xxxxxx'
Wholesale Greenhouses, Inc., Sunnyside Plants, Inc. and Cracon Inc.
(collectively the "Acquired Entities") present fairly the financial position and
the results of operations and cash flows of the Company and the consolidated
Subsidiaries and the Acquired Entities, at the indicated dates and for the
indicated periods. Such financial statements and related schedules have been
prepared in accordance with generally accepted principles of accounting,
consistently applied throughout the periods involved, except as otherwise noted
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 pro
forma financial statements and other pro forma financial information included in
the Registration Statement and the Prospectus present fairly the information
shown therein, have been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial statements, have been properly
compiled on the pro forma bases described herein, and, in the opinion of the
Company, the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions or
circumstances referred to therein. No other financial statements or schedules
of the Company or any other entity are required to be included in the
Registration Statement pursuant to any requirement of the Act or any Rules or
Regulations, including Rule 3-05 of Regulation S-X.
3
(f) Xxxxxx Xxxxxxxx LLP, Xxxx Xxxxx LLP and Xxxxxx,
Xxxxxxxxx, Xxxx & Xxxxxxxx, P.C., who have certified certain of the financial
statements filed with the Commission as part of the Registration Statement,
are independent public accountants as required by the Act and the Rules and
Regulations.
(g) 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 the Subsidiaries might result in
any material adverse change in the business, properties, assets, operations or
financial condition of the Company and of the Subsidiaries taken as a whole or
might prevent the consummation of the transactions contemplated hereby, except
as set forth in the Registration Statement.
(h) 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. 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.
(i) The Company and the Subsidiaries have filed all Federal,
State, local and foreign income 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. All tax
liabilities have been adequately provided for in the financial statements of the
Company.
(j) Since the respective dates as of which information is
given in the Registration Statement, as it may be amended or supplemented, there
has not been any material adverse change or any development involving a
prospective material adverse change in or affecting the business, properties,
assets, operations or financial condition of the Company and the Subsidiaries
taken as a whole, 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, as it may be
amended or supplemented. The Company and the Subsidiaries have no material
contingent obligations which are not disclosed in the Company's financial
statements which are included in the Registration Statement.
(k) 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 charter or bylaws 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 or any statute, judgment, decree, order,
rule or regulation applicable to the Company or any Subsidiary and which default
is of material significance in respect of the condition, financial or otherwise,
of the Company and the Subsidiaries taken as a whole or the business,
properties, assets, operations or financial condition
4
of the Company and the Subsidiaries taken as a whole. Except with respect to
that certain Amended and Restated Credit Agreement, dated as of February 20,
1997, as amended, 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, any indenture,
mortgage, deed of trust or other agreement or instrument to which the Company
or any Subsidiary is a party, or of the charter or by-laws of the Company or
any order, rule or regulation applicable to the Company or any Subsidiary of
any court or of any regulatory body or administrative agency or other
governmental body having jurisdiction which conflict, breach or default could
reasonably be expected to have a material adverse effect on the Company.
(l) The Company and each of the Subsidiaries hold all
material licenses, certificates and permits from governmental authorities which
are necessary to the conduct of their businesses; and neither the Company nor
any of the Subsidiaries has infringed any patents, patent rights, trade names,
trademarks or copyrights, which infringement is material to the business of the
Company and the Subsidiaries taken as a whole. The Company knows of no material
infringement by others of patents, patent rights, trade names, trademarks or
copyrights owned by or licensed to the Company or any Subsidiary.
(m) Neither the Company nor any Subsidiary is an "investment
company" or an affiliated person of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined under the Investment
Company Act of 1940, as amended (the "1940 Act"), and the rules and regulations
of the Commission thereunder.
(n) 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.
(o) The Company and each of the Subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks as is adequate for
the conduct of their respective businesses and the value of their respective
properties and as is customary for companies engaged in similar industries.
(p) 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
5
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.
(q) The Company confirms as of the date hereof that it is in
compliance with all provisions of Section 1 of Laws of Florida, Chapter 92-198,
AN ACT RELATING TO DISCLOSURE OF DOING BUSINESS WITH CUBA (Fla. Stat. ch.
517.075). The Company further agrees that if it commences engaging in business
with the government of Cuba or with any person or affiliate located in Cuba
after the date the Registration Statement becomes or has become effective with
the Commission or with the Florida Department of Banking and Finance (the
"Department"), whichever date is later, or if the information reported or
incorporated by reference in the Prospectus, if any, concerning the Company's
business with Cuba or with any person or affiliate located in Cuba changes in
any material way, the Company will provide the Department notice of such
business or change, as appropriate, in a form acceptable to the Department.
(r) The Certificate of Designation has been duly adopted by
the Company's Board of Directors in compliance with the Company's Certificate of
Incorporation and By-Laws.
(s) The Series A Preferred Stock has been duly and validly
authorized by the Company for issuance and sale to the Underwriter pursuant to
this Agreement and the Series A Preferred Stock, when issued and delivered to
and paid for by the Underwriter in accordance with the terms of this Agreement,
will be validly issued, fully paid and non-assessable and not subject to any
preemptive or similar rights.
(t) The Warrant Agreement has been duly and validly
authorized by the Company and, when executed and delivered by the Company
(assuming the due authorization, execution and delivery by the Warrant Agent),
will constitute a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general principles of
equity and the discretion of the court before which any proceeding therefor may
be brought.
(u) The Warrants have been duly and validly authorized by the
Company, and when issued and delivered in accordance with the terms of the
Warrant Agreement and delivered to and paid for by the Underwriter in accordance
with the terms hereof will have been duly and validly issued and the issuance of
such Warrants will not be subject to any preemptive or similar rights.
(v) The Warrant Shares initially issuable upon exercise of
the Warrants have been duly and validly authorized and reserved for issuance
upon exercise of the Warrants and, when issued and delivered upon exercise of
the Warrants against payment of the Exercise Price (as defined in the Warrant
Agreement), the Warrant Shares will have been duly and validly
6
issued and will be fully paid and non-assessable, and the issuance of such
Warrant Shares will not be subject to any preemptive or similar rights.
(w) The Company has all requisite corporate power and
authority to enter into this Agreement, to issue and deliver the Securities and
Warrant Shares and to consummate the transactions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by the Company. No
consent, approval, authorization or order of any court or governmental agency or
body is required for the performance of this Agreement by the Company or the
consummation by the Company of the transactions contemplated hereby, except such
as have been obtained and such as may be required under state securities or
"Blue Sky" laws in connection with the purchase and distribution of the
Securities by the Underwriter.
(x) Except as provided in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus), there
are no consensual encumbrances or restrictions on the ability of any Subsidiary
(i) to pay dividends or make any other distributions on such Subsidiary's
capital stock or to pay any indebtedness owed to the Company or any other
Subsidiary, (ii) to make any loans or advances to, or investments in, the
Company or any other Subsidiary, or (iii) to transfer any of its property or
assets to the Company or any other Subsidiary.
(y) The Securities, the Warrant Agreement and this Agreement
will conform in all material respects to the descriptions thereof in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
3. PURCHASE, SALE AND DELIVERY OF THE SECURITIES. On the basis of
the representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the Underwriter, and the Underwriter agrees to purchase from
the Company $40,000,000 aggregate amount of the Securities for $38,400,000.
Certificates in definitive form for the Securities that the Underwriter has
agreed to purchase hereunder, and in such denomination or denominations and
registered in such name or names as the Underwriter requests upon notice to the
Company at least 48 hours prior to the Closing Date, shall be delivered by or on
behalf of the Company to the Underwriter, against payment by or on behalf of the
Underwriter of the purchase price therefor by wire transfer payable in
immediately available funds to the account of the Company. Such delivery of and
payment for the Securities shall be made at the San Francisco offices of Xxxxxx
& Xxxxxxx, at 10:00 A.M., Eastern Standard Time, on December 24, 1997, or at
such other place, time or date as the Underwriter and the Company may agree upon
or as the Underwriter may determine pursuant to Section 7(a) hereof, such time
and date of delivery against payment being herein referred to as the "Closing
Date." The Company will make such certificate or certificates for the
Securities available for checking and packaging by the Underwriter at the
offices in New York, New York of BT Xxxx. Xxxxx at least 24 hours prior to the
Closing Date.
4. OFFERING BY THE UNDERWRITER. After the Registration Statement
becomes effective, the Underwriter proposes to offer for sale to the public the
Securities at the price and upon the terms set forth in the Prospectus.
7
4. COVENANTS OF THE COMPANY. The Company covenants and agrees with
the Underwriter that:
(a) The Company will use its best efforts to cause the
Registration Statement, if not effective at the time of execution of this
Agreement, and any amendments thereto, to become effective promptly. If
required, the Company will file the Prospectus and any amendment or supplement
thereto with the Commission in the manner and within the time period required by
Rule 424(b) under the Act. During any time when a prospectus relating to the
Securities is required to be delivered under the Act, (i) the Company will
comply with all requirements imposed upon it by the Act and the Rules and
Regulations to the extent necessary to permit the continuance of sales of or
dealings in the Securities in accordance with the provisions hereof and of the
Prospectus, as then amended or supplemented, and (ii) the Company will not file
with the Commission the Prospectus or any amendment or supplement to such
Prospectus or any amendment to the Registration Statement of which the
Underwriter shall not previously have been advised and furnished a copy for a
reasonable period of time prior to the proposed filing and as to which filing
the Underwriter shall not have given its consent. The Company will prepare and
file with the Commission, in accordance with the Act and the Rules and
Regulations, promptly upon the reasonable request by the Underwriter or counsel
for the Underwriter, any amendments to the Registration Statement or amendments
or supplements to the Prospectus that may be necessary or advisable in
connection with the distribution of the Securities by the Underwriter, and will
use its best efforts to cause any such amendment to the Registration Statement
to be declared effective by the Commission promptly. The Company will advise
the Underwriter, promptly after it receives notice thereof, of the time when the
Registration Statement or any amendment thereto has been filed or declared
effective or the Prospectus or any amendment or supplement thereto has been
filed and will provide evidence satisfactory to the Underwriter of each such
filing or effectiveness.
(b) The Company will advise the Underwriter promptly (A) when
the Registration Statement or any post-effective amendment thereto shall have
become effective, (B) of receipt of any comments from the Commission, (C) of any
request of the Commission for amendment of the Registration Statement or for
supplement to the Prospectus or for any additional information, and (D) 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.
(c) The Company will deliver to, or upon the order of, the
Underwriter, from time to time, as many copies of any Preliminary Prospectus as
the Underwriter may reasonably request. The Company will deliver to, or upon
the order of, the Underwriter 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 Underwriter may reasonably request.
The Company will deliver to the Underwriter at or before the Closing Date, one
copy of the Registration Statement and all amendments thereto including all
exhibits filed therewith, and will deliver to the Underwriter such number of
copies of the Registration
8
Statement (including such number of copies of the exhibits filed therewith
that may reasonably be requested), and of all amendments thereto, as the
Underwriter may reasonably request.
(d) 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 Underwriter, 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.
(e) 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.
(f) The Company will, for a period ending on the date no
Securities are outstanding, deliver to the Underwriter copies of annual reports
and copies of all other documents, reports and information furnished by the
Company to its stockholders or filed with any securities exchange pursuant to
the requirements of such exchange or with the Commission pursuant to the Act or
the Exchange Act. During such time, the Company will deliver to the Underwriter
similar reports with respect to significant subsidiaries, as that term is
defined in the Rules and Regulations, which are not consolidated in the
Company's financial statements.
(g) The Company shall apply the net proceeds of its sale of
the Securities as set forth under "Use of Proceeds" in the Prospectus.
(h) The Company shall not invest, or otherwise use the
proceeds received by the Company from its sale of the Securities in such a
manner as would require the Company or any of the Subsidiaries to register as an
"investment company" under the 1940 Act and the rules and regulations
thereunder.
(i) The Company will cooperate with the Underwriter in
arranging for the qualification of the Securities for offering and sale under
the securities or "Blue Sky" laws of such jurisdictions as the Underwriter may
designate and will continue such qualifications in effect for as long as may be
necessary to complete the distribution of the Securities; PROVIDED, HOWEVER,
that in connection therewith the Company shall not be required to qualify as a
foreign corporation or to execute a general consent to service of process in any
jurisdiction.
9
(j) Prior to the Closing Date, the Company will furnish to the
Underwriter, as soon as they have been prepared, a copy of any unaudited interim
consolidated financial statements of the Company for any period subsequent to
the period covered by its most recent financial statements appearing in the
Registration Statement and Prospectus.
(k) 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.
6. EXPENSES. The Company agrees to pay all costs and expenses
incident to the performance of its obligations under this Agreement, whether or
not the transactions contemplated herein are consummated or this Agreement is
terminated pursuant to Section 10 hereof, including all costs and expenses
incident to (i) the printing, word processing, filing or other production of
documents with respect to the transactions, including any costs of printing the
registration statement originally filed with respect to the Securities and any
amendment thereto, any Preliminary Prospectus and the Prospectus and any
amendment or supplement thereto, any "Blue Sky" memoranda and the Certificate of
Designation, (ii) all arrangements relating to the delivery to the Underwriter
of copies of the foregoing documents, (iii) the fees and disbursements of the
counsel, the accountants and any other experts or advisors retained by the
Company, (iv) preparation (including printing), issuance and delivery to the
Underwriter of the Securities, (v) the qualification of the Securities under
state securities and "Blue Sky" laws, including filing fees and fees and
disbursements of counsel for the Underwriter relating thereto, (vi) the filing
fees of the Commission and the National Association of Securities Dealers, Inc.
relating to the Securities (including the fees, disbursements and charges of
counsel to the Underwriter in connection therewith), (vii) expenses of the
Company in connection with any meetings with prospective investors in the
Securities (viii) fees and expenses of the transfer agent for the Series A
Preferred Stock and of the Warrant Agent; and (ix) any fees charged by
investment rating agencies for the rating of the Securities. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriter set forth in Section 7 hereof is not satisfied,
because this Agreement is terminated pursuant to Section 10 hereof or because of
any failure, refusal or inability on the part of the Company to perform all
obligations and satisfy all conditions on its part to be performed or satisfied
hereunder other than by reason of a default by the Underwriter, the Company will
reimburse the Underwriter upon demand (accompanied by documentation) for all
out-of-pocket expenses (including counsel fees and disbursements) that shall
have been incurred by the Underwriter in connection with the proposed purchase
and sale of the Securities.
7. CONDITIONS OF THE UNDERWRITER'S OBLIGATIONS. The obligation of
the Underwriter to purchase and pay for the Securities shall, in its sole
discretion, be subject to the following conditions:
(a) If the registration statement originally filed with
respect to the Securities or any amendment thereto filed prior to the Closing
Date has not been declared effective as of the time of execution hereof, the
Registration Statement or such amendment shall have been declared effective not
later than 10:00 a.m., New York City time, on the date on which the amendment to
the registration statement originally filed with respect to the Securities or to
10
the Registration Statement, as the case may be, containing information regarding
the initial public offering price of the Securities has been filed with the
Commission, or such later time and date as shall have been consented to by the
Underwriter; if required, the Prospectus and any amendment or supplement thereto
shall have been filed in accordance with Rule 424(b) under the Act; no stop
order suspending the effectiveness of the Registration Statement or any
amendment thereto and no proceedings for those purposes shall have been
instituted or, to the knowledge of the Company or the Underwriter, threatened or
are contemplated by the Commission; and the Company shall have complied with or
satisfactorily responded to any request of the Commission for additional
information.
(b) The Underwriter shall have received an opinion in form
and substance satisfactory to the Underwriter, dated the Closing Date, of
Brownstein, Hyatt, Xxxxxx & Xxxxxxxxxx, P.C., counsel for the Company,
substantially in the form of Exhibit A hereto.
(c) The Underwriter shall have received an opinion, dated the
Closing Date, of Xxxxxx & Xxxxxxx, counsel for the Underwriter, with respect to
certain legal matters relating to this Agreement, and such other related matters
as the Underwriter may require. In rendering such opinion, Xxxxxx & Xxxxxxx
shall have received and may rely upon such certificates and other documents and
information as they may reasonably request to pass upon such matters. In
addition, in rendering their opinion, Xxxxxx & Xxxxxxx may state that their
opinion is limited to matters of New York and Delaware General Corporation Law
and federal law.
(d) The Underwriter shall have received from Xxxxxx
Xxxxxxxx LLP, Xxxx Xxxxx LLP and Xxxxxx, Xxxxxxxxx, Xxxx & Xxxxxxx, P.C., a
letter or letters dated, respectively, the date hereof and the Closing Date,
each in form and substance satisfactory to the Underwriter.
(e) The representations and warranties of the Company
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and as of the Closing Date; the Company shall have
performed all covenants and agreements and satisfied all conditions on its part
to be performed or satisfied hereunder at or prior to the Closing Date; and
subsequent to the date of the most recent financial statements in the
Prospectus, there shall have been no material adverse change in the business,
properties, assets, operations or financial condition of the Company and the
Subsidiaries, taken as a whole, except as set forth in, or contemplated by, the
Registration Statement and the Prospectus.
(f) The sale of the Securities by the Company hereunder shall
not be enjoined (temporarily or permanently) on the Closing Date.
(g) Subsequent to the effective date of the Registration
Statement, there shall not have occurred any material adverse change, or any
event that would have a material adverse effect on the business, properties,
assets, operations or financial condition of the Company and the Subsidiaries,
taken as a whole.
11
(h) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, except
in each case as described in or as contemplated by the Prospectus, none of
the Company or any of the Subsidiaries shall have incurred any liabilities or
obligations, direct or contingent (other than in the ordinary course of
business) that are material to the Company and the Subsidiaries, taken as a
whole, or entered into any transactions not in the ordinary course of
business that are material to the business, properties, assets, operations or
financial condition of the Company and the Subsidiaries, taken as a whole,
and, other than as contemplated by the Prospectus, there shall not have been
any change in the capital stock or long-term indebtedness of the Company or
the Subsidiaries that is material to the business, properties, assets,
operations or financial condition of the Company and the Subsidiaries, taken
as a whole.
(i) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, the
conduct of the business and operations of the Company or any of the Subsidiaries
has not been interfered with by strike, fire, flood, hurricane, accident or
other calamity (whether or not insured) or by any court or governmental action,
order or decree, and, except as otherwise stated therein, the properties of the
Company or any of the Subsidiaries have not sustained any loss or damage
(whether or not insured) as a result of any such occurrence, except any such
interference, loss or damage which would not have a material adverse effect on
the business, properties, assets, operations or financial condition of the
Company and the Subsidiaries, taken as a whole.
(j) The Underwriter shall have received a certificate, dated
the Closing Date, signed on behalf of the Company by its Chief Executive Officer
or President, and the Chief Financial Officer of the Company, on behalf of the
Company, to the effect that:
(i) The representations and warranties of the Company
in this Agreement are true and correct in all material respects as of the
date hereof and as if made on and as of the Closing Date, and the Company
has performed all covenants and agreements and satisfied hereunder all
conditions on its part to be performed or satisfied hereunder at or prior
to the Closing Date;
(ii) No stop order suspending the effectiveness of the
Registration Statement or any amendment thereto and no proceedings for such
purpose has been instituted or, to the knowledge of the Company, threatened
or are contemplated by the Commission;
(iii) Subsequent to the effective date of the
Registration Statement, there has not occurred any event or events that,
individually or in the aggregate, would have a material adverse effect on
the business, properties, assets, operations or financial condition of the
Company and the Subsidiaries, taken as a whole;
(iv) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
except in each case as described in or as contemplated by the Prospectus,
none of the Company or any of the Subsidiaries has incurred any liabilities
or obligations, direct or contingent (other than in the ordinary
12
course of business) that are material to the Company and the
Subsidiaries, taken as a whole, or entered into any transactions not in
the ordinary course of business that are material to the business,
properties, assets, operations or financial condition of the Company and
the Subsidiaries, taken as a whole, and, other than as contemplated by
the Prospectus, there shall not have been any change in the capital
stock or long-term indebtedness of the Company or the Subsidiaries that
is material to the business, properties, assets, operations or financial
condition of the Company and the Subsidiaries, taken as a whole;
(v) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, the
conduct of the business and operations of the Company or any of the
Subsidiaries has not been interfered with by strike, fire, flood,
hurricane, accident or other calamity (whether or not insured) or by any
court or governmental action, order or decree, and, except as otherwise
stated therein, the properties of the Company or any of the Subsidiaries
have not sustained any loss or damage (whether or not insured) as a result
of such occurrence, except any such interference, loss or damage which
would not have a material adverse effect on the business, properties,
assets, operations or financial condition of the Company and the
Subsidiaries, taken as a whole; and
(vi) The sale of the Securities by the Company
hereunder has not been enjoined (temporarily or permanently).
(k) The Underwriter shall have received a certificate, dated
the Closing Date, signed on behalf of the Company by its Chief Financial Officer
of the Company, certifying a schedule which describes in detail the Company's
outstanding shares of Common Stock on a fully diluted basis.
On or before the Closing Date, the Underwriter and counsel for the
Underwriter shall have received such further documents, opinions, certificates
and schedules or instruments relating to the business, corporate, legal and
financial affairs of the Company as they shall have heretofore reasonably
requested from the Company.
All such opinions, certificates, letters, schedules, documents or
instruments delivered pursuant to this Agreement will comply with the provisions
hereof only if they are reasonably satisfactory in all material respects to the
Underwriter and counsel for the Underwriter. The Company shall furnish to the
Underwriter such conformed copies of such opinions, certificates, letters,
schedules, documents and instruments in such quantities as the Underwriter shall
reasonably request.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless the
Underwriter, and each person, if any, who controls the Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, against any
losses, claims, damages or liabilities, joint or several, to which such
Underwriter or such controlling person may become subject under
13
the Act, the Exchange Act or otherwise, insofar as any such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon:
(i) any untrue statement or alleged untrue statement
of any material fact contained in (A) the registration statement originally
filed with respect to the Securities or any amendment thereto or any
Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto or (B) any application or other document, or any amendment or
supplement thereto, executed by the Company or based upon written
information furnished by or on behalf of the Company filed in any
jurisdiction in order to qualify the Securities under the securities or
"Blue Sky" laws thereof or filed with the Commission or any securities
association or securities exchange (each an "Application"); or
(ii) the omission or alleged omission to state, in such
registration statement or any amendment thereto, any Preliminary Prospectus
or the Prospectus or any amendment or supplement thereto, or any
Application, a material fact required to be stated therein or necessary to
make the statements therein not misleading,
and will reimburse, as incurred, the Underwriter and each such controlling
person for any legal or other expenses incurred by the Underwriter or such
controlling person in connection with investigating, defending against or
appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action; PROVIDED, HOWEVER, 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 any untrue statement or alleged untrue statement
or omission or alleged omission made in such registration statement or any
amendment thereto, any Preliminary Prospectus or the Prospectus or any amendment
or supplement thereto, or any Application in reliance upon and in conformity
with written information furnished to the Company by the Underwriter
specifically for use therein; and PROVIDED, FURTHER, that the Company will not
be liable to the Underwriter or any person controlling the Underwriter with
respect to any such untrue statement or omission made in any Preliminary
Prospectus that is corrected in the Prospectus (or any amendment or supplement
thereto) if the person asserting any such loss, claim, damage or liability
purchased Securities from the Underwriter in reliance upon the Preliminary
Prospectus but was not sent or given a copy of the Prospectus (as amended or
supplemented) at or prior to the written confirmation of the sale of such
Securities to such person in any case where such delivery of the Prospectus (as
so amended or supplemented) is required by the Act, unless such failure to
deliver the Prospectus (as amended or supplemented) was a result of
noncompliance by the Company with Section 5(c) of this Agreement. This
indemnity agreement will be in addition to any liability that the Company may
otherwise have to the indemnified parties. The Company shall not be liable
under this Section 8 for any settlement of any claim or action effected without
its consent, which shall not be unreasonably withheld.
(b) The Underwriter will indemnify and hold harmless each of
the Company, its directors, its officers who signed the Registration Statement
and each person, if any, who controls the Company within the meaning of Section
15 of the Act or Section 20 of the Exchange Act against any losses, claims,
damages or liabilities to which the Company or any such director, officer or
controlling person may become subject under the Act, the Exchange Act, or
14
otherwise, insofar as such losses, claims, damages or liabilities (or actions 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 or any amendment thereto, any Preliminary Prospectus or the Prospectus
or any amendment or supplement thereto, or any Application or (ii) the omission
or the alleged omission to state therein a material fact required to be stated
in the Registration Statement or any amendment thereto, any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto, or any
Application, or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by the
Underwriter specifically for use therein; and, subject to the limitation set
forth immediately preceding this clause, will reimburse, as incurred, any legal
or other expenses incurred by the Company or any such director, officer or
controlling person in connection with investigating or defending against or
appearing as a third party witness in connection with any such loss, claim,
damage, liability or action in respect thereof. This indemnity agreement will
be in addition to any liability that the Underwriter may otherwise have to the
indemnified parties. The Underwriter shall not be liable under this Section 8
for any settlement of any claim or action effected without its consent, which
shall not be unreasonably withheld.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action for which such indemnified
party is entitled to indemnification under this Section 8, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 8, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party (i) will not
relieve it from any liability under paragraph (a) or (b) above unless and to the
extent it did not otherwise learn of such action and such failure results in the
forfeiture by the indemnifying party of substantial rights and defenses and
(ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraphs (a) and (b) above. In case any such action is brought
against any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; PROVIDED, HOWEVER, that if (i) the use
of counsel chosen by the indemnifying party to represent the indemnified party
would present such counsel with a conflict of interest, (ii) the defendants in
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have been advised by counsel that there may be
one or more legal defenses available to it and/or other indemnified parties that
are different from or additional to those available to the indemnifying party,
or (iii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of the institution of such action, then, in each
such case, the indemnifying party shall not have the right to direct the defense
of such action on behalf of such indemnified party or parties and such
indemnified party or parties shall have the right to select separate counsel to
defend such action on behalf of such indemnified party or parties. After notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof and approval by such indemnified party of counsel
appointed to
15
defend such action, the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other expenses, other
than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the immediately preceding sentence (it being understood, however,
that in connection with such action the indemnifying party shall not be liable
for the expenses of more than one separate counsel (in addition to local
counsel) in any one action or separate but substantially similar actions in
the same jurisdiction arising out of the same general allegations or
circumstances, designated by the Underwriter in the case of paragraph (a) of
this Section 8 or the Company in the case of paragraph (b) of this Section 8,
representing the indemnified parties under such paragraph (a) or paragraph
(b), as the case may be, who are parties to such action or actions) or (ii)
the indemnifying party has authorized in writing the employment of counsel for
the indemnified party at the expense of the indemnifying party. After such
notice from the indemnifying party to such indemnified party, the indemnifying
party will not be liable for the costs and expenses of any settlement of such
action effected by such indemnified party without the consent of the
indemnifying party, unless such indemnified party waived in writing its rights
under this Section 8, in which case the indemnified party may effect such a
settlement without such consent.
(d) In circumstances in which the indemnity agreement
provided for in the preceding paragraphs of this Section 8 is unavailable or
insufficient to hold harmless an indemnified party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof), each
indemnifying party, in order to provide for just and equitable contribution,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect (i) the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the offering of the Securities or (ii) if
the allocation provided by the foregoing clause (i) is not permitted by
applicable law, not only such relative benefits but also the relative fault of
the indemnifying party or parties on the one hand and the indemnified party on
the other in connection with the statements or omissions or alleged statements
or omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof). The relative benefits received by the Company on
the one hand and the Underwriter on the other shall be deemed to be in the same
proportion as the total proceeds from the offering (before deducting expenses)
received by the Company bear to the total underwriting discounts and commissions
received by the Underwriter. The relative fault of the parties 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 on the one hand,
or the Underwriter on the other, the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission,
and any other equitable considerations appropriate in the circumstances. The
Company and the Underwriter agree that it would not be equitable if the amount
of such contribution were determined by pro rata or per capita allocation or by
any other method of allocation that does not take into account the equitable
considerations referred to in the first sentence of this paragraph (d).
Notwithstanding any other provision of this paragraph (d), the Underwriter shall
not be obligated to make contributions hereunder that in the aggregate exceed
the total underwriting discounts and commissions received by the Underwriter
under this Agreement, less the aggregate
16
amount of any damages that the Underwriter has otherwise been required to pay
by reason of the untrue or alleged untrue statements or the omissions or
alleged omissions to state a material fact, and 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. For purposes of this paragraph (d), each person, if any,
who controls the Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act shall have the same rights to contribution as
the Underwriter, and each director of the Company, each officer of the Company
who signed the Registration Statement and each person, if any, who controls
the Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, shall have the same rights to contribution as the Company.
9. SURVIVAL CLAUSE. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company, its
officers and the Underwriter set forth in this Agreement or made by or on behalf
of them, respectively, pursuant to this Agreement shall remain in full force and
effect, regardless of (i) any investigation made by or on behalf of the Company,
any of its officers or directors, the Underwriter or any controlling person
referred to in Section 8 hereof and (ii) delivery of and payment for the
Securities. The respective agreements, covenants, indemnities and other
statements set forth in Sections 6 and 8 hereof shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement.
10. TERMINATION.
(a) This Agreement may be terminated in the sole discretion
of the Underwriter by notice to the Company given prior to the Closing Date in
the event that the Company shall have failed, refused or been unable to perform
all obligations and satisfy all conditions on its part to be performed or
satisfied hereunder at or prior thereto or, if at or prior to the Closing Date:
(i) the Company shall have sustained any loss or
interference with respect to its businesses or properties from fire, flood,
hurricane, accident or other calamity, whether or not covered by insurance,
or from any labor dispute or any legal or governmental proceeding, which
loss or interference, in the sole judgment of the Underwriter, has had or
has a material adverse effect the business, properties, assets, operations
or financial condition of the Company and the Subsidiaries, taken as a
whole, or there shall have been, in the sole judgment of the Underwriter,
any material adverse change, or any development involving a prospective
material adverse change (including without limitation a change in
management or control of the Company), in the business, properties, assets,
operations or financial condition of the Company and the Subsidiaries,
taken as a whole, except in each case as described in or contemplated by
the Prospectus (exclusive of any amendment or supplement thereto);
(ii) trading in securities generally on the New York
Stock Exchange, American Stock Exchange or the Nasdaq National Market shall
have been suspended or minimum or maximum prices shall have been
established on any such exchange or trading in securities of the Company
shall have been suspended;
17
(iii) a banking moratorium shall have been declared by
New York or United States authorities; or
(iv) there shall have been (A) an outbreak or
escalation of hostilities between the United States and any foreign power,
or (B) an outbreak or escalation of any other insurrection or armed
conflict involving the United States or any other national or international
calamity or emergency, or (C) any material change in the financial markets
of the United States which, in the sole judgment of the Underwriter, makes
it impracticable or inadvisable to proceed with the public offering or the
delivery of the Securities as contemplated by the Registration Statement,
as amended as of the date hereof.
(b) Termination of this Agreement pursuant to this Section 10
shall be without liability of any party to any other party except as provided in
Section 9 hereof.
11. INFORMATION SUPPLIED BY THE UNDERWRITER. The statements set
forth in the last paragraph on the cover page of the Prospectus, the
stabilization legend on the page following the cover page of the Prospectus and
the first, second, third, fourth, fifth (other than the first sentence) and
sixth paragraphs under the heading "Underwriting" in the Prospectus (to the
extent such statements relate to the Underwriter) constitute the only
information furnished by the Underwriter to the Company for the purposes of
Sections 2(b) and 8 hereof. The Underwriter confirm that such statements (to
the extent such statements relate to the Underwriter) are correct.
12. NOTICES. All communications hereunder shall be in writing and,
if sent to the Underwriter, shall be mailed or delivered or telecopied and
confirmed in writing to BT Xxxx. Xxxxx Incorporated, 000 Xxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Corporate Finance Department; if sent to the
Company, shall be mailed or delivered or telecopied and confirmed in writing to
the Company at 0000 Xxxxxxx Xxxxxx, Xxxxxxxx Xxxx, Xxxxxxxxxx 00000, Attention:
Xxxxxxx Xxxxxxxx; with a copy to Xxxxxxxxxx Xxxxx Xxxxxx & Xxxxxxxxxx, P.C., 000
Xxxxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxx, Xxxxxxxx 00000, Attention: Xxxxxx X.
Xxxxxx, Esq.
13. SUCCESSORS. This Agreement shall inure to the benefit of and be
binding upon the Underwriter, the Company and their respective successors and
legal representatives, and nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any other person any legal or equitable
right, remedy or claim under or in respect of this Agreement, or any provisions
herein contained; this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person except that (i) the indemnities of the
Company contained in Section 8 of this Agreement shall also be for the benefit
of any person or persons who control the Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act and (ii) the indemnities
of the Underwriter contained in Section 8 of this Agreement shall also be for
the benefit of the directors of the Company, its officers who have signed the
Registration Statement and any person or persons who control the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act. No
purchaser of Securities from the Underwriter will be deemed a successor because
of such purchase.
18
14. APPLICABLE LAW. The validity and interpretation of this
agreement, and the terms and conditions set forth herein shall be governed by
and construed in accordance with the laws of the state of New York, without
giving effect to any provisions relating to conflicts of law.
15. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
19
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between the Company
and the Underwriter.
Very truly yours,
COLOR SPOT NURSERIES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Chief Executive Officer
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
BT ALEX. BROWN INCORPORATED
By: /s/ Xxxx X. Xxxx
----------------------------
Name: Xxxx Xxxx
Title: Managing Director
20
Exhibit A
Opinion of Brownstein, Hyatt, Xxxxxx & Xxxxxxxxxx, P.C.
(a) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own or lease its properties and
conduct its business as described in the Registration Statement; to the
knowledge of such counsel, based solely upon a review of the corporate records
of the Company, the Company does not own or control, directly or indirectly, any
corporation, association or other entity other than the subsidiaries listed in
Exhibit 21 to Item 16(a) of the Registration Statement (the "Subsidiaries");
each of the Subsidiaries has been duly organized and is validly existing as a
corporation or limited partnership in good standing under the laws of the
jurisdiction of its incorporation, with corporate or partnership power and
authority to own or lease its properties and conduct its business as described
in the Registration Statement (provided that such counsel need not express any
opinion as to the organization of Oda Nursery, Inc.); the Company and each of
the Subsidiaries are duly qualified to transact business in the jurisdictions
set forth on Schedule I hereto; the outstanding shares of capital stock of each
of the Subsidiaries have been duly authorized and validly issued and are fully
paid and nonassessable and, based solely upon the review of the corporate or
partnership records of each such Subsidiary, are owned by the Company or a
Subsidiary; to the knowledge of such counsel, based solely upon the review of
the corporate or partnership records of each such Subsidiary, the outstanding
shares of capital stock of each of the Subsidiaries are owned free and clear of
all liens, encumbrances and equities and claims (other than those in favor of
Credit Agricole Indosuez, as agent for the Company's senior lenders and those
arising under applicable securities laws), 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.
(b) The Company has authorized and outstanding capital stock
as set forth under the caption "Capitalization" in the Prospectus; the
authorized shares of the Company's Common Stock have been duly authorized; the
outstanding shares of the Company's Common Stock (i) issued in connection with
that certain Recapitalization dated as of December 31, 1996 (the
"Recapitalization") and (ii) issued since the date of the Recapitalization have
been duly authorized and validly issued and are fully paid and nonassessable.
Based solely upon the review of the Company's and the Subsidiaries' minute
books, to such counsel's knowledge, except as otherwise stated in the
Prospectus, all of the outstanding shares of capital stock of the Subsidiaries
are owned, directly or indirectly, by the Company, free and clear of all
perfected security interests and, to the knowledge of such counsel, free and
clear of all other restrictions on transferability (other than those imposed by
the Act and the securities or "Blue Sky" laws of certain jurisdictions) or
voting.
(c) Except as described in or contemplated by the Prospectus,
to the knowledge of such counsel, based solely on the review of the corporate
minute book of the Company, 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
A-1
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 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 shares of Common Stock or the right to have any shares of Common Stock 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 Stock or other securities
of the Company.
(d) 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;
and any required filing of the Prospectus pursuant to Rule 424(b) under the Act
has been made in accordance with Rules 424(b) and 430A under the Act.
(e) The Registration Statement, the Prospectus and each
amendment or supplement thereto comply as to form in all material respects with
the requirements of the Act and the applicable rules and regulations thereunder
(except that such counsel need express no opinion as to the financial statements
and related schedules therein, including the notes thereto and supporting
schedules and other financial and statistical data included therein or omitted
therefrom).
(f) The statements under the captions
"Management--Compensation Committee Interlocks and Insider Participation,"
"Management--Limitation on Directors' Liability and Indemnification,"
"Description of Capital Stock," "Description of Units," "Description of Series A
Preferred Stock," "Description of Warrants" and "Certain Definitions" 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.
(g) The information required to be set forth in the
Registration Statement in answer to Items 14 and 15 of Form S-1 to such
counsel's knowledge is accurately and adequately set forth therein in all
material respects.
(h) 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.
(i) The execution and delivery of the Underwriting 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 bylaws of the Company, or any
agreement filed as an exhibit to the Registration Statement which the Company or
any of the Subsidiaries may be bound or of any federal or New York statute, rule
or regulation or Delaware General Corporation Law known to such counsel to be
applicable to
A-2
the Company (other than federal or state securities laws, which are
specifically addressed elsewhere herein) which conflict, breach or default
could reasonably be expected to have a material adverse effect on the Company.
(j) The Underwriting Agreement has been duly authorized,
executed and delivered by the Company.
(k) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body by the Company is necessary in connection with the execution
and delivery of the Underwriting 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, specifying the
same.
(l) The Company is not, and will not become, as a result of
the consummation of the transactions contemplated by the Underwriting Agreement,
and application of the net proceeds therefrom as described in the Prospectus,
required to register as an "investment company" or an affiliated person of, or
"promoter" or "principal underwriter" for, an "investment company," as such
terms are defined in the 1940 Act and the rules and regulations thereunder.
(m) The Certificate of Designation has been duly adopted by
the Company's Board of Directors in compliance with the Company's Certificate of
Incorporation and By-Laws.
(n) The Series A Preferred Stock has been duly authorized by
the Company for issuance and sale to the Underwriter pursuant to the
Underwriting Agreement and are validly issued, fully paid and non-assessable
and, to the knowledge of such counsel, not subject to any preemptive or similar
rights.
(o) The Warrant Agreement has been duly and validly
authorized, executed and delivered by the Company and (assuming due
authorization, execution and delivery by the Warrant Agent) is the legally valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except that the enforcement thereof may be subject to
(i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity and the discretion of the court
before which any proceeding therefor may be brought.
(p) The Warrants have been duly and validly authorized,
issued and delivered in accordance with the terms of the Warrant Agreement, and,
to the knowledge of such counsel, the issuance of such Warrants is not subject
to any preemptive or similar rights.
(q) The Warrant Shares initially issuable upon exercise of
the Warrants have been duly and validly authorized and reserved for issuance
upon exercise of the Warrants and, when issued and delivered upon exercise of
the Warrants against payment of the Exercise
A-3
Price as provided in the Warrant Agreement, the Warrant Shares will have been
duly and validly issued and will be fully paid and non-assessable, and, to
such counsel's knowledge, the issuance of such Warrant Shares will not be
subject to any preemptive or similar rights.
(r) CSN, Inc., a Delaware corporation, has been merged with
and into the Company, with the Company surviving such merger, under the General
Corporation Law of the State of Delaware.
In addition to the matters set forth above, such counsel shall also
furnish a separate written opinion to the effect that nothing has come to the
attention of such counsel which leads them to believe that (i) the Registration
Statement, at the 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, 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 (ii) the
Prospectus, or any supplement thereto, on the date it was filed pursuant to the
Rules and Regulations and as of the Closing Date, 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 opinion as to
financial statements and related schedules therein, including the notes thereto
and supporting schedules and other financial and statistical data included
therein or omitted therefrom). With respect to such statement, such counsel may
state that their belief is based upon the procedures set forth therein, but is
without independent check and verification.
A-4
