Exhibit 1.1
STB Draft: October 3, 1997
5,000,000 SHARES
FRIENDLY ICE CREAM CORPORATION
COMMON STOCK
UNDERWRITING AGREEMENT
DATED OCTOBER __, 1997
TABLE OF CONTENTS
PAGE
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Introductory............................................................... 1
Section 1. Representations and Warranties of the Company................ 2
Section 2. Purchase, Sale and Delivery of the Common Shares............. 12
Section 3. Additional Covenants of the Company.......................... 15
Section 4. Payment of Expenses.......................................... 17
Section 5. Conditions of the Obligations of the Underwriters............ 18
Section 6. Reimbursement of Underwriters' Expenses...................... 22
Section 7. Effectiveness of this Agreement.............................. 22
Section 8. Indemnification.............................................. 23
Section 9. Contribution................................................. 27
Section 10. Default of One or More of the Several Underwriters........... 29
Section 11. Termination of this Agreement................................ 29
Section 12. Representations and Indemnities to Survive Delivery.......... 30
Section 13. Notices...................................................... 30
Section 14. Successors................................................... 31
Section 15. Partial Unenforceability..................................... 31
Section 16. Governing Law Provisions..................................... 32
Section 17. Failure of One or More of the Selling Stockholders to
Sell and Deliver Common Shares.......................... 32
Section 18. General Provisions........................................... 32
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Schedule A
Exhibit A-1
Exhibit A-2
Exhibit B
Exhibit C-1
Exhibit C-2
Exhibit D
Exhibit E
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UNDERWRITING AGREEMENT
October __, 1997
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ SECURITIES, INC.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
As Representative of the several Underwriters
Ladies and Gentlemen:
INTRODUCTORY. Friendly Ice Cream Corporation, a Massachusetts
corporation (the "Company), proposes to issue and sell to the several
underwriters named in SCHEDULE A (the "Underwriters") an aggregate of 5,000,000
shares (the "Firm Common Shares") of its Common Stock, par value $.01 per share
(the "Common Stock"). In addition, (i) the Company has granted to the
Underwriters an option to purchase up to an additional [_____] shares of Common
Stock and (ii) the stockholders of the Company named in Schedule B
(collectively, the "Selling Stockholders") have granted to the Underwriters an
option to purchase up to an additional [_______] shares of Common Stock, as
provided in Section 2 (collectively, the "Optional Common Shares"). The Firm
Common Shares and, if and to the extent such option is exercised, the Optional
Common Shares are collectively called the "Common Shares". ▇▇▇▇▇▇▇▇▇▇
Securities has agreed to act as representative of the several Underwriters (in
such capacity, the "Representative") in connection with the offering and sale of
the Common Shares. Concurrently with the issuance of the Common Shares, the
Company is offering to the public $175 million aggregate principal amount of its
Senior Notes due 2007 (the "Senior Notes") (the "Senior Note Offering") and will
enter into a new $175 million senior secured credit facility (the "New Credit
Facility") and an Indenture to be dated the issue date of the Senior Notes among
the Company, its subsidiary who will guarantee the Senior Notes and The Bank of
New York, as trustee (the "Indenture").
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (File
No. 333-34633), which contains a form of prospectus to be used in connection
with the public offering and sale of the Common Shares. Such registration
statement, as amended, including the financial statements, exhibits and
schedules thereto, in the form in which it was declared effective by the
Commission under the Securities Act of 1933 and the rules and regulations
promulgated thereunder (collectively, the "Securities Act"), including any
information deemed to be a part thereof at the time of effectiveness pursuant to
Rule 430A or Rule 434 under the Securities Act, is called the "Registration
Statement". Any registration statement filed by the Company pursuant to
Rule 462(b) under the Securities Act is called the "Rule 462(b) Registration
Statement", and from and after the date and time of filing of the Rule 462(b)
Registration Statement the term "Registration Statement" shall include the
Rule 462(b) Registration Statement. Such prospectus, in the form first used by
the Underwriters to confirm sales of the Common Shares, is called the
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"Prospectus"; PROVIDED, HOWEVER, if the Company has, with the consent of
▇▇▇▇▇▇▇▇▇▇ Securities, elected to rely upon Rule 434 under the Securities Act,
the term "Prospectus" shall mean the Company's prospectus subject to completion
(each, a "preliminary prospectus") dated October __, 1997 (such preliminary
prospectus is called the "Rule 434 preliminary prospectus"), together with the
applicable term sheet (the "Term Sheet") prepared and filed by the Company with
the Commission under Rules 434 and 424(b) under the Securities Act and all
references in this Agreement to the date of the Prospectus shall mean the date
of the Term Sheet. All references in this Agreement to the Registration
Statement, the Rule 462(b) Registration Statement, a preliminary prospectus, the
Prospectus or the Term Sheet, or any amendments or supplements to any of the
foregoing, shall include any copy thereof filed with the Commission pursuant to
its Electronic Data Gathering, Analysis and Retrieval System ("▇▇▇▇▇").
The Company and each of the Selling Stockholders hereby confirm their
respective agreements with the Underwriters as follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
A. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents, warrants and covenants to each Underwriter as follows:
(a) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The Registration
Statement and any Rule 462(b) Registration Statement have been declared
effective by the Commission under the Securities Act. The Company has complied
to the Commission's satisfaction with all requests of the Commission for
additional or supplemental information. No stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement is in effect and no proceedings for such purpose have been instituted
or are pending or, to the knowledge of the Company, are contemplated or
threatened by the Commission.
Each preliminary prospectus and the Prospectus when filed complied in
all material respects with the Securities Act and, if filed by electronic
transmission pursuant to ▇▇▇▇▇ (except as may be permitted by Regulation S-T
under the Securities Act), was identical to the copy thereof delivered to the
Underwriters for use in connection with the offer and sale of the Common Shares.
Each of the Registration Statement, any Rule 462(b) Registration Statement and
any post-effective amendment thereto, at the time it became effective, complied
in all material respects with the Securities Act and did not 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 not misleading. The
Prospectus, as amended or supplemented, as of its date, did not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The representations and warranties set
forth in the two immediately preceding sentences do not apply to statements in
or omissions from the Registration Statement, any Rule 462(b) Registration
Statement, or any post-effective amendment thereto, or the Prospectus, or any
amendments or supplements thereto, made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company in writing by
the Representative expressly for use therein.
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(b) OFFERING MATERIALS FURNISHED TO UNDERWRITERS. The Company has
delivered to the Representative one complete manually signed copy of the
Registration Statement and of each consent and certificate of experts filed as a
part thereof, and conformed copies of the Registration Statement (without
exhibits) and preliminary prospectuses and the Prospectus, as amended or
supplemented, in such quantities and at such places as the Representative has
reasonably requested for each of the Underwriters.
(c) DISTRIBUTION OF OFFERING MATERIAL BY THE COMPANY. The Company
has not distributed and will not distribute, prior to the later of the Second
Closing Date (as defined below) and the completion of the Underwriters'
distribution of the Common Shares, any offering material in connection with the
offering and sale of the Common Shares other than a preliminary prospectus, the
Prospectus or the Registration Statement.
(d) THE UNDERWRITING AGREEMENT. This Agreement has been duly
authorized, executed and delivered by, and is a valid and binding agreement of,
the Company, enforceable in accordance with its terms, except as rights to
indemnification hereunder may be limited by applicable law or public policy and
except as the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles.
(e) AUTHORIZATION OF THE COMMON SHARES. The Common Shares to be
purchased by the Underwriters from the Company have been duly authorized for
issuance and sale pursuant to this Agreement and, when issued and delivered by
the Company pursuant to this Agreement, will be validly issued, fully paid and
nonassessable.
(f) INCORPORATION AND GOOD STANDING OF THE COMPANY AND ITS
SUBSIDIARIES. Each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation and has corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Prospectus and, in the case of the Company, to enter into
and perform its obligations under this Agreement, the Indenture and the New
Credit Facility. Each of the Company and each subsidiary is duly qualified as a
foreign corporation to transact business and is in good standing in the
Commonwealth of Massachusetts and each other jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except for such jurisdictions (other than
the Commonwealth of Massachusetts) where the failure to so qualify or to be in
good standing would not, individually or in the aggregate, result in a Material
Adverse Change (as defined below). All of the issued and outstanding capital
stock of each subsidiary has been duly authorized and validly issued, is fully
paid and nonassessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance or claim, except as described or contemplated in the Prospectus.
The Company does not own or control, directly or indirectly, any corporation,
association or other entity other than the subsidiaries listed in Exhibit 21 to
the Registration Statement.
(g) CAPITALIZATION AND OTHER CAPITAL STOCK MATTERS. The authorized,
issued and outstanding capital stock of the Company is as set forth in the
Prospectus under the caption
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"Capitalization" (other than for subsequent issuances, if any, pursuant to
employee benefit plans described in the Prospectus or upon exercise of
outstanding options or warrants described in the Prospectus). The Common Stock
(including the Common Shares) conforms in all material respects to the
description thereof contained in the Prospectus. All of the issued and
outstanding shares of Common Stock have been duly authorized and validly issued,
are fully paid and nonassessable and have been issued in compliance with federal
and state securities laws. None of the outstanding shares of Common Stock were
issued in violation of any preemptive rights, rights of first refusal or other
similar rights to subscribe for or purchase securities of the Company. Except
for the ML Life and Bedrock Warrants, there are no authorized or outstanding
options, warrants, preemptive rights, rights of first refusal or other rights to
purchase, or equity or debt securities convertible into or exchangeable or
exercisable for, any capital stock of the Company or any of its subsidiaries
other than those accurately described in the Prospectus. The description of the
Company's stock option, stock bonus and other stock plans or arrangements, and
the options or other rights granted thereunder, set forth in the Prospectus
accurately and fairly presents in all material respects the information required
to be shown with respect to such plans, arrangements, options and rights.
(h) NO APPLICABLE REGISTRATION OR OTHER SIMILAR RIGHTS. There are no
persons with registration or other similar rights to have any equity or debt
securities registered for sale under the Registration Statement or included in
the offering contemplated by this Agreement, except for such rights as have been
duly waived or for which the period of notice to require such securities to be
registered has run.
(i) NO MATERIAL ADVERSE CHANGE. Except as otherwise disclosed in the
Prospectus, subsequent to the respective dates as of which information is given
in the Prospectus: (i) there has been no material adverse change, or any
development that could reasonably be expected to result in a material adverse
change, in the condition, financial or otherwise, or in the earnings,
stockholders' equity, business, management, operations or prospects, whether or
not arising from transactions in the ordinary course of business, of the Company
and its subsidiaries, considered as one entity (any such change is called a
"Material Adverse Change"); (ii) the Company and its subsidiaries, considered as
one entity, have not incurred any material liability or obligation, indirect,
direct or contingent, not in the ordinary course of business nor entered into
any material transaction or agreement not in the ordinary course of business;
and (iii) except as disclosed in the Prospectus, there has been no dividend or
distribution of any kind declared, paid or made by the Company or, except for
dividends paid to the Company or other subsidiaries, any of its subsidiaries on
any class of capital stock or repurchase or redemption by the Company or any of
its subsidiaries of any class of capital stock.
(j) INDEPENDENT ACCOUNTANTS. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, who have expressed
their opinion with respect to the financial statements (which term as used in
this Agreement includes the related notes thereto) and supporting schedules
filed with the Commission as a part of the Registration Statement and included
in the Prospectus, are independent public or certified public accountants as
required by the Securities Act.
(k) PREPARATION OF THE FINANCIAL STATEMENTS. The financial
statements filed with the Commission as a part of the Registration Statement and
included in the Prospectus
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present fairly the consolidated financial position of the Company and its
subsidiaries as of and at the dates indicated and the results of their
operations and cash flows for the periods specified. The supporting schedules
included in the Registration Statement present fairly the information required
to be stated therein. Such financial statements and supporting schedules have
been prepared in conformity with generally accepted accounting principles, as
applied in the United States, applied on a consistent basis throughout the
periods involved, except as may be expressly stated in the related notes
thereto. No other financial statements or supporting schedules are required to
be included in the Registration Statement. The financial information set forth
in the Prospectus under the captions "Prospectus Summary--Summary Consolidated
Financial Information", "Selected Consolidated Financial Information" and
"Capitalization" fairly present the information set forth therein on a basis
consistent with that of the audited financial statements contained in the
Registration Statement. The pro forma financial information of the Company and
its subsidiaries included under the caption "Prospectus Summary--Summary
Consolidated Financial Information", and elsewhere in the Prospectus and in the
Registration Statement present fairly the information contained therein, have
been prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements and have been properly presented on
the bases described therein, and the assumptions used in the preparation thereof
are reasonable and the adjustments used therein are appropriate to give effect
to the transactions and circumstances referred to therein. The Company's ratios
of earnings to fixed charges set forth in the Prospectus under the captions
"Prospectus Summary--Summary Consolidated Financial Information" and in
"Selected Consolidated Financial Information" have been calculated in compliance
with Item 503(d) of Regulation S-K under the Securities Act.
(l) STOCK EXCHANGE LISTING. The Common Shares have been approved
for inclusion on the Nasdaq National Market, subject only to official notice of
issuance.
(m) NON-CONTRAVENTION OF EXISTING INSTRUMENTS; NO FURTHER
AUTHORIZATIONS OR APPROVALS REQUIRED. Neither the Company nor any of its
subsidiaries is in violation of its charter or by-laws or is in default (or,
with the giving of notice or lapse of time, would be in default) ("Default")
under any indenture, mortgage, loan or credit agreement, note, contract,
franchise, lease or other instrument to which the Company or any of its
subsidiaries is a party or by which it or any of them may be bound, or to which
any of the property or assets of the Company or any of its subsidiaries is
subject (each, an "Existing Instrument"), except for such Defaults as would not,
individually or in the aggregate, result in a Material Adverse Change. The
Company's execution, delivery and performance of this Agreement, the Indenture
and the New Credit Facility and consummation of the transactions contemplated
hereby and thereby and by the Prospectus (i) have been duly authorized by all
necessary corporate action and will not result in any violation of the
provisions of the charter or by-laws of the Company or any subsidiary, (ii) will
not conflict with or constitute a breach of, or Default or a Debt Repayment
Triggering Event (as defined below) under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of its subsidiaries pursuant to, or require the consent of any
other party to, any Existing Instrument, except for such conflicts, breaches,
Defaults, liens, charges or encumbrances as would not, individually or in the
aggregate, result in a Material Adverse Change and (iii) will not result in any
violation of any law, administrative regulation or administrative or court
decree applicable to the Company or any subsidiary, except for such violations
as would not, individually or in the aggregate, result in a Material Adverse
6
Change. No consent, approval, authorization or other order of, or registration
or filing with, any court or other governmental or regulatory authority or
agency, is required for the Company's execution, delivery and performance of
this Agreement, the Indenture and the New Credit Facility and consummation of
the transactions contemplated hereby and thereby and by the Prospectus, except
such as have been obtained or made by the Company and are in full force and
effect under the Securities Act, applicable state securities or blue sky laws
and from the National Association of Securities Dealers, Inc. (the "NASD"). As
used herein, a "Debt Repayment Triggering Event" means any event or condition
which gives, or with the giving of notice or lapse of time would give, the
holder of any note, debenture or other evidence of indebtedness (or any person
acting on such holder's behalf) the right to require the repurchase, redemption
or repayment of all or a portion of such indebtedness by the Company or any of
its subsidiaries.
(n) ACCURACY OF EXHIBITS. There are no contracts or other documents
which are required to be described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and Regulations and
which have not been so described or filed.
(o) NO MATERIAL ACTIONS OR PROCEEDINGS. There are no legal or
governmental actions, suits or proceedings pending or, to the Company's
knowledge, threatened (i) against or affecting the Company or any of its
subsidiaries, (ii) which has as the subject thereof any officer or director of,
or property owned or leased by, the Company or any of its subsidiaries or
(iii) relating to environmental or discrimination matters, where in any such
case (A) there is a reasonable possibility that such action, suit or proceeding
might be determined adversely to the Company or such subsidiary and (B) any such
action, suit or proceeding, if so determined adversely, would reasonably be
expected to result in a Material Adverse Change or adversely affect the
consummation of the transactions contemplated by this Agreement.
(p) POSSESSION OF INTELLECTUAL PROPERTY. Other than as set forth in
the Prospectus, the Company and each of its subsidiaries own or possess adequate
rights to use all material patents, patent applications, trademarks, service
marks, trade names, trademark registrations, service ▇▇▇▇ registrations,
copyrights, licenses and know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures) necessary for the conduct of their respective businesses and have no
reason to believe that the conduct of their respective businesses will conflict
with, and have not received any notice of any claim of conflict with, any such
rights of others.
(q) POSSESSION OF LICENSES AND PERMITS. The Company and each of its
subsidiaries possess all material licenses, certificates, authorizations and
permits issued by, and have made all declarations and filings with, the
appropriate state, federal or foreign regulatory agencies or bodies which are
necessary or desirable for the ownership of their respective properties or the
conduct of their respective businesses as described in the Prospectus, except
where any failures to possess or make the same, singularly or in the aggregate,
would not result in a Material Adverse Change, and the Company has not received
notification of any revocation or modification of any such license,
authorization or permit and has no reason to believe that any such license,
certificate, authorization or permit will not be renewed, except such
revocations, modifications or non-renewals as would not result in a Material
Adverse Change.
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(r) TITLE TO PROPERTIES. The Company and each of its subsidiaries
has good and marketable title to all the properties and assets reflected as
owned in the financial statements referred to in Section 1(A)(k) above (or
elsewhere in the Prospectus), in each case free and clear of any security
interests, mortgages, liens, encumbrances, equities, claims and other defects,
except as described in the Prospectus and such as do not materially and
adversely affect the value of such property and do not materially interfere with
the use made or proposed to be made of such property by the Company or such
subsidiary. The real property, improvements, equipment and personal property
held under lease by the Company or any subsidiary are held under valid and
enforceable leases, with such exceptions as are not material and do not
materially interfere with the use made or proposed to be made of such real
property, improvements, equipment or personal property by the Company or such
subsidiary.
(s) TAXES. The Company and its subsidiaries each (i) have filed all
necessary federal, state and foreign income and franchise tax returns, (ii) have
paid all federal, state, local and foreign taxes due and payable for which it is
liable, including, but not limited to, withholding taxes and amounts payable
under the Internal Revenue Code of 1986, as amended (the "Code"), and has
furnished all information returns it is required to furnish pursuant to the
Code, (iii) have established adequate reserves for all such taxes which are not
yet due and payable and (iv) do not have any tax deficiency or claims
outstanding or assessed or, to the Company's knowledge, proposed against it
which could reasonably be expected to result in a Material Adverse Change.
(t) NO LABOR DISPUTE. No labor disturbance by the employees of the
Company or any of its subsidiaries exists or, to the Company's knowledge, is
imminent which might be expected to result in a Material Adverse Change.
(u) COMPANY NOT AN "INVESTMENT COMPANY". The Company has been
advised of the rules and requirements under the Investment Company Act of 1940,
as amended (the "Investment Company Act"). The Company is not, and after
receipt of payment for the Common Shares will not be, an "investment company"
within the meaning of Investment Company Act and will conduct its business in a
manner so that it will not become subject to the Investment Company Act.
(v) NO LENDING RELATIONSHIPS. Attached hereto as EXHIBIT E is, to
the Company's knowledge, a complete and accurate list of the lenders under the
Old Credit Facility (as defined in the Prospectus) as of the date of this
Agreement, which constitute all of the Company's lenders who would have received
any of the proceeds from the sale of the Common Shares hereunder to repay
outstanding debt had such repayment occurred on the date of this Agreement.
(w) NO STABILIZATION. Neither the Company, nor to the Company's
knowledge, any of its affiliates, has taken or may take, directly or indirectly,
any action designed to cause or result in, or which has constituted or which
might reasonably be expected to constitute, the stabilization or manipulation of
the price of the Common Shares to facilitate the sale or resale of the Common
Shares.
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(x) INSURANCE. Each of the Company and its subsidiaries are insured
by recognized, financially sound and reputable institutions with policies in
such amounts and with such deductibles and covering such risks as are generally
deemed adequate and customary for their businesses including, but not limited
to, policies covering real and personal property owned or leased by the Company
and its subsidiaries against theft, damage, destruction, acts of vandalism and
earthquakes. The Company has no reason to believe that it or any subsidiary
will not be able (i) to renew its existing insurance coverage as and when such
policies expire or (ii) to obtain comparable coverage from similar institutions
as may be necessary or appropriate to conduct its business as now conducted and
at a cost that would not result in a Material Adverse Change. Neither of the
Company nor any subsidiary has been denied any insurance coverage which it has
sought or for which it has applied.
(y) TRANSACTIONS WITH MANAGEMENT AND OTHERS. No relationship, direct
or indirect, exists between or among the Company on the one hand, and the
directors, officers, stockholders, customers or suppliers of the Company on the
other hand, which is required to be described in the Prospectus and which is not
so described.
(z) NO UNLAWFUL CONTRIBUTIONS OR OTHER PAYMENTS. Neither the Company
nor any of its subsidiaries nor, to the Company's knowledge, any employee or
agent of the Company or any subsidiary, has made any contribution or other
payment to any official of, or candidate for, any federal, state or foreign
office in violation of any law or of the character required to be disclosed in
the Prospectus.
(aa) ACCOUNTING CONTROLS. The Company and each of its subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability;
(iii) access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets is
computed with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(ab) COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as would not,
individually or in the aggregate, result in a Material Adverse Change (i)
neither the Company nor any of its subsidiaries is in violation of any federal,
state, local or foreign law or regulation relating to pollution or protection of
human health or the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata) or wildlife,
including without limitation, laws and regulations relating to emissions,
discharges, releases or threatened releases of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum and
petroleum products (collectively, "Materials of Environmental Concern"), or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of Environment Concern
(collectively, "Environmental Laws"), which violation includes, but is not
limited to, noncompliance with any permits or other governmental authorizations
required for the operation of the business of the Company or its subsidiaries
under applicable Environmental Laws, or noncompliance with the terms and
conditions thereof, nor has the Company or any of its subsidiaries received any
written communication, whether from a
9
governmental authority, citizens group, employee or otherwise, that alleges that
the Company or any of its subsidiaries is in violation of any Environmental Law;
(ii) there is no claim, action or cause of action filed with a court or
governmental authority with respect to which the Company has received notice, no
investigation with respect to which the Company has received written notice, and
no written notice by any person or entity alleging potential liability for
investigatory costs, cleanup costs, governmental responses costs, natural
resources damages, property damages, personal injuries, attorneys' fees or
penalties arising out of, based on or resulting from the presence, or release
into the environment, of any Material of Environmental Concern at any location
owned, leased or operated by the Company or any of its subsidiaries, now or in
the past (collectively, "Environmental Claims"), pending or, to the best of the
Company's knowledge, threatened against the Company or any of its subsidiaries
or any person or entity whose liability for any Environmental Claim the Company
or any of its subsidiaries has retained or assumed either contractually or by
operation of law; and (iii) to the Company's knowledge, there are no past or
present actions, activities, circumstances, conditions, events or incidents,
including, without limitation, the release, emission, discharge, presence or
disposal of any Material of Environmental Concern, that reasonably could result
in a violation of any Environmental Law or form the basis of a potential
Environmental Claim against the Company or any of its subsidiaries or against
any person or entity whose liability for any Environmental Claim the Company or
any of its subsidiaries has retained or assumed either contractually or by
operation of law.
(ac) EMPLOYEE BENEFIT PLANS. No "prohibited transaction" (as defined
in Section 406 of the Employee Retirement Income Security Act of 1974, as
amended, including the regulations and published interpretations thereunder
("ERISA"), or Section 4975 of the Code), or "accumulated funding deficiency" (as
defined in Section 302 of ERISA) or any of the events set forth in Section
4043(b) of ERISA (other than events with respect to which the 30-day notice
requirement under Section 4043 of ERISA has been waived) has occurred with
respect to any employee benefit plan which could result in a Material Adverse
Change; each employee benefit plan is in compliance in all material respects
with applicable law, including ERISA and the Code; the Company has not incurred
and does not expect to incur liability under Title IV of ERISA with respect to
the termination of, or withdrawal from, any "pension plan"; and each "pension
plan" (as defined in ERISA) for which the Company would have any liability that
is intended to be qualified under Section 401(a) of the Code is so qualified in
all material respects and nothing has occurred, whether by action or by failure
to act, which could cause the loss of such qualification with respect to such
plan which could result in a Material Adverse Change.
(ad) MINUTE BOOKS. The minute books of the Company and each of its
subsidiaries have been made available to the Underwriters and counsel for the
Underwriters, and such books (i) contain a complete summary of all meetings and
actions of the directors and stockholders of the Company and each of its
subsidiaries since January 1992 through the date of the latest meeting and
action, and (ii) accurately in all material respects reflect all transactions
referred to in such minutes.
Any certificate signed by an officer of the Company and delivered to
the Representative or to counsel for the Underwriters on the First Closing Date
or the Second
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Closing Date shall be deemed to be a representation and warranty by the Company
to each Underwriter as to the matters set forth therein.
B. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS. Each
Selling Stockholder severally represents, warrants and covenants to each
Underwriter as follows:
(a) THE UNDERWRITING AGREEMENT. This Agreement has been duly
authorized, executed and delivered by or on behalf of such Selling Stockholder
and is a valid and binding agreement of such Selling Stockholder, enforceable in
accordance with its terms, except as rights to indemnification or contribution
hereunder may be limited by applicable law and except as the enforcement hereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights and remedies of creditors or by
general equitable principles.
(b) THE CUSTODY AGREEMENT AND POWER OF ATTORNEY. Each of the
(i) Custody Agreement signed by such Selling Stockholder and BankBoston, N.A.,
as custodian (the "Custodian"), relating to the deposit of the Common Shares to
be sold by such Selling Stockholder (the "Custody Agreement") and (ii) Power of
Attorney signed by such Selling Stockholder appointing certain individuals or
entities named therein as such Selling Stockholder's attorneys-in-fact (each, an
"Attorney-in-Fact") to the extent set forth therein relating to the transactions
contemplated hereby and by the Prospectus (the "Power of Attorney"), has been
duly authorized, executed and delivered by such Selling Stockholder and is a
valid and binding agreement of such Selling Stockholder, enforceable in
accordance with its terms, except as rights to indemnification or contribution
thereunder may be limited by applicable law and except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting the rights and remedies of creditors
or by general equitable principles.
(c) TITLE TO COMMON SHARES TO BE SOLD; ALL AUTHORIZATIONS OBTAINED.
Such Selling Stockholder is, and on the First Closing Date and the Second
Closing Date (as defined below) will be, the sole beneficial owner of all of the
Common Shares which may be sold by such Selling Stockholder pursuant to this
Agreement on such date and the legal right and power, and all authorizations and
approvals required by law and under its charter or by-laws, partnership
agreement, trust agreement or other organizational documents, to enter into this
Agreement and its Custody Agreement and Power of Attorney, to sell, transfer and
deliver all of the Common Shares which may be sold by such Selling Stockholder
pursuant to this Agreement and to comply with its other obligations hereunder
and thereunder.
(d) DELIVERY OF THE COMMON SHARES TO BE SOLD. Delivery of the Common
Shares which are sold by such Selling Stockholder pursuant to this Agreement
will pass good and valid title to such Common Shares, free and clear of any
security interest, mortgage, pledge, lien, encumbrance or other claim.
(e) NON-CONTRAVENTION; NO FURTHER AUTHORIZATIONS OR APPROVALS
REQUIRED. The execution and delivery by such Selling Stockholder of, and the
performance by such Selling Stockholder of its obligations under, this
Agreement, the Custody Agreement and the Power of
11
Attorney will not contravene or conflict with, result in a breach of, or
constitute a default under, or require the consent of any other party to, the
charter or by-laws, partnership agreement, trust agreement or other
organizational documents of such Selling Stockholder or any other agreement or
instrument to which such Selling Stockholder is a party or by which it is bound
or under which it is entitled to any right or benefit, any provision of
applicable law or any judgment, order, decree or regulation applicable to such
Selling Stockholder of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over such Selling
Stockholder. Except for filings to be made by the Company and the Underwriters
under the Securities Act, applicable state securities or blue sky laws and with
the NASD, no consent, approval, authorization or other order of, or registration
or filing with, any court or other governmental authority or agency, is required
for the consummation by such Selling Stockholder of the transactions
contemplated in this Agreement.
(f) NO REGISTRATION OR OTHER SIMILAR RIGHTS. Such Selling
Stockholder does not have any registration or other similar rights to have any
equity or debt securities registered for sale by the Company under the
Registration Statement or included in the offering contemplated by this
Agreement, except for such rights as are described in the Prospectus under
"Shares Eligible for Future Sale".
(g) NO FURTHER CONSENTS, ETC. No consent, approval or waiver is
required under any instrument or agreement to which such Selling Stockholder is
a party or by which it is bound or under which it is entitled to any right or
benefit, in connection with the offering, sale or purchase by the Underwriters
of any of the Common Shares which may be sold by such Selling Stockholder under
this Agreement or the consummation by such Selling Stockholder of any of the
other transactions contemplated hereby.
(h) DISCLOSURE MADE BY SUCH SELLING STOCKHOLDER IN THE PROSPECTUS.
All information furnished by such Selling Stockholder in writing expressly for
use in the Registration Statement and Prospectus is, and on the First Closing
Date and the Second Closing Date will be, true, correct, and complete in all
material respects, and does not, and on the First Closing Date and the Second
Closing Date will not, contain any untrue statement of a material fact or omit
to state any material fact necessary to make such information not misleading.
Such Selling Stockholder confirms as accurate the number of shares of Common
Stock set forth in the preliminary prospectus and, as of the First Closing Date
or the Second Closing Date, as the case may be, in the Prospectus under the
caption "Ownership of Common Stock" (both prior to and after giving effect to
the sale of the Common Shares).
(i) NO PRICE STABILIZATION OR MANIPULATION. Such Selling Stockholder
has not taken and will not take, directly or indirectly, any action designed to
or that might be reasonably expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Common Shares.
Any certificate signed by or on behalf of any Selling Stockholder and
delivered to the Representative or to counsel for the Underwriters shall be
deemed to be a representation and warranty by such Selling Stockholder to each
Underwriter as to the matters covered thereby.
12
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE COMMON SHARES.
(a) THE FIRM COMMON SHARES. The Company agrees to issue and sell to
the several Underwriters the Firm Common Shares upon the terms herein set forth.
On the basis of the representations, warranties and agreements herein contained,
and upon the terms but subject to the conditions herein set forth, the
Underwriters agree, severally and not jointly, to purchase from the Company the
respective number of Firm Common Shares set forth opposite their names on
SCHEDULE A. The purchase price per Firm Common Share to be paid by the several
Underwriters to the Company shall be $[___] per share.
(b) THE FIRST CLOSING DATE. Delivery of certificates for the Firm
Common Shares to be purchased by the Underwriters and payment therefor shall be
made at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ (or such other place as may be agreed to by the Company and the
Representative) at 10:00 a.m., New York City time, on ___________, 1997 or such
other time and date not later than 10:00 a.m. New York City time on the seventh
business day thereafter, as the Representative shall designate by notice to the
Company (the time and date of such closing are called the "First Closing Date").
The Company hereby acknowledges that circumstances under which the
Representative may provide notice to postpone the First Closing Date as
originally scheduled include, but are in no way limited to, any determination by
the Company or the Representative to recirculate to the public copies of an
amended or supplemented Prospectus or a delay as contemplated by the provisions
of Section 10.
(c) THE OPTIONAL COMMON SHARES; THE SECOND CLOSING DATE. In
addition, on the basis of the representations, warranties and agreements herein
contained, and upon the terms but subject to the conditions herein set forth,
the Company and the Selling Stockholders hereby grant an option to the several
Underwriters to purchase, severally and not jointly, up to an aggregate of [ ]
Optional Common Shares from the Company and the Selling Stockholders at the
purchase price per share to be paid by the Underwriters for the Firm Common
Shares. The option granted hereunder is for use by the Underwriters solely in
covering any over-allotments in connection with the sale and distribution of the
Firm Common Shares. The option granted hereunder may be exercised at any time
(but not more than once) upon notice by the Representative to the Company and
the Selling Stockholders (with a copy to the Company) which notice may be given
at any time within 30 days from the date of this Agreement. Such notice shall
set forth (i) the aggregate number of Optional Common Shares as to which the
Underwriters are exercising the option, (ii) the names and denominations in
which the certificates for the Optional Common Shares are to be registered and
(iii) the time, date and place at which such certificates will be delivered
(which time and date may be simultaneous with, but not earlier than, the First
Closing Date; and in such case the term "First Closing Date" shall refer to the
time and date of delivery of certificates for the Firm Common Shares and the
Optional Common Shares). Such time and date of delivery is called the "Second
Closing Date" and shall be determined by the Representative and shall not be
earlier than three nor later than five full business days after delivery of such
notice of exercise. The Second Closing Date may occur on the same day as the
First Closing Date. If any Optional Common Shares are to be purchased, (a) each
Underwriter agrees, severally and not jointly, to purchase the number of
Optional Common Shares (subject to such adjustments to eliminate fractional
shares as the Representative may determine) that bears
13
the same proportion to the total number of Optional Common Shares to be
purchased as the number of Firm Common Shares set forth on SCHEDULE A opposite
the name of such Underwriter bears to the total number of Firm Common Shares and
(b) the Company and each Selling Stockholder agree, severally and not jointly,
to sell the number of Optional Common Shares determined as follows:
(A) In the event the Underwriters exercise the over-allotment option in
full, then (i) each of the Selling Stockholders agrees to sell the number
of Optional Shares set forth in Schedule B opposite the name of such
Selling Stockholder and (ii) the Company agrees to sell the number of
Optional Shares set forth in the paragraph "Introductory" of this
Agreement;
(B) In the event the Underwriters exercise the over-allotment option for a
number of Optional Common Shares (the "Actual Exercise Amount") which is
less than 750,000 but greater than the aggregate number of Optional Common
Shares granted by the Selling Stockholders, then each of the Selling
Stockholders and the Company agrees, severally and not jointly, to sell the
number of Optional Common Shares determined as follows:
(1) first, each Selling Stockholder agrees to sell the number of
Optional Common Shares set forth in Schedule B opposite the name of
such Selling Stockholder; and
(2) second, the Company agrees to sell the number of Optional Common
Shares which, when added to the number of Optional Common Shares sold
by the Selling Stockholders pursuant to clause (1) above, equals the
Actual Exercise Amount.
(C) In the event the Actual Exercise Amount is less than the aggregate
number of Optional Common Shares granted by the Selling Stockholders, then
each of the Selling Stockholders agrees, severally and not jointly, to sell
the number of Optional Common Shares equal to the number of Optional Common
Shares granted by such Selling Stockholder that bears the same proportion
to the Actual Exercise Amount as the number of Optional Common Shares set
forth in Schedule B opposite the name of such Selling Stockholder bears to
the total number of Optional Common Shares granted by the Selling
Stockholders collectively, and the Company shall not sell any Optional
Common Shares.
The Representative may cancel the option at any time prior to its
expiration by giving written notice of such cancellation to the Company and the
Selling Stockholders (with a copy to the Company).
(d) PUBLIC OFFERING OF THE COMMON SHARES. The Representative hereby
advises the Company and the Selling Stockholders that the Underwriters intend to
offer for sale to the public, as described in the Prospectus, their respective
portions of the Common Shares as soon after this Agreement has been executed and
the Registration Statement has been declared effective as the Representative, in
its sole judgment, has determined is advisable and practicable.
(e) PAYMENT FOR THE COMMON SHARES. Payment for the Common Shares to
be sold by the Company shall be made at the First Closing Date (and, if
applicable, at the Second
14
Closing Date) by wire transfer of immediately available funds to the order of
the Company. Payment for the Common Shares to be sold by the Selling
Stockholders shall be made at the First Closing Date or at the Second Closing
Date, as applicable by wire transfer of immediately available funds to the order
of the Custodian. It is understood that the Representative has been authorized,
for its own account and the accounts of the several Underwriters, to accept
delivery of and receipt for, and make payment of the purchase price for, the
Firm Common Shares and any Optional Common Shares the Underwriters have agreed
to purchase. ▇▇▇▇▇▇▇▇▇▇ Securities, individually and not as the Representative
of the Underwriters, may (but shall not be obligated to) make payment for any
Common Shares to be purchased by any Underwriter whose funds shall not have been
received by the Representative by the First Closing Date or the Second Closing
Date, as the case may be, for the account of such Underwriter, but any such
payment shall not relieve such Underwriter from any of its obligations under
this Agreement.
Each Selling Stockholder hereby agrees that (i) it will pay all stock
transfer taxes, stamp duties and other similar taxes, if any, payable upon the
sale or delivery of the Common Shares to be sold by such Selling Stockholder to
the several Underwriters, or otherwise in connection with the performance of
such Selling Stockholder's obligations hereunder and (ii) the Custodian is
authorized to deduct for such payment any such amounts from the proceeds to such
Selling Stockholder hereunder and to hold such amounts for the account of such
Selling Stockholder with the Custodian under the Custody Agreement. In
connection with the preceding sentence, the Representative agrees to pay the New
York State stock transfer tax payable in connection with the sale and delivery
of the Optional Common Shares by the Selling Stockholders, and each Selling
Stockholder agrees to reimburse the Representative promptly for the transfer
taxes attributable to the Optional Common Shares sold by such Selling
Stockholder if such transfer tax payments are not rebated to the Representative.
The Representative agrees to use commercially reasonable efforts to cause the
rebate of such transfer taxes.
(f) DELIVERY OF THE COMMON SHARES. The Company shall deliver, or
cause to be delivered, to the Representative for the accounts of the several
Underwriters certificates for the Firm Common Shares at the First Closing Date,
against the irrevocable release of a wire transfer of immediately available
funds for the amount of the purchase price therefor. The Company and the
Selling Stockholders shall also deliver, or cause to be delivered, to the
Representative for the accounts of the several Underwriters, certificates for
the Optional Common Shares the Underwriters have agreed to purchase from them at
the First Closing Date or the Second Closing Date, as the case may be, against
the irrevocable release of a wire transfer of immediately available funds for
the amount of the purchase price therefor. The certificates for the Common
Shares shall be in definitive form and registered in such names and
denominations as the Representative shall have requested at least two full
business days prior to the First Closing Date (or the Second Closing Date, as
the case may be) and shall be made available for inspection on the business day
preceding the First Closing Date (or the Second Closing Date, as the case may
be) at a location in New York City as the Representative may designate. Time
shall be of the essence, and delivery at the time and place specified in this
Agreement is a further condition to the obligations of the Underwriters.
(g) DELIVERY OF PROSPECTUS TO THE UNDERWRITERS. Not later than 12:00
p.m. on the second business day following the date the Common Shares are
released by the Underwriters
15
for sale to the public, the Company shall delivery or cause to be delivered
copies of the Prospectus in such quantities and at such places as the
Representative shall reasonably request.
SECTION 3. ADDITIONAL COVENANTS OF THE COMPANY.
A. COVENANTS OF THE COMPANY. The Company further covenants and agrees
with each Underwriter as follows:
(a) REPRESENTATIVE'S REVIEW OF PROPOSED AMENDMENTS AND SUPPLEMENTS.
During such period beginning on the date hereof and ending on the later of the
First Closing Date or such date that, in the opinion of counsel for the
Underwriters, the Prospectus is no longer required by law to be delivered in
connection with sales by an Underwriter or dealer (the "Prospectus Delivery
Period"), prior to amending or supplementing the Registration Statement
(including any registration statement filed under Rule 462(b) under the
Securities Act) or the Prospectus, the Company shall furnish to the
Representative for review a copy of each such proposed amendment or supplement,
and the Company shall not file any such proposed amendment or supplement to
which the Representative reasonably objects.
(b) SECURITIES ACT COMPLIANCE. After the date of this Agreement, the
Company shall promptly advise the Representative in writing (i) of the receipt
of any comments of, or requests for additional or supplemental information from,
the Commission, (ii) of the time and date of any filing of any post-effective
amendment to the Registration Statement or any amendment or supplement to any
preliminary prospectus or the Prospectus, (iii) of the time and date that any
post-effective amendment to the Registration Statement becomes effective and
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereto or of any order preventing or suspending the use of any preliminary
prospectus or the Prospectus, or of any proceedings to remove, suspend or
terminate from listing or quotation the Common Stock from any securities
exchange upon which it is listed for trading or included or designated for
quotation, or of the threatening or initiation of any proceedings for any of
such purposes. If the Commission shall enter any such stop order at any time,
the Company will use its reasonable best efforts to obtain the lifting of such
order at the earliest possible moment. Additionally, the Company agrees that it
shall comply with the provisions of Rules 424(b), 430A and 434, as applicable,
under the Securities Act and will use its reasonable efforts to confirm that any
filings made by the Company under such Rule 424(b) were received in a timely
manner by the Commission.
(c) AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS AND OTHER SECURITIES
ACT MATTERS. If, during the Prospectus Delivery Period, any event shall occur
or condition exist as a result of which it is necessary to amend or supplement
the Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not misleading,
or if in the reasonable opinion of the Representative or counsel for the
Underwriters it is otherwise necessary to amend or supplement the Prospectus to
comply with law, the Company agrees to promptly prepare (subject to
Section 3(A)(a) hereof), file with the Commission and furnish at its own expense
to the Underwriters and to dealers, amendments or supplements to the Prospectus
so that the statements in the Prospectus as so amended or supplemented will not,
in the light of the circumstances when the Prospectus is delivered to a
16
purchaser, be misleading or so that the Prospectus, as amended or supplemented,
will comply with law.
(d) COPIES OF ANY AMENDMENTS AND SUPPLEMENTS TO THE PROSPECTUS. The
Company agrees to furnish the Representative, without charge, during the
Prospectus Delivery Period, as many copies of the Prospectus and any amendments
and supplements thereto as the Representative may reasonably request.
(e) BLUE SKY COMPLIANCE. The Company shall cooperate with the
Representative and counsel for the Underwriters to qualify or register the
Common Shares for sale under (or obtain exemptions from the application of) the
state securities or blue sky laws or Canadian provincial Securities laws (if
applicable) of those jurisdictions reasonably designated by the Representative,
shall comply with such laws and shall continue such qualifications,
registrations and exemptions in effect so long as required for the distribution
of the Common Shares. The Company shall not be required to qualify as a foreign
corporation or to take any action that would subject it to general service of
process in any such jurisdiction where it is not presently qualified or where it
would be subject to taxation as a foreign corporation. The Company will advise
the Representative promptly of the suspension of the qualification or
registration of (or any such exemption relating to) the Common Shares for
offering, sale or trading in any jurisdiction or any initiation or threat of any
proceeding for any such purpose, and in the event of the issuance of any order
suspending such qualification, registration or exemption, the Company shall use
its best efforts to obtain the withdrawal thereof at the earliest possible
moment.
(f) USE OF PROCEEDS. The Company shall apply the net proceeds from
the sale of the Common Shares sold by it in the manner described under the
caption "Use of Proceeds" in the Prospectus.
(g) TRANSFER AGENT. The Company shall engage and maintain, at its
expense, a registrar and transfer agent for the Common Stock.
(h) EARNINGS STATEMENT. As soon as practicable, the Company will
make generally available to its security holders and to the Representative an
earnings statement (which need not be audited) covering the twelve-month period
ending [_______________] that satisfies the provisions of Section 11(a) of the
Securities Act.
(i) PERIODIC REPORTING OBLIGATIONS. During the Prospectus Delivery
Period the Company shall file, on a timely basis, with the Commission and the
Nasdaq National Market all reports and documents required to be filed under the
Exchange Act. Additionally, the Company shall file with the Commission all
reports on Form SR as may be required under Rule 463 under the Securities Act.
(j) AGREEMENT NOT TO OFFER OR SELL ADDITIONAL SECURITIES During the
period of 90 days following the date of the Prospectus, the Company will not,
without the prior written consent of ▇▇▇▇▇▇▇▇▇▇ Securities (which consent may be
withheld at the sole discretion of ▇▇▇▇▇▇▇▇▇▇ Securities), directly or
indirectly, sell, offer, contract or grant any option to sell,
17
pledge, transfer or establish an open "put equivalent position" within the
meaning of Rule 16a-1(h) under the Exchange Act, or otherwise dispose of or
transfer, or announce the offering of, or file any registration statement under
the Securities Act in respect of, any shares of Common Stock, options or
warrants to acquire shares of the Common Stock or securities exchangeable or
exercisable for or convertible into shares of Common Stock (other than as
contemplated by this Agreement with respect to the Common Shares); PROVIDED,
HOWEVER, that the Company may issue shares of its Common Stock or options to
purchase its Common Stock, or Common Stock upon exercise of options, pursuant to
any stock option, stock bonus or other stock plan or arrangement described in
the Prospectus.
(k) FUTURE REPORTS TO THE REPRESENTATIVE. During the period of five
years hereafter the Company will furnish to the Representative at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Attention:[ ]: (i) as soon as practicable
after the end of each fiscal year, when made available to holders of its capital
stock, copies of the Annual Report of the Company containing the balance sheet
of the Company as of the close of such fiscal year and statements of income,
stockholders' equity and cash flows for the year then ended and the opinion
thereon of the Company's independent public or certified public accountants;
(ii) as soon as practicable after the filing thereof, copies of each proxy
statement, Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current
Report on Form 8-K or other report filed publicly by the Company with the
Commission, the NASD or any securities exchange; and (iii) as soon as available,
copies of any report or communication of the Company mailed generally to holders
of its capital stock.
B. COVENANTS OF THE SELLING STOCKHOLDERS. Each Selling Stockholder
further covenants and agrees with each Underwriter:
DELIVERY OF FORMS W-8 AND W-9 . To deliver to the Representative
prior to the First Closing Date a properly completed and executed United States
Treasury Department Form W-8 (if the Selling Stockholder is a non-United States
person) or Form W-9 (if the Selling Stockholder is a United States Person).
▇▇▇▇▇▇▇▇▇▇ Securities, on behalf of the several Underwriters, may, in
its sole discretion, waive in writing the performance by the Company of any one
or more of the foregoing covenants or extend the time for their performance.
SECTION 4. PAYMENT OF EXPENSES.
Subject to the provisions of the last paragraph of this Section 4, the
Company agrees to pay all costs, fees and expenses incurred in connection with
the performance of its and the Selling Stockholders' obligations hereunder and
in connection with the transactions contemplated hereby, including without
limitation (i) all expenses incident to the issuance and delivery of the Common
Shares (including all printing and engraving costs), (ii) all fees and expenses
of the registrar and transfer agent of the Common Stock, (iii) all necessary
issue, transfer and other stamp taxes in connection with the issuance and sale
by the Company of the Common Shares to the Underwriters, (iv) all fees and
expenses of the Company's counsel, independent public or certified pubic
accountants and other advisors, (v) all costs and expenses
18
incurred in connection with the preparation, printing, filing, shipping and
distribution of the Registration Statement (including financial statements,
exhibits, schedules, consents and certificates of experts), each preliminary
prospectus and the Prospectus, and all amendments and supplements thereto, and
this Agreement, (vi) all filing fees, attorneys' fees and expenses incurred by
the Company or the Underwriters in connection with qualifying or registering (or
obtaining exemptions from the qualification or registration of) all or any part
of the Common Shares for offer and sale under the state securities or blue sky
laws or the provincial securities laws of Canada, and, if requested by the
Representative, preparing and printing a "Blue Sky Survey" or memorandum, and
any supplements thereto, advising the Underwriters of such qualifications,
registrations and exemptions, (vii) the filing fees incident to the NASD's
review and approval of the Underwriters' participation in the offering and
distribution of the Common Shares, (viii) the fees and expenses associated with
including the Common Shares on the Nasdaq National Market, and (ix) all other
fees, costs and expenses referred to in Item 13 of Part II of the Registration
Statement. Except as provided in this Section 4, Section 6, Section 8 and
Section 9 hereof, the Underwriters shall pay their own expenses, including the
fees and disbursements of their counsel and the expenses of advertising any
offering of Common Stock made by the Underwriters.
The Selling Stockholders further agree with each Underwriter to pay
(directly or by reimbursement) all fees and expenses incident to the performance
of their obligations under this Agreement which are not otherwise specifically
provided for herein, including but not limited to (i) fees and expenses of
counsel and other advisors for such Selling Stockholders, (ii) fees and expenses
of the Custodian and (iii) subject to the provisions of the second paragraph of
Section 2(e), expenses, stock transfer taxes, stamp duties and all other taxes
incident to the sale and delivery of the Common Shares to be sold by such
Selling Stockholders to the Underwriters hereunder (which taxes, if any, may be
deducted by the Custodian under the provisions of Section 2 of this Agreement).
This paragraph is not intended to supersede or otherwise affect any rights the
Selling Stockholders may have outside this Agreement to cause the Company to pay
any such expenses.
SECTION 5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS.
The obligations of the several Underwriters to purchase and pay for
the Firm Common Shares or the Optional Common Shares as provided herein shall be
subject to (i) with respect to the Common Shares at the First Closing Date, the
accuracy of the representations and warranties on the part of the Company set
forth in Section 1 hereof as of the date hereof and as of the First Closing Date
as though then made and to the timely performance by the Company of its
covenants and other obligations and to each of the conditions set forth below
other than clauses (g) and (h); and (ii) with respect to the Optional Common
Shares at the Second Closing Date, the accuracy of the respective
representations and warranties on the part of the Company and the Selling
Stockholders set forth in Section 1 hereof as of the date hereof and as of the
Second Closing Date as though then made and to the timely performance by the
Company and the Selling Stockholders of their respective covenants and other
obligations and to each of the following conditions:
(a) ACCOUNTANTS' COMFORT LETTER. On the date hereof, the
Representative shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, independent
public or certified public
19
accountants for the Company, a letter dated the date hereof addressed to
the Underwriters, in form and substance satisfactory to the Representative,
containing statements and information of the type ordinarily included in
accountant's "comfort letters" to underwriters, delivered according to
Statement of Auditing Standards No. 72 (or any successor bulletin), with
respect to the audited and unaudited financial statements and certain
financial information contained in the Registration Statement and the
Prospectus (and the Representative shall have received an additional [___]
conformed copies of such accountants' letter for each of the several
Underwriters).
(b) COMPLIANCE WITH REGISTRATION REQUIREMENTS; NO STOP ORDER; NO
OBJECTION FROM NASD. For the period from and after effectiveness of this
Agreement and prior to the First Closing Date and, with respect to the
Optional Common Shares, the Second Closing Date:
(i) the Company shall have filed the Prospectus with the
Commission (including the information required by Rule 430A under the
Securities Act) in the manner and within the time period required by
Rule 424(b) under the Securities Act; or the Company shall have filed
a post-effective amendment to the Registration Statement containing
the information required by such Rule 430A, and such post-effective
amendment shall have become effective; or, if the Company elected to
rely upon Rule 434 under the Securities Act and obtained the
Representative's consent thereto, the Company shall have filed a Term
Sheet with the Commission in the manner and within the time period
required by such Rule 424(b);
(ii) no stop order suspending the effectiveness of the
Registration Statement, any Rule 462(b) Registration Statement, or any
post-effective amendment to the Registration Statement, shall be in
effect and no proceedings for such purpose shall have been instituted
or threatened by the Commission; and
(iii) the NASD shall have raised no objection to the fairness and
reasonableness of the underwriting terms and arrangements.
(c) NO MATERIAL ADVERSE CHANGE. (i) Neither the Company nor any of
its subsidiaries shall have sustained since the date of the latest audited
financial statements included in the Prospectus any loss or interference
with its business from fire, explosion, flood or other calamity, whether or
not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus or (ii) since such date there shall not have
been any Material Adverse Change or any change in the capital stock or
long-term debt of the Company or any of its subsidiaries, otherwise than as
set forth in the Prospectus, the effect of which, in any such case
described in clause (i) or (ii), is, in the judgment of the Representative,
so material and adverse as to make it impracticable or inadvisable to
proceed with the public offering or the delivery of the Common Shares on
the terms and in the manner contemplated in the Prospectus exclusive of any
supplement.
20
(d) NO DOWNGRADING. Subsequent to the execution and delivery of this
Agreement (i) no downgrading shall have occurred in the rating accorded the
Senior Notes or any of the Company's or any of its subsidiaries' other debt
securities by any "nationally recognized statistical rating organization,"
as that term is defined by the Commission for purposes of Rule 436(g)(2) of
the Rules and Regulations and (ii) no such organization shall have publicly
announced that it has under surveillance or review (other than an
announcement with positive implications of a possible upgrading), its
rating of the Senior Notes or any of the Company's other debt securities.
(e) OPINIONS OF COUNSEL FOR THE COMPANY. On each of the First
Closing Date and the Second Closing Date, the Representative shall have
received the favorable opinion of (a) ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, special counsel
for the Company, dated as of such Closing Date, the form of which is
attached as EXHIBIT A-1 and (b) , counsel to the Company,
dated as of such Closing Date, the form of which is attached as EXHIBIT A-2
(and the Representative shall have received an additional [___] conformed
copies of such counsels' legal opinions for each of the several
Underwriters).
(f) OPINION OF COUNSEL FOR UNDERWRITERS. On each of the First
Closing Date and Second Closing Date, the Representative shall have
received from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Underwriters,
such opinion or opinions, dated as of such Closing Date, with respect to
such matters as the Representative may reasonably require, and the Company
shall have furnished to such counsel such documents as they reasonably
request for enabling them to pass upon such matters.
(g) OPINION OF COUNSEL FOR THE SELLING STOCKHOLDERS. On each of the
First Closing Date and the Second Closing Date the Representative shall
have received the favorable opinion of ▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇ LLP, dated as
of such Closing Date, the form of which is attached as EXHIBIT B (and the
Representative shall have received an additional [___] conformed copies of
such counsel's legal opinion for each of the several Underwriters).
(h) SELLING STOCKHOLDERS' CERTIFICATE. On each of the First Closing
Date and the Second Closing Date the Representative shall have received a
written certificate executed by the Attorney-in-Fact of each Selling
Stockholder, dated as of such Closing Date, to the effect that:
(i) the representations, warranties and covenants of such Selling
Stockholder set forth in Section 1(B) of this Agreement are true and
correct with the same force and effect as though expressly made by such
Selling Stockholder on and as of such Closing Date; and
(ii) such Selling Stockholder 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.
(i) SELLING STOCKHOLDERS' DOCUMENTS. Prior to the date hereof, the
Selling Stockholders shall have furnished for review by the Representative
copies of the Powers
21
of Attorney and Custody Agreements executed by each of the Selling
Stockholders and such further information, certificates and documents as
the Representative may reasonably request.
(j) OFFICERS' CERTIFICATE. On each of the First Closing Date and
Second Closing Date, the Company shall have furnished to the Representative
a certificate, dated as of such Closing Date, of its Chairman of the Board,
its President or a Vice President and its chief financial officer stating
that (i) such officers have carefully examined the Registration Statement
and the Prospectus, (ii) in their opinion, as of the Effective Time, the
Registration Statement and the Prospectus did not include any untrue
statement of a material fact and did not omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, and since the Effective Time, no event has occurred which
should have been set forth in a supplement or amendment to the Registration
Statement or the Prospectus and (iii) to their knowledge after reasonable
investigation, as of the First Closing Date and the Second Closing Date,
the representations and warranties of the Company in this Agreement are
true and correct, the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder
at or prior to such Closing Date, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or, to their knowledge,
are contemplated by the Commission, and subsequent to the date of the most
recent financial statements in the Prospectus, there has been no Material
Adverse Change, except as set forth in the Prospectus.
(k) BRING-DOWN COMFORT LETTER. On each of the First Closing Date and
the Second Closing Date the Representative shall have received from ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, LLP, independent public or certified public accountants for the
Company, a letter dated such date, in form and substance reasonably
satisfactory to the Representative, to the effect that they reaffirm the
statements made in the letter furnished by them pursuant to subsection (a)
of this Section 5, except that the specified date referred to therein for
the carrying out of procedures shall be no more than three business days
prior to the First Closing Date or Second Closing Date, as the case may be
(and the Representative shall have received an additional [___] conformed
copies of such accountants' letter for each of the several Underwriters).
(l) LOCK-UP AGREEMENT FROM CERTAIN SHAREHOLDERS OF THE COMPANY. On
the date hereof, the Company shall have furnished to the Representative an
agreement in the form of EXHIBIT C-1 hereto from each of the lender-equity
holders listed in EXHIBIT D hereto and in the form of Exhibit C-2 hereto
from each of the non-lender-equity holders listed in Exhibit D hereto, and
such agreements shall be in full force and effect on each of the First
Closing Date and the Second Closing Date.
(m) RECAPITALIZATION. The Recapitalization, as defined and described
in the Prospectus, shall have been, or be concurrently, completed as of the
First Closing Date, including, without limitation, the Senior Note Offering
shall have been, or be concurrently, consummated and the Company shall have
entered, or be concurrently
22
entering, into the New Credit Facility and the proceeds therefrom shall
have been applied, or are being applied concurrently with the offering of
the Common Shares, as described in the Prospectus.
(n) ADDITIONAL DOCUMENTS. On or before each of the First Closing
Date and the Second Closing Date, the Representative and counsel for the
Underwriters shall have received such information, documents and opinions
as they may reasonably require for the purposes of enabling them to pass
upon the issuance and sale of the Common Shares as contemplated herein, or
in order to evidence the accuracy of any of the representations and
warranties, or the satisfaction of any of the conditions or agreements,
herein contained.
(o) LEGAL MATTERS. All corporate proceedings and other legal matters
incident to the authorization, form and validity of this Agreement, the
Common Shares, the Indenture, the New Credit Facility, the Registration
Statement and the Prospectus, and all other legal matters relating to this
Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for the Underwriters, and
the Company shall have furnished to such counsel all documents and
information that they may reasonably request to enable them to pass upon
such matters.
If any condition specified in this Section 5 is not satisfied when and
as required to be satisfied, this Agreement may be terminated by the
Representative by notice to the Company and the Selling Stockholders at any time
prior to the First Closing Date and, with respect to the Optional Common Shares,
at any time prior to the Second Closing Date, which termination shall be without
liability on the part of any party to any other party, except that Section 4,
Section 6, Section 8 and Section 9 shall at all times be effective and shall
survive such termination.
SECTION 6. REIMBURSEMENT OF UNDERWRITERS' EXPENSES.
If this Agreement is terminated by the Representative pursuant to
Section 5, Section 7 or Section 11(i) (in respect of the Company's securities
only), (iv) or (v) or if the sale to the Underwriters of the Common Shares or
the Optional Common Shares, as the case may be, is not consummated because of
any refusal, inability or failure on the part of the Company to perform any
agreement herein or to comply with any provision hereof, the Company agrees to
reimburse the Representative and the other Underwriters severally, upon demand
for all out-of-pocket expenses that shall have been reasonably incurred by the
Representative and the Underwriters in connection with the proposed purchase and
the offering and sale of the Common Shares or the Optional Common Shares, as the
case may be, including but not limited to fees and disbursements of counsel,
printing expenses, travel expenses, postage, facsimile and telephone charges.
In the event the sale of Optional Common Shares is not consummated because of
any refusal, inability or failure on the part of any Selling Stockholder to
perform any agreement herein or to comply with any provision hereof, such
Selling Stockholder (or such Selling Stockholders severally, in the event such
non-consummation is caused by more than one Selling Stockholder as described
above) agree to reimburse the Representative and the other Underwriters
23
severally, upon demand for those expenses described above which are attributable
to the Optional Common Shares to be sold by such Selling Stockholder(s).
SECTION 7. EFFECTIVENESS OF THIS AGREEMENT.
This Agreement shall not become effective until the later of (i) the
execution of this Agreement by the parties hereto and (ii) notification by the
Commission to the Company and the Representative of the effectiveness of the
Registration Statement under the Securities Act. Prior to such effectiveness,
this Agreement may be terminated by any party by notice to each of the other
parties hereto, and any such termination shall be without liability on the part
of (a) the Company or the Selling Stockholders to any Underwriter, except that
the Company and the Selling Stockholders shall be obligated to reimburse the
expenses of the Representative and the Underwriters pursuant to Sections 4 and 6
hereof, (b) of any Underwriter to the Company or the Selling Stockholders or
(c) of any party hereto to any other party except that the provisions of
Section 8 and Section 9 shall at all times be effective and shall survive such
termination.
SECTION 8. INDEMNIFICATION.
(a) INDEMNIFICATION OF THE UNDERWRITERS. The Company and its
subsidiaries agree to indemnify and hold harmless each Underwriter and each
Selling Stockholder, their respective officers and employees, and each person,
if any, who controls any Underwriter and any Selling Stockholder within the
meaning of the Securities Act and the Exchange Act against any loss, claim,
damage, liability or expense, as incurred, to which such Underwriter, such
Selling Stockholder or such controlling person (as applicable) may become
subject, under the Securities Act, the Exchange Act or other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Company), insofar as such loss, claim, damage, liability or
expense (or actions in respect thereof as contemplated below) arises out of or
is based (i) upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, or any amendment thereto,
including any information deemed to be a part thereof pursuant to Rule 430A or
Rule 434 under the Securities Act, or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein not misleading; or (ii) upon any untrue statement or alleged
untrue statement of a material fact contained in any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto), or the omission or
alleged omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; or (iii) any act or failure to act or any alleged act or
failure to act by any Underwriter in connection with, or relating in any manner
to, the Common Stock or the offering contemplated hereby, and which is included
as part of or referred to in any loss, claim, damage, liability or action
arising out of or based upon any matter covered by clause (i) or (ii) above,
PROVIDED that the Company shall not be liable under this clause (iii) to the
extent that a court of competent jurisdiction shall have determined by a final
judgment that such loss, claim, damage, liability or action resulted directly
from any such acts or failures to act undertaken or omitted to be taken by such
Underwriter through its bad faith or willful misconduct; and to reimburse each
Underwriter, each Selling Stockholder and each such controlling person (as
applicable) for any and all expenses (including the reasonable fees and
disbursements of counsel chosen by
24
▇▇▇▇▇▇▇▇▇▇ Securities) as such expenses are reasonably incurred by such
Underwriter, such Selling Stockholder or such controlling person (as applicable)
in connection with investigating, defending, settling, compromising or paying
any such loss, claim, damage, liability, expense or action; PROVIDED, HOWEVER,
that the foregoing indemnity agreement shall not apply to any loss, claim,
damage, liability or expense to the extent, but only to the extent, arising out
of or based upon any 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 by the Representative or by such Selling
Stockholder (as applicable) expressly for use in the Registration Statement, any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto); and PROVIDED, FURTHER, that with respect to any preliminary
prospectus, the foregoing indemnity agreement shall not inure to the benefit of
any Underwriter from whom the person asserting any loss, claim, damage,
liability or expense purchased Common Shares, or any person controlling such
Underwriter, if copies of the Prospectus were timely delivered to the
Underwriter pursuant to Section 2 and a copy of the Prospectus (as then amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Underwriter
to such person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the Common Shares to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, claim, damage, liability or expense.
Each of the Selling Stockholders agrees to indemnify and hold harmless
the Company and each Underwriter, their respective officers and employees, and
each person, if any, who controls the Company and any Underwriter within the
meaning of the Securities Act and the Exchange Act against any loss, claim,
damage, liability or expense, as incurred, to which the Company, such
Underwriter or such controlling person (as applicable) may become subject, under
the Securities Act, the Exchange Act or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Selling Stockholder), insofar as such loss, claim, damage, liability or expense
(or actions in respect thereof as contemplated below) arises out of or is based
(i) upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, or any amendment thereto, including any
information deemed to be a part thereof pursuant to Rule 430A or Rule 434 under
the Securities Act, or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case only to the extent that the untrue statement or
alleged untrue statement or the omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company or the Underwriters by such Selling Stockholder expressly for use
therein; or (ii) upon any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, in each
case only to the extent that the untrue statement or alleged untrue statement or
the omission or alleged omission was made in reliance upon and in conformity
with written information furnished to the Company or the Underwriters by such
Selling Stockholder expressly for use therein; or (iii) any act or failure to
act or any alleged act or failure to act by any Underwriter in connection with,
or relating in any manner to, the Common Stock or the offering contemplated
hereby, and which is based upon any matter covered
25
by clause (i) or (ii) above, PROVIDED that such Selling Stockholder shall not be
liable under this clause (iii) to the extent that a court of competent
jurisdiction shall have determined by a final judgment that such loss, claim,
damage, liability or action resulted directly from any such acts or failures to
act undertaken or omitted to be taken by such Underwriter through its bad faith
or willful misconduct; and to reimburse the Company, each Underwriter, each such
controlling person (as applicable) for any and all expenses (including the
reasonable fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇▇▇▇ Securities) as
such expenses are reasonably incurred by the Company, such Underwriter or such
controlling person (as applicable) in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action; PROVIDED, HOWEVER, that with respect to any preliminary
prospectus, the foregoing indemnity agreement shall not inure to the benefit of
any Underwriter from whom the person asserting any loss, claim, damage,
liability or expense purchased Common Shares, or any person controlling such
Underwriter, if copies of the Prospectus were timely delivered to the
Underwriter pursuant to Section 2 and a copy of the Prospectus (as then amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Underwriter
to such person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the Common Shares to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, claim, damage, liability or expense; PROVIDED that the
liability of each Selling Stockholder under the foregoing indemnity agreement
shall be limited to an amount equal to the initial public offering price of the
Common Shares sold by such Selling Stockholder, less the underwriting discount,
as set forth on the front cover page of the Prospectus.
The indemnity agreement set forth in this Section 8(a) shall be in
addition to any liabilities that the Company and the Selling Stockholders may
otherwise have.
(b) INDEMNIFICATION OF THE COMPANY, ITS DIRECTORS AND OFFICERS. Each
Underwriter agrees, severally and not jointly, to indemnify and hold harmless
the Company, each of its directors, each of its officers who signed the
Registration Statement, the Selling Stockholders and each person, if any, who
controls the Company or any Selling Stockholder within the meaning of the
Securities Act or the Exchange Act, against any loss, claim, damage, liability
or expense, as incurred, to which the Company, or any such director, officer,
Selling Stockholder or controlling person may become subject, under the
Securities Act, the Exchange Act, or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Underwriter), insofar as such loss, claim, damage, liability or expense (or
actions in respect thereof as contemplated below) arises out of or is based upon
any untrue or alleged untrue statement of a material fact contained in the
Registration Statement, any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), or arises out of or is based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in the Registration
Statement, any preliminary prospectus, the Prospectus (or any amendment or
supplement thereto), in reliance upon and in conformity with written information
furnished to the Company by the Representative expressly for use therein; and to
reimburse the Company, or any such director, officer, Selling Stockholder or
controlling person for any legal
26
and other expense reasonably incurred by the Company, or any such director,
officer, Selling Stockholder or controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action. Each of the Company and each of the
Selling Stockholders hereby acknowledges that the only information that the
Underwriters have furnished to the Company expressly for use in the Registration
Statement, any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto) are the statements set forth (A) in the paragraph on the
inside front cover page of the Prospectus concerning stabilization by the
Underwriters (B) in the last paragraph on the front cover page of the Prospectus
and (C) in the table in the first paragraph and in the second, fifth, eighth and
ninth paragraphs under the caption "Underwriting" in the Prospectus; and the
Underwriters confirm that such statements are correct. The indemnity agreement
set forth in this Section 8(b) shall be in addition to any liabilities that each
Underwriter may otherwise have.
(c) NOTIFICATIONS AND OTHER INDEMNIFICATION PROCEDURES. Promptly
after receipt by an indemnified party under this Section 8 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 8, notify
the indemnifying party in writing of the commencement thereof, but the omission
so to notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party for contribution or otherwise than under
the indemnity agreement contained in this Section 8 or to the extent it is not
prejudiced as a proximate result of such failure. In case any such action is
brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it shall elect,
jointly with all other indemnifying parties similarly notified, by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; PROVIDED, HOWEVER, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that a conflict may arise between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of such indemnifying
party's election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel (together with local counsel), approved by the
indemnifying party (▇▇▇▇▇▇▇▇▇▇ Securities in the case of Section 8(b) and
Section 9), representing the indemnified parties who are parties to such action)
or (ii) the indemnifying party shall not have employed counsel satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action, in each of which
27
cases the reasonable fees and expenses of counsel shall be at the expense of the
indemnifying party.
(d) SETTLEMENTS. The indemnifying party under this Section 8 shall
not be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by
Section 8(c) hereof, the indemnifying party agrees that it shall be liable for
any settlement of any proceeding effected without its written consent if
(i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 15 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed the indemnified party in accordance with such request prior to
the date of such settlement. Notwithstanding the immediately preceding
sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, an indemnifying party shall not be liable for any settlement effected
without its consent if such indemnifying party (i) reimburses such indemnified
party in accordance with such request to the extent it in its reasonable
judgment considers such request to be reasonable and (ii) provides written
notice to the indemnified party substantiating the unpaid balance as
unreasonable, in each case prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement, compromise or consent to the entry of judgment in
any pending or threatened action, suit or proceeding in respect of which any
indemnified party is or could have been a party and indemnity was or could have
been sought hereunder by such indemnified party, unless such settlement,
compromise or consent includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such action,
suit or proceeding.
(e) INDEMNIFICATION OF A QUALIFIED INDEPENDENT UNDERWRITER. Without
limitation and in addition to its obligations under the other subsections of
this Section 8, the Company agrees to indemnify and hold harmless ▇▇▇▇▇▇▇▇▇▇
Securities, Inc. and each person, if any, who controls ▇▇▇▇▇▇▇▇▇▇ Securities,
Inc. within the meaning of the Securities Act or the Exchange Act from and
against any loss, claim, damage, liabilities or expense, as incurred, arising
out of or based upon ▇▇▇▇▇▇▇▇▇▇ Securities, Inc.'s acting as a "qualified
independent underwriter" (within the meaning of Rule 2720 to the NASD's Conduct
Rules) in connection with the offering contemplated by this Agreement, and
agrees to reimburse each such indemnified person for any legal or other expense
reasonably incurred by them in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action; PROVIDED, HOWEVER, that the Company shall not be liable in
any such case to the extent that any such loss, claim, damage, liability or
expense results from the gross negligence or willful misconduct of ▇▇▇▇▇▇▇▇▇▇
Securities, Inc.
28
SECTION 9. CONTRIBUTION.
If the indemnification provided for in Section 8 is for any reason
held to be unavailable to or otherwise insufficient to hold harmless an
indemnified party in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount paid or payable by such indemnified party, as incurred, as
a result of any losses, claims, damages, liabilities or expenses referred to in
Section 8 (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Selling Stockholders, on the one hand,
and the Underwriters, on the other hand, from the offering of the Common Shares
pursuant to this Agreement 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 and the Selling Stockholders, on the one
hand, and the Underwriters, on the other hand, in connection with the statements
or omissions or inaccuracies in the representations and warranties herein which
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Company and the Selling Stockholders, on the one hand, and the Underwriters,
on the other hand, in connection with the offering of the Common Shares pursuant
to this Agreement shall be deemed to be in the same respective proportions as
the total net proceeds from the offering of the Common Shares pursuant to this
Agreement (before deducting expenses) received by the Company and the Selling
Stockholders and the total underwriting discount received by the Underwriters,
in each case as set forth on the front cover page of the Prospectus (or, if
Rule 434 under the Securities Act is used, the corresponding location on the
Term Sheet) bear to the aggregate initial public offering price of the Common
Shares as set forth on such cover. The relative fault of the Company and the
Selling Stockholders, on the one hand, and the Underwriters, on the other hand,
shall be determined by reference to, among other things, whether any such untrue
or alleged untrue statement of a material fact or omission or alleged omission
to state a material fact or any such inaccurate or alleged inaccurate
representation or warranty relates to information supplied by the Company or the
Selling Stockholders, on the one hand, or the Underwriters, on the other hand,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 8(c), any legal or
other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim. The provisions set forth in
Section 8(c) with respect to notice of commencement of any action shall apply if
a claim for contribution is to be made under this Section 9; PROVIDED, HOWEVER,
that no additional notice shall be required with respect to any action for which
notice has been given under Section 8(c) for purposes of indemnification. The
Company, the Selling Stockholders and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 9 were determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in this Section 9. Notwithstanding
the provisions of this Section 9, no Underwriter shall be required to contribute
any amount in excess of the underwriting commissions received by such
Underwriter in connection with the Common Shares underwritten by it and
distributed
29
to the public. The liability of each Selling Stockholder for contribution
hereunder shall be limited to an amount equal to the initial public offering
price of the Common Shares sold by such Selling Stockholder, less the
underwriting discount, as set forth on the front cover page of the Prospectus.
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 to contribute pursuant to this Section 9 are several,
and not joint, in proportion to their respective underwriting commitments as set
forth opposite their names in SCHEDULE A. For purposes of this Section 9, each
officer and employee of an Underwriter and each person, if any, who controls an
Underwriter within the meaning of the Securities Act and the Exchange 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 with the meaning of the
Securities Act and the Exchange Act shall have the same rights to contribution
as the Company.
SECTION 10. DEFAULT OF ONE OR MORE OF THE SEVERAL UNDERWRITERS.
If, on the First Closing Date or the Second Closing Date, as the case
may be, any one or more of the several Underwriters shall fail or refuse to
purchase Common Shares that it or they have agreed to purchase hereunder on such
date, and the aggregate number of Common Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase does not
exceed 10% of the aggregate number of the Common Shares to be purchased on such
date, the other Underwriters shall be obligated, severally, in the proportions
that the number of Firm Common Shares set forth opposite their respective names
on SCHEDULE A bears to the aggregate number of Firm Common Shares set forth
opposite the names of all such non-defaulting Underwriters, or in such other
proportions as may be specified by the Representative with the consent of the
non-defaulting Underwriters, to purchase the Common Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such
date. If, on the First Closing Date or the Second Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase Common
Shares and the aggregate number of Common Shares with respect to which such
default occurs exceeds 10% of the aggregate number of Common Shares to be
purchased on such date, and arrangements satisfactory to the Representative and
the Company for the purchase of such Common Shares are not made within 48 hours
after such default, this Agreement shall terminate without liability of any
party to any other party except that the provisions of Section 4, Section 8,
Section 9 and this Section 10 shall at all times be effective and shall survive
such termination. In any such case either the Representative or the Company
shall have the right to postpone the First Closing Date or the Second Closing
Date, as the case may be, but in no event for longer than seven days in order
that the required changes, if any, to the Registration Statement and the
Prospectus or any other documents or arrangements may be effected. As used in
this Agreement, the term "Underwriter" shall be deemed to include any person
substituted for a defaulting Underwriter under this Section 10. Any action
taken under this Section 10 shall not relieve any defaulting Underwriter from
liability to the Company or the other Underwriters in respect of any default of
such Underwriter under this Agreement.
30
SECTION 11. TERMINATION OF THIS AGREEMENT. Prior to the First
Closing Date this Agreement may be terminated by the Representative by notice
given to the Company and the Selling Stockholders if at any time (i) trading or
quotation in any of the Company's securities shall have been suspended or
limited, or trading in securities generally on any of the Nasdaq Stock Market,
the New York Stock Exchange, the American Stock Exchange or in the
over-the-counter market shall have been suspended or limited, or minimum or
maximum prices shall have been generally established on any such stock exchange
or market by the Commission, by any such exchange, by the NASD or by any other
regulatory body or governmental authority having jurisdiction; (ii) a general
banking moratorium shall have been declared by any of federal or state
authorities; (iii) there shall have occurred any outbreak or escalation of
national or international hostilities or any crisis or calamity, or a
declaration of a national emergency or war by the United States, or any change
in the United States or international financial markets, or any substantial
change or development involving a prospective substantial change in United
States' or international political, financial or economic conditions (or the
effect of international conditions on the financial markets in the United States
shall be such), in each case as in the judgment of the Representative is
material and adverse and makes it impracticable to market the Common Shares in
the manner and on the terms described in the Prospectus or to enforce contracts
for the sale of securities; (iv) in the judgment of the Representative there
shall have occurred any Material Adverse Change; or (v) the Company shall have
sustained a loss by strike, fire, flood, earthquake, accident or other calamity
of such character as in the judgment of the Representative may interfere
materially with the conduct of the business and operations of the Company
regardless of whether or not such loss shall have been insured. Any termination
pursuant to this Section 11 shall be without liability on the part of (a) the
Company or the Selling Stockholders to any Underwriter, except that the Company
and the Selling Stockholders shall be obligated to reimburse the expenses of the
Representative and the Underwriters pursuant to Sections 4 and 6 hereof, (b)
any Underwriter to the Company or the Selling Stockholders, or (c) of any party
hereto to any other party except that the provisions of Section 8 and Section 9
shall at all times be effective and shall survive such termination.
SECTION 12. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY.
The respective indemnities, agreements, representations, warranties
and other statements of the Company, of its officers, of the Selling
Stockholders and of the several Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any of
its or their partners, officers or directors or any controlling person or the
Selling Stockholders, as the case may be, and will survive delivery of and
payment for the Common Shares sold hereunder and any termination of this
Agreement.
SECTION 13. NOTICES.
All communications hereunder shall be in writing and shall be mailed,
hand delivered or telecopied and confirmed to the parties hereto as follows:
31
If to the Representative:
NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
with a copy to:
NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to the Company:
Friendly Ice Cream Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
If to the Selling Stockholders prior to the Second Closing Date:
BankBoston, N.A.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile:
Attention: ▇▇▇ ▇▇▇▇▇
If to the Selling Stockholders after the Second Closing Date, to BankBoston,
N.A. at the address set forth above, unless such Selling Stockholder has
furnished requisite contact information to the Company or the Underwriters, in
which case communications shall be sent in accordance with such contact
information.
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
SECTION 14. SUCCESSORS.
This Agreement will inure to the benefit of and be binding upon the
parties hereto, including any substitute Underwriters pursuant to Section 10
hereof, and to the benefit of the employees, officers and directors and
controlling persons referred to in Section 8 and Section 9, and in each case
their respective successors, and personal representatives, and no other person
32
will have any right or obligation hereunder. The term "successors" shall not
include any purchaser of the Common Shares as such from any of the Underwriters
merely by reason of such purchase.
SECTION 15. PARTIAL UNENFORCEABILITY.
The invalidity or unenforceability of any Section, paragraph or
provision of this Agreement shall not affect the validity or enforceability of
any other Section, paragraph or provision hereof. If any Section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, there shall be deemed to be made such minor changes (and only
such minor changes) as are necessary to make it valid and enforceable.
SECTION 16. GOVERNING LAW PROVISIONS.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO
BE PERFORMED IN SUCH STATE.
SECTION 17. FAILURE OF ONE OR MORE OF THE SELLING STOCKHOLDERS TO
SELL AND DELIVER COMMON SHARES.
If one or more of the Selling Stockholders shall fail to sell and
deliver to the Underwriters the Optional Common Shares to be sold and delivered
by such Selling Stockholders at the Second Closing Date pursuant to this
Agreement, then the Underwriters may at their option, by written notice from the
Representative to the Company and the Selling Stockholders, either (i) terminate
this Agreement with respect to the Optional Common Shares at the Second Closing
Date without any liability on the part of any Underwriter or, except as provided
in Sections 4, 6, 8 and 9 hereof, the Company or the Selling Stockholders, or
(ii) purchase the shares which the Company and other Selling Stockholders have
agreed to sell and deliver in accordance with the terms hereof. If one or more
of the Selling Stockholders shall fail to sell and deliver to the Underwriters
the Optional Common Shares to be sold and delivered by such Selling Stockholders
pursuant to this Agreement at the Second Closing Date, then the Underwriters
shall have the right, by written notice from the Representative to the Company
and the Selling Stockholders, to postpone the Second Closing Date, as the case
may be, but in no event for longer than seven days in order that the required
changes, if any, to the Registration Statement and the Prospectus or any other
documents or arrangements may be effected.
SECTION 18. GENERAL PROVISIONS.
This Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter
hereof. This Agreement may be executed in two or more counterparts, each one of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement may not be amended or
modified unless in writing by all of the parties hereto, and no condition herein
(express or implied) may be waived unless waived in writing by each party whom
the condition
33
is meant to benefit. The Table of Contents and the Section headings herein are
for the convenience of the parties only and shall not affect the construction or
interpretation of this Agreement.
Each of the parties hereto acknowledges that it is a sophisticated
business person who was adequately represented by counsel during negotiations
regarding the provisions hereof, including, without limitation, the
indemnification provisions of Section 8 and the contribution provisions of
Section 9, and is fully informed regarding said provisions. Each of the parties
hereto further acknowledges that the provisions of Sections 8 and 9 hereto
fairly allocate the risks in light of the ability of the parties to investigate
the Company, its affairs and its business in order to assure that adequate
disclosure has been made in the Registration Statement, any preliminary
prospectus and the Prospectus (and any amendments and supplements thereto), as
required by the Securities Act and the Exchange Act.
34
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
Very truly yours,
FRIENDLY ICE CREAM CORPORATION
By:
------------------------------
Name:
Title:
[Names of Selling Stockholders]
By:
------------------------------
(Attorney-in-fact)
The foregoing Underwriting Agreement is hereby confirmed and accepted
by the Representative in San Francisco, California as of the date first above
written.
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ SECURITIES, INC.
Acting as Representative of the
several Underwriters named in
the attached Schedule A.
By:
----------------------------------
SCHEDULE A
NUMBER OF FIRM COMMON
UNDERWRITERS SHARES TO BE PURCHASED
NationsBanc ▇▇▇▇▇▇▇▇▇▇
Securities, Inc.
[___] [___]
[___] [___]
[___] [___]
[___] [___]
Total 5,000,000
SCHEDULE B
MAXIMUM NUMBER
OF OPTIONAL
COMMON SHARES TO
SELLING STOCKHOLDER BE SOLD
------------------- ----------------
Selling Stockholder........................ [______]
Selling Stockholder........................ [______]
Total............................. [______]
EXHIBIT A-1
Opinion of ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, special counsel to the Company, to be
delivered pursuant to Section 5(e) of the Underwriting Agreement.
References to the Prospectus in this EXHIBIT A-1 include any
supplements thereto at the Closing Date.
(i) The authorized, issued and outstanding capital stock of the
Company (including the Common Stock) conform in all material respects to
the descriptions thereof set forth in the Prospectus. The description of
the Company's stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted and exercised
thereunder, set forth in the Prospectus accurately and fairly presents in
all material respects the information required to be shown with respect to
such plans, arrangements, options and rights.
(ii) Assuming that the Underwriting Agreement has been duly
authorized, executed and delivered by the Company and the Selling
Stockholders, it is a valid and binding agreement of the Company
enforceable in accordance with its terms, except as rights to
indemnification thereunder may be limited by applicable law or public
policy and except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable principles.
(iii) Assuming that the Common Shares to be purchased by the
Underwriters from the Company have been duly authorized for issuance and
sale pursuant to the Underwriting Agreement, when such Common Shares have
been issued and delivered by the Company pursuant to the Underwriting
Agreement against payment of the consideration set forth therein, such
Common Shares will be validly issued, fully paid and nonassessable;
assuming that the Common Shares to be sold by the Selling Stockholders to
the Underwriters have been duly authorized, such Common Shares have been
validly issued and are fully paid and nonassessable.
(iv) Each of the Registration Statement and the Rule 462(b)
Registration Statement, if any, has been declared effective by the
Commission under the Securities Act. To the knowledge of such counsel, no
stop order suspending the effectiveness of either of the Registration
Statement or the Rule 462(b) Registration Statement, if any, has been
issued under the Securities Act and no proceedings for such purpose have
been instituted or are pending or are contemplated or threatened by the
Commission. Any required filing of the Prospectus and any supplement
thereto pursuant to Rule 424(b) under the Securities Act has been made in
the manner and within the time period required by such Rule 424(b).
(v) The Registration Statement, including any Rule 462(b)
Registration Statement, the Prospectus and each amendment or supplement to
the Registration Statement and the Prospectus as of their respective
effective or issue dates (other than the
A-1
financial statements and supporting schedules included or incorporated by
reference therein or in exhibits to or excluded from the Registration
Statement, as to which no opinion need be rendered) comply as to form in
all material respects with the applicable requirements of the Securities
Act.
(vi) The Common Shares have been approved for inclusion on the Nasdaq
National Market.
(vii) The statements (i) in the Prospectus under the captions "Risk
Factors--Restrictions Imposed Under New Credit Facility", "--Fraudulent
Conveyance" and "--Shares Eligible for Future Sale", "Management's
Discussion and Analysis and Results of Operations--Liquidity", "Description
of New Credit Facility", "Description of Senior Notes", "Description of
Capital Stock", "Shares Eligible for Future Sale", and "Underwriting" and
(ii) in Item 14 and Item 15 of the Registration Statement, insofar as such
statements constitute matters of law, summaries of legal matters, the
Company's charter or by-law provisions, documents or legal proceedings, or
legal conclusions, has been reviewed by such counsel and fairly present and
summarize, in all material respects, the matters referred to therein.
(viii) No consent, approval, authorization or other order of, or
registration or filing with, any federal or New York court, governmental
authority or agency, is required for the Company's execution, delivery and
performance of the Underwriting Agreement and consummation of the
transactions contemplated thereby and by the Prospectus, except as required
under the Securities Act, applicable state securities or blue sky laws and
from the NASD.
(ix) The execution and delivery of the Underwriting Agreement by the
Company and the performance by the Company of its obligations thereunder
(other than performance by the Company of its obligations under the
indemnification section of the Underwriting Agreement, as to which no
opinion need be rendered) (i) will not result in any violation of the
provisions of the charter or by-laws of the Company or any subsidiary;
(ii) will not constitute a breach of, or Default or a Debt Repayment
Triggering Event under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or
any of its subsidiaries pursuant to, any Existing Instrument identified on
an annex to such opinion which the Company has represented lists all
material Existing Instruments to which the Company or any of such
subsidiaries is bound or to which any of the property or assets of the
Company or any of such subsidiaries is subject, except for such breaches,
Defaults, liens, charges or encumbrances as would not, individually or in
the aggregate, result in a Material Adverse Change; or (iii) will not
result in any violation of any federal or New York statute or any rule or
regulation that has been issued pursuant to any federal or New York statute
or any order known to such counsel issued pursuant to any federal or New
York statute by any court or governmental agency or body or court having
jurisdiction over the Company or any subsidiary.
(x) The Company is not, and after receipt of payment for the Common
Shares will not be, an "investment company" within the meaning of
Investment Company Act.
A-2
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company,
representatives of the independent public or certified public accountants
for the Company and with representatives of the Underwriters at which the
contents of the Registration Statement and the Prospectus, and any
supplements or amendments thereto, and related matters were discussed and,
although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus (other than as
specified above in paragraphs (i) and (vii)), and any supplements or
amendments thereto, on the basis of the foregoing, nothing has come to
their attention which has led them to believe that either the Registration
Statement or any amendments thereto, at the time the Registration Statement
or such amendments became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that
the Prospectus, as of its date and at the First Closing Date or the Second
Closing Date, as the case may be, contained an untrue statement of a
material fact or omitted to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading (it being understood that such counsel need
express no belief as to the financial statements or schedules or other
financial or statistical data derived therefrom, included in the
Registration Statement or the Prospectus or any amendments or supplements
thereto).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the
General Corporation Law of the State of Delaware, the law of the State of
New York or the federal law of the United States, to the extent they deem
proper and specified in such opinion, upon the opinion (which shall be
dated the First Closing Date or the Second Closing Date, as the case may
be, shall be satisfactory in form and substance to the Underwriters, shall
expressly state that the Underwriters may rely on such opinion as if it
were addressed to them and shall be furnished to the Representative) of
other counsel of good standing whom they believe to be reliable and who are
satisfactory to counsel for the Underwriters; PROVIDED, HOWEVER, that such
counsel shall further state that they believe that they and the
Underwriters are justified in relying upon such opinion of other counsel,
and (B) as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company and public officials.
A-3
EXHIBIT A-2
Opinion to be delivered pursuant to Section 5(e) of the Underwriting
Agreement by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, General Counsel of the Company and/or by [▇▇▇▇▇▇
Hall], Massachusetts counsel to the Company, which opinions may be divided among
such counsel in any manner satisfactory to counsel to the Underwriters.
References to the Prospectus in this Exhibit A-2 include any supplements thereto
at the Closing Date.
(i) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the Commonwealth of
Massachusetts.
(ii) The Company has full corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the
Underwriting Agreement.
(iii) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in the States of
and in each other jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except for such jurisdictions (other than the States of
) where the failure to so qualify or to be in good standing
would not, individually or in the aggregate, result in a Material Adverse
Change.
(iv) Each subsidiary has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has full corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Prospectus and, to the knowledge of such counsel, is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct of
business, except for such jurisdictions where the failure to so qualify or
to be in good standing would not, individually or in the aggregate, result
in a Material Adverse Change.
(v) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued and outstanding capital stock of each
subsidiary has been duly authorized and validly issued, is fully paid and
non-assessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge,
lien, encumbrance or, to the knowledge of such counsel, any pending or
threatened claim.
(vi) All of the outstanding shares of Common Stock (including those
to be sold by the Selling Stockholders to the Underwriters) have been duly
authorized and validly issued, are fully paid and nonassessable and, to
such counsel's knowledge, have been issued in compliance with the
registration and qualification requirements of federal and state securities
laws. The form of certificate used to evidence the Common Stock is in due
and proper form and complies in all material respects with all applicable
requirements of the charter and by-laws of the Company and the General
Corporation Law of the Commonwealth of Massachusetts.
A-4
(vii) No stockholder of the Company or any other person has any
preemptive right, right of first refusal or other similar right to
subscribe for or purchase securities of the Company arising (i) by
operation of the charter or by-laws of the Company or the General
Corporation Law of the Commonwealth of Massachusetts or (ii) to the
knowledge of such counsel, otherwise.
(viii) The Underwriting Agreement has been duly authorized, executed
and delivered by, and is a valid and binding agreement of, the Company.
(ix) The Common Shares to be purchased by the Underwriters from the
Company have been duly authorized for issuance and sale pursuant to the
Underwriting Agreement and, when issued and delivered by the Company
pursuant to the Underwriting Agreement against payment of the consideration
set forth therein, will be validly issued, fully paid and nonassessable;
the Common Shares to be sold by the Selling Stockholders to the
Underwriters have been duly authorized, validly issued and are fully paid
and nonassessable.
(x) To the knowledge of such counsel, no stop order suspending the
effectiveness of either of the Registration Statement or the Rule 462(b)
Registration Statement, if any, has been issued under the Securities Act
and no proceedings for such purpose have been instituted or are pending or
are contemplated or threatened by the Commission.
(xi) The statements (i) in the Prospectus under the captions
"Prospectus Summary--Recent Developments", "Risk Factors--Relationships
with ▇▇▇▇▇▇▇; Potential Conflicts of Interest; Dependence on Senior
Management", "--Regulation" and "--Effect of Certain Anti-Takeover
Provisions", "Management's Discussion and Analysis and Results of
Operations--Liquidity", "Business--Licenses and Trademarks" and
"--Government Regulation and Legal Proceedings", "Management", "Certain
Transactions", "Description of Capital Stock" and "Underwriting" and
(ii) in Item 14 and Item 15 of the Registration Statement, insofar as such
statements constitute matters of law, summaries of legal matters, the
Company's charter or by-law provisions, documents or legal proceedings, or
legal conclusions, has been reviewed by such counsel and fairly present and
summarize, in all material respects, the matters referred to therein.
(xii) To the knowledge of such counsel, there are no legal or
governmental actions, suits or proceedings pending or threatened which are
required to be disclosed in the Registration Statement, other than those
disclosed therein.
(xiii) To the knowledge of such counsel, there are no Existing
Instruments required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto other than those described or
referred to therein or filed as exhibits thereto; and the descriptions
thereof and references thereto are correct in all material respects.
(xiv) No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental authority or
agency, is required for the
A-5
Company's execution, delivery and performance of the Underwriting Agreement
and consummation of the transactions contemplated thereby and by the
Prospectus, except as required under the Securities Act, applicable state
securities or blue sky laws and from the NASD.
(xv) The execution and delivery of the Underwriting Agreement by the
Company and the performance by the Company of its obligations thereunder
(other than performance by the Company of its obligations under the
indemnification section of the Underwriting Agreement, as to which no
opinion need be rendered) (i) have been duly authorized by all necessary
corporate action on the part of the Company; (ii) will not result in any
violation of the provisions of the charter or by-laws of the Company or any
subsidiary; (iii) will not constitute a breach of, or Default or a Debt
Repayment Triggering Event under, or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the
Company or any of its subsidiaries pursuant to, any material Existing
Instrument, except for such breaches, Defaults, liens, charges or
encumbrances as would not, individually or in the aggregate, result in a
Material Adverse Change; or (iv) to the knowledge of such counsel, will not
result in any violation of any law, administrative regulation or
administrative or court decree applicable to the Company or any subsidiary,
except for such violations as would not, individually or in the aggregate,
result in a Material Adverse Change.
(xvi) Except as disclosed in the Prospectus, to the knowledge of such
counsel, there are no persons with registration or other similar rights to
have any equity or debt securities registered for sale under the
Registration Statement or included in the offering contemplated by the
Underwriting Agreement, except for such rights as have been duly waived.
(xvii) To the knowledge of such counsel, neither the Company nor any
subsidiary is in violation of its charter or by-laws or any law,
administrative regulation or administrative or court decree applicable to
the Company or any subsidiary or is in Default in the performance or
observance of any obligation, agreement, covenant or condition contained in
any material Existing Instrument, except in each such case for such
violations or Defaults as would not, individually or in the aggregate,
result in a Material Adverse Change.
(xviii) The Company and each of its subsidiaries have good and
marketable title in fee simple to all real property owned by them, in each
case free and clear of all liens, encumbrances and defects except such as
are described in the Prospectus or such as do not materially affect the
value of such property and do not materially interfere with the use made
and proposed to be made of such property by the Company and its
subsidiaries; and all real property and buildings held under lease by the
Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases, with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries.
A-6
(xix) To such counsel's knowledge and other than as set forth in the
Prospectus, (A) the Company possesses such certificates, authorizations or
permits issued by the appropriate state, federal or foreign regulatory
agencies or bodies necessary to conduct the business now operated by it,
except where the failure to possess such certificates, authorizations or
permits would not be reasonably expected to result in a Material Adverse
Change, and (B) the Company has not received any notice of proceedings
relating to the revocation or modification of any such certificate,
authorization or permit which, singularly or in the aggregate, if the
subject of an unfavorable decision, ruling, or finding, would be reasonably
expected to result in a Material Adverse Change.
(xx) To such counsel's knowledge and other than as set forth in the
Prospectus, the Company and each of its subsidiaries own or possess
adequate rights to use all material patents, patent applications,
trademarks, service marks, trade names, trademark registrations, service
▇▇▇▇ registrations, copyrights and licenses necessary for the conduct of
their respective businesses and have no reason to believe that the conduct
of their respective businesses will conflict with, and have not received
any notice of any claim of conflict with, any such rights of others.
In rendering the opinion referred to in subsection (xviii) above, such
counsel may state that no examination of record titles for the purpose of
such opinion has been made, and that they are relying upon a general review
of the titles of the Company and its subsidiaries, upon opinions of local
counsel and abstracts, reports and policies of title companies rendered or
issued at or subsequent to the time of acquisition of such property by the
Company or its subsidiaries, upon opinions of counsel to the lessors of
such property and, in respect of matters of fact, upon certificates of
officers of the Company or its subsidiaries, PROVIDED that such counsel
shall state that they believe that both the Underwriters and they are
justified in relying upon such opinions, abstracts, reports, policies and
certificates.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company,
representatives of the independent public or certified public accountants
for the Company and with representatives of the Underwriters at which the
contents of the Registration Statement and the Prospectus, and any
supplements or amendments thereto, and related matters were discussed and,
although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus (other than as
specified above in paragraph (xi)), and any supplements or amendments
thereto, on the basis of the foregoing, nothing has come to their attention
which has led them to believe that either the Registration Statement or any
amendments thereto, at the time the Registration Statement or such
amendments became effective, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that the
Prospectus, as of its date and at the First Closing Date or the Second
Closing Date, as the case may be, contained an untrue statement of a
material fact or omitted to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading (it being understood that such counsel need
express no belief as to the financial statements or schedules or other
A-7
financial or statistical data derived therefrom, included in the
Registration Statement or the Prospectus or any amendments or supplements
thereto).
A-8
EXHIBIT B
Opinion of counsel for the Selling Stockholders to be delivered
pursuant to Section 5(g) of the Underwriting Agreement.
The opinion of such counsel pursuant to Section 5(g) shall be rendered
to the Representative at the request of the Company and shall so state therein.
References to the Prospectus in this EXHIBIT B include any supplements thereto
at the Closing Date.
BankBoston, N.A. is the sole registered owner of the Shares to
be sold by the Selling Stockholders; and assuming that the Underwriters
purchase the Common Shares which are sold by such Selling Stockholders
pursuant to the Underwriting Agreement for value, in good faith and without
notice of any adverse claim, the delivery of such Common Shares pursuant to
the Underwriting Agreement will pass good and valid title to such Common
Shares, free and clear of any security interest, mortgage, pledge, lien,
encumbrance or other claim.
B-1
EXHIBIT C-1
September __, 1997
▇▇▇▇▇▇▇▇▇▇ Securities
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
As Representative of the Several Underwriters
Re: Friendly Ice Cream Corporation (the "Company")
----------------------------------------------
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of Class
B Voting Stock or Class C Nonvoting Common Stock of the Company or securities
convertible into or exchangeable or exercisable for Class A Voting Common Stock
of the Company. The Company proposes to carry out a public offering (the
"Offering") of Common Stock (the "Common Stock") of the Company (into which the
Class A Voting Common Stock, Class B Voting Stock and Class C Nonvoting Common
Stock are being converted in connection with the Offering and a related
amendment of the Company's Articles of Organization) for which you will act as
the representative of the underwriters. The undersigned recognizes that the
Offering will be of benefit to the undersigned and will benefit the Company by,
among other things, raising additional capital for its operations. The
undersigned acknowledges that you and the other underwriters are relying on the
representations and agreements of the undersigned contained in this letter in
carrying out the Offering and in entering into underwriting arrangements with
the Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that the
undersigned will not, without the prior written consent of ▇▇▇▇▇▇▇▇▇▇ Securities
(which consent may be withheld in its sole discretion), directly or indirectly,
sell, offer, contract or grant any option to sell (including without limitation
any short sale), pledge, transfer, establish an open "put equivalent position"
within the meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934,
as amended (the "Exchange Act") or otherwise dispose of any shares of Common
Stock, options or warrants to acquire shares of Common Stock, or securities
exchangeable or exercisable for or convertible into shares of Common Stock
currently or hereafter owned either of record or beneficially (as defined in
Rule 13d-3 under the Exchange Act) by the undersigned (collectively "Transfer"),
other than shares purchased in or after consummation of the Offering that are
not "restricted securities" within the meaning of Rule 144 of the Securities Act
of 1933, as amended, or publicly announce the undersigned's intention to do any
of the foregoing, for a period commencing on the date of the Prospectus relating
to the Offering and continuing through the close of trading on the date 360 days
after the date of such Prospectus. The undersigned also agrees that the terms
and conditions of this Lockup Agreement will be binding on it as well as any
shares of capital stock of the Company held by it (or its successors and
assigns), either beneficially or of record. The undersigned further agrees that
should the undersigned sell any of its shares of Class B Voting Stock or Class C
Nonvoting Common Stock of the Company prior to the date of the Prospectus,
C-1
it will obtain a valid and binding Lockup Agreement from the buyer of such
shares in substantially the same form as this Lockup Agreement. The undersigned
further agrees and consents to the entry of stop transfer instructions with the
Company's transfer agent and registrar against the transfer of shares of Common
Stock or securities convertible into or exchangeable or exercisable for Common
Stock held by the undersigned except in compliance with the foregoing
restrictions. Notwithstanding the foregoing, the undersigned may Transfer
shares of Common Stock to any person or entity that was a direct or beneficial
holder of Common Stock immediately prior to the sale of Common Stock by the
Company in consummation of the Offering.
With respect to the Offering only, the undersigned waives any registration
rights relating to registration under the Securities Act of any Common Stock
owned either of record or beneficially by the undersigned, including any rights
to receive notice of the Offering.
This agreement is irrevocable and will be binding on the undersigned and the
respective successors, heirs, personal representatives, and assigns of the
undersigned.
-----------------------------
Printed Name of Holder
By:
---------------------------------
Signature
------------------------------
Printed Name of Person Signing
(AND INDICATE CAPACITY OF PERSON SIGNING IF
SIGNING AS CUSTODIAN, TRUSTEE, OR ON BEHALF
OF AN ENTITY)
C-2
EXHIBIT C-2
, 1997
▇▇▇▇▇▇▇▇▇▇ Securities
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
As Representative of the Several Underwriters
Re: Friendly Ice Cream Corporation (the "Company")
----------------------------------------------
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of Class
A Voting Common Stock of the Company or securities convertible into or
exchangeable or exercisable for such Class A Voting Common Stock of the Company.
The Company proposes to carry out a public offering (the "Offering") of Common
Stock (the "Common Stock") of the Company (into which the Class A Voting Common
Stock is being converted in connection with the Offering and a related amendment
of the Company's Articles of Organization) for which you will act as the
representative of the underwriters. The undersigned recognizes that the
Offering will be of benefit to the undersigned and will benefit the Company by,
among other things, raising additional capital for its operations. The
undersigned acknowledges that you and the other underwriters are relying on the
representations and agreements of the undersigned contained in this letter in
carrying out the Offering and in entering into underwriting arrangements with
the Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that the
undersigned will not, without the prior written consent of ▇▇▇▇▇▇▇▇▇▇ Securities
(which consent may be withheld in its sole discretion), directly or indirectly,
sell, offer, contract or grant any option to sell (including without limitation
any short sale), pledge, transfer, establish an open "put equivalent position"
within the meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934,
as amended (the "Exchange Act") or otherwise dispose of any shares of Common
Stock, options or warrants to acquire shares of Common Stock, or securities
exchangeable or exercisable for or convertible into shares of Common Stock
currently or hereafter owned either of record or beneficially (as defined in
Rule 13d-3 under the Exchange Act) by the undersigned (collectively,
"Transfer"), other than shares purchased in or after consummation of the
Offering that are not "restricted securities" within the meaning of Rule 144 of
the Securities Act of 1933, as amended, or publicly announce the undersigned's
intention to do any of the foregoing, for a period commencing on the date of the
Prospectus relating to the Offering and continuing through the close of trading
on the date 360 days after the date of such Prospectus. The undersigned also
agrees that the terms and conditions of this Lockup Agreement will be binding on
it as well as any shares of capital stock of the Company held by it (or its
successors and assigns), either beneficially or of record. The undersigned
further agrees that should the undersigned sell any of its shares of Class A
Nonvoting Common Stock of the Company prior to the date of such Prospectus, it
will obtain a valid and binding Lockup Agreement from the buyer of such shares
in substantially the same
C-3
form as this Lockup Agreement. The undersigned further agrees and consents to
the entry of stop transfer instructions with the Company's transfer agent and
registrar against the transfer of shares of Common Stock or securities
convertible into or exchangeable or exercisable for Common Stock held by the
undersigned except in compliance with the foregoing restrictions.
Notwithstanding the foregoing, if the undersigned is not a director or an
executive officer of the Company, the undersigned may Transfer shares of Common
Stock to any person or entity that was a direct or beneficial holder of Common
Stock immediately prior to the sale of Common Stock by the Company in
consummation of the Offering.
With respect to the Offering only, the undersigned waives any registration
rights relating to registration under the Securities Act of any Common Stock
owned either of record or beneficially by the undersigned, including any rights
to receive notice of the Offering.
This agreement is irrevocable and will be binding on the undersigned and the
respective successors, heirs, personal representatives, and assigns of the
undersigned.
-----------------------------
Printed Name of Holder
By:
---------------------------------
Signature
------------------------------
Printed Name of Person Signing
(AND INDICATE CAPACITY OF PERSON SIGNING IF
SIGNING AS CUSTODIAN, TRUSTEE, OR ON BEHALF
OF AN ENTITY)
C-4
EXHIBIT D
Persons required to deliver lock-up letters
[Insert names of lender-equity holders]
The Equitable Life Assurance Society of the U.S.
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
D-1