1
Exhibit 1.1
AUTHENTIC SPECIALTY FOODS, INC.
COMMON STOCK
(PAR VALUE $1.00 PER SHARE)
---------------
UNDERWRITING AGREEMENT
------------
August ___, 1997
CRUTTENDEN XXXX INCORPORATED
SUTRO & CO. INCORPORATED
WEDBUSH XXXXXX SECURITIES INC.
As Representatives of the several
Underwriters named in Schedule I hereto,
c/o Cruttenden Xxxx Incorporated
00000 Xxx Xxxxxx
Xxxxxx, XX 00000
Dear Ladies and Gentlemen:
Authentic Specialty Foods, Inc., a corporation organized under the
laws of the State of Texas (the "Company"), proposes to issue and sell to the
several Underwriters named in Schedule I hereto (collectively, the
"Underwriters," which term shall also include any underwriter substituted as
hereinafter provided in Section 6) [4,100,000] shares (the "Firm Shares") of
Common Stock, $1.00 par value per share (the "Common Stock"), of the Company,
all of which are to be issued and sold by the Company (the "Firm Shares"), and,
in addition to the Firm Shares, for the sole purpose of covering
over-allotments in connection with the sale of the Firm Shares, the Company
proposes to grant to the Underwriters an option to purchase up to an additional
[615,000] shares (the "Option Shares"). The Firm Shares and any Option Shares
purchased pursuant to this Agreement are hereinafter called the "Shares."
This is to confirm the agreement concerning the sale and the purchase
of the Shares from the Company by the Underwriters. The Company understands
that the Underwriters propose to make a public offering of the Shares as soon
as you deem advisable after the Registration Statement (as defined below)
becomes effective.
1. Representations, Warranties and Agreements of the Company. The
Company represents and warrants to, and agrees with, each Underwriter that:
2
(a) A registration statement on Form S-1 (File No. 333-29959)
relating to the Shares has been prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and the Rules and Regulations (as defined below) of the Securities and Exchange
Commission (the "Commission") thereunder and has been filed with the
Commission. Copies of such registration statement and any amendments, and all
forms of the related prospectuses contained therein, previously filed by the
Company with the Commission have been delivered to you and the Company has
consented to the Underwriter's use of such copies for the purposes permitted by
the Securities Act. Such registration statement, including the prospectus, Part
II and all exhibits thereto, as amended at the time when it shall become
effective, is herein referred to as the "Registration Statement," and the
prospectus included as part of the Registration Statement on file with the
Commission that discloses all the information that was omitted from the
prospectus on the effective date pursuant to Rule 430A of the Rules and
Regulations with any changes contained in any prospectus filed with the
Commission by the Company with your consent after the effective date of the
Registration Statement, is herein referred to as the "Final Prospectus." Such
amendments to such Registration Statement as may have been required prior to
the date hereof have been filed with the Commission; and the Company will file
such additional amendments to such Registration Statement and such amended
prospectuses as may hereafter be required. If the Registration Statement has
been declared effective under the Securities Act by the Commission, the Company
has prepared and will promptly file with the Commission the information omitted
from the Registration Statement pursuant to Rule 430A(a) of the Rules and
Regulations as part of an amendment or supplement to the prospectus pursuant to
subparagraph (1) or (4) of Rule 424(b) of the Rules and Regulations or as part
of a post-effective amendment to the Registration Statement (including an
amended prospectus); otherwise the Company has prepared and will promptly file
an amendment to the Registration Statement (including an amended prospectus).
The prospectus included as part of the Registration Statement on the date when
the Registration Statement became effective is referred to herein as the
"Effective Prospectus"; any prospectus included in the Registration Statement
of the Company and in any amendments thereto prior to the effective date of the
Registration Statement is referred to herein as a "Pre-Effective Prospectus."
For purposes of this Agreement, "Rules and Regulations" mean the rules and
regulations adopted by the Commission under either the Securities Act or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
applicable, and "affiliate" shall have the definition specified in Rule 405 of
the Rules and Regulations.
(b) No stop order or other order preventing or suspending the
use of any Pre-Effective Prospectus has been issued by the Commission nor any
"Blue Sky" or securities authority of any jurisdiction and each Pre-Effective
Prospectus, at the time of filing thereof, conformed in all material respects
with the requirements of the Securities Act and the Rules and Regulations, did
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
except that the foregoing shall not apply to statements in or omissions from
any Pre-Effective Prospectus in reliance upon, and in conformity with, written
information furnished to the Company by you, or by any Underwriter through you,
specifically for use in the preparation thereof.
2
3
(c) As of the Closing Date (as defined herein), the
Registration Statement will have been declared effective under the Securities
Act, and no post-effective amendment to the Registration Statement will have
been filed as of the Closing Date or Option Closing Date (as defined herein),
as the case may be, without the Representatives' approval as provided in
Section 3(a) hereof. When the Registration Statement becomes effective and at
all times subsequent thereto, the Registration Statement, any post-effective
amendment thereto and the Effective Prospectus and the Final Prospectus as
amended or supplemented shall comply in all material respects with the
requirements of the Securities Act and the Rules and Regulations. No such
document shall contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that the foregoing shall not apply to statements in, or
omissions from, any such document, in reliance upon, and in conformity with,
written information furnished to the Company by you, or by any Underwriter
through you, specifically for use in the preparation thereof. There is no
contract or document required to be described in the Registration Statement or
Effective Prospectus or Final Prospectus or to be filed as an exhibit to the
Registration Statement which is not in all material respects accurately
described in the Effective Prospectus or Final Prospectus and filed as an
exhibit to the Registration Statement or Final Prospectus, or both, as the case
may be. As of the Closing Date or Option Closing Date, as the case may be, no
stop order or other order suspending the effectiveness of the Registration
Statement or preventing or suspending the use of the Effective Prospectus or
the Final Prospectus or any amendment or supplement thereto, has been issued by
the Commission or any "Blue Sky" or securities authority of any jurisdiction.
(d) McGladrey & Xxxxxx, LLP, whose reports appear in the
Registration Statement, the Pre-Effective Prospectus, the Effective Prospectus
and the Final Prospectus, are independent auditors as required by the
Securities Act and the Rules and Regulations.
(e) Xxxxxxxx, Xxxx & Xxxxx, L.L.P., whose report appears in
the Registration Statement, the Pre-Effective Prospectus, the Effective
Prospectus and the Final Prospectus, are independent auditors as required by
the Securities Act and the Rules and Regulations.
(f) The financial statements (including the related schedules
and notes) of the Company and La Victoria Foods, Inc., a California corporation
("La Victoria"), included in the Registration Statement, any Pre-Effective
Prospectus, the Effective Prospectus and/or the Final Prospectus, together with
the unaudited financial information of the Company and La Victoria forming part
of the Registration Statement, each Pre-Effective Prospectus, the Effective
Prospectus and/or the Final Prospectus, present fairly the financial condition,
the results of the operations and changes in cash flows and equity of the
entities purported to be shown thereby at the dates and for the periods
indicated and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
indicated. The selected and summary financial data included in the Registration
Statement, the Effective Prospectus, and the Final Prospectus present fairly
the information shown therein and have been compiled on a basis substantially
consistent with the financial statements presented in the Registration
Statement, the Effective Prospectus, and the Final Prospectus.
3
4
(g) The pro forma financial information included in the
Registration Statement, each Pre-Effective Prospectus, the Effective Prospectus
and/or the Final Prospectus presents fairly the information shown therein, has
been prepared in accordance with generally accepted accounting principles and
the Rules and Regulations with respect to pro forma information, has been
properly compiled on the pro forma basis described therein and, in the opinion
of the Company, the assumptions used in the preparation thereof are reasonable
and the adjustments used therein are appropriate under the circumstances.
(h) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Texas, with full power and authority (corporate and other) to own, lease and
operate its properties and conduct its business as described in the
Registration Statement, each Pre-Effective Prospectus, the Effective Prospectus
and Final Prospectus, and is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the character
of the business conducted by it or the location of the properties owned or
leased by it makes such qualification necessary; and the Company holds all
licenses, certificates, permits, consents, orders, approvals and other
authorizations from governmental authorities necessary or appropriate for the
conduct of its business and to own or lease, as the case may be, and to operate
its properties as described in the Registration Statement, each Pre-Effective
Prospectus, the Effective Prospectus and Final Prospectus. The expiration or
revocation of any such licenses, certificates, permits, consents, orders,
approvals or other governmental authorizations would not materially affect the
operations of the Company. None of the activities or businesses of the Company
is in violation of, or might cause the Company to violate, any law, rule,
regulation or order of the United States, any state, county, city or locality,
or of any agency or body of the United States or of any state, county, city or
locality of any foreign jurisdiction, which violation could have a material
adverse effect on the financial condition, results of operations, business or
prospects of the Company.
(i) La Victoria has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
California, with full power and authority (corporate and other) to own, lease
and operate its properties and conduct its business as described in the
Registration Statement, each Pre-Effective Prospectus, the Effective Prospectus
and Final Prospectus, and is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the character
of the business conducted by it or the location of the properties owned or
leased by it makes such qualification necessary; and La Victoria holds all
licenses, certificates, permits, consents, orders, approvals and other
authorizations from governmental authorities necessary or appropriate for the
conduct of its business and to own or lease, as the case may be, and to operate
its properties as described in the Registration Statement, each Pre-Effective
Prospectus, the Effective Prospectus and Final Prospectus. The expiration or
revocation of any such licenses, certificates, permits, consents, orders,
approvals or other governmental authorizations would not materially affect the
operations of La Victoria. None of the activities or businesses of La Victoria
is in violation of, or might cause La Victoria to violate, any law, rule,
regulation or order of the United States, any state, county, city or locality,
or of any agency or body of the United States or of any state, county, city or
locality of any foreign jurisdiction, which
4
5
violation could have a material adverse effect on the financial condition,
results of operations, business or prospects of La Victoria.
(j) The Contribution and Exchange Agreement, by and among the
Company, Xxxxxx X. Xxxxxxxx ("Xxxxxxxx"), TSG2 L.P., a Delaware limited
partnership ("TSG2"), TSG2 Management, L.L.C., a Delaware limited liability
company ("TSG2 Management"), and Xxxxx Xxxxxx ("Lively"), and Lively comprising
all of the members of LV Foods, L.L.C., a Delaware limited liability company
("LV Foods"), (TSG2, TSG2 Management and Lively collectively, the "Members"),
entered into as of June 20, 1997 (the "Contribution Agreement"), pursuant to
which (A) the Company shall acquire all of the membership interests in and to
LV Foods (the "LV Foods Purchase"), (B) the Company shall acquire 112 shares of
the outstanding common stock, $100.00 par value, of La Victoria (the "Tanklage
Purchase"), and the transactions contemplated therein, have been duly and
validly authorized by the Company, Tanklage and the Members, and the
Contribution Agreement has been duly and validly executed and delivered by the
Company, Tanklage and the Members.
(k) Upon the consummation of the transactions contemplated in
the Contribution Agreement, [WHICH SHALL OCCUR CONTEMPORANEOUSLY WITH AND IN
ANY EVENT NO LATER THAN IMMEDIATELY FOLLOWING THE CLOSING OF THE OFFER AND
PURCHASE OF THE FIRM SHARES], the Company will own directly or indirectly, all
of the outstanding capital stock of La Victoria free and clear of all liens,
encumbrances, equities or claims except as set forth in each Pre-Effective
Prospectus, the Effective Prospectus and Final Prospectus. The company does not
own or control any other corporation association or entity.
(l) The Pro-Forma and As Adjusted capitalization of the
Company as of June 30, 1997 is as set forth under the caption "Capitalization"
in the Registration Statement, each Pre-Effective Prospectus, the Effective
Prospectus and Final Prospectus, and the Common Stock conforms to the
description thereof contained under the caption "Description of Capital Stock"
in the Registration Statement, each Pre-Effective Prospectus, the Effective
Prospectus and Final Prospectus; the outstanding shares of Common Stock
(including the Shareholder Shares) have been and are, and the Shares to be sold
by the Company, upon issuance and delivery and payment therefor in the manner
herein described, will be, duly authorized, validly issued, fully paid and
nonassessable and are not subject to any preemptive or similar rights. Except
as described in the Registration Statement, each Pre-Effective Prospectus, the
Effective Prospectus and Final Prospectus, there are no preemptive rights or
other rights to subscribe for or to purchase, or any restriction upon the
voting or transfer of, any shares of Common Stock pursuant to the Company's
Articles of Incorporation, By-laws or other governing documents or any
agreement, contract or other instrument to which the Company is a party or by
which it may be bound. 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 waived or satisfied, for or
relating to the registration of any shares of Common Stock; and any such
waivers, to the best of the Company's knowledge, were duly and validly given.
The description of the Company's outstanding stock options and other stock
plans or arrangements and the options or other rights granted and exercised
thereunder set forth in the Registration Statement, each Pre-Effective
Prospectus, the Effective Prospectus and/or the Xxxxx
0
6
Prospectus accurately and fairly presents in all material respects the
information required to be shown with respect to such options, plans,
arrangements, and rights.
(m) The redemption by the Company of the shares of its Common
Stock held by The Shansby Group ("Shansby") and TSG International ("TSGI") has
been duly and validly authorized by the Company, Shansby and TSGI, and the
consummation of the redemption will not result in a violation of, or constitute
a default under, the Articles of Incorporation, By-laws or other governing
documents of the Company, or any contract, indenture, mortgage, deed of trust,
loan or credit agreement, bond debenture, note, lease or other agreement or
instrument to which the Company, Shansby or TSGI is a party or by which any of
them is bound, or to which any of their properties is subject, nor will the
redemption violate any law, rule, administrative regulation, judgment, order,
writ or decree of any court, or any governmental agency or body having
jurisdiction over the Company, Shansby or TSGI or any of their property, or
result in the creation or imposition of any lien, charge, claim or encumbrance
upon any property or asset of the Company, Shansby or TSGI.
(n) All offers and sales of (i) the Common Stock by the
Company (other than the Shares); and (ii) the capital stock of La Victoria were
at all relevant times exempt from the registration requirements of the
Securities Act and were the subject of an available exemption from the
registration requirements of applicable state securities or Blue Sky laws.
(o) When duly countersigned by the Company's transfer agent
and registrar and delivered to the Underwriters in accordance with the
provisions of this Agreement, good and marketable title to the unissued Shares
to be issued and sold by the Company to the Underwriters hereunder will pass to
the Underwriters free and clear of any liens, security interests, adverse
claims, equities or other encumbrances of any kind or character, except as may
be created by any Underwriter.
(p) Except as described in or contemplated by the
Registration Statement, each Pre-Effective Prospectus, the Effective Prospectus
and Final Prospectus, (i) there has not been any material adverse change in, or
any adverse development which materially affects, the business, properties,
financial condition, results of operations or prospects of any of the Company,
LV Foods or La Victoria whether or not arising in the ordinary course of
business, from the date as of which information is given; (ii) none of the
Company, LV Foods or La Victoria has, directly or indirectly, incurred any
liabilities or obligations, direct or contingent, not in the ordinary course of
business, or which is material in amount whether or not in the ordinary course
of business, or entered into any transactions not in the ordinary course of
business, or which is material to the business of the Company, LV Foods or La
Victoria whether or not in the ordinary course of business; (iii) the
agreements to which the Company, LV Foods or La Victoria is a party, described
in the Registration Statement, each Pre-Effective Prospectus, the Effective
Prospectus and Final Prospectus, are valid and enforceable by the Company, LV
Foods or La Victoria and, to the best knowledge of the Company, the other party
or parties thereto are not in material breach or default under any such
agreement; (iv) there has not been any change in the capital stock of or any
incurrence of long-term debt by, the Company, LV Foods or La Victoria, or any
issuance or grant of options, warrants or
6
7
rights to purchase the capital stock of the Company, LV Foods or La Victoria,
or any security convertible into, exercisable for, or exchangeable for capital
stock of the Company, LV Foods or La Victoria, or any declaration or payment of
any dividend or other distribution on any class of the capital stock of the
Company, LV Foods or La Victoria from the date as of which information is given
in the Registration Statement, each Pre-Effective Prospectus, the Effective
Prospectus and Final Prospectus; (v) there is outstanding no security or other
instrument which by its terms is convertible into or exchangeable for capital
stock of the Company, LV Foods or La Victoria; and (vi) there is no commitment,
plan or arrangement to change or alter the rights, preferences or privileges of
any outstanding class or series of the capital stock of the Company, LV Foods
or La Victoria.
(q) None of the Company, LV Foods or La Victoria is, or with
the giving of notice or lapse of time or both would be, in violation of or in
default under, or will the execution or delivery of this Agreement or the
Contribution Agreement or consummation of the transactions contemplated hereby
or thereby result in a violation of, or constitute a default under, the
Articles of Incorporation, By-laws or other governing documents of the Company,
or any contract, indenture, mortgage, deed of trust, loan or credit agreement,
bond, debenture, note, lease or other agreement or instrument, to which any of
the Company, LV Foods or La Victoria is a party or by which any of them is
bound, or to which any of their properties is subject, nor will the performance
by the Company of its obligations under this Agreement or under the
Contribution Agreement violate any law, rule, administrative regulation,
judgment, order, writ or decree of any court, or any governmental agency or
body having jurisdiction over the Company or any of its properties, or result
in the creation or imposition of any lien, charge, claim or encumbrance upon
any property or asset of the Company. Except for permits and similar
authorizations or notifications required under the Securities Act and the
securities or "Blue Sky" laws of certain jurisdictions and for such permits,
authorizations and notifications which have been obtained, no consent,
approval, authorization or order of any court, governmental agency or body,
financial institution or other person or entity is required in connection with
the consummation of the transactions contemplated by this Agreement or the
Contribution Agreement, including, without limitation, the valid sale and
delivery of the Shares.
(r) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under this Agreement
and the Contribution Agreement, and this Agreement and the Contribution
Agreement have been duly authorized, executed and delivered by the Company and
constitute legal, valid and binding agreements of the Company and are
enforceable against the Company in accordance with their respective terms
except as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally.
(s) The Company, LV Foods and La Victoria have good and
marketable title in fee simple to all items of real property and good and
marketable title to all personal property owned by them, in each case free and
clear of all liens, charges, claims, encumbrances and defects except such as
are described or referred to in the Registration Statement, each Pre-Effective
Prospectus, the Effective Prospectus and Final Prospectus or such as do not
materially affect the value of such
7
8
property and do not interfere with the use made or proposed to be made of such
property by the Company, LV Foods or La Victoria, and any real property and
buildings held under lease by the Company, LV Foods or La Victoria are held by
them under valid, existing and enforceable leases with such exceptions as are
not material and do not interfere with the use made or proposed to be made of
such property and buildings by the Company, LV Foods or La Victoria and except
as enforceability may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting creditors' rights generally.
(t) There is no litigation or governmental proceeding to
which the Company, LV Foods or La Victoria is a party or to which any of their
property is subject or which is pending or, to the Company's knowledge,
threatened against or affecting the Company, LV Foods or La Victoria, which
could result in any material adverse change in the financial condition, results
of operations, business or prospects of the Company, which is required to be
disclosed in the Registration Statement, each Pre-Effective Prospectus, the
Effective Prospectus and Final Prospectus or which could materially and
adversely affect the consummation of the transactions contemplated by this
Agreement, nor are there any actions, suits or proceedings related to
environmental matters or related to discrimination on the basis of age, sex,
religion, race, or physical or mental disability, and no labor disturbance by
the employees of the Company, LV Foods or La Victoria exists or is imminent
which could be expected to affect adversely the financial condition, results of
operations, business or prospects of the Company or which is required to be
disclosed in the Registration Statement, each Pre-Effective Prospectus, the
Effective Prospectus and Final Prospectus.
(u) None of the Company, LV Foods or La Victoria is in
violation of any law, ordinance, governmental rule or regulation or court
decree to which any of them may be subject, which violation could have a
material adverse effect on the financial condition, results of operations,
business or prospects of the Company.
(v) The Company and La Victoria comply in all material
respects with all Environmental Laws (as defined below), except to the extent
that failure to comply with such Environmental Laws would not have a material
adverse effect on the financial condition, results of operation, business or
prospects of the Company. The Company and La Victoria (i) are not the subject
of any pending or, to the knowledge of the Company, threatened federal, state
or local investigation evaluating whether any remedial action by the Company or
La Victoria is needed to respond to a release of any Hazardous Materials (as
defined below) into the environment, resulting from the Company's or La
Victoria's business operations or ownership or possession of any of their
properties or assets, or (ii) is not in contravention of any Environmental Law
that could reasonably be expected to have a material adverse effect on the
financial condition, results of operation, business or prospects of the
Company. Neither the Company nor La Victoria has received any notice or claim,
nor are there pending or, to the knowledge of the Company, threatened lawsuits
against them, with respect to violations of an Environmental Law or in
connection with any release of Hazardous Materials into the environment that,
in the aggregate, if the subject of any unfavorable decision, ruling or
finding, could reasonably be expected to have a material adverse effect on the
financial condition, results of operation, business or prospects of the
Company. As used herein, "Environmental Laws" means any federal, state, city or
local law or regulation applicable to the
8
9
Company's or La Victoria's business operations or ownership or possession of
any of their properties or assets relating to environmental matters, and
"Hazardous Materials" means those substances that are regulated by or form the
basis of liability under any Environmental Laws.
(w) The Company has not taken and shall not take, directly or
indirectly, any action designed to cause or result in, or which has constituted
or which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Common Stock to facilitate the sale
or resale of the Shares.
(x) The Company, LV Foods and La Victoria have timely (giving
effect to permitted extensions) filed and properly prepared all necessary
federal, state, local and foreign income, franchise and any other required tax
returns and have paid all taxes shown as due thereon, and the Company has no
knowledge of any tax deficiency which has been or might be asserted against the
Company, LV Foods or La Victoria which might materially and adversely affect
the financial condition, results of operations, business or prospects of the
Company.
(y) Neither the Company, La Victoria nor any officers,
directors, employees or agents or any other persons associated with or acting
on behalf of the Company or La Victoria has at any time (i) made any
contributions to any candidate for political office in violation of law, or
failed to disclose fully any contributions to any candidate for political
office in accordance with any applicable statute, rule, regulation or ordinance
requiring such disclosure, (ii) made any payment to any local, state, federal
or foreign governmental officer or official, or other person charged with
similar public or quasi-public duties, other than payments required or allowed
by applicable law, (iii) violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended, (iv) made any payment outside the ordinary
course of business to any purchasing or selling agent or person charged with
similar duties of any entity to which the Company or La Xxxxxxxx xxxxx or from
which the Company or La Victoria buys products for the purpose of influencing
such agent or person to buy products from or sell products to the Company or La
Victoria, (v) made any other bribe, rebate, payoff, influence payment, kickback
or other unlawful payment or (vi) engaged in any transaction, maintained any
bank account or used any corporate funds except for transactions, bank accounts
and funds which have been and are reflected in the normally maintained books
and records of the Company or La Victoria.
(z) Except for the several Underwriters and the
Representatives there are no claims for services in the nature of and no person
has any right to receive a finder's fee, brokerage fee or similar fee with
respect to this Agreement, the Contribution Agreement, the transactions
contemplated hereby or thereby or the acquisition by LV Foods of its interest
in La Victoria, for which the Company or any of the several Underwriters may be
responsible.
(aa) The Company and La Victoria have their properties
adequately insured against loss or damage by fire and maintain such other
insurance as is prudent or customarily maintained by companies in the same or
similar business and in the same or similar locality.
9
10
(bb) The Company and La Victoria own or possess rights to use
all material patents, patent rights, inventions, proprietary software (whether
represented by source code, object code or in any other manner), trademarks,
service marks, trade names and copyrights (collectively, the "Intangibles")
necessary for the conduct of their respective businesses as described in the
Registration Statement, each Pre-Effective Prospectus, the Effective Prospectus
and Final Prospectus and have taken all reasonable security measures to protect
the secrecy, confidentiality and value of their trade secrets and know-how that
are valid and protectable and are not part of the public knowledge or
literature. All of the Intangibles that the Company or La Victoria own or have
pending, or under which they are licensed, are in good standing and
uncontested. Any of the Company's or La Victoria's employees and any other
person who, either alone or in concert with others, developed, invented,
discovered, derived, programmed or designed these secrets, or who have
knowledge of or access to information relating to them, have been put on notice
and have entered into agreements that these secrets are proprietary to the
Company or La Victoria, as the case may be, and are not to be divulged or
misused. Neither the Company nor La Victoria has received any notice of
infringement of or conflict with, and to the best of the Company's knowledge,
neither the Company nor La Victoria is infringing or in conflict with, asserted
rights of others with respect to any Intangibles which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, could
materially and adversely affect the financial condition, results of operations,
business or prospects of the Company. To the knowledge of the Company, there is
no infringement by others of Intangibles of the Company or La Victoria.
(cc) There are no outstanding loans or advances or guarantees
of indebtedness by the Company, LV Foods or La Victoria to or for the benefit
of any affiliate of the Company, LV Foods or La Victoria, any of the officers
or directors of the Company, LV Foods or La Victoria, or any of the members of
the families of any of them, or any other business relationships or
related-party transaction of the nature described in Item 404 of Regulation S-K
involving the Company, LV Foods or La Victoria and any other persons referred
to in said Item 404, which are required by the Rules and Regulations to be
described in the Registration Statement, each Pre-Effective Prospectus, the
Effective Prospectus and Final Prospectus except such that are so described.
(dd) The Company is eligible to use Form S-1 for the
registration of the Shares.
(ee) Application for quotation of the Common Stock on the
National Association of Securities Dealers Automated Quotations (herein called
Nasdaq) National Market has been approved, subject to notice of issuance.
(ff) The Company and La Victoria have each complied with all
provisions of Section 517.075, Florida Statutes (Chapter 92-198, Laws of
Florida), relating to doing business with the Government of Cuba or any person
or affiliate located in Cuba.
(gg) The Company and La Victoria each 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 in order to
permit preparation of financial statements in accordance with generally
accepted accounting
10
11
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.
(hh) The Company is not, and upon the consummation of the
transactions contemplated hereby will not be, an "investment company" or a
company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
2. Purchase, Sale and Delivery of Shares.
(a) On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell the Firm Shares to the several Underwriters,
and each Underwriter agrees, severally and not jointly, to purchase from the
Company, at a purchase price of $______ per share, the respective number of
Firm Shares set forth opposite their names on Schedule I hereto (subject to
adjustment as provided in Section 6 hereof).
(b) Subject to the terms and conditions and in reliance upon
the representations and warranties and agreements set forth herein, the Company
hereby grants an option to the several Underwriters to purchase, severally and
not jointly, up to [615,000] Option Shares, at the same purchase price per
share as the Underwriters shall pay for the Firm Shares. Said option may be
exercised only to cover over-allotments in the sale of the Firm Shares by the
Underwriters. Said option may be exercised in whole or in part at any time (but
not more than once) on or before the 30th day after the date of the Effective
Prospectus upon written or telegraphic notice by the Underwriters to the
Company setting forth the number of Option Shares as to which the several
Underwriters are exercising the option and the settlement date, which shall not
be earlier than the Closing Date (as defined below). Delivery of certificates
for the Option Shares by the Company and payment therefor shall be made as
provided in Section 2(c) hereof. The number of Option Shares to be purchased by
each Underwriter shall be the same percentage of the total number of Option
Shares to be purchased by the several Underwriters as such Underwriter is
purchasing of the Firm Shares, subject in each case to such adjustments as the
Underwriters in their absolute discretion shall make to eliminate any
fractional shares.
(c) Delivery of definitive certificates for the Firm Shares
and the Option Shares (if the option provided for in Section 2(b) hereof shall
have been exercised on or before the second business day prior to the Closing
Date) shall be made to you for the respective accounts of the Underwriters
against payment to the Company of the purchase price therefor by wire transfer
in immediately available funds. Payment of the purchase price for, and delivery
of certificates for, the Firm Shares shall be made at the offices of Xxxxxx &
Xxxxxx L.L.P., 2300 First City Tower, 0000 Xxxxxx, Xxxxxxx, Xxxxx 00000 (or at
such other place as may be agreed upon between you and the Company) at 9:00
a.m. Texas time, on the fourth full business day following the date of this
Agreement or at such other time and date not later than seven full business
days thereafter as you and the Company may determine, such time and date of
payment and delivery being herein called
11
12
the "Closing Date." The certificates for the Shares will be registered in such
name or names and denominations as you request in writing at least two full
business days prior to the Closing Date. The Company will permit you to examine
and package such certificates for delivery at least three full business days
prior to the Closing Date.
It is understood that each Underwriter has authorized you,
individually and not as Representatives of the several Underwriters, to accept
delivery and receipt of, for its account, the Shares that it has agreed to
purchase, and each Underwriter has further authorized you (but not obligated
you) to make payment of the purchase price on behalf of any Underwriter or
Underwriters whose check or checks shall not have been received by you prior to
the Closing Date or Option Closing Date, as the case may be, for the Shares to
be purchased by such Underwriter or Underwriters. Any such payment by you shall
not relieve any such Underwriter or Underwriters of any of its or their
obligations hereunder or under any other underwriting arrangement relating to
the Shares, including, without limitation, the Agreement Among Underwriters.
If the option provided for in Section 2(b) hereof is exercised after
the second business day prior to the Closing Date, the Company will deliver (at
the expense of the Company) to the Underwriters, at Irvine, California, on the
date specified by the Underwriters (which shall be no earlier than the second
business day and no later thin the third business day after the exercise of
said option), certificates for the Option Shares in such names and
denominations as the Underwriters shall have requested against payment to the
Company of the purchase price thereof by wire transfer in immediately available
funds. If settlement for the Option Shares occurs after the Closing Date, the
Company will deliver to the Underwriters on the settlement date for the Option
Shares (such date and time of delivery and payment for the Option Shares being
herein called the "Option Closing Date" and, together with the Closing Date,
the "Closing Dates"), and the obligation of the Underwriters to purchase the
Option Shares shall be conditioned on receipt of supplemental opinions,
certificates and letters confirming as of such date the opinions, certificates
and letters delivered on the Closing Date pursuant to Section 4 hereof.
3. Covenants. The Company covenants and agrees with each
Underwriter that:
(a) The Company shall use its best efforts to cause the
Registration Statement to become effective and, if the procedure in Rule 430A
of the Rules and Regulations is utilized, to comply with the provisions of, and
make all requisite filings with the Commission pursuant to, Rule 430A of the
Rules and Regulations and to notify you promptly (in writing, if requested) of
all such filings. The Company shall notify you promptly of the receipt of any
comments from the Commission and any request by the Commission for any
amendment of or supplement to the Registration Statement or the Effective
Prospectus or the Final Prospectus or for additional information. The Company
shall prepare and file with the Commission, promptly upon your request, any
amendments of or supplements to the Registration Statement or the Effective
Prospectus or the Final Prospectus which, in your opinion, may be necessary or
advisable in connection with the distribution of the Shares. The Company shall
not file any amendment of or supplement to the Registration Statement or the
Effective Prospectus or the Final Prospectus (including any post-effective
amendment), which is not approved by you after reasonable notice thereof, such
approval
12
13
not to be unreasonably withheld or delayed. The Company shall advise you
promptly of the issuance by the Commission or any State or other regulatory
body of any stop order or other order suspending the effectiveness of the
Registration Statement, suspending or preventing the use of any Pre-Effective
Prospectus, Effective Prospectus or Final Prospectus or suspending the
qualification of the Shares for offering or sale in any jurisdiction, or of the
institution of any proceedings for any such purpose. The Company shall use its
best efforts to prevent the issuance of any stop order or other such order and,
should a stop order or other such order be issued, to obtain as soon as
possible the lifting thereof.
(b) If the Company has elected to rely upon Rule 430A, it
will take such steps as it deems necessary to ascertain promptly whether the
form of prospectus transmitted for filing under Rule 424(b) was received for
filing by the Commission and, in the event that it was not, it will promptly
file such prospectus.
(c) The Company shall furnish to the Underwriters, from time
to time and without charge, a reasonable number of copies of the Registration
Statement and of each amendment and supplement thereto, of which two of each
such Registration Statement and each amendment and supplement thereto for the
Representatives and one for counsel for the Underwriters ("Underwriters'
Counsel") shall be originally signed and shall include exhibits. During the
period in which a prospectus is required to be delivered under the Securities
Act and the Rules and Regulations, the Company shall furnish to each
Underwriter, from time to time and without charge, such number of copies of the
Pre-Effective Prospectus, Effective Prospectus and Final Prospectus as such
Underwriter may reasonably request and the Company hereby consents to the use
of such copies for purposes permitted by the Securities Act.
(d) Within the time during which a Final Prospectus relating
to the Shares is to be delivered under the Securities Act, the Company shall
comply with all requirements imposed upon it by the Securities Act, as now and
hereafter amended, and by the Rules and Regulations, as from time to time in
force, so far as is necessary to permit the continuance of sales of or dealings
in the Shares as contemplated by the provisions hereof and the Final
Prospectus. If during such period any event occurs or condition exists as a
result of which in the opinion of Underwriters' Counsel or counsel for the
Company, the Final Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances then existing,
not misleading, or if during such period it is necessary in the opinion of
Underwriters' Counsel or counsel for the Company, to amend the Registration
Statement or supplement the Final Prospectus to comply with the Securities Act,
the Company shall promptly notify you and shall amend the Registration
Statement or supplement the Final Prospectus (at the expense of the Company),
subject to Section 3(a), so as to correct such statement or omission or effect
such compliance, provided that the Company shall determine the final terms of
any such amendment or supplement only after considering such changes in any
such documents as the Underwriters may reasonably request.
(e) The Company shall take or cause to be taken all necessary
actions and furnish to whomever you may direct such information as may be
required for sale of the Shares under the
13
14
laws of such jurisdictions which you shall designate; except that in no event
shall the Company be obligated in connection therewith to qualify as a foreign
corporation.
(f) The Company shall make generally available to its
security holders, in the manner contemplated by Rule 158(b) under the
Securities Act, as soon as practicable but in any event not later than 45 days
after the end of its fiscal quarter in which the first anniversary date of the
effective date of the Registration Statement occurs, an earnings statement
satisfying the requirements of Section 11(a) of the Securities Act covering a
period of at least twelve (12) consecutive months beginning after the effective
date of the Registration Statement.
(g) For a period of 180 days following the date of the
Effective Prospectus (the "Lock-Up Period"), the Company will not, without your
prior written consent, (i) purchase any shares of Common Stock or equity
securities of the Company or (ii) offer, issue, sell, transfer, grant options
to purchase or otherwise dispose of, for value or otherwise, directly or
indirectly, any shares of Common Stock or other equity securities of the
Company except (A) the Shares, (B) pursuant to the exercise of options or
warrants of the Company outstanding immediately prior to the Closing Date, as
described in the Effective Prospectus and Final Prospectus, (C) up to a total
of __________ shares of Common Stock upon the exercise or grant of options
currently outstanding or authorized pursuant to the Company's existing employee
benefit plans, as described in the Effective Prospectus and Final Prospectus,
(D) up to a total of ____ shares of Common Stock currently authorized to any
existing 401(k) benefit plan of the Company, as described in the Effective
Prospectus and Final Prospectus, or (E) in connection with a merger of another
corporation into, or an acquisition of all or substantially all of the assets
or stock of another entity by, the Company where the Company or a subsidiary is
the surviving entity; PROVIDED, the recipient of such shares of Common Stock or
equity securities of the Company agrees in writing to also abide by the
restrictions set forth in this Section 3(g) for the duration of the Lock-Up
Period.
(h) The Company shall take all actions, necessary or
appropriate, to validly consummate the LV Foods Purchase and the Tanklage
Purchase [CONTEMPORANEOUSLY WITH AND IN ANY EVENT NO LATER THAN IMMEDIATELY
FOLLOWING] the closing of the sale of the Firm Shares.
(i) The Company shall apply the net proceeds of the sale of
the Shares as set forth under the caption "Use of Proceeds" in the Final
Prospectus.
(j) The Company shall file such reports 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 Securities
Act.
(k) The Company will furnish to you as early as practicable
prior to the Closing Date and Option Closing Date, as the case may be, but not
less than two full business days prior thereto, a copy of its latest available
unaudited interim financial statements that have been read by the Company's
independent certified public accountants, as stated in their letters to be
furnished pursuant to Section 4(g).
14
15
(l) The Company will comply with all provisions of all
undertakings contained in the Registration Statement.
(m) The Company shall pay or cause to be paid (A) all
expenses (including any capital duties, stamp duties and stock transfer taxes)
incurred in connection with the delivery to the several Underwriters of the
Shares, (B) all fees and expenses (including, without limitation, fees and
expenses of the Company's accountants and counsel) in connection with the
preparation printing, filing, delivery and shipping of the Registration
Statement (including the financial statements therein and all amendments and
exhibits thereto), each Pre-Effective Prospectus, the Effective Prospectus and
the Final Prospectus as amended or supplemented and the printing, delivery and
shipping of this Agreement and other underwriting documents, including
Underwriters' Questionnaires, Underwriters' Powers of Attorney, Blue Sky
Memoranda, Agreements Among Underwriters and Selected Dealer Agreements and any
letters transmitting the offering material to Underwriters or selling group
members (including costs of mailing and shipment) and the cost of furnishing
copies thereof to the Underwriters, (C) all legal fees, filing fees and fees
and disbursements of Underwriters' Counsel incurred in connection with the
qualification of the Shares under state securities laws as provided hereof and
in the review of the offering by the NASD, (D) the filing fee of the NASD, (E)
any applicable listing fees, including the fee for including the Company's
Common Stock for quotation on the Nasdaq National Market, (F) the cost of
printing certificates representing the Shares, (G) the cost and charges of any
transfer agent or registrar, (H) the costs of preparing, promoting and
distributing bound volumes for the Representatives and their counsel, and (I)
all other costs and expenses incident to the performance of its obligations
hereunder which are not otherwise provided for in this section. If the sale of
the Shares provided for herein is not consummated prior to December 31, 1997
and (i) the failure to complete the offering is due to a reason other than the
failure of the Underwriters to satisfy all of their obligations under this
Agreement, (ii) there is a material adverse change in the Company's business,
financial conditions, results of operations or prospects or (iii) the
Underwriters discover in the course of their due diligence, including during
the marketing of the Offering, material facts or circumstances relating to the
Company which render the contemplated Offering impracticable, the Company shall
pay for all reasonable out-of-pocket expenses (including fees and disbursements
of counsel) incurred by the Underwriters in connection with the investigation,
preparing to market and marketing the Shares or in contemplation of performing
their obligations hereunder, all "Blue Sky" filing fees and expenses, legal
fees incurred in qualifying the Shares under State Securities or "Blue Sky"
laws and in the review of the offering by the NASD, and any expenses incurred
by the Company including printing expenses and its accounting and legal fees.
The Company shall not in any event be liable to any of the Underwriters for
loss of anticipated profits from the transactions covered by this Agreement.
(n) The Company, at its expense, will furnish to its
shareholders an annual report (including financial statements prepared in
accordance with generally accepted accounting principles audited by independent
certified public accountants), and, as soon as practicable after the end of
each of the first three quarters of each fiscal year, a statement of operations
of the Company for such quarter (which may be in summary form), all in
reasonable detail, and during the five year period after the date hereof, at
its expense, will furnish you, with copies for each of the several
Underwriters, (i) as soon as practicable after the end of each fiscal year, a
balance sheet of the
15
16
Company and any subsidiaries as at the end of such fiscal year, together with
statements of income or operations, shareholders' equity and changes in cash
flows of the Company and any consolidated subsidiaries, and of any
non-consolidated significant subsidiary, for such fiscal year, all in
reasonable detail and accompanied by a copy of the certificate or report
thereon of independent certified public accountants, (ii) as soon as they are
available, a copy of all reports (financial or other) mailed to security
holders, (iii) as soon as they are available, a copy of all reports and
financial statements furnished to or filed with the Commission, and (iv) such
other information as you may from time to time reasonably request. In addition,
during such five-year period the Company will furnish you, with copies for each
of the several Underwriters, every material press release and every material
news item or article in respect of the Company or its affairs that is released
or prepared by the Company.
(o) If the Company has an active subsidiary or subsidiaries,
the financial Statements provided for in Section 3(n) will be on a consolidated
basis to the extent the accounts of the Company and its subsidiary or
subsidiaries are consolidated in reports furnished to its shareholders
generally. Separate financial statements shall be furnished for all
subsidiaries whose accounts are not consolidated but which at the time are
significant subsidiaries as defined in the Rules and Regulations.
(p) At or before the Closing Date, you shall receive from
each of the Company's officers, directors and affiliates, officers and
directors of any significant subsidiary of the Company and certain other
current and prospective holders of the Company's Common Stock and other equity
securities, including without limitation Tanklage and the Members ("Insiders"),
a written agreement (i) not to offer, sell, transfer, grant any option to
purchase or otherwise dispose of, directly or indirectly, any shares of Common
Stock or other equity securities of the Company now owned or hereafter acquired
by such person during the Lock-Up Period without your prior written consent.
For a period of two years following the Lock-Up Period, the Company will use
its best efforts to notify you of any sales made by such Insiders under Rule
144 of the Rules and Regulations or any similar provision of or under the
Securities Act enacted after the date hereof.
(q) The Company shall continue to maintain 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 in order to
permit preparation of financial statements in accordance 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.
(r) The Company shall comply with all registration, filing
and reporting requirements of the Exchange Act which may from time to time be
applicable to the Company. Without limiting the generality of the foregoing,
within 30 days following the Closing Date, the Company will file a registration
statement for the Common Stock under Section 12(g) of the Exchange Act, will
use its best efforts to cause such registration statement to become effective
and
16
17
will supply copies of the Form 8-A and any amendments or supplements thereto,
to the Representatives and their counsel, together with copies for each of the
several Underwriters within five days of its filings with the Commission.
(s) The Company shall make all filings required, including
registration under the Exchange Act, to obtain and maintain the inclusion of
the Common Stock on the Nasdaq National Market concurrently with the effective
date of the Registration Statement (with Nasdaq Symbols mutually acceptable to
the Company and the Representatives).
(t) The Company will file timely with the Commission and the
NASD, if required, a report on Form SR in accordance with the Rules and
Regulations of the Commission under the Securities Act.
(u) Prior to the first day of trading, the Company shall
obtain a CUSIP number for the Common Stock.
(v) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a registrar
(which may be the same entity as the transfer agent) for its Common Stock.
(w) If any time during the 25-day period after the
Registration Statement becomes effective, any rumor, publication or event
relating to or affecting the Company shall occur as a result of which in your
opinion the market price of the Common Stock has been or is likely to be
materially affected (regardless of whether such rumor, publication or event
necessitates a supplement to or amendment of the Final Prospectus), the Company
will, after written notice from you advising the Company to the effect set
forth above, forthwith prepare, consult with you concerning the substance of,
and disseminate a press release or other public statement, reasonably
satisfactory to you, responding to or commenting on such rumor, publication or
event.
(x) Prior to the Closing Date and during the period for which
a prospectus is required to be delivered pursuant to the Rules and Regulations
under the Securities Act, the Company shall not issue any press release or
other publicity about the Company without the prior approval of the
Representatives and Underwriters' Counsel.
4. Conditions of Underwriters' Obligations. The obligations of the
several underwriters hereunder are subject to the accuracy, as of the date
hereof and on each Closing Date and Option Closing Date, as if made on the
dates thereof, of the representations and warranties of the Company contained
herein, to the performance by the Company of its obligations hereunder and to
the following additional conditions:
(a) The Registration Statement and all post-effective
amendments thereto shall have become effective and all filings required by Rule
424 and Rule 430A of the Rules and Regulations shall have been made; at each
Closing Date, no stop order or other order suspending the effectiveness of the
Registration Statement or any amendment or supplement thereto shall have been
17
18
issued; no proceedings for the issuance of such an order shall have been
initiated or threatened; and any request of the Commission for additional
information (to be included in the Registration Statement or the Final
Prospectus or otherwise) shall have been disclosed to you and complied with to
the reasonable satisfaction of you and your counsel.
(b) No Underwriter shall have advised the Company that the
Registration Statement or Effective Prospectus or Final Prospectus, or any
amendment or supplement thereto, contains an untrue statement of fact which, in
your opinion, is material, or omits to state a fact which, in your opinion, is
material and is required to be stated therein or is necessary to make the
statements therein not misleading.
(c) On or prior to each Closing Date, you shall have received
from Gardere & Xxxxx, L.L.P., Underwriters' Counsel, such opinion or opinions
with respect to the sufficiency of all corporate proceedings and other legal
matters relating to this Agreement and the transactions contemplated hereby as
you reasonably may require and Underwriters' Counsel shall have received such
papers and information as they request to enable them to pass upon such
matters. In rendering such opinion, Underwriters' Counsel may rely upon the
opinion to be delivered to the Underwriters by the counsel for the Company
pursuant to Section 4(d) herein.
(d) On each Closing Date there shall have been furnished to
you the opinion (addressed to the Underwriters) of Xxxxxx & Xxxxxx L.L.P.,
counsel for the Company, dated as of such Closing Date and in form and
substance satisfactory to Underwriters' Counsel and stating that it may be
relied upon by Underwriters' Counsel in giving their opinion, to the effect
that:
(i) The Company has been duly organized and is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its organization, with full corporate power and authority to
own, lease, license or use its properties and conduct its business as described
in the Registration Statement, each Pre-Effective Prospectus, the Effective
Prospectus and Final Prospectus, and is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in which the
character of the business conducted by it or the location of the properties
owned, leased licensed or used by it makes such qualification necessary, except
for jurisdictions in which the failure to so qualify would not have a material
adverse effect on the financial condition, results of operations, business or
prospects of the Company.
(ii) La Victoria has been duly organized and is
validly existing as a corporation in good standing under the laws of the State
of California, with full corporate power and authority to own, lease, license
or use its properties and conduct its business as described in the Registration
Statement, each Pre-Effective Prospectus, the Effective Prospectus and Final
Prospectus, and is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction in which the character of the business
conducted by it or the location of the properties owned, leased licensed or
used by it makes such qualification necessary, except for jurisdictions in
which the failure to so qualify would not have a material adverse effect on the
financial condition, results of operations, business or prospects of the
Company.
18
19
(iii) LV Foods has been duly organized and is
validly existing as a limited liability company under the laws of the State of
Delaware, with full power and authority to own, lease, license or use its
properties and conduct its business as described in the Registration Statement,
each Pre-Effective Prospectus, the Effective Prospectus and Final Prospectus,
and is duly qualified to do business as a foreign limited liability company and
is in good standing in each jurisdiction in which the character of the business
conducted by it or the location of the properties owned, leased licensed or
used by it makes such qualification necessary, except for jurisdictions in
which the failure to so qualify would not have a material adverse effect on the
financial condition, results of operations, business or prospects of the
Company.
(iv) The authorized, issued and outstanding capital
stock of the Company as of June 30, 1997 is as set forth under the caption
"Capitalization" in each Pre-Effective Prospectus, the Effective Prospectus and
Final Prospectus and there have been no changes in the authorized and
outstanding capital stock of the Company since such date. The Common Stock of
the Company conforms to the description thereof contained in each Pre-Effective
Prospectus, the Effective Prospectus and the Final Prospectus. The outstanding
shares of Common Stock have been and are, and the Shares to be issued and sold
by the Company, upon issuance and delivery and payment therefor in the manner
herein described will be, duly authorized, validly issued, fully paid and
nonassessable and were not issued in violation of any statutory or other
preemptive rights or other rights to subscribe for or purchase any securities.
Except as described in each Pre-Effective Prospectus, the Effective Prospectus
and the Final Prospectus, there are no preemptive or other rights to subscribe
for or to purchase, or any restriction upon the voting or transfer of, any
shares of Common Stock pursuant to the Company's Articles of Incorporation,
By-laws other governing documents or any agreement, contract or other
instrument to which the Company is a party or by which it is bound; 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 waived or satisfied, for or relating to the registration of any
shares of Common Stock; and such waivers were duly and validly given.
(v) The authorized, issued and outstanding capital
stock of the La Victoria as of June 30, 1997 is as set forth within the
Financial Statements of La Victoria in each Pre-Effective Prospectus, the
Effective Prospectus and Final Prospectus and there have been no changes in the
authorized and outstanding capital stock of La Victoria since such date. The
outstanding shares of capital stock of La Victoria are duly authorized, validly
issued, fully paid and nonassessable and were not issued in violation of any
statutory or other preemptive rights or other rights to subscribe for or
purchase any securities. Except as described in each Pre-Effective Prospectus,
the Effective Prospectus and the Final Prospectus, there are no preemptive or
other rights to subscribe for or to purchase, or any restriction upon the
voting or transfer of, any shares of capital stock of La Victoria pursuant to
La Victoria's Articles of Incorporation, By-laws, other governing documents or
any agreement, contract or other instrument to which La Victoria is a party or
by which it is bound.
(vi) All of the authorized, issued and outstanding
membership interests of LV Foods are beneficially owned by the Members and
there have been no changes in the authorized and outstanding membership
interests of LV Foods since its formation. The outstanding
19
20
membership interests of LV Foods are duly authorized, validly issued, fully
paid and nonassessable and were not issued in violation of any statutory or
other preemptive rights or other rights to subscribe for or purchase any
securities. Except as described in each Pre-Effective Prospectus, the Effective
Prospectus and the Final Prospectus, there are no preemptive or other rights to
subscribe for or to purchase, or any restriction upon the voting or transfer
of, any of the membership interests pursuant to LV Foods' [ARTICLES OF
INCORPORATION, BY-LAWS], other governing documents or any agreement, contract
or other instrument to which LV Foods is a party or by which it is bound.
(vii) None of the Company, La Victoria or LV Foods
is, nor with the giving of notice or lapse of time or both will any of them be,
in violation of or in default under, nor will the execution or delivery of this
Agreement or the Contribution Agreement or consummation of the transactions
contemplated hereby or thereby result in a violation of, or constitute a
default under, the Articles of Incorporation, By-laws or other governing
documents of the Company, La Victoria or LV Foods or any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, deed of
trust, loan or credit agreement, bond, debenture, note, lease or other
agreement or instrument to which the Company, La Victoria or LV Foods is a
party or by which any of them is bound, or to which any of their properties is
subject, nor will the performance by the Company, La Victoria or LV Foods of
their obligations under this Agreement or the Contribution Agreement violate
any existing law, rule, administrative regulation, judgment, order, writ or
decree of any court or any governmental agency or body having jurisdiction over
the Company, La Victoria or LV Foods or their properties, or result in the
creation or imposition of any lien, charge, claim or encumbrance upon any
property or asset of the Company, La Victoria or LV Foods, where such
violation, default or lien would have a material adverse effect on the
financial condition, results of operations, business or prospects of the
Company, La Victoria and LV Foods, taken as a whole. Except for permits and
similar authorizations or notifications required under the Securities Act, the
Securities or "Blue Sky" laws of certain jurisdictions and from the NASD and
for such permits, authorizations and notifications which have been obtained, no
consent, approval, authorization or order of any court, governmental agency or
body or financial institution is required in connection with the consummation
of the transactions contemplated by this Agreement and the Contribution
Agreement, including, without limitation, the valid sale and delivery of the
Shares.
(viii) The redemption by the Company of the shares
of its Common Stock held by Shansby and TSGI has been duly and validly
authorized by the Company and, to the knowledge of such counsel, Shansby and
TSGI, and the consummation of the redemption will not result in a violation of,
or constitute a default under, the Articles of Incorporation, By-laws or other
governing documents of the Company and, to the knowledge of such counsel,
Shansby or TSGI, or any contract, indenture, mortgage, deed of trust, loan or
credit agreement, bond debenture, note, lease or other agreement or instrument
to which the Company and, to the knowledge of such counsel, Shansby or TSGI, is
a party or by which any of them is bound, or to which any of their properties
is subject, nor will the redemption violate any law, rule, administrative
regulation, judgment, order, writ or decree of any court, or any governmental
agency or body having jurisdiction over the Company and, to the knowledge of
such counsel, Shansby or TSGI, or any of their property, or result in the
creation or imposition of any lien, charge, claim or encumbrance upon any
property or asset of the Company and, to the knowledge of such counsel, Shansby
or TSGI.
20
21
(vix) The descriptions in the Registration Statement,
each Pre-Effective Prospectus, the Effective Prospectus and the Final
Prospectus of the statutes, regulations, legal or governmental proceedings,
contracts and other documents therein described, to the extent that such
descriptions constitute summaries of matters of law, documents or proceedings,
or legal conclusions, have been reviewed by such counsel and fairly present the
information disclosed therein in all material respects.
(x) The Registration Statement and all post-effective
amendments thereto have become effective under the Securities Act and no stop
order or other order suspending the effectiveness of the Registration Statement
or preventing or suspending the use of any Pre-Effective Prospectus, the
Effective Prospectus, the Final Prospectus or any amendment or supplement
thereto has been issued and no proceedings for that purpose have been
instituted or are pending before or contemplated by the Commission or any "Blue
Sky" or securities authority of any jurisdiction and all filings required by
Rule 424 and Rule 430A of the Rules and Regulations have been (or will be) made
within the required time period; the Registration Statement, each Pre-Effective
Prospectus, the Effective Prospectus and the Final Prospectus and any amendment
or supplement thereto, as of their respective effective dates, comply in all
material respects with the requirements of the Securities Act and the Rules and
Regulations (except that counsel need express no opinion on the financial
statements or other financial data) and all amendments to the Registration
Statement required to be filed have been so filed.
(xi) To such counsel's knowledge and other than as
set forth in the Effective Prospectus and the Final Prospectus, there are no
legal or governmental proceedings pending to which the Company, LV Foods or La
Victoria is a party or of which any property of the Company, LV Foods or La
Victoria is the subject which, if determined adversely to the Company, LV Foods
or La Victoria, would individually or in the aggregate have a material adverse
effect on the financial condition, results of operation, business or prospects
of the Company (assuming the consummation of the transactions contemplated by
the Contribution Agreement); to such counsel's knowledge, no such proceedings
are threatened by governmental authorities or threatened by others; and, to
such counsel's knowledge, after reasonable investigation, no pending or
threatened litigation or governmental action, suit or proceeding, statute or
regulation required to be described in each Pre-Effective Prospectus, the
Effective Prospectus and the Final Prospectus is not so described.
(xii) To the best of such counsel's knowledge, all
descriptions in each Pre-Effective Prospectus, the Effective Prospectus and
the Final Prospectus of contracts and other documents and trademarks, and the
statements under the captions "Dividend Policy," "The Shansby Group,"
"Management," "Certain Transactions," "Description of Capital Stock" and
"Shares Eligible for Future Sale" are accurate in all material respects and
fairly present the information set forth therein; and such counsel does not
know, after reasonable investigation, of any contracts or documents of a
character required to be summarized or described in each Pre-Effective, the
Effective Prospectus and Final Prospectus, or required to be filed as exhibits
to the Registration Statement, which are not so summarized, described or filed.
21
22
(xiii) Except as disclosed or specifically described
in the Effective Prospectus and the Final Prospectus, there are no outstanding
options, warrants or other rights of the Company, La Victoria or LV Foods
calling for the issuance of, and no commitments or obligations to issue, any
shares of capital stock or membership interests of the Company, La Victoria or
LV Foods or any security convertible into or exchangeable for capital stock or
membership interests of the Company, La Victoria or LV Foods
(xiv) The Company has the corporate power to enter
into and perform its obligations under this Agreement and the Contribution
Agreement and this Agreement and the Contribution Agreement have been duly
authorized, executed and delivered by the Company and constitute the valid and
binding agreements of the Company and are enforceable against the Company in
accordance with their terms, except insofar as indemnification and contribution
provisions may be limited by Federal or state securities laws or equitable
principles, and except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting creditors' rights
generally.
(xv) The Members and Tanklage have the power,
corporate and other, to enter into and perform their obligations under the
Contribution Agreement and the Contribution Agreement has been duly authorized,
executed and delivered by Members and Tanklage and constitute the valid and
binding agreements of the Members and Tanklage and are enforceable against the
Members and Tanklage in accordance with their terms, except insofar as
indemnification and contribution provisions may be limited by Federal or state
securities laws or equitable principles, and except as enforceability may be
limited by bankruptcy, insolvency, reorganization or other similar laws
affecting creditors' rights generally.
(xvi) Upon the consummation of the transactions
contemplated in the Contribution Agreement, [WHICH SHALL OCCUR
CONTEMPORANEOUSLY WITH AND IN ANY EVENT NO LATER THAN IMMEDIATELY FOLLOWING THE
CLOSING OF THE OFFER AND PURCHASE OF THE FIRM SHARES], the Company will own
directly or indirectly, all of the outstanding capital stock of La Victoria
free and clear of all liens, encumbrances, equities or claims except as set
forth in each Pre-Effective Prospectus, the Effective Prospectus and Final
Prospectus. The Company does not own or control any other corporation,
association or entity.
(xvii) The Company, La Victoria and LV Foods have
obtained all licenses, permits and other governmental authorizations necessary
to the conduct of their business as now being conducted; such licenses, permits
and other governmental authorizations are in full force and effect and the
Company, La Victoria and LV Foods are in all respects complying therewith; and
the Company, La Victoria and LV Foods, their activities and products, are
otherwise in compliance with all laws, rules, regulations and statutes of any
jurisdiction to which it they are subject.
(xviii) The offer and sale of all securities of the
Company made within the last three years as set forth in Part II, Item 26 of
the Registration Statement were exempt from the registration requirements of
the Securities Act and from the registration or qualification requirements of
all relevant state securities laws.
22
23
(xix) The Company is not an "investment company" or
a company controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
In rendering such opinion, such counsel may rely (A)
as to matters involving the application of laws other than the laws of the
United States and jurisdictions in which they are admitted, to the extent such
counsel deems proper and to the extent specified in such opinion, if at all,
upon an opinion or opinions (in form and substance reasonably satisfactory to
Underwriters' Counsel) of other counsel reasonably acceptable to Underwriters'
Counsel, familiar with the applicable laws, provided that copies of any such
opinions shall be delivered to Underwriters' Counsel; and (B) as to matters of
fact, to the extent they deem proper, on certificates of responsible officers
of the Company, La Victoria, LV Foods and the Members and certificates or other
written statements of officers of departments of various jurisdictions having
custody of documents respecting the corporate existence or good standing of the
Company, La Victoria, LV Foods and the Members, provided that copies of any
such statements or certificates shall be delivered to Underwriters' Counsel.
The opinion of such counsel for the Company shall state that the opinion of any
such other counsel is in form satisfactory to such counsel for the Company and,
in their opinion, you and they are entitled in relying thereon.
Such counsel shall also state that such counsel has
participated in conferences with directors, officers and other representatives
of the Company, representatives of the independent public accountants of the
Company and your representatives at which the contents of the Registration
Statement, the Pre-Effective Prospectus, the Effective Prospectus and the Final
Prospectus and related matters were discussed, have participated in the
preparation of the Registration Statement, the Pre-Effective Prospectus, the
Effective Prospectus and the Final Prospectus, have reviewed all documents
referred to in the Pre-Effective Prospectus, the Effective Prospectus and the
Final Prospectus or annexed as an exhibit to the Registration Statement, as
well as certain other corporate documents furnished to such counsel by the
Company and, on the basis of the foregoing and without independent check or
verification, no facts have come to the attention of such counsel to lead such
counsel to believe that, as of its effective date, the Registration Statement,
or any further amendment thereto made by the Company prior to such Closing Date
(other than the financial statements and related schedules or financial or
statistical data therein, as to which such counsel need express no opinion),
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,
in light of the circumstances in which they were made, not misleading or that,
as of their respective dates, the Effective Prospectus and the Final
Prospectus, or any further amendment or supplement thereto made by the Company
prior to such Closing Date (other than the financial statements and related
schedules or financial statistical data therein, as to which such counsel need
express no opinion), contained an untrue statement of a material fact or
omitted to state a material fact necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading or that, as
of such Closing Date, any of the Registration Statement, Effective Prospectus,
the Final Prospectus, or any further amendment or supplement thereto made by
the Company to such Closing Date (other than the financial statements and
related schedules or financial or statistical data therein, as to which such
counsel need express no opinion), contains an untrue
23
24
statement of a material fact or omits to state a material fact necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading; and although such counsel has not undertaken to determine
independently the accuracy or completeness of the statements contained in the
Registration Statement, the Effective Prospectus or the Final Prospectus and
takes no responsibility therefor, they do not know of any amendment to the
Registration Statement required to be filed or of any contracts or other
documents of a character required to be filed as an exhibit to the Registration
Statement or required to be described in the Registration Statement, the
Effective Prospectus or the Final Prospectus, which are not filed or described
as required.
(e) There shall have been furnished to you on the Closing
Date and on the Option Closing Date, if any, a certificate, dated such Closing
Date and addressed to you, signed by the President and by the Chief Financial
Officer of the Company to the effect that: (i) the representations and
warranties of the Company in this Agreement are true and correct, as if made on
and as of such Closing Date, and the Company has complied with all the
agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to such Closing Date; (ii) no stop order or other order
suspending the effectiveness of the Registration Statement or preventing or
suspending the use of any Pre-Effective Prospectus, the Effective Prospectus or
Final Prospectus or any amendment or supplement thereto has been issued by the
Commission or any "Blue Sky" or securities authority of any jurisdiction, and
no proceedings for that purpose has been initiated or threatened; (iii) all
filings required by Rule 424 and Rule 430A of the Rules and Regulations have
been made; (iv) the signers of said certificate have carefully examined the
Registration Statement and the Effective Prospectus and the Final Prospectus,
and any amendments or supplements thereto, and such documents contain all
statements and information required to be included therein, and do not include
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading; (v) there has been no material adverse change in the general
affairs, business key personnel, earnings, capitalization, financial position
or net worth of the Company since the effective date of the Registration
Statement; and (vi) since the effective date of the Registration Statement,
there has occurred no event required to be set forth in an amendment or
supplement to the Registration Statement or the Effective Prospectus and the
Final Prospectus which has not been so set forth.
(f) Since the effective date of the Registration Statement,
none of the Company, LV Foods or La Victoria shall have sustained any loss or
interference with its business from flood, accident or other calamity (whether
or not covered by insurance) or from any labor dispute or court or governmental
action, order or decree, nor shall the Company, LV Foods or La Victoria have
become a party to or the subject of any litigation, nor shall there have been a
change in the general affairs, business, key personnel, earnings,
capitalization, financial position or net worth of the Company, LV Foods or La
Victoria, whether or not arising in the ordinary course of business, which
loss, litigation or change is so material and adverse to the Company that, in
your judgment, shall render it inadvisable to proceed with the delivery of the
Shares.
(g) On the date of this Agreement and on each Closing Date
you shall have received letters of each of McGladrey & Xxxxxx, LLP, and
Xxxxxxxx, Xxxx & Optiz, L.L.P., dated such date and each Closing Date,
addressed to you as Representatives, containing statements and
24
25
information of the type ordinarily included in accountants' "comfort letters"
to underwriters with respect to the financial statements and certain financial
information contained in the Registration Statement and the Effective
Prospectus and Final Prospectus, in such form and substance satisfactory to
you, including without limitation the statements set forth in Annex I and Annex
II hereto.
(h) At or prior to the Closing Date, you shall have received
the written agreements described in Section 3(p) hereof.
(i) All proceedings taken in connection with the issuance,
sale, transfer and delivery of the Shares shall be satisfactory in form and
substance to you and to Underwriters' Counsel, and you shall have been
furnished such additional documents and certificates as you may reasonably
request.
(j) You shall have been furnished evidence in usual written
or telegraphic form from the appropriate authorities of the several
jurisdictions, or other evidence satisfactory to you, of the qualification
referred to in Section 3(e) above.
(k) Prior to the Closing Date, the Shares shall have been
duly authorized for quotation on the Nasdaq National Market upon official
notice of issuance.
(l) The NASD, upon review of the terms of the public offering
of the Shares, shall not have objected to your participation in such offering.
(m) On or after the date hereof there shall not have occurred
any of the following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange, American Stock Exchange or
Nasdaq; (ii) a general moratorium on commercial banking activities declared by
either federal or California authorities; or (iii) a material adverse change in
the financial markets in the United States or internationally or any outbreak
or escalation of hostilities involving the United States or the declaration by
the United States of a national emergency or war, if the effect of any such
outbreak or escalation of hostilities specified in this Clause (iii) in your
judgment makes it impracticable or inadvisable to proceed with the delivery of
the Shares.
All such opinions, certificates, letters and documents shall
be in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to you and the Underwriters' Counsel. Any
certificate or document signed by any officer of the Company and delivered to
you or the Underwriters' Counsel shall be deemed a representation and warranty
by such officer individually and by the Company hereunder to the Underwriters
as to the statements made therein. The Company shall furnish you with such
number of conformed copies of such opinions, certificates, letters and other
documents as you shall reasonably request. If any of the conditions specified
in this Section 4 shall not have been fulfilled when and as required by this
Agreement, this Agreement and all obligations of the Underwriters hereunder may
be cancelled at, or at any time prior to, each Closing Date, by you. Any such
cancellation shall be without liability of the Underwriters to the Company.
Notice of such cancellation shall be given to the Company in writing, or by
telegraph or telephone and confirmed in writing.
25
26
5. Indemnification and Contribution.
(a) Subject to the conditions set forth below, the Company
agrees to indemnify and hold harmless the Underwriters, any member of the
selling group, and each of such entities' officers, directors, partners,
employees, agents, and counsel, and each person, if any, who controls any one
of the Underwriters or selling group members within the meaning of Section 15
of the Securities Act or Section 20(a) of the Exchange Act (each an
"Indemnified Underwriter") against any and all loss, claim, damage, expense or
liability, joint or several, to which such Indemnified Underwriter may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage, expense or liability (or action in respect thereof) arises out of or is
based upon (i) the inaccuracy of any of the representations or warranties made
by the Company in Section 1 thereof or otherwise, or (ii) any untrue statement
or alleged untrue statement of a material fact contained (A) in the
Registration Statement, any Pre-Effective Prospectus, the Effective Prospectus
or the Final Prospectus or any amendment or supplement thereto, or (B) in any
application or other document or communication (in this Section 5, collectively
called an "Application") executed by or on behalf of the Company or based upon
written information furnished by or on behalf of the Company in any
jurisdiction in order to qualify the Shares under the "Blue Sky" or securities
laws thereof or filed with the Commission or any securities exchange or
national market system, such as the Nasdaq National Market, or (iii) the
omission or alleged omission to state, in the Registration Statement, any
Pre-Effective Prospectus, the Effective Prospectus or Final Prospectus or any
amendment or supplement thereto or in any Application, a material fact required
to be stated therein or necessary to make the statements therein not
misleading, or (iv) any breach of any representation, warranty, covenant or
agreement of the Company contained in this Agreement; and shall pay each
Indemnified Underwriter for any and all costs and expenses, including
reasonable attorneys' fees, as and when incurred by such Indemnified
Underwriter in connection with investigating or defending against or appearing
as a third-party witness in connection with any litigation, commenced or
threatened, and any and all amounts paid in settlement of any claim or
litigation of any such loss, claim, damage, liability or action whatsoever,
notwithstanding the possibility that payments for such expenses might later
held to be improper; except that the Company shall not be liable in any such
case to the extent, but only 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 reliance upon and in
conformity with written information furnished to the Company through you by or
on behalf of any Underwriter specifically for use in the preparation of the
Registration Statement, any Pre-Effective Prospectus, the Effective Prospectus
or Final Prospectus or any amendment or supplement thereto, or any Application,
nor shall the Company be liable 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 in any Pre-Effective
Prospectus which is corrected in the Final Prospectus if a sufficient number of
copies of such Final Prospectus were provided to the party seeking
indemnification and such party failed to send or deliver a copy and such Final
Prospectus to the person asserting any such loss, claim, damage or liability at
or prior to the written confirmation of the sale of such shares to such person,
if such delivery was required by law. In addition to its other obligations
under this Section 5(a), the Company agrees that, as an interim measure during
the pendency of any claim, action, investigation, inquiry or other proceeding
arising
26
27
out of or based upon any statement or omission, or any alleged statement or
omission, or any inaccuracy in the representations and warranties of the
Company herein or the failure to perform its obligations hereunder, it will pay
each Indemnified Underwriter on a monthly basis for all costs and expenses,
including reasonable attorneys' fees, incurred in connection with investigating
or defending any such claim, action, investigation, inquiry or other
proceeding, notwithstanding the absence of a judicial determination as to the
propriety and enforceability of the Company's obligation to indemnify hereunder
or to pay each Indemnified Underwriter for such expenses and the possibility
that such payments might later be held to have been improper by a court of
competent jurisdiction. To the extent that any such interim payment is so held
to have been improper, each Indemnified Underwriter shall promptly return it to
the Company, together with interest compounded daily, determined on the basis
of the prime rate (or other commercial lending rate for borrowers of the
highest credit standing) announced from time to time by Bank of America NT&SA,
San Francisco, California (the "Prime Rate"). Any such interim payment which is
not made to an Indemnified Underwriter within 30 days of a request for payment,
shall bear interest at the Prime Rate from the date of such request. The
foregoing agreement to indemnify shall be in addition to any liability which
the Company may otherwise have, including liabilities arising under this
Agreement.
(b) Each Underwriter severally, but not jointly, shall
indemnify and hold harmless the Company, each director of the Company, each
officer of the Company who has signed the Registration Statement and any person
who controls the Company within the meaning of the Securities Act against any
loss, claim, damage or liability to which the Company may become subject, under
the Securities Act or otherwise, insofar as such loss, claim, damage or
liability (or action in respect thereof) arises out of or is based upon (i) any
untrue statement or alleged untrue statement of a material fact contained (A)
in the Registration Statement, any Pre-Effective Prospectus, the Effective
Prospectus or Final Prospectus or any amendment or supplement thereto, or (B)
in any Application, or (ii) the omission or alleged omission to state in the
Registration Statement, any Pre-Effective Prospectus, the Effective Prospectus
or Final Prospectus or any amendment or supplement thereto or in any
Application a material fact required to be stated therein or necessary to make
the statements therein not misleading; except that such indemnification shall
be available in each such 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 through you by or on behalf of such Underwriter specifically for
use in the preparation thereof; and shall pay the Company for any and all costs
and expenses, including reasonable attorneys' fees, as and when incurred by it
in connection with investigating or against or appearing as a third-party
witness in connection with any such loss, claim, damage, liability or action.
This indemnity agreement shall be in addition to any liability which any
Underwriter may otherwise have. The Company acknowledges that the statements
set forth in the last paragraph of the cover page (insofar as such information
relates to the Underwriters), the paragraph on page 2 with respect to
stabilization and under the heading "Underwriting" in any Pre-Effective
Prospectus, Effective Prospectus and/or the Final Prospectus constitute the
only information furnished in by or on behalf of the several Underwriters, for
inclusion in any such Prospectus, and you, as the Underwriters, confirm that
such statements are correct.
27
28
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) of notice of any claim or the commencement of any action,
the indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify the indemnifying
party in writing of the claim or the commencement of that action; the failure
to notify the indemnifying party shall not relieve it from any liability which
it may have to an indemnified party. If any such claim or action shall be
brought against an indemnified party, and it shall notify the indemnifying
party thereof, the indemnifying party shall be entitled to participate therein
and, to the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel reasonably
satisfactory the indemnified party. After notice from the indemnifying party to
the indemnified party of its election to assume the defense of such claim or
action, the indemnifying party shall not be liable to the indemnified party
under such subsection for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense thereof other than
reasonable costs of investigation; except that you shall have the right to
employ counsel to represent you and other Indemnified Underwriters who may be
subject to liability arising out of any claim in respect of which indemnity may
be sought by the Indemnified Underwriters against the Company under such
subsection if, in your reasonable judgment, it is advisable for you and those
Indemnified Underwriters to be represented by separate counsel, and in that
event the fees and expenses of such separate counsel shall be paid by the
Company. The Company agrees promptly to notify the Underwriters and the
Representatives of the commencement of any litigation or proceedings against
the Company, respectively, or against any of their officers or directors in
connection with the sale of the Shares, the Registration Statement, any
Pre-Effective Prospectus, the Effective Prospectus or the Final Prospectus or
any amendment or supplement thereto, or any Application. To the extent any
provision of this Section 5 entitles the indemnified party to reimbursement of
fees and expenses, such obligations may be billed by the indemnified party
monthly and shall be due and payable within ten (10) days of the date thereof.
(d) If the indemnification provided for in this Section 5 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand, and the Underwriters on the other, from the
offering of the Shares or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company on the one hand, and the Underwriters on the
other, in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company 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 of the Shares (before deducting
expenses) received by the Company 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 Final Prospectus. 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
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or
28
29
prevent such untrue statement or omission. The Company and the Underwriters
agree that it would not be just and equitable if contributions pursuant to this
subsection (d) were to be 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 into account the equitable
considerations referred to in the first sentence of this subsection (d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of this
subsection (d) shall be deemed to include any and all costs and expenses,
including reasonable attorneys' fees, incurred by such indemnified party in
connection with investigating or defending against any action or claim which is
the subject of this subsection (d). Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares underwritten
by it and distributed to the public were offered to the public exceeds the
amount of any damages that such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations in this subsection (d) to contribute are several in
proportion to their respective underwriting obligations and not joint. Each
party entitled to contribution agrees that upon the service of a summons or
other initial legal process upon it in any action instituted against it in
respect of which contribution may be sought, it shall promptly give written
notice of such service to the party or parties from whom contribution may be
sought, but the omission so to notify such party or parties of any such service
shall not relieve the party from whom contribution may be sought from any
obligation it may have hereunder or otherwise. For purposes of this Section
5(d), each person, if any, who controls an Underwriter within the meaning of
the Securities Act shall have the same rights to contribution as such
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 the Securities Act, shall have the same rights to
contribution as the company. This Section 5(d) is intended to supersede any
right to contribution under the Securities Act, the Exchange Act, or otherwise.
(e) It is agreed that any controversy arising out of the
operation of the interim payment arrangements set forth in Section 5(a) hereof,
including the amounts of any requested payments and method of determining such
amounts, shall be settled by arbitration conducted under the provisions of the
Constitution and Rules of the Board of Governors of the New York Stock
Exchange, Inc. or pursuant to the Code of Arbitration Procedure of the National
Association of Securities Dealers, Inc. Any such arbitration shall be commenced
by service of a written demand for arbitration or written notice of intention
to arbitrate, therein electing the arbitration tribunal. In the event the party
demanding arbitration does not make such designation of an arbitration tribunal
in such demand or notice, then the party responding to said demand or notice is
authorized to do so. Such an arbitration shall be limited to the operation of
the interim payment provisions contained in Section 5(a) hereof and shall not
resolve the ultimate propriety or enforceability of the obligation to indemnify
or pay expenses which is created by the provisions of such Section 5(a) hereof.
6. Substitution of Underwriters. If any Underwriter defaults in
its obligation to purchase the number of Shares which it has agreed to purchase
under this Agreement, the non-defaulting
29
30
Underwriters shall be obligated to purchase (in the respective proportions
which the number of Shares set forth opposite the name of each non-defaulting
Underwriter in Schedule I hereto bears to the total number of Shares set forth
opposite the names of all the non-defaulting Underwriters in Schedule I hereto)
the Shares which the defaulting Underwriter agreed but failed to purchase;
except that the non-defaulting Underwriters shall not be obligated to purchase
any of the Shares if the total number of Shares which the defaulting
Underwriter or Underwriters agreed but failed to purchase exceeds 9.09% of the
total number of Shares, and any non-defaulting Underwriter shall not be
obligated to purchase more than 110% of the number of Shares set forth opposite
its name in Schedule I hereto plus the total number of Option Shares
purchasable by it pursuant to the terms of Section 2(b); provided, further,
that the non-defaulting Underwriters shall not be obligated to purchase any
Shares if such additional purchase would cause any non-defaulting Underwriter
to be in violation of the net capital rule of the Commission or other
applicable law. If the foregoing maximums are exceeded, (i) the non-defaulting
Underwriters, and any other underwriters satisfactory to you who so agree,
shall have the right, but shall not be obligated, to purchase (in such
proportions as may be agreed upon among them) all the Shares which the
defaulting Underwriter agreed but failed to purchase. If the non-defaulting
Underwriters or the other underwriters satisfactory to you do not elect to
purchase the Shares which the defaulting Underwriter or Underwriters agreed but
failed to purchase, this Agreement shall terminate without liability on the
part of any non-defaulting Underwriter or the Company except for the payment of
expenses to be borne by the Company and the Underwriters as provided in Section
3(m) and the indemnity and contribution agreements of the Company and the
Underwriters contained in Section 5 hereof.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have for damages caused by its default. If the other
underwriters satisfactory to you are obligated or agree to purchase the Shares
of a defaulting Underwriter, either you or the Company may postpone the Closing
Date for up to seven full Business Days in order to effect any changes that may
be necessary in the Registration Statement, the Effective Prospectus or the
Final Prospectus or in any other document or agreement, and to file promptly
any amendments or any supplements to the Registration Statement or the
Effective Prospectus or the Final Prospectus which in your opinion may thereby
be made necessary. As used herein, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 6.
7. Effective Date and Termination.
(a) This Agreement shall become effective at whichever of the
following times first occur: (i) at 8:00 A.M., Los Angeles time, on the first
full Business Day following the upon which the Registration Statement becomes
effective, or (ii) the time after the Registration Statement becomes effective
as you, in your discretion, shall first release the Shares for sale to the
public. For purposes of this Section 7, the Shares shall be deemed to have been
released for sale to the public upon release by you for publication of a
newspaper advertisement relating to the Shares or upon release by you of
communications offering the Shares for sale to securities dealers, whichever
shall first occur. Until this Agreement is effective, it may be terminated by
the Company by giving notice as hereinafter provided to you or by you by giving
notice as hereinafter provided to the Company, except that the provisions of
Section 3(m) and Section 5 shall at all times be effective.
30
31
(b) Until the Closing Date, this Agreement may be terminated
by you by giving notice as hereinafter provided to the Company, if (i) the
Company shall have failed, refused or been unable, at or prior to the Closing
Date, to perform any agreement on its part to be performed hereunder; (ii) any
other condition of the obligations of the Underwriters hereunder is not
fulfilled; (iii) if there has been since the date as of which the information
is given in the Final Prospectus, any material adverse change, or any
development involving a prospective material adverse change, in the financial
condition, results of operation, business or prospects of the Company or La
Victoria; (iv) trading in the Shares has been suspended by the Commission or
trading in securities generally on either the New York Stock Exchange, American
Stock Exchange or Nasdaq shall have been suspended or a material limitation on
trading shall have been established; (v) a general moratorium on commercial
banking activities shall have been declared by Federal or California
authorities; or (vi) if there has occurred any material adverse change in the
financial markets in the United States or internationally or any outbreak of
hostilities or escalation of existing hostilities involving the United States
or the declaration by the United States of a national emergency or war or other
calamity or crisis that, in your reasonable judgment, is material and adverse.
Any termination of this Agreement pursuant to this Section 7 shall be without
liability on the part of the Company or any Underwriter, except as otherwise
provided in Sections 3(m) and 5 hereof.
Any notice referred to above may be given at the address
specified in Section 9 hereof in writing or by telegraph or telephone, and if
by telegraph or telephone, shall be immediately confirmed in writing.
8. Survival of Indemnities, Contribution, Warranties and
Representations. The indemnity and contribution agreements contained in Section
5 and the representations, warranties and agreements of the Company in Sections
1 and 3 shall survive the delivery of the Shares to the Underwriters hereunder
and shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement or any investigation made by or on behalf of any
indemnified party.
9. Notices. Except as otherwise provided in this Agreement, (a)
whenever notice is required by the provisions of this Agreement to be given to
the Company such notice shall be in writing (and may be telecopied if confirmed
by letter) addressed to the Company at 0000 Xxxxxx X, Xxxxx Xxxxxxx, Xxxxx
00000, telecopier number (000) 000-0000, Attention: President; and (b) whenever
notice is required by the provisions of this Agreement to be given to the
several Underwriters, such notice shall be in writing addressed to the
Underwriters in care of Cruttenden Xxxx Incorporated, 00000 Xxx Xxxxxx, Xxxxx
000, Xxxxxx, Xxxxxxxxxx 00000, telecopier number (000) 000-0000, Attention:
President.
10. Information Furnished by Underwriters. The statements set forth
the in the last paragraph on the cover page, the paragraph on page 2 with
respect to stabilization, and under the caption "Underwriting" in any
Pre-Effective Prospectus and in the Effective Prospectus and the Final
Prospectus, constitute the written information furnished by or on behalf of any
Underwriter referred to in paragraph (b) and (c) of Section 1 hereof and in
paragraph (b) of Section 5 hereof.
31
32
11. Parties. This Agreement is made solely for the benefit of the
several Underwriters, the Company, any officer, director or controlling person
referred to in Section 5 hereof. The term "successors and assigns," as used in
this Agreement, shall not include any purchaser of any of the Shares from any
of the Underwriters merely by reason of such purchase.
12. Definition of "Business Day." The purposes of this Agreement,
"Business Day" means any other than Saturday, Sunday, a federal holiday or a
day on which the New York Stock Exchange is closed.
13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA,
WITHOUT GIVING EFFECT TO THE CHOICE OF LAW OR CONFLICT OF LAWS
PRINCIPLES THEREOF.
14. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
[THE NEXT PAGE IS THE SIGNATURE PAGE.]
32
33
If the foregoing is in accordance with your understanding, please sign
and return to us seven counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement among each of the Underwriters and
the Company. It is understood that your acceptance of this letter on behalf of
each of the Underwriters is pursuant to the authority set forth in a form of
Agreement among Underwriters, the form of which shall be submitted to the
Company for examination, upon request, but without warranty on your part as to
the authority of the signers thereof.
Very truly yours,
AUTHENTIC SPECIALTY FOODS, INC.
By:
-----------------------------------
Name:
Title: Chief Financial Officer
Accepted as of the date hereof:
CRUTTENDEN XXXX INCORPORATED
SUTRO & CO. INCORPORATED
WEDBUSH XXXXXX SECURITIES INC.
By:
--------------------------------------
(Cruttenden Xxxx Incorporated)
On behalf of each of the Underwriters
34
SCHEDULE I
NUMBER OF
OPTIONAL
TOTAL SHARES TO BE
NUMBER OF PURCHASED IF
FIRM MAXIMUM
SHARES TO BE OPTION
UNDERWRITER PURCHASED EXERCISED
Cruttenden Xxxx Incorporated.....................................
Sutro & Co. Incorporated
Wedbush Xxxxxx Securities Inc.
Total 4,100,000 615,000
========= =======
I-1
35
ANNEX I
Pursuant to Section 4(g) of the Underwriting Agreement, McGladrey &
Xxxxxx, LLP shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and La Victoria within the meaning of the
Securities Act and the applicable published Rules and Regulations;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules of the Company and
La Victoria audited (and, if applicable, prospective financial
statements and/or pro forma financial information examined) by them
and included in the Prospectus or the Registration Statement comply as
to form in all material respects with the applicable accounting
requirements of the Securities Act and the related published Rules and
Regulations; and, if applicable, they have made a review in accordance
with standards established by the American Institute of Certified
Public Accountants of the unaudited consolidated interim financial
statements, selected financial data, pro forma financial information,
prospective financial statements and/or condensed financial statements
derived from audited financial statements of the Company and La
Victoria for the periods specified in such letter, as indicated in
their reports thereon, copies of which have been furnished to the
representatives of the Underwriters (the "Representatives");
(iii) On the basis of limited procedures, not constituting an
audit in accordance with generally accepted auditing standards,
consisting of, in the case of the Company, a reading of the unaudited
financial statements and other information referred to below, a
reading of the latest available interim financial statements of the
Company and La Victoria, inspection of the minute books of the Company
and La Victoria since the date of the latest audited financial
statements included in the Prospectus, inquiries of officials of the
Company and La Victoria responsible for financial and accounting
matters and such other inquiries and procedures as may be specified in
such letter, nothing came to their attention that caused them to
believe that:
(A) any unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of
cash flows as of dates or for periods beginning after June
30, 1997 included in the Prospectus do not comply as to form
in all material respects with the applicable accounting
requirements of the Securities Act and the related published
Rules and Regulations, or are not in conformity with
generally accepted accounting principles applied on a basis
substantially consistent basis for the audited consolidated
statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the
Prospectus;
II-1
36
(B) any other unaudited income statement data and
balance sheet items for the periods or as of the dates
referred to in Clause (A) above included in the Prospectus do
not agree with the corresponding items in the unaudited
consolidated financial statements from which such data and
items were derived, and any such unaudited data and items
were not determined on a basis substantially consistent with
the basis for the corresponding amounts in the audited
consolidated financial statements included in the Prospectus;
(C) the unaudited financial statements which were
not included in the Prospectus but from which were derived
any unaudited condensed financial statements as of dates or
for periods beginning after June 30, 1997 and any unaudited
income statement data and balance sheet items included in the
Prospectus and referred to in Clause (B) were not determined
on a basis substantially consistent with the basis for the
audited consolidated financial statements included in the
Prospectus;
(D) any unaudited pro forma consolidated condensed
financial statements included in the Prospectus do not comply
as to form in all material respects with the applicable
accounting requirements of the Securities Act and the
published Rules and Regulations or the pro forma adjustments
have not been properly applied to the historical amounts in
the compilation of those statements;
(E) as of a specified date not more than five days
prior to the date of such letter, there have been any changes
in the consolidated capital stock (other than issuances of
capital stock upon exercise of options and stock appreciation
rights, upon earn-outs of performance shares and upon
conversions of convertible securities, in each case which
were outstanding on the date of the latest financial
statements included in the Prospectus) or any increase in the
consolidated long-term debt of the Company or La Victoria, or
any decreases in consolidated net current assets or net
assets or other items specified by the Representatives or any
increases in any items specified by the Representatives, in
each case as compared with amounts shown in the latest
balance sheet included in the Prospectus; except in each case
for changes, increases or decreases which the Prospectus
discloses have occurred or may occur or which are described
in such letter; and
(F) for the period from the date of the latest
financial statements included in the Prospectus to the
specified date referred to in Clause (E) there were any
decreases in consolidated net revenues or operating profit or
the total or per share amounts of consolidated net income or
other items specified by the Representatives, or any
increases in any items specified by the Representatives, in
each case as compared with the comparable period of the
preceding year and with any other period of corresponding
length specified by the Representatives, except in each case
for decreases or increases which the Prospectus discloses
have occurred or may occur or which are described in such
letter; and
II-2
37
(iv) In addition to the audit referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of
minute books, inquiries and other procedures referred to in paragraph
(iii) above, they have carried out certain specified procedures, not
constituting an audit in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Representatives, which are derived from
the general accounting records of the Company and La Victoria, which
appear in the Prospectus, or in Part II of, or in exhibits and
schedules to, the Registration Statement specified by the
Representatives, and have compared certain of such amounts,
percentages and financial information with the accounting records of
the Company and La Victoria and have found them to be in agreement.
II-3
38
ANNEX II
Pursuant to Section 4(g) of the Underwriting Agreement, Xxxxxxxx, Xxxx
& Xxxxx, L.L.P., shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the
Securities Act and the applicable published Rules and Regulations; and
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules of the Company
audited (and, if applicable, prospective financial statements and/or
pro forma financial information examined) by them and included in the
Prospectus or the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of the
Securities Act and the related published Rules and Regulations; and,
if applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited consolidated interim financial statements, selected
financial data, pro forma financial information, prospective financial
statements and/or condensed financial statements derived from audited
financial statements of the Company for the periods specified in such
letter, as indicated in their reports thereon, copies of which have
been furnished to the representatives of the Underwriters (the
"Representatives").
