Exhibit 1.1
MBP DRAFT 1/20/97
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BOSTON CHICKEN, INC.
(a Delaware corporation)
$250,000,000
_____% Convertible Subordinated Debentures due 2004
PURCHASE AGREEMENT
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___________, 1997
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
ALEX. ▇▇▇▇▇ & SONS INCORPORATED
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇▇▇ ▇▇▇▇▇ World Headquarters
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Boston Chicken, Inc., a Delaware corporation (the "Company"), confirms its
agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇"), ▇▇▇▇. ▇▇▇▇▇ & Sons Incorporated and ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co. Incorporated (collectively, the "Underwriters", which term shall
also include any underwriter substituted as hereinafter provided in Section 9
hereof), with respect to the issue and sale by the Company and the purchase by
the Underwriters, acting severally and not jointly, of the respective principal
amounts set forth in Schedule A hereto of the $250,000,000 aggregate principal
amount of the Company's ____% Convertible Subordinated Debentures due 2004 (the
"Debentures"), and with respect to the grant by the Company to the Underwriters,
acting severally and not jointly, of the option described in Section 2(b) hereof
to purchase all or any part of an additional $37,500,000 principal amount of
Debentures to cover over-allotments, if any. The aforesaid $250,000,000
principal amount of Debentures (the "Initial Securities") to be purchased by the
Underwriters and all or any
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part of the $37,500,000 principal amount of Debentures subject to the option
described in Section 2(b) hereof (the "Option Securities") are hereinafter
called, collectively, the "Securities". The Securities are to be issued
pursuant to an Indenture dated as of ___________, 1997 (the "Indenture") between
the Company and Bankers Trust Company, as trustee (the "Trustee").
The Securities are convertible into shares of common stock $.01 par value
per share, of the Company (the "Common Stock") in accordance with the terms of
the Securities and the Indenture, at the initial conversion price specified in
Schedule B hereto.
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Underwriters deem advisable after this
Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-_____) covering the
registration of the Securities, and the shares of Common Stock issuable upon
conversion of the Securities, under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will
prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations. The information included in such prospectus that was
omitted from such registration statement at the time it became effective but
that is deemed to be part of such registration statement at the time it became
effective pursuant to paragraph (b) of Rule 430A is referred to as "Rule 430A
Information." Each prospectus used before such registration statement became
effective, and any prospectus that omitted the Rule 430A Information that was
used after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus." Such registration
statement, including the exhibits thereto, schedules thereto, if any, and the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act, at the time it became effective and including the Rule 430A
Information, is herein called the "Registration Statement." Any registration
statement filed pursuant to Rule 462(b) of the 1933 Act Regulations is herein
referred to as the "Rule 462(b) Registration Statement," and after such filing
the term "Registration Statement" shall include the Rule 462(b) Registration
Statement. The final prospectus, including the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the 1933 Act, in the
form first furnished to
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the Underwriters for use in connection with the offering of the Securities is
herein called the "Prospectus." For purposes of this Agreement, all references
to the Registration Statement, any preliminary prospectus, the Prospectus or any
amendment or supplement to any of the foregoing shall be deemed to include the
copy filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval system ("▇▇▇▇▇").
All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (and all
other references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is or is deemed
to be incorporated by reference in the Registration Statement, any preliminary
prospectus or the Prospectus, as the case may be; and all references in this
Agreement to amendments or supplements to the Registration Statement, any
preliminary prospectus or the Prospectus shall be deemed to mean and include the
filing of any document under the Securities Exchange Act of 1934 (the "1934
Act") which is or is deemed to be incorporated by reference in the Registration
Statement, such preliminary prospectus or the Prospectus, as the case may be.
SECTION 1. Representations and Warranties.
(a) The Company represents and warrants to each Underwriter as of the date
hereof, and agrees with each Underwriter, as follows:
(i) The Company meets the requirements for use of Form S-3 under the
1933 Act. Each of the Registration Statement and any Rule 462(b)
Registration Statement has become effective under the 1933 Act and no stop
order suspending the effectiveness of the Registration Statement or any
Rule 462(b) Registration Statement has been issued under the 1933 Act and
no proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are contemplated by the Commission, and any
request on the part of the Commission for additional information has been
complied with.
At the respective times the Registration Statement or any Rule 462(b)
Registration Statement became effective, the Registration Statement and the
Rule 462(b) Registration Statement complied in all material respects with
the requirements of the 1933 Act and the 1933 Act Regulations and the Trust
Indenture Act of 1939, as amended (the "1939 Act") and the rules and
regulations of the Commission under the 1939 Act (the "1939 Act
Regulations") and did not contain an untrue statement of a material fact or
omit to
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state a material fact required to be stated therein or necessary to make
the statements therein not misleading, and at the time any post-effective
amendments to the Registration Statement or any Rule 462(b) Registration
Statement become effective any such post-effective amendments will comply
in all material respects with the requirements of the 1933 Act and the 1933
Act Regulations and the 1939 Act and the 1939 Act Regulations and will not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading. Neither the Prospectus nor any amendments or
supplements thereto, at the time the Prospectus or any such amendment or
supplement was issued, included 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, and the Prospectus, as amended or supplemented, at the Closing
Time (and, if any Option Securities are purchased, at the Date of Delivery)
will not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. The
representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or Prospectus
made in reliance upon and in conformity with information furnished to the
Company in writing by any Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for
use in the Registration Statement or Prospectus or to that part of the
Registration Statement which shall constitute the Statement of Eligibility
and Qualification under the 1939 Act (Form T-1) of the Trustee.
Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations and each
preliminary prospectus and the Prospectus delivered to the Underwriters for
use in connection with this offering was identical to the electronically
transmitted copies thereof filed with the Commission pursuant to ▇▇▇▇▇,
except to the extent permitted by Regulation S-T.
(ii) The accountants who certified the financial statements and
supporting schedules included in the Registration Statement are independent
public accountants as required by the 1933 Act and the 1933 Act
Regulations.
(iii) The consolidated financial statements included in the
Registration Statement and the Prospectus present
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fairly the financial position of the Company and its consolidated
subsidiaries as at the dates indicated and the results of their operations
for the periods specified; said financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis (except as may otherwise be indicated therein); and the
supporting schedules included in the Registration Statement present fairly
the information required to be stated therein.
(iv) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein, (A) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, (B) there have
been no transactions entered into by the Company or its subsidiaries, other
than those in the ordinary course of business, which are material with
respect to the Company and its subsidiaries considered as one enterprise,
and (C) there has been no dividend or distribution of any kind declared,
paid or made by the Company on any class of its capital stock.
(v) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware with
corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Prospectus; and the Company is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which it owns or leases property or
conducts a significant amount of business, except where the failure to so
qualify would not have a material adverse effect on the condition,
financial or otherwise, or the earnings, business affairs or business
prospects of the Company and its subsidiary considered as one enterprise.
(vi) Each "significant subsidiary" of the Company (as such term is
defined in Rule 1-02 of Regulation S-X) (each a "Subsidiary and
collectively, the Subsidiaries"), has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has corporate power and authority to
own, lease and operate its properties and to conduct its business and is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which it owns or leases property or
conducts a significant amount of business, except where the failure to so
qualify
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would not have a material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise; except as
otherwise disclosed in the Registration Statement, all of the issued and
outstanding capital stock of each such Subsidiary has been duly authorized
and validly issued, is fully paid and non-assessable and is owned by the
Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity. The only
subsidiaries of the Company are the subsidiaries listed on Schedule C
hereto.
(vii) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus in the column "Actual" under the
caption "Capitalization" (except for subsequent issuances, if any, pursuant
to this Agreement, pursuant to reservations, agreements or employee benefit
plans referred to in the Prospectus or pursuant to the exercise of
convertible securities, options or warrants referred to in the Prospectus).
The shares of issued and outstanding Common Stock have been duly authorized
and validly issued and are fully paid and non-assessable; the Common Stock
conforms to all statements relating thereto contained in the Prospectus;
and the issuance of the Securities is not subject to preemptive or other
similar rights which have not been waived.
(viii) The Securities to be issued and sold pursuant to this
Agreement have been duly authorized, and when issued, authenticated and
delivered pursuant to this Agreement, against payment of the consideration
set forth herein, will have been duly executed, authenticated, issued and
delivered and will constitute legal, valid and binding obligations of the
Company, subject, as to enforcement, to bankruptcy, insolvency,
reorganization or other similar laws of general applicability now or
hereafter in effect relating to or affecting creditors' rights and to
general equity principles, entitled to the benefits provided by the
Indenture under which they are to be issued, which will be substantially in
the form included as an exhibit to the Registration Statement; the
Indenture has been duly authorized and duly qualified under the 1939 Act,
and when executed and delivered by the Company and the Trustee (assuming
due authorization, execution and delivery by the Trustee), will constitute
a legal, valid and binding instrument enforceable in accordance with its
terms subject, as to enforcement, to bankruptcy, insolvency, reorganization
or other similar laws of general applicability now or hereafter in effect
relating to or affecting creditors' rights and to general equity
principles; and the Securities
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and the Indenture conform in all material respects to the descriptions
thereof in the Prospectus.
(ix) Upon issuance and delivery of the Securities in accordance with
this Agreement and the Indenture, the Securities shall be convertible at
the option of the holder thereof for shares of Common Stock in accordance
with the terms of the Securities and the Indenture; and the shares of
Common Stock initially issuable upon conversion of Securities have been
duly authorized and reserved for issuance, and when issued and delivered,
pursuant to the terms of the Indenture, will be validly issued, fully paid
and non-assessable.
(x) Neither the Company nor any of its subsidiaries is in violation
of its charter or by-laws or in material default in the performance or
observance of any obligation, agreement, covenant or condition contained in
any material contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which the Company or any of its subsidiaries is a party
or by which it or any of them may be bound, or to which any of the material
property or assets of the Company or any subsidiary is subject; and the
execution, delivery and performance of this Agreement and the Indenture and
the consummation of the transactions contemplated herein and therein and
compliance by the Company with its obligations hereunder and thereunder
have been duly authorized by all necessary corporate action and will not
conflict with or constitute a breach of, or default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any material
property or assets of the Company or any of its subsidiaries pursuant to,
any material contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which the Company or any of its subsidiaries is a party
or by which it or any of them may be bound, or to which any of the material
property or assets of the Company or any subsidiary is subject, nor will
such action result in any violation of the provisions of the charter or by-
laws of the Company or any applicable law, rule, regulation, judgment,
order or administrative or court decree.
(xi) There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company or
any of its subsidiaries, which is required to be disclosed in the
Registration Statement (other than as disclosed therein), or which the
Company reasonably believes is likely to result in any material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business
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prospects of the Company and its subsidiaries considered as one enterprise,
or which the Company reasonably believes is likely to materially and
adversely affect the properties or assets thereof or might materially and
adversely affect the consummation of this Agreement; all pending legal or
governmental proceedings to which the Company or any of its subsidiaries is
a party or of which any of their respective property or assets is the
subject which are not described in the Registration Statement, including
ordinary routine litigation incidental to the business, are, considered in
the aggregate, not material to the Company and its subsidiaries considered
as one enterprise; and there are no contracts or documents of the Company
or any of its subsidiaries which are required to be filed as exhibits to
the Registration Statement by the 1933 Act or by the 1933 Act Regulations
which have not been so filed.
(xii) The Company and its subsidiaries own, possess, have the right
to use, or reasonably believe they can acquire on reasonable terms, the
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names (collectively, "patent and
proprietary rights") currently employed by them in connection with the
business now operated by them, and neither the Company nor any of its
subsidiaries has received any notice or, to the best of their respective
knowledge, is otherwise aware of any infringement of or conflict with
asserted rights of others with respect to any such patent or proprietary
rights which the Company reasonably believes to be likely to result in an
unfavorable decision, ruling or finding, or of any facts which the Company
reasonably believes would render any such patent and proprietary rights
invalid or inadequate to protect the interest of the Company or its
subsidiaries therein, and which infringement or conflict or invalidity or
inadequacy, singly or in the aggregate, would result in any material
adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise.
(xiii) No authorization, approval or consent of any court or
governmental authority or agency is necessary in connection with the
offering, issuance or sale of the Securities hereunder or the issuance of
shares of Common Stock upon conversion of the Securities, except such as
may be required under the 1933 Act or the 1933 Act Regulations, the 1939
Act or the 1939 Act Regulations or state securities laws.
8
(xiv) This Agreement has been duly authorized, executed and delivered
by the Company.
(xv) There are no persons with registration or other similar rights
to have any securities registered pursuant to the Registration Statement or
otherwise registered by the Company under the 1933 Act, except as stated in
the Prospectus.
(xvi) All taxes and fees required to be paid within respect to the
execution of the Indenture and the issuance of the Securities have been
paid.
(xvii) The documents incorporated or deemed to be incorporated by
reference in the Prospectus, at the time they were or hereafter are filed
with the Commission, complied and will comply as to form in all material
respects with the requirements of the 1934 Act and the rules and
regulations of the Commission under the 1934 Act (the "1934 Act
Regulations").
(b) Any certificate identified as a certificate under this Agreement and
signed by any officer of the Company and delivered to the Underwriters or to
counsel for the Underwriters shall be deemed a representation and warranty by
the Company to each Underwriter as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) On the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the Company agrees to
sell to each Underwriter, severally and not jointly, and each Underwriter,
severally and not jointly, agrees to purchase from the Company, at the price set
forth in Schedule B, the aggregate principal amount of Initial Securities set
forth in Schedule A opposite the name of such Underwriter, plus any additional
principal amount of Initial Securities which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 9 hereof.
(b) In addition, on the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
hereby grants an option to the Underwriters, severally and not jointly, to
purchase up to an additional $37,500,000 principal amount of Securities at the
same price set forth in Schedule B for the Initial Securities, plus accrued
interest, if any, from the Closing Date to the Date of Delivery (as defined
below). The option hereby granted will expire 30 days after the date hereof and
may be exercised in whole or in part from time to time only for the purpose of
covering over-allotments which may be made in connection with the
9
offering and distribution of the Initial Securities upon notice by the
Underwriters to the Company setting forth the number of Option Securities as to
which the several Underwriters are then exercising the option and the time and
date of payment and delivery for such Option Securities. Any such time and date
of delivery (a "Date of Delivery") shall be determined by the Underwriters, but
shall not be earlier than two full business days nor later than five full
business days after the exercise of said option, nor in any event prior to the
Closing Time, as hereinafter defined, unless otherwise agreed by the
Underwriters and the Company. If the option is exercised as to all or any
portion of the Option Securities, each of the Underwriters, acting severally and
not jointly, will purchase that proportion of the total principal amount of
Option Securities then being purchased which the principal amount of Initial
Securities set forth in Schedule A opposite the name of such Underwriter bears
to the total principal amount of Initial Securities, subject in each case to
such adjustments as the Underwriters in their discretion shall make to eliminate
any sales or purchases of Securities having a principal amount less than $1,000.
(c) Payment of the purchase price for the Initial Securities shall be made
at the office of ▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇, Three First National Plaza, Chicago,
Illinois, and delivery of certificates for the Initial Securities shall be made
against payment therefor at the office of ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ World
Headquarters, North Tower, World Financial Center, New York, New York 10281-
1305, or (in either case) at such other place as shall be agreed upon by the
Underwriters and the Company, at 10:00 A.M. on the fourth business day after the
date hereof (unless postponed in accordance with the provisions of Section 9),
or such other time not later than ten business days after such date as shall be
agreed upon by the Underwriters and the Company (such time and date of payment
and delivery being herein called "Closing Time"). In addition, in the event
that any or all of the Option Securities are purchased by the Underwriters,
payment of the purchase price for such Option Securities shall be made at the
above-mentioned office of ▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇, and delivery of certificates for
the Option Securities shall be made against payment therefor at the above-
mentioned office of ▇▇▇▇▇▇▇ ▇▇▇▇▇, or (in either case) at such other place as
shall be agreed upon by the Underwriters and the Company, on each Date of
Delivery as specified in the notice from the Underwriters to the Company.
Payment shall be made to the Company by a wire transfer of immediately available
funds to a bank account designated by the Company, against delivery to the
Underwriters of certificates for the Securities to be purchased by them.
Certificates for the Initial Securities and the Option Securities, if any, shall
be in such denominations and registered in such names as the Underwriters may
request in writing at least one business day before the Closing Time or the
relevant Date of
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Delivery, as the case may be. The certificates for the Initial Securities and
the Option Securities, if any, will be made available for examination and
packaging by the Underwriters not later than 3:00 P.M. on the last business day
prior to the Closing Time or the relevant Date of Delivery, as the case may be.
SECTION 3. Covenants of the Company. The Company covenants with each
Underwriter as follows:
(a) The Company will comply with the requirements of Rule 430A and
will notify the Underwriters immediately, and confirm the notice in
writing, (i) when any post-effective amendment to the Registration
Statement shall become effective, or any supplement to the Prospectus or
any amended Prospectus shall have been filed, (ii) of the receipt of any
comments from the Commission on the Registration Statement, (iii) of any
request by the Commission for any amendment to the Registration Statement
or any amendment or supplement to the Prospectus or for additional
information, (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose, and (v) of the suspension
of the qualification of the Securities for offering or sale in any
jurisdiction, or the initiation or threatening of any proceedings for any
such purpose. The Company will promptly effect the filings necessary
pursuant to Rule 424(b) and will take such steps as it deems necessary to
ascertain promptly whether the form of prospectus transmitted for filing
under Rule 424(b) was received by the Commission and, in the event that it
was not, it will promptly file such prospectus. The Company will make every
reasonable effort to prevent the issuance of any stop order and, if any
stop order is issued, to obtain the lifting thereof at the earliest
possible moment.
(b) The Company will give the Underwriters notice of its intention to
file or prepare any amendment to the Registration Statement (including any
filing under Rule 462(b)) or any amendment or supplement to either the
prospectus included in the Registration Statement at the time it became
effective or to the Prospectus, whether pursuant to the 1933 Act, the 1934
Act or otherwise, will furnish the Underwriters with copies of any such
amendment or supplement a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file any such amendment or
supplement or use any such prospectus to which the Underwriters or counsel
for the Underwriters shall reasonably object, provided that such objection
shall not prevent the filing of any such amendment
11
or supplement which, in the opinion of counsel for the Company, is required
to be filed by the requirements of the 1933 Act or the 1933 Act
Regulations.
(c) The Company will deliver to each Underwriters a signed copy of the
Registration Statement as originally filed and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein
and documents incorporated or deemed to be incorporated by reference
therein) and will also deliver to the Underwriters as many conformed copies
of the Registration Statement as originally filed and of each amendment
thereto (without exhibits) as the Underwriters may reasonably request. The
copies of the Registration Statement and each amendment thereto furnished
to the Underwriters will be identical to the electronically transmitted
copies thereof filed with the Commission pursuant to ▇▇▇▇▇, except to the
extent permitted by Regulation S-T.
(d) The Company will furnish to each Underwriter, from time to time
during the period when the Prospectus is required to be delivered under the
1933 Act or the 1934 Act, such number of copies of the Prospectus (as
amended or supplemented) as such Underwriter may reasonably request for the
purposes contemplated by the 1933 Act or the 1934 Act or the respective
applicable rules and regulations of the Commission thereunder; provided
that in the event that an Underwriter is required to deliver a Prospectus
in connection with sales of any of the Securities at any time nine months
or more after the time of issuance of the Prospectus, upon the request of
such Underwriter but at its expense, the Company will prepare and deliver
to such Underwriter as many copies as it may request of a Prospectus (as
amended or supplemented) complying with Section 10(a)(3) of the 1933 Act.
The Prospectus and any amendments or supplements thereto furnished to the
Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to ▇▇▇▇▇, except to the extent
permitted by Regulation S-T.
(e) The Company will comply with the 1933 Act and the 1933 Act
Regulations, the 1934 Act and the 1934 Act Regulations and the 1939 Act and
the 1939 Act Regulations so as to permit the completion of the distribution
of the Securities as contemplated in this Agreement and in the Prospectus.
If at any time when a prospectus is required by the 1933 Act to be
delivered in connection with sales of the Securities, any event shall occur
or condition shall exist as a result of which it is necessary, to amend the
Registration Statement or amend or supplement the Prospectus in order that
the Prospectus will not include any untrue
12
statements of a material fact or omit to state a material fact necessary in
order to make the statements therein not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, at any such time to amend the Registration Statement or
amend or supplement the Prospectus in order to comply with the requirements
of the 1933 Act or the 1933 Act Regulations, the Company will promptly
prepare and file with the Commission, subject to Section 3(b), such
amendment or supplement as may be necessary to correct such statement or
omission or to make the Registration Statement or the Prospectus comply
with such requirements, and the Company will furnish to the Underwriters
such number of copies of such amendment or supplement as the Underwriters
may reasonably request.
(f) The Company will endeavor, in cooperation with the Underwriters,
to qualify the Securities and the Shares of Common Stock issuable upon
conversion of the Securities for offering and sale under the applicable
securities laws of such states and other jurisdictions of the United States
as the Underwriters may designate; provided, however, that the Company
shall not be obligated to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified or to execute a general
consent to service of process in any jurisdiction. In each jurisdiction in
which the Securities or such Shares of Common Stock have been so qualified,
the Company will file such statements and reports as may be required by the
laws of such jurisdiction to continue such qualification in effect for so
long as it may be required to complete the distribution of such Securities.
(g) The Company will timely file such reports pursuant to the 1934 Act
as are necessary to make generally available to its security holders as
soon as practicable an earnings statement for the purposes of, and to
provide the benefits contemplated by, the last paragraph of Section 11(a)
of the 1933 Act.
(h) The Company will use the net proceeds received by it from the sale
of the Securities in the manner specified in the Prospectus under "Use of
Proceeds".
(i) The Company will file with the National Association of Securities
Dealers ("NASD") all documents and notices required by the NASD of
companies that have issued securities that are traded in the over-the-
counter market and quotations for which are reported by the National
Association of Securities Dealers Automated Quotation System-National
Market System.
13
(j) The Company will not, without the prior written consent of ▇▇▇▇▇▇▇
▇▇▇▇▇, contract to sell or announce or make any offering, sale or other
disposition of any debt securities of the Company having a maturity greater
than one year during the period beginning from the date of this Agreement
and continuing through the earlier of the termination of trading
restrictions with respect to the Securities, as notified to the Company by
you, or the Closing Time.
(k) During a period of 120 days from the date of the Prospectus, the
Company will not, without the prior written consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇, (i)
directly or indirectly, sell, offer to sell, grant any option for the sale
of, or otherwise dispose of, any Common Stock or any security convertible
or exchangeable into or exercisable for Common Stock (except for Debentures
issued pursuant to this Agreement or Common Stock issued pursuant to the
Company's employee or director stock option plans, upon exercise or
conversion of outstanding options or warrants or convertible debt described
in the Prospectus or in connection with acquisitions or currently effective
shelf registration statements (provided that the number of shares of Common
Stock issued in connection with such acquisitions or such registration
statements does not exceed 1,000,000)) or (ii) file any registration
statement under the 1933 Act to register the offer or sale of any shares of
Common Stock or any security convertible or exchangeable into or
exercisable for Common Stock.
(l) The Company will use its best efforts to have the Securities
quoted on the Nasdaq Small Cap Market and the shares of Common Stock
issuable upon conversion of Securities quoted on the Nasdaq National Market
(or listed on a national securities exchange) and to cause the Securities
to be registered under the ▇▇▇▇ ▇▇▇.
(m) The Company will reserve and keep available at all times, free of
preemptive rights, shares of Common Stock for the purpose of enabling the
Company to satisfy any obligations to issue Common Stock upon conversion of
Securities.
(n) The Company, during the period when the Prospectus is required to
be delivered under the 1933 Act or the 1934 Act, will file all documents
required to be filed with the Commission pursuant to Section 13, 14 or 15
of the 1934 Act within the time periods required by the 1934 Act and the
1934 Act Regulations.
14
SECTION 4. Payment of Expenses. The Company will pay all expenses incident
to the performance of its obligations under this Agreement, except as otherwise
expressly provided in Section 3(d) hereof, including (i) the printing and filing
of the Registration Statement as originally filed and of each amendment thereto,
(ii) the reproduction of this Agreement and the Indenture, (iii) the
preparation, issuance and delivery of the certificates for the Securities to the
Underwriters, (iv) the fees and disbursements of the Company's counsel and
accountants, (v) the qualification of the Securities and the shares of Common
Stock issuable upon conversion of the Securities under securities laws in
accordance with the provisions of Section 3(f) hereof, including filing fees and
the fees and disbursements of counsel in connection therewith and in connection
with the preparation of the 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 each preliminary prospectus, and of the Prospectus
and any amendments or supplements thereto, (vii) the printing and delivery to
the Underwriters of copies of the Blue Sky Survey, (viii) the fees and expenses
of the Trustee, including the fees and disbursements of counsel for the Trustee
in connection with the Indenture, (ix) any fees payable in connection with the
rating of the Securities, (x) the fee of the National Association of Securities
Dealers, Inc. and (xi) the fees and expenses incurred in connection with the
quotation of the Securities, and the shares of Common Stock into which the
Securities are convertible, in accordance with the provisions of Section 3(l).
It is understood, however, that except as provided in Section 6 hereof, you will
pay the fees of your counsel, transfer taxes on resale of any of the Securities
by you and any advertising expenses incurred in connection with any offers you
may make.
If this Agreement is terminated by the Underwriters in accordance with the
provisions of Section 5 or Section 8(a)(i) hereof, the Company shall reimburse
the Underwriters for all of their reasonable out-of-pocket expenses, including
the reasonable fees and disbursements of counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of the
Underwriters hereunder are subject to the accuracy of the representations and
warranties of the Company herein contained, to the performance by the Company of
its obligations hereunder, and to the following further conditions:
(a) The Registration Statement, including any Rule 462(b) Registration
Statement, has become effective and at Closing Time no stop order
suspending the effectiveness of the Registration Statement shall have been
issued under the 1933 Act or proceedings therefor initiated or threatened
by the Commission. A prospectus containing the Rule 430A
15
Information shall have been filed with the Commission in accordance with
Rule 424(b) of the 1933 Act Regulations within the prescribed time period
and prior to Closing Time the Company shall have provided evidence
satisfactory to the Underwriters of such timely filing, or a post-effective
amendment providing such information shall have been promptly filed and
declared effective in accordance with the requirements of Rule 430A of the
1933 Act Regulations.
(b) At Closing Time the Underwriters shall have received:
(1) The favorable opinion, dated as of Closing Time, of ▇▇▇▇,
▇▇▇▇ & ▇▇▇▇▇, counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Delaware.
(ii) The Company has corporate power and authority to own,
lease and operate its properties and to conduct its business as
described in the Registration Statement.
(iii) To the best of their knowledge and information, the
Company is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which a
failure to so qualify would have a material adverse effect on the
business of the Company and its subsidiaries considered as one
enterprise.
(iv) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Prospectus in the column
"Actual" under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to this Agreement or
pursuant to reservations, agreements or employee benefit plans
referred to in the Prospectus or pursuant to the exercise of
convertible securities, options or warrants referred to in the
Prospectus) and the shares of issued and outstanding Common Stock
have been duly authorized and validly issued and are fully paid
and non-assessable.
(v) Each Subsidiary has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of the
16
[State of Delaware], has corporate power and authority under such
laws to own, lease and operate its properties and to conduct its
business as described in the Registration Statement and, to the
best of their knowledge and information, is duly qualified as a
foreign corporation to transact business and is in good standing
in each jurisdiction in which a failure to so qualify would have
a material adverse effect on the business of the Company and its
subsidiaries considered as one enterprise; except as otherwise
disclosed in the Registration Statement, all of the issued and
outstanding capital stock of each Subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable
and, to the best of their knowledge and information, is owned by
the Company, directly or through subsidiaries, free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim
or equity.
(vi) The issuance of the Securities is not subject to
preemptive or other similar rights arising by operation of law,
under the charter or by-laws of the Company or, to the best of
their knowledge and information, otherwise, which have not been
waived.
(vii) The Initial Securities or Option Securities, as the
case may be, to be issued and sold by the Company pursuant to
this Agreement have been duly authorized by requisite corporate
action on the part of the Company, and the Securities, when
executed and authenticated in accordance with the terms of the
Indenture and delivered to and paid for by you, will be valid and
binding obligations of the Company entitled to the benefits of
the Indenture and enforceable against the Company in accordance
with their terms, except to the extent that enforcement thereof
may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, and by general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity); and the
Securities and the Indenture conform as to legal matters in all
material respects to the descriptions thereof in the Prospectus.
17
(viii) The Indenture has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement,
enforceable against the Company in accordance with its terms,
except to the extent that enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors'
rights generally, and by general principles of equity (regardless
of whether enforceability is considered in a proceeding at law or
in equity); the Indenture has been duly qualified under the 1939
Act.
(ix) Upon issuance and delivery of the Securities in
accordance with this Agreement and the Indenture, the Securities
shall be convertible at the option of the holder thereof for
shares of Common Stock in accordance with the terms of the
Securities and the Indenture; and the shares of Common Stock
initially issuable upon conversion of Securities have been duly
authorized and reserved for issuance and, when issued and
delivered pursuant to the terms of the Indenture, will be validly
issued, fully paid and non-assessable.
(x) This Agreement has been duly authorized, executed and
delivered by the Company.
(xi) The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the
1933 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); and, to the best of their knowledge and
information, no stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement
has been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission.
(xii) The Registration Statement, including any Rule 462(b)
Registration Statement and the Rule 430A Information, as
applicable, the Prospectus and each amendment or supplement to
the Registration Statement and Prospectus (excluding the
documents incorporated by reference therein) as of their
respective effective or issue dates
18
(other than the financial statements and schedules and other
financial data included therein, and the Trustee's Statement of
Eligibility on Form T-1 (the "Form T-1") as to which no opinion
need be rendered) complied as to form in all material respects
with the requirements of the 1933 Act and the 1933 Act
Regulations.
(xiii) The Common Stock conforms to the description thereof
contained in the Prospectus, and the form of certificate used to
evidence the Common Stock is in due and proper form and complies
with all applicable statutory requirements and with any
applicable requirements of the charter and by-laws of the
Company.
(xiv) To the best of their knowledge and information, (a)
there are no legal or governmental proceedings pending or
threatened against the Company or any of its subsidiaries which
are required to be disclosed in the Registration Statement, other
than those disclosed therein, and (b) all pending legal or
governmental proceedings to which the Company or any of its
subsidiaries is a party or to which any of their property is
subject which are not described in the Registration Statement,
including ordinary routine litigation incidental to the business,
are, considered in the aggregate, not material.
(xv) To the best of their knowledge and information, there
are no contracts, indentures, mortgages, loan agreements, notes,
leases or other instruments required to be described in the
Registration Statement or to be filed as exhibits thereto other
than those described therein or filed as exhibits thereto, and
the descriptions thereof in the Registration Statement are
correct in all material respects.
(xvi) No authorization, approval, consent or order of any
court or governmental authority or agency is required in
connection with the offering, issuance or sale of the Securities
to the Underwriters or the issuance of shares of Common Stock
upon conversion of the Securities, except (A) the registration
under the 1933 Act of the Securities and the shares of Common
Stock issuable upon conversion of Securities, (B) registration
under the 1934 Act of the Securities, (C) the qualification of
the Indenture under the
19
1939 Act and (D) such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Securities by you, and the issuance of shares
of Common Stock upon conversion of Securities.
(xvii) To the best of their knowledge and information, the
execution, delivery and performance of this Agreement and the
Indenture and the consummation of the transactions contemplated
herein and therein and compliance by the Company with its
obligations hereunder and thereunder will not conflict with or
constitute a breach of, or default under, or result in the
creation or imposition of any lien, charge or encumbrance upon
any material property or assets of the Company or any of its
subsidiaries pursuant to, any material contract, indenture,
mortgage, loan agreement, note, lease or other instrument to
which the Company or any of its subsidiaries is a party or by
which it or any of them may be bound, or to which any material
property or assets of the Company or any of its subsidiaries is
subject, nor will such action result in any violation of the
provisions of the charter or by-laws of the Company, or any
applicable law, rule, regulation, judgment, order or
administrative or court decree.
(xviii) Each document filed pursuant to the 1934 Act (other
than the financial statements and supporting schedules included
therein, as to which no opinion need be rendered) and
incorporated or deemed to be incorporated by reference in the
Prospectus complied when so filed as to form in all material
respects with the 1934 Act and the 1934 Act Regulations.
(2) The favorable opinion, dated as of Closing Time, of ▇▇▇▇▇,
▇▇▇▇▇ & ▇▇▇▇▇, counsel for the Underwriters, with respect to the
matters set forth in (i), (ii), (vi), (solely as to preemptive or
other similar rights arising by operation of law or under the charter
or by-laws of the Company) and (vii) to (xiii), inclusive, of
subsection (b)(1) of this Section.
(3) In giving their opinions required by subsections (b)(1) and
(b)(2), respectively, of this Section, ▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇ and ▇▇▇▇▇,
▇▇▇▇▇ & ▇▇▇▇▇ shall each additionally state that nothing has come to
20
their attention that would lead them to believe that the Registration
Statement or any amendment thereto, including the Rule 430A
Information (except for the financial statements and schedules and
other financial data included or incorporated by reference therein or
omitted therefrom and the Form T-1, as to which counsel need make no
statement), at the time such Registration Statement or any such
amendment became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading or that the Prospectus or any amendment or supplement
thereto (except for the financial statements and schedules and other
financial data included or incorporated by reference therein or
omitted therefrom and the Form T-1, as to which counsel need make no
statement), at the time the Prospectus was issued, at the time any
such amended or supplemented prospectus was issued or at Closing Time,
included or includes an untrue statement of a material fact or omitted
or omits 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.
In rendering such opinion, such counsel may rely, as to matters of
fact (but not as to legal conclusions), to the extent they deem
proper, on certificates of responsible officers of the Company and
public officials. Such opinion shall not state that it is to be
governed or qualified by, or that it is otherwise subject to, any
treatise, written policy or other document relating to legal opinions,
including, without limitation, the Legal Opinion Accord of the ABA
Section of Business Law (1991).
(c) At Closing Time there shall not have been, since the date hereof
or since the respective dates as of which information is given in the
Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of
the Company and its subsidiaries considered as one enterprise, whether or
not arising in the ordinary course of business, and the Underwriters shall
have received a certificate of the Chairman, a Vice Chairman, the President
or a Vice President of the Company and of the chief financial or chief
accounting officer of the Company or the Vice President -SEC and Financial
Reporting, dated as of Closing Time, to the effect that, to the best of
their knowledge based on reasonable investigation, (i) there has been no
such material adverse change, (ii) the representations and warranties in
Section 1 hereof are true and correct with the
21
same force and effect as though expressly made at and as of Closing Time,
(iii) the Company has complied with all agreements and satisfied all
conditions required on its part to be performed or satisfied at or prior to
Closing Time pursuant to this Agreement, and (iv) no stop order suspending
the effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been initiated or threatened by the
Commission.
(d) At the time of the execution of this Agreement, the Underwriters
shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP a letter dated such date, in
form and substance satisfactory to the Underwriters, to the effect that (i)
they are independent public accountants with respect to the Company and its
subsidiary within the meaning of the 1933 Act and the 1933 Act Regulations;
(ii) it is their opinion that the consolidated financial statements and
supporting schedules included in the Registration Statement and covered by
their opinions therein comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the 1933 Act
Regulations; (iii) based upon limited procedures set forth in detail in
such letter, nothing has come to their attention which causes them to
believe that (A) the interim unaudited financial statements of the Company
and its subsidiaries included in the Registration Statement do not comply
as to form in all material respects with the applicable accounting
requirements of the 1933 Act and the 1933 Act Regulations or are not
presented in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the audited
consolidated financial statements included in the Registration Statement
(except as may otherwise be indicated therein), (B) the unaudited amounts
of revenue, earnings and earnings per common and equivalent share set forth
under "Selected Consolidated Financial and Store Data" in the Prospectus
were not determined on a basis substantially consistent with that used in
determining the corresponding amounts in the audited financial statements
included in the Registration Statement, or (C) at a specified date not more
than three days prior to the date of this Agreement, there has been any
change in the capital stock of the Company or any increase in the
consolidated long-term debt of the Company and its subsidiary or any
decrease in consolidated net current assets or net assets as compared with
the amounts shown in the October 6, 1996 balance sheet incorporated by
reference in the Registration Statement or, during the period from October
6, 1996 to a specified date not more than three days prior to the date of
this Agreement, there were any decreases, as compared with the
corresponding period in the preceding year, in consolidated revenues, net
income or net
22
income per share of the Company and its subsidiaries, except in all
instances for changes, increases or decreases which the Registration
Statement and the Prospectus disclose have occurred or may occur and except
as otherwise set forth in such letter; and (iv) in addition to the
examination referred to in their opinions and the limited procedures
referred to in clause (iii) above, they have carried out certain specified
procedures, not constituting an audit, with respect to certain amounts,
percentages and financial information which are included in the
Registration Statement and Prospectus and which are specified by the
Underwriters, and have found such amounts, percentages and financial
information to be in agreement with the relevant accounting, financial and
other records of the Company and its subsidiary identified in such letter.
(e) At Closing Time the Underwriters shall have received from ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP a letter, dated as of Closing Time, to the effect that they
reaffirm the statements made in the letter furnished pursuant to subsection
(d) of this Section, except that the specified date referred to shall be a
date not more than five days prior to Closing Time and to the further
effect that they have carried out procedures as specified in clause (iv) of
subsection (d) of this Section with respect to certain amounts, percentages
and financial information specified by the Underwriters and deemed to be a
part of the Registration Statement pursuant to Rule 430(A)(b) and have
found such amounts, percentages and financial information to be in
agreement with the records specified in such clause (iv).
(f) [Intentionally left blank]
(g) At Closing Time and at each Date of Delivery, if any, counsel for
the Underwriters shall have been furnished with such documents and opinions
as they may reasonably require for the purpose of enabling them to pass
upon the issuance and sale of the Securities as herein contemplated and
related proceedings, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Company in connection
with the issuance and sale of the Securities as herein contemplated and
with respect to the shares of Common Stock issuable upon conversion of the
Securities shall be reasonably satisfactory in form and substance to the
Underwriters and counsel for the Underwriters.
23
(h) In the event that the Underwriters exercise their option provided
in Section 2(b) hereof to purchase all or any portion of the Option
Securities, the representations and warranties of the Company contained
herein and the statements in any certificates furnished by the Company
hereunder shall be true and correct as of each Date of Delivery and, at the
relevant Date of Delivery, the Underwriters shall have received:
(1) A certificate, dated such Date of Delivery, of the Chairman,
a Vice Chairman, the President or a Vice President of the Company and
of the chief financial or chief accounting officer of the Company or
the Vice President - SEC and Financial Reporting confirming that the
certificate delivered at the Closing Time pursuant to Section 5(c)
hereof remains true and correct as of such Date of Delivery.
(2) The favorable opinion of ▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇, counsel for the
Company, in form and substance reasonably satisfactory to counsel for
the Underwriters, dated such Date of Delivery, relating to the Option
Securities to be purchased on such Date of Delivery and otherwise to
the same effect as the opinion required by Sections 5(b)(1) and
5(b)(3) hereof.
(3) The favorable opinion of ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, counsel for
the Underwriters, dated such Date of Delivery, relating to the Option
Securities to be purchased on such Date of Delivery and otherwise to
the same effect as the opinion required by Sections 5(b)(2) and
5(b)(3) hereof.
(4) A letter from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, in form and substance
satisfactory to the Underwriters and dated such Date of Delivery,
substantially the same in form and substance as the letter furnished
to the Underwriters pursuant to Section 5(e) hereof, except that the
"specified date" in the letter furnished pursuant to this Section
5(h)(4) shall be a date not more than five days prior to such Date of
Delivery.
If any material condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement, or, in the case
of any condition to the purchase of Option Securities, on a Date of Delivery
which is after the Closing Time, the obligations of the several Underwriters to
purchase the relevant Option Securities, may be terminated by the Underwriters
by notice to the Company at any time at or prior to Closing Time or such Date of
Delivery, as the case may be, and
24
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof.
SECTION 6. Indemnification.
(a) The Company agrees to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage or expense
whatsoever, promptly after submission for payment, arising out of any
untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement (or any amendment thereto), including the
Rule 430A Information, if applicable, or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage or expense
whatsoever, promptly after submission for payment, to the extent of the
aggregate amount paid in settlement of any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or such alleged untrue statement or omission; provided that
(subject to Section 6(d) below) any such settlement is effected with the
written consent of the Company; and
(iii) against any and all expense whatsoever, promptly after
submission for payment (including, subject to Section 6(c) hereof, the
reasonable fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇ ▇▇▇▇▇),
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or (ii)
above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent
25
arising out of any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for
use in the Registration Statement (or any amendment thereto), including the Rule
430A Information, or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto) and provided further, that, insofar as this
indemnity agreement relates to any untrue statement or omission, or any alleged
untrue statement or omission, made in a preliminary prospectus, but eliminated
or remedied in the Prospectus, it shall not inure to the benefit of an
Underwriter (or to the benefit of any person who controls such Underwriter) if a
copy of the Prospectus was not delivered by such Underwriter to the person
asserting the claim arising from such untrue statement or omission, or such
alleged untrue statement or omission at or prior to the time required by the
1933 Act, if the delivery thereof would have constituted a defense to the claim
asserted by such person.
(b) Each Underwriter severally agrees to indemnify and hold harmless the
Company, its directors, each of its officers who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all
loss, liability, claim, damage or expense described in the indemnity contained
in subsection (a) of this Section, promptly after submission for payment, but
only with respect to untrue statements or omissions, or alleged untrue
statements or omissions, made in the Registration Statement (or any amendment
thereto), including the Rule 430A Information, or any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Registration Statement (or any
amendment thereto) or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
which it may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of any such
action. If it so elects within a reasonable time after receipt of such notice,
an indemnifying party, jointly with any other indemnifying parties receiving
such notice, may assume the defense of such action, with counsel chosen by it
and approved by the indemnified parties defendant in such action, unless such
indemnified parties reasonably object to such assumption on the ground that
there may be legal defenses
26
available to them which are different from or in addition to those available to
such indemnifying party. If an indemnifying party assumes the defense of such
action, the indemnifying parties shall not be liable for any fees and expenses
of counsel for the indemnified parties incurred thereafter in connection with
such action. In no event shall the indemnifying parties be liable for fees and
expenses of more than one counsel (in addition to any local counsel retained for
local procedural and practice matters) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification could be sought under
this Section 6 (whether or not the indemnified parties are actual or potential
parties thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim, (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act by or
on behalf of any indemnified party, (iii) does not impugn the reputation of any
indemnified party and (iv) does not restrict any indemnified party from engaging
in any activity.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for reasonable fees and
expenses of counsel, such indemnifying party agrees that it shall be liable for
any settlement of the nature contemplated by Section 6(a)(ii) effected without
its written consent if (i) such settlement is entered into more than 45 days
after receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
SECTION 7. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement, or
contained in certificates of officers of the Company submitted pursuant hereto
and identified as such, shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter or
controlling person, or by or on behalf of the Company, and shall survive
delivery of the Securities to the Underwriters.
27
SECTION 8. Termination of Agreement.
(a) The Underwriters may terminate this Agreement, by written notice to
the Company, at any time at or prior to Closing Time (i) if there has been,
since the date of this Agreement or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any material adverse change in the financial markets in
the United States or any outbreak of hostilities or escalation thereof involving
the United States or other calamity or crisis the effect of which is such as to
make it, in the judgment of the Underwriters, impracticable to market the
Securities or to enforce contracts for the sale of the Securities, or (iii) if
trading in the Common Stock has been suspended by the Commission or the Nasdaq
National Market, or (iv) any downgrading in the rating accorded the Company's
debt securities by any "nationally recognized statistical rating organization,"
as that term is defined by the Commission for purposes of Rule 436(g)(2) under
the 1933 Act, or any such organization shall have announced publicly that it has
placed any of such debt securities on what is commonly termed a "watch list" for
possible downgrading, or (v) if trading generally on the New York Stock Exchange
or the Nasdaq National Market has been suspended, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices for securities have
been required, by said Exchange or by such system or by order of the Commission
or any other governmental authority, or if a banking moratorium has been
declared by either Federal or New York authorities.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof.
SECTION 9. Default by One or More of the Underwriters. If one or more of
the Underwriters shall fail at Closing Time or a Date of Delivery to purchase
the Securities which it or they are obligated to purchase under this Agreement
(the "Defaulted Securities"), the non-defaulting Underwriters 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 Securities in such amounts as may be agreed upon
and upon the terms herein set forth; if, however, the non-defaulting
Underwriters shall not have completed such arrangements within such 24-hour
period, then:
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(a) if the number of Defaulted Securities does not exceed 10% of the
aggregate principal amount of Securities to be purchased on such date, each
of 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
(b) if the number of Defaulted Securities exceeds 10% of the
aggregate principal amount of Securities to be purchased on such date, this
Agreement or, with respect to any Date of Delivery which occurs after the
Closing Time, the obligation of the Underwriters to purchase and of the
Company to sell the Option Securities to be purchased and sold on such Date
of Delivery shall terminate without liability on the part of any non-
defaulting Underwriter or the Company.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery which is after the Closing
Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Company to sell the relevant Option Securities,
as the case may be, either the non-defaulting Underwriters or the Company shall
have the right to postpone Closing Time or the relevant Date of Delivery, as the
case may be, 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. As used herein, the term "Underwriter" includes any
person substituted for an Underwriter under this Section 9.
SECTION 10. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given when delivered
personally to the recipient, one day after being sent to the recipient by
reputable overnight express courier service (charges prepaid), five days after
being mailed to the recipient (postage prepaid) or upon confirmation if
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to ▇▇▇▇▇▇▇ ▇▇▇▇▇, at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice Chairman - Investment
Banking; notices to the Company shall be directed to it at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention:
___________________________________.
SECTION 11. Parties. This Agreement shall each inure to the benefit of
and be binding upon the Underwriters and the
29
Company and their respective successors. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Underwriters and the Company and their respective
successors and the controlling persons and officers and directors referred to in
Section 6 and their heirs and legal representatives, any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
herein contained. This Agreement and all conditions and provisions hereof are
intended to be for the sole and exclusive benefit of the Underwriters and the
Company and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities
from any Underwriter shall be deemed to be a successor by reason merely of such
purchase.
SECTION 12. Governing Law and Time. 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. SPECIFIED TIMES OF DAY REFER
TO NEW YORK CITY TIME.
* * *
30
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,
BOSTON CHICKEN, INC.
By:______________________________
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
ALEX. ▇▇▇▇▇ & SONS INCORPORATED
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
By: ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
By:______________________________
Authorized Signatory
31
SCHEDULE A
Principal Amount of
Name of Underwriter Initial Securities
------------------- -------------------
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇..................
Incorporated...............................
Alex. ▇▇▇▇▇ & Sons Incorporated........................
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated......................
---------
Total...................................
=========
Sch A-1
SCHEDULE B
BOSTON CHICKEN, INC.
$250,000,000
____% Convertible Subordinated Debentures due 2004
1. The initial public offering price of the Securities shall be ___% of
the principal amount thereof, plus accrued interest, if any, from the date of
issuance.
2. The purchase price to be paid by the Underwriters for the Initial
Securities shall be ___% of the principal amount thereof.
3. The interest rate on the Securities shall be ___% per annum.
4. The Securities shall be convertible into shares of common stock, par
value $.01 per share, of the Company at an initial conversion price of $_____
per share.
Sch B-1
SCHEDULE C
List of Subsidiaries
Sch C-1