HOSPITALITY WORLDWIDE SERVICES, INC.
2,875,000 SHARES(1)
COMMON STOCK ($0.01 PAR VALUE)
UNDERWRITING AGREEMENT
_______ __, 1997
▇▇▇▇▇▇▇▇▇ & COMPANY, INC.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
As Representative of the Several Underwriters
Ladies and Gentlemen:
Hospitality Worldwide Services, Inc., a New York corporation
(the "COMPANY") hereby confirms its agreement with both of you and each of the
other Underwriters named in SCHEDULE I hereto (collectively, the "UNDERWRITERS,"
which term shall also include any underwriter substituted as hereinafter
provided in Section 2(b) hereof), for whom you are acting as representative (in
such capacity, the "REPRESENTATIVE") with respect to the purchase by the
Underwriters, acting severally and not jointly, of 2,500,000 shares of Common
Stock of the Company, $.01 par value per share (the "COMMON STOCK") from the
Company (said 2,500,000 shares of Common Stock are herein called the
"UNDERWRITTEN STOCK"). The Company also proposes to sell to the Underwriters,
acting severally and not jointly, up to 375,000 additional shares of Common
Stock (said 375,000 shares of Common Stock being herein called the "OPTION
STOCK" and the Option Stock with the Underwritten Stock is herein collectively
called the "STOCK"). The Common Stock is more fully described in the
Registration Statement and the Prospectus hereinafter mentioned. This
Underwriting Agreement, as amended, supplemented or modified in writing from
time to time, if at all, is referred to herein as the "AGREEMENT."
The Company hereby confirms the agreements made with respect
to the purchase of the Stock by the several Underwriters. You represent and
warrant that you have been authorized by each of the other Underwriters to enter
into this Agreement on their behalf and to act for them in the manner herein
provided.
The Company has also agreed to issue and sell to you,
Jefferies & Company, Inc., for your own account and not as the Representative of
the several Underwriters, warrants (the "WARRANTS") pursuant to the
Representative's Warrant Agreement (the "WARRANT AGREEMENT") to purchase an
aggregate of ________ shares of Common Stock (the "WARRANT SHARES").
The terms which follow, when used in this Agreement, shall
have the meanings indicated. "PRELIMINARY PROSPECTUS" shall mean any preliminary
prospectus referred to in Section l(a) below and any
--------
(1) Includes an option to purchase up to 375,000 additional shares to cover
overallotments, if any.
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preliminary prospectus included in the Registration Statement on the date that
the Registration Statement becomes effective (the "EFFECTIVE DATE") that omits
Rule 430A Information (as defined below). "REGISTRATION STATEMENT" shall mean
the registration statement referred to in Section l(a) below, including
financial statements, schedules and exhibits, as amended at the Representation
Date (as defined below) or, if not effective at the Representation Date, in the
form in which it shall become effective, and any term sheet filed with the
United States Securities and Exchange Commission (the "COMMISSION") pursuant to
Rule 434 of the rules and regulations (the "ACT REGULATIONS") promulgated under
the Securities Act of 1933, as amended (the "ACT"), the information deemed to be
a part of the Registration Statement at the time it became effective pursuant to
Rule 430A(b) or Rule 434(d) of the Act Regulations, and, in the event of any
amendment thereto or the filing of any abbreviated registration statement,
pursuant to Rule 462(b) of the Act Regulations relating thereto after the
effective date of such registration statement, shall also mean (from and after
the effectiveness of such amendment or the filing of such abbreviated
registration statement) such registration statement as so amended, together with
any such abbreviated registration statement and, in the event any post-effective
amendment thereto becomes effective prior to the Closing Date (as defined in
Section 2 hereof), shall also mean such registration statement as so amended.
Such term shall include Rule 430A Information deemed to be included therein at
the Effective Date as provided by Rule 430A (as defined below). The prospectus
constituting a part of the Registration Statement (including the Rule 430A
Information), as from time to time amended or supplemented, is hereinafter
referred to as the "PROSPECTUS," except that if any revised prospectus shall be
provided to the Underwriters by the Company which differs from the prospectus on
file at the Commission at the Effective Date, whether or not such revised
prospectus is required to be filed by the Company pursuant to Rule 424 of the
Act Regulations, the term "PROSPECTUS" shall refer to each such revised
prospectus from and after the time it is first provided to the Underwriters for
such use; PROVIDED, HOWEVER, that if in reliance on Rule 434 of the Act
Regulations and with the consent of Jefferies & Company, Inc., the Company shall
have provided to the Underwriters a term sheet pursuant to Rule 434(b) or (c),
as applicable, prior to the time that a confirmation is sent or given for
purposes of Section 2(10)(a) of the Act, the term Prospectus shall mean the
"prospectus subject to completion" (as defined in Rule 434(g) of the Act
Regulations) last provided to the Underwriters by the Company and circulated by
the Underwriters to all prospective purchasers of the Stock (including the
information deemed to be a part of the Registration Statement at the time it
became effective pursuant to Rule 434(d) of the Act Regulations).
Notwithstanding the foregoing, if any revised prospectus shall be provided to
the Underwriters by the Company for use in connection with the offering of the
Stock that differs from the prospectus referred to in the immediately preceding
sentence (whether or not such revised prospectus is required to be filed with
the Commission pursuant to Rule 424(b) of the Act Regulations), the term
Prospectus shall refer to such revised prospectus from and after the time it is
first provided to the Underwriters for such use. If, in reliance on Rule 434 of
the Act Regulations and with the consent of Jefferies & Company, Inc., the
Company shall have provided to the Underwriters a term sheet pursuant to Rule
434(b) or (c), as applicable, prior to the time that a confirmation is sent or
given for purposes of Section 2(10)(a) of the Act, the Prospectus and the term
sheet, together, will not be materially different from the prospectus in the
Registration Statement. "RULE 158," "RULE 424," "RULE 430A" and "RULE 434" refer
to such rules under the Act Regulations. "RULE 430A INFORMATION" means
information with respect to the Stock and the offering thereof permitted to be
omitted from the Registration Statement when it becomes effective pursuant to
Rule 430A.
SECTION 1. REPRESENTATIONS AND WARRANTIES. The Company
represents and warrants to each of the Underwriters as of the date hereof (such
date being referred to as the "REPRESENTATION DATE"), as follows:
(a). A Registration Statement on Form SB-2 (File No.
333-_____) with respect to the Stock, including a prospectus subject to
completion, has been prepared by the Company in conformity with the requirements
of the Act and the Act Regulations and has been filed with the Commission; such
amendments to such registration statement, such amended prospectuses subject to
completion and such abbreviated registration statements pursuant to Rule 462(b)
of the Act Regulations as may have been required prior to the date hereof, have
been similarly prepared and filed with the Commission; and the Company will file
such additional amendments to such registration statement, such amended
prospectuses subject to completion and such abbreviated registration statements
as may hereafter be required. Copies of such registration statement and
amendments, of each related Preliminary Prospectus and of any Rule 434 term
sheet and of any abbreviated registration statement pursuant to Rule 462(b) of
the Act Regulations have been delivered to you.
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(b). The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus or instituted proceedings for
that purpose, and each such Preliminary Prospectus has conformed in all material
respects to the requirements of the Act and the Act Regulations and, as of its
date, has not included any untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; and at the time
the Registration Statement became or becomes, as the case may be, effective and
at all times subsequent thereto up to and on the Closing Date (hereinafter
defined) and on any later date on which shares of Option Stock are to be
purchased, (i) the Registration Statement and the Prospectus, and any amendments
and supplements thereto and any abbreviated registration statements, contained
and will contain all material information required to be included therein by the
Act and the Act Regulations and will in all material respects conform to the
requirements of the Act and the Act Regulations; (ii) the Registration
Statement, and any amendments or supplements thereto, did not and will not
include any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; and (iii) the Prospectus, and any amendments and supplements thereto
and any abbreviated registration statements, did not and will not include any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; PROVIDED that the Company makes no
representations, or warranties or agreements as to the information provided in
writing to the Company by or on behalf of the Underwriters expressly for use in
the Registration Statement or the Prospectus, and the Company agrees that the
only information provided in writing by or on behalf of the Underwriters to the
Company expressly for use in the Registration Statement or the Prospectus is
that information contained in the section of the Prospectus entitled
"Underwriting," the last paragraph of text on the cover page of the Prospectus
and the paragraph regarding stabilization appearing on the inside front cover
page of the Prospectus.
(c). (i) Each of the Company and its subsidiaries is a
corporation duly incorporated and validly existing in good standing under the
laws of its state or jurisdiction of incorporation, with full corporate power
and authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the Prospectus; (ii)
each of the Company and its subsidiaries is duly qualified to transact business
and is in good standing in each jurisdiction or place where it owns or leases
property or conducts business so as to require qualification, except where the
failure, individually or in the aggregate, to be so qualified would not have a
material adverse effect on the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not occurring in the ordinary course of
business (a "MATERIAL ADVERSE EVENT"); (iii) the Company does not own or control
any interest in any corporation, association, partnership, limited liability
company, joint venture or other entity other than its subsidiaries listed on
SCHEDULE II hereto; and (iv) except as set forth on SCHEDULE II, each of its
subsidiaries does not own or control any interest in any corporation,
association, partnership, limited liability, joint venture or other entity.
(d). Each of the Company and its subsidiaries has all
necessary authorizations, approvals, orders, licenses, certificates, franchises
and permits of and from all regulatory or governmental officials, bodies and
tribunals ("PERMITS") to own or lease its respective properties and to conduct
its businesses as described in the Registration Statement and Prospectus, except
for certificates, authorizations or permits that are not material and the
absence of which do not and will not interfere with the conduct of the business
of the Company, and none of the Company nor any of its subsidiaries has received
any notice or threat of proceedings relating to the revocation or modification
of any such Permits; each of the Company and its subsidiaries has fulfilled and
performed all of its respective current obligations with respect to such
Permits, and no event has occurred which allows, or after notice or lapse of
time, or both, would allow, revocation or termination thereof or results in any
other material impairment of the rights of the holder of any such Permit; and
such Permits contain no restrictions that are materially burdensome to the
Company or its subsidiaries; and each of the Company and its subsidiaries is in
compliance with all applicable laws, rules, regulations, orders and consents.
The property and businesses of the Company and its subsidiaries conform in all
material respects to the descriptions thereof contained in the Registration
Statement and the Prospectus.
(e). Except as set forth in the Registration Statement and
Prospectus, (i) each of the Company and its subsidiaries has good and marketable
title to all properties and assets described in the Registration Statement
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and Prospectus as owned by it, free and clear of any pledge, lien, security
interest, encumbrance, claim or equitable interest, other than such as would not
result in a Material Adverse Event; (ii) the agreements to which the Company or
any of its subsidiaries is a party described in the Registration Statement and
Prospectus are valid agreements, enforceable against (and, to the best of the
Company's knowledge enforceable by) the Company and its subsidiaries (as
applicable), except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or by general equitable
principles and, to the best of the Company's knowledge, the other contracting
party or parties thereto are not in material breach or material default under
any of such agreements; and (iii) each of the Company and its subsidiaries has
valid and enforceable leases for all properties described in the Registration
Statement and Prospectus as leased by it, except as the enforcement thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights generally or by
general equitable principles. Except as otherwise disclosed in the Registration
Statement and Prospectus, each of the Company and its subsidiaries own or lease
all such properties as are necessary to its operations as now conducted or as
proposed in the Registration Statement and Prospectus to be conducted.
(f). The Company has full legal right, power and authority to
enter into this Agreement and the Warrant Agreement and perform the transactions
contemplated hereby. Each of this Agreement, the Warrant Agreement and the
Warrants has been duly authorized, executed and delivered by the Company and is
a valid and binding agreement on the part of the Company, enforceable in
accordance with its terms except as the enforcement hereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally or by general
equitable principles; the performance of this Agreement and the Warrant
Agreement, the issuance and sale of the Stock, the issuance of the Warrants and
the consummation of any other matters herein or therein contemplated will not
(i) result in a material breach or violation of any of the terms and provisions
of, or constitute a default under, any bond, debenture, note or other evidence
of indebtedness, or under any lease, contract, indenture, mortgage, deed of
trust, loan agreement, joint venture or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which it or any of its
subsidiaries or their respective properties may be bound; (ii) violate the
charter or bylaws of the Company or any of its subsidiaries; or (iii) violate
any law, statute, order, rule, regulation, writ, injunction, judgment or decree
applicable to the Company or any of its subsidiaries or their respective
properties of any court, government or governmental agency or body, domestic or
foreign. No consent, approval, authorization or order of or qualification with
any court, government or governmental agency or body, domestic or foreign, is
required for the execution and delivery of this Agreement, the Warrant Agreement
or the Warrants and the consummation by the Company or any of its subsidiaries
of the transactions herein and therein contemplated, except such as may be
required under the Act and state securities laws, all of which requirements have
been satisfied in all material respects.
(g). Each of the Company and its subsidiaries owns or
possesses adequate rights to use all patents, patent applications, patent
rights, inventions, trade secrets, know-how, trademarks, service marks, trade
names and copyrights which are necessary to conduct its businesses as described
in the Registration Statement and Prospectus; none of the Company or any of its
subsidiaries has received any notice of, and has no knowledge of, any
infringement of or conflict with asserted rights of the Company by others with
respect to any patent, patent applications, patent rights, inventions, trade
secrets, know-how, trademarks, service marks, trade names or copyrights; and
none of the Company or any of its subsidiaries has received any notice of, and
has no knowledge of, any infringement of or conflict with asserted rights of
others with respect to any patent, patent rights, inventions, trade secrets,
know-how, trademarks, service marks, trade names or copyrights.
(h). All outstanding shares of capital stock of the Company
(i) have been duly authorized and validly issued and are fully paid and
nonassessable; (ii) have been issued in compliance with all federal and state
securities laws; and (iii) no further approval or authorization of any
shareholder, the Board of Directors of the Company or others is required for the
issuance and sale or transfer of the Stock hereunder;
(i). Except as described in the Prospectus, (i) there are no
outstanding securities convertible into or exchangeable for, and no outstanding
options, warrants or other rights to purchase, any shares of the capital stock
of the Company or its subsidiaries, nor any agreements or commitments to issue
any of the same; (ii) there are no registration rights, preemptive rights or
other rights to subscribe for or to purchase the securities of the Company
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or its subsidiaries that have not been satisfied or expressly waived prior to
the date hereof, or any contracts or commitments to issue or sell, shares of its
capital stock or any such options, rights, convertible securities or
obligations; (iii) there are no restrictions upon the voting or transfer of, any
capital stock pursuant to the Company's or its subsidiaries' certificates or
articles of incorporation or by-laws or any agreement or other instrument to
which the Company or its subsidiaries is a party; and (iv) the Stock when issued
and delivered against payment therefor in accordance with the terms of this
Agreement, will be duly and validly issued, fully paid and nonassessable, and
will be sold free and clear of any pledge, lien, security interest, encumbrance,
claim or equitable interest.
(j). The Company has reserved and kept available for the
exercise of the Warrants such number of authorized but unissued shares of Common
Stock to permit the exercise in full of the Warrants. The Warrant Shares, when
issued and sold pursuant to the Warrants, (i) will not be subject to any
preemptive rights or other rights to subscribe for or to purchase the Warrant
Shares; (ii) will have no restrictions upon the voting or transfer of, any
Warrant Shares pursuant to the Company's certificate or articles of
incorporation or by-laws or any agreement or other instrument to which the
Company or its subsidiaries is a party; and (iii) the Warrant Shares, when
issued and delivered against payment therefor in accordance with the terms of
the Warrant Agreement, will be duly and validly issued, fully paid and
nonassessable, and will be sold free and clear of any pledge, lien, security
interest, encumbrance, claim or equitable interest.
(k). The authorized and outstanding capital stock of the
Company as of June 30, 1997, is as set forth in the Registration Statement and
the Prospectus under the caption "Capitalization" and conforms to the statements
relating thereto contained in the Registration Statement and the Prospectus (and
such statements correctly state the substance of the instruments defining the
capitalization of the Company); and the description of the Company's stock
options or other rights granted and exercised under the Company's stock option,
stock bonus and other stock plans or arrangements, set forth in the Registration
Statement and the Prospectus accurately and fairly presents the information
required to be shown with respect to such plans, arrangements, options and
rights.
(l). All issued and outstanding shares of capital stock of the
subsidiaries of the Company have been duly authorized and validly issued and are
fully paid and nonassessable, and were not issued in violation of or subject to
any preemptive right, or other rights to subscribe for or purchase shares and
are owned by the Company [or a subsidiary of the Company] free and clear of any
pledge, lien, security interest, encumbrance, claim or equitable interest.
(m). BDO ▇▇▇▇▇▇▇, LLP (i) has examined the consolidated
financial statements of the Company, together with the related schedules and
notes for each of the years in the two (2) year period ended December 31, 1996;
and (ii) has performed the procedures set out in Statement on Accounting
Standards No. 71 ("SAS 71") for a review of the interim financial information
for each of the three (3) month periods ended March 31, 1996 and 1997, filed
with the Commission as a part of the Registration Statement and included in the
Prospectus, are independent accountants within the meaning of the Act and the
Act Regulations; the audited consolidated financial statements of the Company,
together with the related schedules and notes, and the unaudited consolidated
financial information, forming part of the Registration Statement and
Prospectus, fairly present the financial position and the results of operations
of the Company and its subsidiaries at the respective dates and for the
respective periods to which they apply; and all audited consolidated financial
statements of the Company, together with the related schedules and notes, and
the unaudited consolidated financial information, filed with the Commission as
part of the Registration Statement, have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved except as may be otherwise stated therein. The selected and
summary financial and statistical data included in the Registration Statement
and the Prospectus present fairly the information shown therein and have been
compiled on a basis consistent with the audited financial statements presented
therein. No other financial statements or schedules are required to be included
in the Registration Statement.
(n). Fotinakis Phitidis (SA) has examined the consolidated
financial statements of The ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Company (Propriety) Limited, together
with the related schedules and notes for each of the years in the two (2) year
period ended December 31, 1996; and (ii) has performed the procedures set out in
Statement on Accounting Standards No. 71 ("SAS 71") for a review of the interim
financial information for each of the three (3)
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month periods ended March 31, 1996 and 1997, filed with the Commission as a part
of the Registration Statement and included in the Prospectus, are independent
accountants within the meaning of the Act and the Act Regulations; the audited
consolidated financial statements of the Company, together with the related
schedules and notes, and the unaudited consolidated financial information,
forming part of the Registration Statement and Prospectus, fairly present the
financial position and the results of operations of the Company and its
subsidiaries at the respective dates and for the respective periods to which
they apply; and all audited consolidated financial statements of the Company,
together with the related schedules and notes, and the unaudited consolidated
financial information, filed with the Commission as part of the Registration
Statement, have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved except as may be
otherwise stated therein. The selected and summary financial and statistical
data included in the Registration Statement and the Prospectus present fairly
the information shown therein and have been compiled on a basis consistent with
the audited financial statements presented therein. No other financial
statements or schedules are required to be included in the Registration
Statement.
(o). The pro forma financial information and the related notes
thereto included in the Registration Statement have been prepared in accordance
with the Commission's rules and guidelines with respect to pro forma financial
statements, have been properly compiled on the pro forma basis described therein
and, in the opinion of the Company, the assumptions used in the preparation
thereof are reasonable and the adjustments used therein are appropriate to give
effect to the transactions and circumstances referred to therein.
(p). The Company maintains 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 compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(q). The statistical, industry and market-related data
included in the Registration Statement and the Prospectus is reliable and
accurate in all material respects.
(r). Each of the Company and its subsidiaries maintains
insurance covering its properties, operations, personnel and businesses. Such
insurance insures against such losses and risks as are adequate in accordance
with customary industry practice to protect the Company, its subsidiaries and
their businesses. Neither the Company nor its subsidiaries has received written
notice from any insurer or agent of such insurer that substantial capital
improvements or other expenditures will have to be made in order to continue
such insurance. All such insurance is outstanding and duly in force on the date
hereof.
(s). The Company is not, and after application of the proceeds
from the sale of the Stock will not be an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, and the rules and regulations promulgated
thereunder.
(t). Neither of the Company nor any of its subsidiaries is (i)
in violation of its respective charter or by-laws; (ii) in violation of any law,
ordinance, administrative or governmental rule or regulation applicable to the
Company or its subsidiaries or of any franchise, license, permit, judgment or
any decree of any court or governmental agency or body having jurisdiction over
the Company or its subsidiaries; or (iii) in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note, lease,
bond, debenture, bank loan, credit agreement or other agreement, instrument or
evidence of indebtedness to which the Company or its subsidiaries is a party or
by which any of them may be bound, or to which any of the property or assets of
the Company or its subsidiaries is subject.
(u). There is not any pending or, to the best of the Company's
knowledge, any threatened action, suit, claim or proceeding against the Company,
any of its subsidiaries or any of their respective officers or directors (and
which are related to the Company or such Subsidiaries) or any of the respective
properties, assets or
6
rights of the Company or any of its subsidiaries before any court, government or
governmental agency or body, domestic or foreign, having jurisdiction over the
Company or any of its subsidiaries or over their respective officers or
properties or otherwise which (i) might result in a Material Adverse Event; (ii)
might prevent consummation of the transactions contemplated hereby; or (iii) is
required to be disclosed in the Registration Statement or Prospectus and is not
so disclosed; and there are no agreements, contracts, leases or documents of the
Company or any of its subsidiaries of a character required to be described or
referred to in the Registration Statement or Prospectus or to be filed as an
exhibit to the Registration Statement by the Act or the Rules and Regulations
which have not been accurately described in the Registration Statement or
Prospectus or filed as exhibits to the Registration Statement.
(v). Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus, there has not
been (i) a Material Adverse Event; (ii) any transaction that is material to the
Company and its subsidiaries considered as one enterprise, except transactions
entered into in the ordinary course of business; (iii) any obligation, direct or
contingent, that is material to the Company and its subsidiaries considered as
one enterprise, incurred by the Company or its subsidiaries, except obligations
incurred in the ordinary course of business; (iv) any change in the capital
stock or outstanding indebtedness of the Company or any of its subsidiaries that
is material to the Company and its subsidiaries considered as one enterprise;
(v) any dividend or distribution of any kind declared, paid or made on the
capital stock of the Company or any of its subsidiaries; or (vi) any loss or
damage (whether or not insured) to the property of the Company or any of its
subsidiaries which has been sustained or will have been sustained which could
reasonably be expected to result in a Material Adverse Event.
(w). Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement thereto or in any abbreviated
Registration Statement), subsequent to the respective dates as of which such
information is given in the Registration Statement and the Prospectus (or any
amendment or supplement thereto or in any abbreviated Registration Statement),
neither the Company nor any of its subsidiaries has issued any securities, or
incurred any material liability or obligations, direct or contingent, or entered
into any transaction not in the ordinary course of business, or entered into any
transaction with an affiliate (as the term "AFFILIATE" is defined in Rule 405
promulgated by the Commission pursuant to the Act) of the Company which would
otherwise be required to be disclosed in the Registration Statement or the
Prospectus, declared or paid any dividend on its capital stock, or made any
other distribution to any of its shareholders, and there has not been any
material change in the capital stock or other equity, or material increase in
the short-term debt or long-term debt, of the Company or its subsidiaries or any
development involving or which could reasonably be expected to result in a
Material Adverse Event.
(x). There is (i) no unfair labor practice complaint pending
or, to the best knowledge of the Company, threatened against the Company or any
of its subsidiaries before the National Labor Relations Board or any state or
local labor relations board, and no significant grievance or significant
arbitration proceeding arising out of or under any collective bargaining
agreement is so pending against the Company or its subsidiaries, or, to the best
knowledge, of the Company, threatened against any of them; (ii) no strike, labor
dispute, slowdown or stoppage pending against the Company or its subsidiaries,
or, to the best knowledge of the Company, threatened against the Company or any
of its subsidiaries; and (iii) to the best knowledge of the Company, no union
representation question existing with respect to the employees of the Company or
its subsidiaries and, to the best knowledge of the Company, no union organizing
activities are taking place, except (with respect to any matter specified in
clause (i), (ii) or (iii) above, singly or in the aggregate) such as could not
reasonably be expected to result in a Material Adverse Event.
(y). The Company has timely filed all necessary federal, state
and foreign income and franchise tax returns and has paid all taxes shown
thereon as due, and there is no tax deficiency that has been or, to the best of
the Company's knowledge, might be asserted against the Company that might result
in a Material Adverse Event; and all tax liabilities are adequately provided for
on the books of the Company.
(z). Neither the Company nor any of its subsidiaries is in
Violation of any federal, state, local or foreign laws or regulations relating
to pollution or protection of human health or the environment (including,
without limitation, ambient air, surface water, ground water, land surface or
subsurface strata), including, without limitation, laws and regulations relating
to emissions, discharges, releases or threatened releases of chemicals,
7
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products ("MATERIALS OF ENVIRONMENTAL CONCERN"), or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of Environmental Concern
(collectively, "ENVIRONMENTAL LAWS"), which Violation could be reasonably
expected to result in a Material Adverse Event. As used herein, "VIOLATION"
includes, but is not limited to, noncompliance with any permit or other
governmental authorization required under applicable Environmental Laws and
noncompliance with the terms and conditions of any such permit or authorization.
In addition, (i) neither the Company nor any of its subsidiaries has received
any communication, whether from a governmental authority, citizens' group,
employee or otherwise, alleging that the Company or any of its subsidiaries is
not in full compliance with any Environmental Laws or permit or authorization
required under applicable Environmental Laws where such failure to comply could
reasonably be expected to result in a Material Adverse Event; and (ii) there are
no circumstances that may be reasonably anticipated to prevent or interfere with
such full compliance in the future.
(aa). There is no claim, action, cause of action,
investigation or written notice by any person or entity alleging potential
liability (including, without limitation, potential liability for investigatory
costs, cleanup costs, governmental response costs, natural resources damages,
property damages, personal injuries or penalties) arising out of, based on or
resulting from (i) the presence, or release into the environment, of any
Material of Environmental Concern at any location owned or operated by the
Company or any of its subsidiaries; or (ii) circumstances forming the basis of
any Violation, or alleged violation, of any Environmental Law (collectively,
"ENVIRONMENTAL CLAIMS") pending or threatened 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 which liability or violation
could be reasonably expected to result in a Material Adverse Event.
(bb). To the best knowledge of the Company, 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 could form the basis of
any Environmental Claim against the Company or 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, which claim could be reasonably expected to result in a
Material Adverse Event.
(cc). To the best knowledge of the Company, the Company and
its subsidiaries have complied with and will be in compliance with the
provisions of that certain Florida act relating to doing business with Cuba,
codified as Section 517.075 of the Florida statutes, and the rules and
regulations promulgated thereunder or is exempt therefrom.
(dd). The Company, its Subsidiaries, its directors and its
officers, have not taken and will not take, directly or indirectly, any action
designed to, or that might be reasonably expected to, cause or result in
stabilization or manipulation of the price of the Stock. Additionally, the
Company, its Subsidiaries, its directors and its officers have not distributed
and will not distribute prior to the later of (i) the Closing Date, or any date
on which Option Stock are to be purchased, as the case may be, and (ii)
completion of the distribution of the Stock, any offering material in connection
with the offering and sale of the Stock other than any Preliminary Prospectuses,
the Prospectus, the Registration Statement and other materials, if any,
permitted by the Act.
(ee). None of the Company or any of its subsidiaries, and to
the best knowledge of the Company, none of their respective directors or
officers has, at any time during the last five (5) years, (i) made any unlawful
contribution to any candidate for foreign office or failed to disclose fully any
contribution in violation of law; or (ii) made any payment to any federal or
state governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or permitted by the
laws of the United States or any jurisdiction thereof.
(ff). The Stock is duly authorized for listing, subject to
official notice of issuance, on the Nasdaq National Stock Market (herein called
"NASDAQ").
8
(gg). There are no outstanding loans, advances (except normal
advances for business expenses in the ordinary course of business) or guarantees
of indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any of the members of the families of any of them,
except as disclosed in the Registration Statement and the Prospectus.
SECTION 2. SALE AND DELIVERY TO THE UNDERWRITERS; CLOSING.
(a). Subject to the terms and conditions set forth herein, the
Company agrees to sell to each Underwriter, severally and not jointly, and, on
the basis of the representations and warranties herein contained and subject to
the terms and conditions herein set forth, each Underwriter, severally and not
jointly, agrees to purchase from the Company at $_____ per share the number of
shares of Underwritten Stock set forth opposite its name in SCHEDULE I plus any
additional number of shares of Underwritten Stock that such Underwriter may be
obligated to purchase pursuant to Section 9 below.
(b). In addition, subject to the terms and conditions set
forth herein, the Company hereby grants an option to the Underwriters, severally
and not jointly, to purchase from the Company up to 375,000 shares of Option
Stock at the purchase price per share paid by the Underwriters set forth in
Section 2(a) hereof. The option granted by the Company pursuant to this Section
2(b) (the "OVER-ALLOTMENT OPTION") will expire automatically at the close of
business on the 30th calendar day after (i) the Effective Date, if the Company
has elected not to rely upon Rule 430A under the Act Regulations; or (ii) the
Representation Date, if the Company has elected to rely upon Rule 430A under the
Act Regulations, and may be exercised in whole or in part at the Closing Date
and at one date subsequent to the Closing Date but prior to the expiration of
such option only for the purpose of covering over-allotments which may be made
in connection with the offering and distribution of the Underwritten Stock upon
notice by the Representative to the Company setting forth the number of shares
of Option Stock as to which the several Underwriters are then exercising the
option and the time and date of payment and delivery for such Option Stock. Any
such date (the "OPTION CLOSING DATE") shall be determined by the Representative
and may be the same date as (but not earlier than) the Closing Date, but in no
event shall such Option Closing Date be earlier than two full business days nor
later than seven full business days after the giving of notice of the exercise
of such option to the Company, unless otherwise agreed upon by the
Representative and the Company. If the Over-Allotment Option is exercised as to
all or any portion of the Option Stock, each of the Underwriters, acting
severally and not jointly, will purchase that proportion of the total number of
shares of Option Stock as to which the Over-Allotment Option is being exercised
which the number of shares of Underwritten Stock set forth opposite its name in
Schedule I bears to the total number of shares of Underwritten Stock, except as
otherwise agreed upon between the Representative and the Company, subject in
each case to such adjustments as the Representative in its discretion shall make
to eliminate any sales or purchases of fractional shares.
(c). Payment of the purchase price for, and delivery of, the
Underwritten Stock to be purchased by the several Underwriters shall be made at
such place as shall be agreed upon by the Representative and, the Company at
10:00 A.M., New York City time, (i) on the third (3rd) full business day
following the first (1st) day that Underwritten Stock is are traded; (ii) if
this Agreement is executed and delivered after 9:30 A.M., New York City time,
the fourth (4th) full business day following the day that this Agreement is
executed and delivered; or (iii) at such other time and date not later than
seven (7) full business days following the first day that Underwritten Stock is
traded as the Representative and the Company may determine (or at such time and
date to which payment and delivery shall have been postponed pursuant to Section
9(e) hereof), such time and date of payment and delivery being herein called the
"CLOSING DATE;" PROVIDED, HOWEVER, that if the Company has not made available to
the Representative copies of the Prospectus within the time provided herein, the
Representative may, in its sole discretion, postpone the Closing Date until no
later than two (2) full business days following delivery of copies of the
Prospectus to the Representative; for purposes of Rule 15c6-1 under the
Securities Exchange Act, the Closing Date (if later than the otherwise
applicable settlement date) shall be the settlement date for payments of funds
and delivery of securities for all Underwritten Stock sold. In addition, if the
Underwriters purchase any or all of the Option Stock, payment of the purchase
price and delivery of certificates for such Option Stock shall be made at such
place as shall be agreed upon by the Representative and the Company on the
Option Closing Date as specified in the relevant notice from the Representative
to the Company.
9
(d). Payment shall be made to the Company by wire transfer of
same-day federal funds payable to the Company against delivery to the
Representative for the respective accounts of the Underwriters of certificates
for the Stock to be purchased by them. Certificates for the Stock shall be in
such denominations and registered in such names as the Representative may
request in writing at least two (2) business days before the Closing Date or the
Option Closing Date, as the case may be. The certificates for the Stock will be
made available for examination and packaging by the Representative not later
than 1:00 P.M. New York City time on the last business day prior to the Closing
Date or the Option Closing Date, as the case may be, at the offices of the
transfer agent for the Common Stock in New York, New York.
(e). On the Underwritten Stock Closing Date, the Company shall
issue and sell to ▇▇▇▇▇▇▇▇▇ & Company, Inc. for its own account and not as
Representative of the several Underwriters Warrants to purchase an aggregate of
________ shares of Common Stock at a price per Warrant equal to $_____. The
Warrants will be exercisable at any time and from time to time on or after the
first anniversary of the date of the Prospectus up to the fifth anniversary
thereof. Each Warrant shall be substantially in the form filed as an exhibit to
the Registration Statement.
SECTION 3. COVENANTS OF THE COMPANY. The Company covenants
with each Underwriter as follows:
(a). The Company will use its best efforts to cause the
Registration Statement, if not effective at the Representation Date, and any
amendment thereof, to become effective as promptly as possible after the filing
thereof. The Company will not file any amendment to the Registration Statement
or amendment or supplement to the Prospectus, any Rule 434 Act Regulation term
sheet or any 462(b) Act Regulation abbreviated Registration Statement, to which
the Representative shall reasonably object in writing after a reasonable
opportunity to review such amendment or supplement. Subject to the foregoing
sentences in this clause (a), if the Registration Statement has become or
becomes effective pursuant to Rule 430A, or filing of the Prospectus or
supplement to the Prospectus is otherwise required under Rule 424(b), the
Company will cause the Prospectus to be completed, or such supplement thereto to
be filed with the Commission pursuant to the applicable paragraph of Rule 424(b)
within the time period prescribed and will provide evidence reasonably
satisfactory to the Representative of such timely filing. The Company promptly
will advise the Representative (i) when the Registration Statement, if not
effective at the Representation Date, and any amendment thereto, shall have
become effective; (ii) when the Prospectus, and any supplement thereto, shall
have been filed (if required) with the Commission pursuant to Rule 424(b); (iii)
when any amendment to the Registration Statement shall have been filed or become
effective; (iv) of any request by the Commission for any amendment of or
supplement to the Registration Statement or any Prospectus or for any additional
information; (v) of the receipt by the Company of any notification of, or if the
Company otherwise has knowledge of, the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose; and (vi) of the
receipt by the Company of any notification with respect to the suspension of the
qualification of the Stock for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. The Company will use its best
efforts to prevent the issuance of any such stop order and, if issued, to obtain
as soon as possible the withdrawal thereof.
(b). If, at any time when a prospectus relating to the Stock
is required to be delivered under the Act, any event occurs as a result of which
the Prospectus as then amended or supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein in the light of the circumstances under which they
were made not misleading, or if it shall be necessary to amend the Registration
Statement or amend or supplement the Prospectus to comply with the Act or the
Act Regulations, the Company promptly will prepare and file with the Commission,
subject to the second sentence of Section 3(a), an amendment or supplement which
will correct such statement or omission or effect such compliance.
(c). The Company consents to the use of the Prospectus in
accordance with the provisions of the Act and with the securities or Blue Sky
laws of the jurisdictions in which Stock is offered by the Underwriters and by
all dealers to whom Stock may be sold, both in connection with the offering and
sale of the Stock and for such period of time thereafter as the Prospectus is
required by the Act to be delivered in connection with the sales by
10
any Underwriters or dealer. The Company will comply with all requirements
imposed upon it by the Act, as now and hereafter amended, so far as necessary to
permit the continuance of sales of or dealing in the Stock in accordance with
the provisions hereof and of the Prospectus.
(d). Not later than the 45th day following the end of the
fourth fiscal quarter first occurring after the "effective date" (as defined in
Rule 158 under the Act) of the Registration Statement (the "EFFECTIVE DATE"),
the Company will mail and make generally available to its security holders a
consolidated earning statement covering a period of at least twelve (12) months
beginning with the first full calendar quarter following the Effective Date
which shall satisfy the provisions of Section 11(a) of the Act and Rule 158
thereunder and shall advise you in writing when such statement has been made so
available.
(e). The Company will furnish to the Representative, without
charge, one signed copy of the Registration Statement (including exhibits
thereto) and, so long as delivery of a prospectus by the Underwriters or a
dealer may be required by the Act, as many copies of each Preliminary Prospectus
and the Prospectus and all amendments and supplements thereto as the
Representative may reasonably request.
(f). The Company will apply the net proceeds from the sale of
the Stock to be sold hereunder in accordance with the description set forth in
the "Use of Proceeds" section of the Prospectus.
(g). The Company will cooperate with the Representative and
its counsel in connection with endeavoring to obtain and maintain the
qualification or registration, or exemption from qualification, of the Stock for
offer and sale under the applicable securities or Blue Sky laws of such states
and other jurisdictions of the United States as the Representative may
designate; provided, that in no event shall the Company be obligated to qualify
to do business in any jurisdiction where it is not now so qualified or to take
any action which would subject it to taxation or general service of process in
any jurisdiction where it is not now so subject.
(h). During a period of five (5) years commencing with the
date hereof, the Company will furnish to the Representative, and to each
Underwriter who may so request in writing, copies of all periodic and special
reports furnished to shareholders of the Company and of all information,
documents and reports filed with Commission pursuant to the Act or the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT").
(i). The Company agrees that it will not, without the prior
written consent of ▇▇▇▇▇▇▇▇▇ & Company, Inc., during the period ending 180 days
after the date of the Prospectus, (i) offer, pledge, sell, contract to sell,
sell any option or contract to purchase, purchase any option to contract to
sell, grant any option, right or warrant to purchase, or otherwise transfer or
dispose of, directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock; (ii) enter
into any swap or similar agreement that transfers, in whole or in part, the
economic risk of ownership of the Common Stock; or (iii) release any security
holder (or his, her or its transferee), from any "lock-up" provision or
agreement, whether any such transaction described in clause (i), (ii) or (iii)
above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise. The foregoing provisions shall not apply to (A) the Common
Stock to be sold to the Underwriters pursuant to this agreement; and (B) options
granted by the Company to purchase Common Stock granted under its option plans
described in the Registration Statement. For purposes of this paragraph a sale,
offer, or other disposition shall be deemed to include any sale to an
institution which can, following such sale, sell Common Stock in reliance on
Rule 144A.
(j). The Company will use its best efforts to cause all
directors, officers, and certain other beneficial owners of shares of Common
Stock or securities convertible or exchangeable into Common Stock (listed on
SCHEDULE III attached hereto) to agree that, without the prior written consent
of ▇▇▇▇▇▇▇▇▇ & Company, Inc., he, she or it will not, without the prior written
consent of ▇▇▇▇▇▇▇▇▇ & Company, Inc., during the period ending 180 days after
the date of the Prospectus, (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option to contract to sell, grant
any option, right or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock, or (ii) enter into any
swap or similar agreement that transfers, in whole or in part, the economic risk
of ownership of the Common Stock, whether any such transaction described in
clause (i) or (ii)
11
above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise. The foregoing provisions shall not apply to (A) the Common
Stock to be sold to the Underwriters pursuant to this agreement; (B) options
granted by the Company to purchase Common Stock granted under its option plans
described in the Registration Statement; and (C) transfers, without
consideration, of the Common Stock or any securities convertible into, or
exercisable or exchangeable for Common Stock to family members or to one or more
trusts established for the benefit of one or more family members are permitted
at any time, provided that the transferee execute and deliver to ▇▇▇▇▇▇▇▇▇ &
Company, Inc., an agreement whereby the transferee agrees to be bound by all of
the foregoing terms and provisions.
(k). In addition, such holder will agree that, without the
prior written consent of ▇▇▇▇▇▇▇▇▇ & Company, Inc. on behalf of the
Underwriters, it will not, from the date hereof through the period ending 180
days after the date of the Prospectus, make any demand for or exercise any right
with respect to, the registration of any shares of Common Stock or any security
convertible into or exercisable for Common Stock. For purposes of this Section 1
and [subparagraph (a)(ii) of Section 5], a holder shall be deemed to
beneficially own shares of Common Stock that are issuable upon the exercise of
options, warrants or other rights to acquire Common Stock on or before 180 days
following the Closing Date.
(l). During the period of five years hereafter the Company
will furnish to the Representatives as soon as practicable after the end of each
fiscal year, a copy of its annual report to stockholders for such year; and the
Company will furnish to the Representative (i) as soon as available, a copy of
each report or definitive proxy statement of the Company filed with the
Commission under the Exchange Act or mailed to stockholders, and (ii) from time
to time, such other information concerning the Company as the Representative may
reasonably request, provided that prior to the Company's furnishing any such
other information that is nonpublic you shall enter into such agreement
respecting the confidentiality thereof as the Company may reasonably request.
(m). The Company will cooperate with the Underwriters and
their counsel in connection with endeavoring to obtain and maintain the
qualification or registration, or exemption from qualification, of the shares of
Stock for offer and sale under the applicable securities laws of such states and
other jurisdictions of the United States as the Underwriters may designate;
PROVIDED, that in no event shall the Company be obligated to qualify to do
business in any jurisdiction where it is not now so qualified or to take any
action which would subject it to taxation or general service of process in any
jurisdiction where it is not now so subject.
(n). The Company will not at any time, directly or indirectly
(A) take any action designed to cause or result in, or that has constituted or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Stock, or (B) (1) sell, bid for, purchase or pay anyone any
compensation for soliciting purchases of, Stock or (2) pay or agree to pay any
person any compensation for soliciting another to purchase any other securities
of the Company.
(o). The Company will comply with all the provisions of any
undertakings contained in the Registration Statement.
(p). The Company shall cause the Stock to be quoted on the
Nasdaq National Market and shall use its best efforts to maintain such trading
while the shares of Stock are outstanding.
(q). Until expiration of the Warrant, keep reserved sufficient
shares of Common Stock for issuance upon exercise of the Warrant.
SECTION 4. PAYMENT OF EXPENSES. Whether or not the
transactions contemplated hereby are consummated or this Agreement is
terminated, and, except as noted herein below, the Company will pay (directly or
by reimbursement), and will be responsible for, all costs and expenses incident
to the performance of the obligations of the Company under this Agreement,
including but not limited to expenses related to the following, if incurred, (i)
the printing and filing of the Registration Statement as originally filed and of
each amendment thereto; (ii) the printing and/or copying of this Agreement, the
Master Agreement Among Underwriters, the Selected Dealer Agreement,
communications with the Underwriters and any other documents in connection with
the offering,
12
purchase, sale and delivery of the Stock; (iii) the preparation, issuance and
delivery of the Stock to the Underwriters, including capital duties, stamp
duties and transfer taxes, if any, payable upon issuance of any of the Stock or
the sale of the Stock to the Underwriters; (iv) the fees and disbursements of
the Company's counsel and accountants; (v) the qualification of the Stock under
state securities laws, including filing fees and the reasonable fees and
disbursements of counsel for the Representative in connection therewith and in
connection with the preparation of any Blue Sky survey and any supplemental Blue
Sky survey; (vi) the printing and delivery to the Underwriters of copies of the
Registration Statement as originally filed and of each amendment thereto, of the
Preliminary Prospectus and of the Prospectus and any amendments or supplements
thereto; (vii) the printing and/or copying and delivery to the Underwriters of
copies of the Blue Sky survey and any supplemental Blue Sky survey; (viii) the
fees and expenses incurred in connection with the listing of the stock on any
national securities exchange or Nasdaq; (ix) the fees payable to the National
Association of Securities Dealers, Inc.; and (x) the preparation, issuance and
delivery of the Warrants to Jefferies & Company, Inc., including capital duties,
stamp duties and transfer taxes, if any, payable upon issuance of any of the
Warrants or Warrant Shares or the sale of the Warrants to the Underwriters;
If this Agreement is terminated by the Representative in
accordance with the provisions of Sections 5 or 8 hereof, the Company shall
reimburse the Representative and the other Underwriters for all of their
reasonable out-of-pocket expenses, including the reasonable fees and
disbursements of their attorneys, but the Company shall in no event be liable to
any of the several Underwriters for damages on account of loss of anticipated
profits from the sale by them of the stock.
SECTION 5. CONDITIONS OF THE UNDERWRITER'S OBLIGATIONS. The
obligation of the Underwriters to purchase and pay for the Stock hereunder is
subject to the continued accuracy of the representations and warranties of the
Company contained herein as of the date hereof and as of the Closing Date (and,
if applicable, as of the Option Closing Date), to the accuracy of the statements
of the Company made in any certificate or certificates pursuant to the
provisions hereof as of the date hereof and as of the Closing Date (and, if
applicable, as of the Option Closing Date), to the performance by the Company of
its obligations hereunder, and to the following further conditions:
(a). The Registration Statement shall have become effective
not later than 1:30 P.M. New York City time on the date hereof, or at such later
date as may be approved by the Representative and the Company and shall remain
effective at the Closing Date and at the Option Closing Date. No stop order
suspending the effectiveness of the Registration Statement shall have been
issued under the Act or proceedings therefor initiated or, to the knowledge of
the Company or the Representative, threatened by the Commission, and any request
of the Commission for additional information (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been satisfied to the
satisfaction of Underwriters' Counsel.
(b). All corporate proceedings and other legal matters in
connection with this Agreement, the form of Registration Statement and the
Prospectus, and the registration, authorization, issue, sale and delivery of the
Stock, shall have been reasonably satisfactory to Underwriters' counsel, and
such counsel shall have been furnished with such papers and information as they
may reasonably have requested to enable them to pass upon the matters referred
to in this Section.
(c). Subsequent to the execution and delivery of this
Agreement, and prior to the Closing Date, there shall not have been a Material
Adverse Event, which, in your sole judgment, is material and adverse and that
makes it, in your sole judgment, impracticable or inadvisable to proceed with
the public offering of the Stock as contemplated by the Prospectus.
(d). The Company shall have furnished to the Representative
the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Frome & ▇▇▇▇▇▇▇▇▇▇ LLP, counsel to the Company,
addressed to the Underwriters and dated as of the Closing Date, substantially in
the form attached hereto as SCHEDULE IV, with such changes as may be reasonably
requested by the Representative, and if Option Stock is purchased at any date
after the Closing Date, an additional opinion from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Frome &
▇▇▇▇▇▇▇▇▇▇ LLP, addressed to the Underwriters and dated the Option Closing
13
Date, confirming that the statements expressed as of the Closing Date in such
opinion remain valid as of the Option Closing Date.
(e). ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the Underwriters, shall
have furnished to the Underwriters an opinion with respect to such matters as
maybe reasonably requested by the Representative, dated as of the Closing Date,
and if Option Stock is purchased at any date after the Closing Date, an
additional opinion addressed to the Underwriters and dated the Option Closing
Date confirming that the statements expressed as of the Closing Date in such
opinion remain valid as of the Option Closing Date.
(f). The Company shall furnish the Representative a
certificate, signed by the President and the Chief Financial Officer of the
Company, dated the Closing Date (and, if applicable, the Option Closing Date),
to the effect that the signers of such certificate have carefully examined the
Registration Statement, the Prospectus, any supplement or amendment to the
Prospectus and this Agreement and that, to their knowledge:
(i). the representations and warranties of the Company contained in
this Agreement and the Warrant Agreement are true and correct on and
as of the Closing Date, and, if applicable, on and as of the Option
Closing Date and the Company has complied with all the agreements
and satisfied all the conditions under this Agreement and the
Warrant Agreement on its part to be performed or satisfied at or
prior to the Closing Date (and, if applicable, at or prior to the
Option Closing Date);
(ii). no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have
been instituted or, to the knowledge of the Company, threatened; and
(iii). since the date of the most recent financial statements
included in the Prospectus, there has been no Material Adverse
Event.
(g). At the Effective Date, the Representation Date and at the
Closing Date (and, if applicable, at the Option Closing Date), BDO ▇▇▇▇▇▇▇, LLP
shall have furnished to the Underwriters a letter or letters, dated respectively
as of the Effective Date, the Representation Date and the Closing Date (and, if
applicable, the Option Closing Date), in form and substance reasonably
satisfactory to the Underwriters, covering the time periods and relating to the
procedures referred to in Section 2(m) hereof and containing statements and
information of the type customarily included in accountants' "comfort letters"
to underwriters with respect to the financial statements and certain other
information contained in the Registration Statement and the Prospectus.
(h). At the Effective Date, the Representation Date and at the
Closing Date (and, if applicable, at the Option Closing Date), Fotinakis
Phitidis (SA) shall have furnished to the Underwriters a letter or letters,
dated respectively as of the Effective Date, the Representation Date and the
Closing Date (and, if applicable, the Option Closing Date), in form and
substance reasonably satisfactory to the Underwriters, covering the time periods
and relating to the procedures referred to in Section 2(n) hereof and containing
statements and information of the type customarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements and
certain other information contained in the Registration Statement and the
Prospectus.
(i). Prior to the Closing Date, the Stock shall have been duly
authorized for quotation on the Nasdaq upon official notice of issuance. (j). On
or prior to the Closing Date, you shall have received from all of the persons
and entities set forth on SCHEDULE III attached hereto, executed lock-up
agreements.
(k). On or prior to the Closing Date, the Company shall have
executed and delivered the Warrant Agreement to Jefferies & Company, Inc.
14
(l). On or prior to the Closing Date, the Company shall have
executed and delivered the Warrant to Jefferies & Company, Inc.
(m). If any condition specified in this Section 5 shall not
have been fulfilled in all material respects when and as required to be
fulfilled, this Agreement may be terminated by the Representative by written
notice to the Company at or prior to the Closing Date.
(n). All the agreements, opinions, certificates and letters
mentioned above or elsewhere in this Agreement shall be deemed to be in
compliance with the provisions hereof only if ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the
Underwriters, shall be satisfied that they comply in form and scope.
SECTION 6. INDEMNIFICATION AND CONTRIBUTION.
(a). The Company agrees to indemnify, defend and hold harmless
each Underwriter and its affiliates and their respective officers, shareholders,
counsel, agents, employees, directors and any person who controls each
Underwriter or any of their respective affiliates within the meaning of Section
15 of the Act or Section 20 of the Exchange Act, and the respective officers,
shareholders, counsel, agents, employees and directors of such persons (each
Underwriter and each such other person or entity being referred to herein as an
"INDEMNIFIED PERSON"), to the fullest extent lawful from and against any loss,
expense, liability or claim (including the reasonable cost of investigating such
claim) which, jointly or severally, the Indemnified Persons may incur under the
Act, the Exchange Act or otherwise, as such expenses are incurred, insofar as
such loss, expense, liability or claim (i) arises out of or is based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement (or in the Registration Statement as amended by any post-
effective amendment thereof) or in a Prospectus (including any Preliminary
Prospectus); (ii) arises out of or is based upon any omission or alleged
omission to state a material fact required to be stated in either such
Registration Statement or the Prospectus or necessary to make the statements
made therein not misleading in light of the circumstances under which they were
made, except insofar as any such loss, expense, liability or claim arises out of
or is based upon any untrue statement or omission or alleged untrue statement or
omission which has been made therein or omitted therefrom in reliance upon and
in conformity with the information provided in writing to the Company by or on
behalf of the Underwriters, expressly for use in the Registration Statement or
the Prospectus, and the Company agrees that the only such information provided
in writing by or on behalf of the Underwriters, expressly for use in the
Registration Statement or the Prospectus, is that information contained in the
section of the Prospectus entitled "Underwriting," the last paragraph of text on
the cover page of the Prospectus and the paragraph regarding stabilization
appearing on the inside front cover page of the Prospectus; provided, that the
indemnity agreement contained in this Section 6(a) with respect to any
Preliminary Prospectus or amended Preliminary Prospectus shall not inure to the
benefit of the Indemnified Person from whom the person asserting any such loss,
expense, liability or claim purchased the Stock which is the subject thereof, if
the Prospectus corrected any such alleged untrue statement or omission and if
such Underwriter failed to send or give a copy of the Prospectus to such person
at or prior to the written confirmation of the sale of Stock to such person,
provided that the Company has delivered the Prospectus to the Underwriters in
sufficient quantity not less than one full business day prior to the sale to the
person asserting such claim; or (iii) arises directly out of or is based
directly upon 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 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
matters covered by clause (i) or (ii) above (PROVIDED that the Company shall not
be liable under this clause (iii) to the extent that it is determined in a final
judgment by a court of competent jurisdiction, or stipulated by each of the
Underwriters whose act or omission led to such loss, claim, damage, liability or
action 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 gross negligence or willful misconduct). The foregoing
indemnity agreement shall be in addition to any liability which the Company may
otherwise have.
(b). If any action or proceeding (including any government
investigation) is brought or asserted against any Underwriter or their
respective officers, shareholders, employees, directors or any person who
15
controls any of the Underwriters (as described above) in respect of which
indemnity may be sought against the Company pursuant to this Section 6, such
Underwriter shall promptly notify the Company in writing of the institution of
such action (provided, the at the failure to give such notice shall not relieve
the Company of any liability which it may have pursuant to this Agreement,
unless it shall have been determined by a court of competent jurisdiction by
final judgment that such failure has resulted in the forfeiture of substantive
rights or defenses by the indemnifying party) and the Company shall assume the
defense of such action, including the employment of counsel and payment of
reasonable expenses. Such Underwriter or such officer, shareholder, employee,
director or person who controls the Underwriter (as described) shall have the
right to employ its or their own counsel in any such case and to participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Underwriter or of such persons unless: (i) the Company shall
have failed to assume the defense of such action or proceeding or the Company
shall have failed to employ counsel reasonably satisfactory to the Underwriter
in any such action; or (ii) such Indemnified Party or parties shall have been
advised by counsel that there may be one or more defenses available to it or
them that are different from or additional to those available to the Company (in
which case, if such indemnified party or parties notifies the Company in writing
that it elects to employ separate counsel at the expense of the Company, the
Company shall not have the right to assume the defense of such action on behalf
of the indemnified party or parties), in any of which events such fees and
expenses shall be borne by the Company and paid as incurred; provided, that the
Company shall be responsible for the fees and expenses of only one counsel for
all Indemnified Parties hereunder. Anything in this paragraph to the contrary
notwithstanding, the Company shall not be liable for any settlement of any such
claim or action effected without its prior written consent, which consent shall
not be unreasonably withheld.
(c). Each Underwriter severally agrees to indemnity, defend
and hold harmless the Company and its directors, officers, shareholders,
counsel, agents and employees and any person who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act from and
against any loss, expense, liability or claim (including the reasonable cost of
investigation) which, jointly or severally, the Company or any such person may
incur under the Act, the Exchange Act or otherwise, as such expenses are
incurred insofar as such loss, expense, liability or claim arises out of or is
based upon any untrue statement or omission or alleged untrue statement or
omission which has been made in or omitted from the Registration Statement (or
in the Registration Statement as amended by any post-effective amendment
thereof) or in the Prospectus (including any Preliminary Prospectus) in reliance
upon and in conformity with the information relating to the Underwriters
furnished in writing by or on behalf of the Underwriters to the Company. The
Company agrees that the only information provided in writing by or on behalf of
the Underwriters to the Company, expressly for use in the Registration Statement
or the Prospectus, is that information contained in the section of the
Prospectus entitled "Underwriting," the statements appearing as the last
paragraph of text on the cover page of the Prospectus and the paragraph
regarding stabilization appearing on the inside front cover page of the
Prospectus.
(d). If any action is brought against the Company or any
person in respect of which indemnity may be sought against any Underwriter
pursuant to the foregoing paragraph, the Company or such person shall promptly
notify such Underwriter in writing of the institution of such action (provided,
that the failure to give such notice shall not relieve such Underwriter of any
liability which it may have pursuant to this Agreement, unless it shall have
been determined by a court of competent jurisdiction by final judgment that such
failure has resulted in the forfeiture of substantive rights or defenses by the
indemnifying party) and the Underwriters shall assume the defense of such
action, including the employment of counsel and payment of reasonable expenses.
The Company or such person shall have the right to employ its or their own
counsel in any such case and to participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of the Company or such
person unless: (i) such Underwriters shall have failed to assume the defense of
the action or shall have failed to employ counsel reasonably satisfactory to the
Company or such person in any such action; or (ii) such indemnified party or
parties shall have been advised by counsel that there may be one or more
defenses available to it or them that are different from or additional to those
available to such Underwriters (in which case, if such indemnified party or
parties notifies the Underwriters in writing that it elects to employ separate
counsel at the expense of the Underwriters, such Underwriters shall not have the
right to assume the defense of such action on behalf of the indemnified party or
parties), in any of which events such fees and expenses shall be borne by the
Underwriters and paid as incurred; provided, that the Underwriters shall be
responsible for the fees and expenses of only one counsel for all indemnified
parties. Anything in this paragraph to the contrary notwithstanding, the
Underwriters shall not
16
be liable for any settlement of any such claim or action effected without the
written consent of such Underwriter, which consent shall not be unreasonably
withheld.
(e). If the indemnification provided for in this Section 6 is
unavailable to an indemnified party under subsection (a) or (c) of this Section
6 in respect of any losses, damages, expenses, liabilities or claims referred to
therein, then the indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, expenses,
liabilities or claims (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company, on the one hand, and each
Underwriter, on the other hand, from the offering of the Stock or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company, on
the one hand, and each Underwriter, on the other hand, in connection with the
statements or omissions which resulted in such losses, expenses, liabilities or
claims, as well as any other relevant equitable considerations. The relative
benefits received by the Company, on the one hand, and each Underwriter, on the
other hand, shall be deemed to be in the same proportion as the total proceeds
from the offering (net of underwriting discounts and commissions but before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received under the Agreement by each Underwriter. The
relative fault of the Company, on the one hand, and of each Underwriter, on the
other hand, shall be determined by reference to, among other things, whether the
untrue statement or alleged untrue statement of a material fact or omission or
alleged omission relates to information supplied by the Company or by such
Underwriter 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, expenses, liabilities and
claims referred to above shall be deemed to include any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any claim or action.
(f). The Company and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 6 were determined
by PRO RATA allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in Section 6(e) above.
Notwithstanding the provisions of this Section 6, each Underwriter shall not be
required to contribute any amount in excess of the underwriting discounts and
commissions received by it. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(g). The indemnity and contribution agreements contained in
this Section 6 shall remain in full force and effect irrespective of any
investigation made by or on behalf of the Underwriters, or any of their
officers, employees, directors, shareholders, counsel, agents or any person who
controls any Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, by or on behalf of the Company, its directors, officers,
counsel, agents, employees or any person who controls the Company, within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, and shall
survive any termination of this Agreement or the issuance and delivery of the
Stock. The Company and each Underwriter agree promptly to notify the others of
the commencement of any litigation or proceeding against it and, in the case of
the Company, against any of its respective officers and directors in connection
with the issuance and sale of the Stock, or in connection with the Registration
Statement or Prospectus.
SECTION 7. SURVIVAL. All representations, warranties and
agreements contained in this Agreement, or contained in certificates of officers
of the Company submitted pursuant hereto, shall remain operative and in full
force and effect, regardless of any investigation made by or on behalf of the
several Underwriters or any of their respective officers, employees, directors,
shareholders or person who controls any Underwriter, or by or on behalf of the
Company and shall survive delivery of the Stock to and payment for the Stock by
the several Underwriters.
SECTION 8. TERMINATION OF AGREEMENT.
The Representative shall have the right to terminate this
Agreement by giving notices hereinafter specified in Section 10 hereof at any
time at or prior to the Closing Date or on or prior to any later date(s) on
which
17
Option Stock may be purchased, as the case may be, (i) if the Company shall have
failed, refused or been unable to perform any agreement on its part to be
performed, or because any other condition of the Underwriters' obligations
hereunder required to be fulfilled is not fulfilled, including, without
limitation, any change in the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company and its subsidiaries
considered as one enterprise from that set forth in the Registration Statement
or Prospectus, which, in your sole judgment, is material and adverse, or (ii) if
additional material governmental restrictions, not in force and effect on the
date hereof, shall have been imposed upon trading in securities generally or
minimum or maximum prices shall have been generally established on the New York
Stock Exchange or on the American Stock Exchange or in the over the counter
market by the NASD, or trading in securities generally shall have been suspended
on either such exchange or in the over the counter market by the NASD, or if a
banking moratorium shall have been declared by federal, New York or California
authorities, or (iii) if the Company or any of its subsidiaries shall have
sustained a loss by strike, fire, flood, earthquake, accident or other calamity
of such character as to interfere materially with the conduct of the business
and operations of the Company regardless of whether or not such loss shall have
been insured, or (iv) if there shall have been a material adverse change in the
general political or economic conditions or financial markets as in your
reasonable judgment makes it inadvisable or impracticable to proceed with the
offering, sale and delivery of the Stock, or (v) if there shall have been an
outbreak or escalation of hostilities or of any other insurrection or armed
conflict or the declaration by the United States of a national emergency which,
in the reasonable opinion of the Representative, makes it impracticable or
inadvisable to proceed with the public offering of the Stock as contemplated by
the Prospectus.
If this Agreement is terminated pursuant to this Section or
any other provision of this Agreement, such termination shall be without
liability of any party to any other party except as provided in Sections 4 and
6.
SECTION 9. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS.
(a). If one or more of the Underwriters shall fail at the
Closing Date (or the Option Closing Date) to purchase the shares of Underwritten
Stock which it or they are obligated to purchase under this Agreement (the
"DEFAULTED STOCK"), the Representative shall have the right, within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Stock in such amounts as may be agreed upon and upon the terms
herein set forth. If, however, the Representative shall not have completed such
arrangements within such 24-hour period, then:
(i). If the number of shares of Defaulted Stock does not
exceed 10% of the total number of shares of Underwritten Stock, the
non-defaulting Underwriters shall be obligated to purchase the full
amount thereof in the proportions that their respective underwriting
obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or
(ii). If the number of shares of Defaulted Stock exceeds
10% of the Underwritten Stock, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter or the Company.
(b). No action taken pursuant to this Section 9 shall relieve
any defaulting Underwriter from liability in respect of its default.
(c). In the event of any such default which does not result in
a termination of this Agreement, the Representative and the Company shall have
the right to postpone the Closing Date for a period not exceeding seven days in
order to effect any required changes in the Registration Statement or Prospectus
or in any other documents or arrangements.
SECTION 10. NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication. Notices to the
Representative shall be directed to Jefferies & Company, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, attention of ___________,
with a copy to ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, attention of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq. Notices
to the Company
18
shall be directed to ___________, Hospitality Worldwide Services, Inc., ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; with a copy to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Frome & ▇▇▇▇▇▇▇▇▇▇ LLP, attention of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
SECTION 11. PARTIES. This Agreement shall inure to the benefit
of and be binding upon the Underwriters, the Company and their respective
executors, administrators, assigns, successors and legal representatives.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to provide any person, firm or corporation, other than the
Underwriters, the Company and their respective successors and legal
representatives and the controlling persons and officers, employees, directors
and shareholders referred to in Sections 6 and 7 and their respective heirs and
legal representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein or therein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the Underwriters, the Company and their respective
successors and legal representatives, and said controlling persons,
shareholders, officers and directors and their respective heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Stock from the Underwriters shall be deemed to be a successor or
assign by reason merely of such purchase.
SECTION 12. GOVERNING, LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF.
[SIGNATURE PAGE(S) FOLLOW]
19
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Underwriters and the Company in accordance with its terms.
Very truly yours,
HOSPITALITY WORLDWIDE SERVICES, INC.
By:__________________________________
Name:_____________________________
Title:____________________________
CONFIRMED AND ACCEPTED, as of the
date first above written:
▇▇▇▇▇▇▇▇▇ & COMPANY, INC.
By:______________________________________
Name:_________________________________
Title:__________________________________
For themselves and as Representative of the
other Underwriters named in this Agreement
20
SCHEDULE I
SCHEDULE OF UNDERWRITERS AND NUMBER OF SHARES TO BE PURCHASED
NUMBER OF SHARES OF NUMBER OF SHARES OF
UNDERWRITTEN STOCK TO OPTION STOCK TO BE
UNDERWRITER BE PURCHASED PURCHASED
Jefferies & Company, Inc...........
================================================================================
TOTAL .............. 2,500,000 375,000
I-1
SCHEDULE II
SCHEDULE OF THE COMPANY'S SUBSIDIARIES
NAME OF SUBSIDIARY JURISDICTION OF ORGANIZATION OWNERSHIP STRUCTURE
II-1
SCHEDULE III
SCHEDULE OF LOCK-UP AGREEMENT SIGNATORIES
III-1
SCHEDULE IV
FORM OF OPINION TO BE RENDERED BY
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ FROME & ▇▇▇▇▇▇▇▇▇▇ LLP, COUNSEL TO THE COMPANY
1. Each of the Company and the Subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation;
2. Each of the Company and the Subsidiaries has the corporate
power and authority to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and the Prospectus;
3. Each of the Company and the Subsidiaries is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction, if any, in which it is reasonably known to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Frome &
▇▇▇▇▇▇▇▇▇▇ LLP (which has conducted a reasonable and thorough investigation and
legal analysis of where the Company and the Subsidiaries are "doing business"),
to own or lease property or conduct business and in which the failure to qualify
could be reasonably expected to result in a Material Adverse Event. The Company
does not own or control, directly or indirectly, any interest in any
corporation, association, partnership, limited liability company, joint venture
or other entity other than ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Company ("LPC"), Hospitality
Restoration and Builders, Inc. ("HRB") and ▇▇▇▇▇▇ Reorder Company ("REORDER" and
together with LPC and HRB, the "Subsidiaries") and the Subsidiaries do not own
or control, directly or indirectly, any interest in any corporation,
association, partnership, limited liability company, joint venture or other
entity;
4. The authorized, issued and outstanding capital stock of the
Company is as set forth in the Registration Statement and the Prospectus under
the caption "Capitalization" as of the dates stated therein;
5. The issued and outstanding shares of capital stock of the
Company have been duly and validly issued and are fully paid and nonassessable
and have not been issued in violation of or subject to any preemptive right,
co-sale right, right of first refusal or other similar right, and the
Underwritten Stock or the Option Stock, as the case may be, to be issued by the
Company pursuant to the terms of the Underwriting Agreement has been duly
authorized and, upon issuance and delivery against payment therefor in
accordance with the terms of the Underwriting Agreement, will be duly and
validly issued and fully paid and nonassessable and will not have been issued in
violation of or subject to any preemptive right, co-sale right, right of first
refusal or other similar right;
6. The authorized and outstanding capital stock of the Company
as of June 30, 1997, is as set forth in the Registration Statement and the
Prospectus under the caption "Capitalization" and conforms to the statements
relating thereto contained in the Registration Statement and the Prospectus (and
such statements correctly state the substance of the instruments defining the
capitalization of the Company); and the description of the Company's stock
options or other rights granted and exercised under the Company's stock option,
stock bonus and other stock plans or arrangements, set forth in the Registration
Statement and the Prospectus accurately and fairly presents the information
required to be shown with respect to such plans, arrangements, options and
rights.
7. Except as set forth in the Prospectus, no holders of Common
Stock or any other securities of the Company have registration rights with
respect to any securities of the Company and, except as set forth in the
Prospectus, all holders of securities of the Company having registration rights
because of the filing of the Registration Statement by the Company have, with
respect to the offering contemplated thereby, waived such rights or such rights
have expired by reason of lapse of time following notification of the Company's
intent to file the Registration Statement or have included securities in the
Registration Statement pursuant to the exercise of and in full satisfaction of
such rights;
8. All issued and outstanding shares of capital stock of the
Subsidiaries have been duly authorized and validly issued and are fully paid and
nonassessable, and have not been issued in violation of or
IV-1
subject to any preemptive right, co-sale right, right of first refusal or other
similar right and are owned by the Company free and clear of any pledge, lien,
security interest, encumbrance, claim or equitable interest;
9. The Company has the corporate power and authority to enter
into the Underwriting Agreement and to issue, sell and deliver to the
Underwriters the Stock to be issued and sold by it thereunder;
10. The Underwriting Agreement has been duly authorized by all
necessary corporate action on the part of the Company and has been duly executed
and delivered by the Company and, assuming due authorization, execution and
delivery by you, is a valid and binding agreement of the Company, enforceable in
accordance with its terms;
11. The Warrant Agreement has been duly and validly
authorized, executed and delivered by the Company and is the legal, valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms, except insofar as indemnification and contribution provisions
may be limited by applicable law or equitable principles and subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization or
similar laws affecting the rights of creditors generally and subject to general
principles of equity;
12. The Warrant has been duly and validly authorized, executed
and delivered by the Company and is the legal, valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms,
except insofar as indemnification and contribution provisions may be limited by
applicable law or equitable principles and subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization or similar laws affecting the
rights of creditors generally and subject to general principles of equity;
13. The Registration Statement has become effective under the
Act and, to our knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted or are pending or threatened under the Act; any required filing
of the Prospectus pursuant to Rule 424(b) has been made in the manner and within
the time period required by Rule 424(b);
14. The Registration Statement and the Prospectus, and each
amendment or supplement thereto (other than the financial statements (including
supporting schedules) and financial data derived therefrom as to which such
counsel need express no opinion), as of the effective date of the Registration
Statement, complied as to form in all material respects with the requirements of
the Act and the applicable Rules and Regulations;
15. The description in the Registration Statement and the
Prospectus of the charter and bylaws of the Company and of statutes are accurate
and fairly present the information required to be presented under the Act and
the applicable Rules and Regulations;
16. To our knowledge, there are no agreements, contracts,
leases or documents to which the Company is a party of a character required to
be described or referred to in the Registration Statement or Prospectus or to be
filed as an exhibit to the Registration Statement which are not described or
referred to therein or filed as required;
17. The performance of the Underwriting Agreement and the
Warrant Agreement and the consummation of the transactions contemplated therein,
the issuance and sale of the Stock and the Warrant Shares , and the issuance of
the Warrants will not (a) result in any violation of the Company's or any of its
Subsidiaries' charter or bylaws or (b) to such counsel's knowledge, result in a
material breach or violation of any of the terms and provisions of, or
constitute a default under, any bond, debenture, note or other evidence of
indebtedness, or under any lease, contract, indenture, mortgage, deed of trust,
loan agreement, joint venture or other agreement or instrument known to such
counsel to which the Company or any of its Subsidiaries is a party or by which
its properties are bound, or any applicable statute, rule or regulation known to
such counsel or, to such counsel's knowledge, any order, writ or decree of any
court, government or governmental agency or body having jurisdiction over the
Company or any of the Subsidiaries, or over any of their properties or
operations;
IV-2
18. No consent, approval, authorization or order of or
qualification with any court, government or governmental agency or body having
jurisdiction over the Company or any of the Subsidiaries, or over any of their
properties or operations is necessary in connection with the consummation by the
Company of the transactions contemplated with the Underwriting Agreement, other
than registration of the Stock under the Act and such as may be required under
state securities laws in connection with the purchase and distribution of the
Stock by the Underwriters;
19. To our knowledge, there are no legal or governmental
proceedings pending or threatened against the Company or any of the Subsidiaries
of a character required to be disclosed in the Registration Statement or the
Prospectus by the Act or the Rules and Regulations;
20. The Company is not an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, and the rules and regulations promulgated
thereunder, or subject to registration under such act; and
In addition, we have participated in conferences with officers
and other representatives of the Company, representatives of the independent
public accountants for the Company, the Representative and counsel to the
Underwriters at which the contents of the Registration Statement and Prospectus
and related matters were discussed; and, although we have not undertaken to
investigate or verify independently and do not assume any responsibility for,
the accuracy, completeness or fairness of the statements contained in the
Registration Statement and Prospectus (except as otherwise expressly set forth
herein), on the basis of the foregoing, nothing has come to our attention that
cause us to believe that (1) any part of the Registration Statement (other than
the financial statements and notes thereto and other financial, statistical and
accounting data or schedules included therein, or omitted therefrom, as to which
we express no opinion), as amended or supplemented, at the time such part of the
Registration Statement became effective and 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 (other than
information omitted therefrom in reliance on Rule 430A under the Securities
Act), or (2) the Prospectus (other than the financial statements and notes
thereto and other financial statistical and accounting data or schedules
included therein, or omitted therefrom, as to which we express no opinion), as
amended or supplemented, as of its date and on the date hereof, 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.
IV-3