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THE SPORTS CLUB COMPANY, INC.
6,000,000 SHARES OF COMMON STOCK*
UNDERWRITING AGREEMENT
March __, 1998
▇▇▇▇▇▇▇▇ & CO. INC.
PRUDENTIAL SECURITIES INCORPORATED
SUTRO & CO. INCORPORATED
as Representatives of the
several Underwriters
c/▇ ▇▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The Sports Club Company, Inc., a Delaware corporation (the "Company"), proposes
to issue and sell to the several Underwriters named in Schedule 1 hereto (the
"Underwriters"), for whom you have been duly authorized to act as
representatives (in such capacity, the "Representatives"), an aggregate of
6,000,000 shares (the "Firm Securities") of the Company's Common Stock, par
value $0.01 per share (the "Common Stock"). The Company and each of the selling
stockholders listed on Schedule 2 hereto (collectively, the "Selling
Stockholders" and each individually, a "Selling Stockholder") have also agreed
to issue and sell pursuant to an option, subject to the terms and conditions
hereof, up to 900,000 additional shares of Common Stock, of which 800,000 shares
are to be issued and sold by the Company and 100,000 shares are to be sold by
the Selling Stockholders. Any and all shares of Common Stock to be issued and
sold pursuant to such option are referred to herein as the "Option Securities,"
and the Firm Securities and any Option Securities are collectively referred to
herein as the "Securities."
The Company and the Selling Stockholders hereby confirm their respective
agreement with the several Underwriters, as set forth below. If you are the only
Underwriters, all references herein to the Representatives shall be deemed to be
the Underwriters.
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* Plus an option to purchase from the Company and the Selling Stockholders up
to 900,000 shares to cover over-allotments.
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1. Agreements to Sell and Purchase.
(a) The Company agrees to issue and sell to each of the
Underwriters, and each of the Underwriters, severally and not jointly, agrees to
purchase from the Company, upon the basis of the representations, warranties,
agreements and covenants herein contained and subject to the terms and
conditions herein set forth, and at a purchase price of $______ per share, the
number of Firm Securities set forth opposite the name of such Underwriter in
Schedule 1 hereto. The Company shall deliver, or cause to be delivered, to the
Representatives for the respective accounts of the Underwriters, one or more
certificates in definitive form for the Firm Securities that the several
Underwriters have agreed to purchase hereunder, and in such denomination or
denominations and registered in such name or names as the Representatives
request upon notice to the Company at least 48 hours prior to the Firm Closing
Date (as hereinafter defined), against payment by or on behalf of the
Underwriters of the purchase price therefor by certified or official bank check
or checks drawn upon or by a New York Clearing House bank and payable in
next-day funds to the order of the Company. Such delivery of and payment for the
Firm Securities shall be made at the offices of ▇▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 9:30 a.m., New York time, on
____________, 1998, or at such other place, time or date as the Representatives
and the Company may agree upon or as the Representatives may determine pursuant
to Section 8 hereof, such time and date of delivery against payment being herein
referred to as the "Firm Closing Date." The Company will make such certificate
or certificates for the Firm Securities available for checking and packaging by
the Representatives at the offices in New York, New York of the Company's
transfer agent or registrar at least 24 hours prior to the Firm Closing Date.
(b) For the purpose of covering any over-allotments in connection
with the distribution and sale of the Firm Securities, the Company and the
Selling Stockholders hereby grant to the several Underwriters an option to
purchase, severally and not jointly, the Option Securities (such Option
Securities, if less than the aggregate amount, to be apportioned first between
the Selling Stockholders on a pro rata basis based on the maximum amount of
Option Securities which the Selling Stockholders are obligated to sell to the
Underwriters pursuant to this Section 1(b) and then from the Company, adjusted
by the Representatives in such manner as they deem advisable to avoid
fractional shares). The purchase price to be paid for any Option Securities
shall be the same price per share as the price per share for the Firm Securities
sold by the Company set forth above in paragraph (a) of this Section 1. The
option granted hereby may be exercised only once as to all or any part of the
Option Securities and must be exercised within thirty days after the date of the
Prospectus. The Underwriters shall not be under any obligation to purchase any
of the Option Securities prior to any exercise of such option. The
Representatives may exercise the option granted hereby by giving notice in
writing or by telephone (confirmed in writing) to the Company setting forth the
aggregate amount of Option Securities as to which the several Underwriters are
then exercising the option and the date and time for delivery of and payment for
such Option Securities. Any such date of delivery shall be determined by the
Representatives but shall not be earlier than two business days or later than
seven business days after such exercise of the option and, in any event, shall
not be earlier than the Firm Closing Date. The time and date set forth in such
notice, or such other time on such other date as the Representatives and the
Company may agree upon or as the Representatives may determine pursuant to
Section 8 hereof, is herein called the "Option Closing Date" with respect to
such Option Securities. Upon exercise of the option as provided herein, the
Company and the Selling Stockholders shall become obligated to sell to each of
the several Underwriters, and, subject to the terms and conditions herein set
forth, each of the Underwriters (severally and not jointly) shall become
obligated to
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purchase from the Company and the Selling Stockholders the same percentage of
the total number of the Option Securities as to which the several Underwriters
are then exercising the option, as such Underwriter is obligated to purchase of
the aggregate number of Firm Securities, as adjusted by the Representatives in
such manner as they deem advisable to avoid fractional Shares. If the option is
exercised as to all or any portion of the Option Securities, one or more
certificates in definitive form for such Option Securities, and payment
therefor, shall be delivered on the related Option Closing Date in the manner,
and upon the terms and conditions, set forth in paragraph (a) of this Section 1,
except that reference therein to the Firm Securities an the Firm Closing Date
shall be deemed, for purposes of this paragraph (b), to refer to such Option
Securities and Option Closing Date, respectively.
Certificates in negotiable form (endorsed in blank or accompanied
by stock powers in blank, with signatures appropriately guaranteed, and any
funds necessary for the purchase of stock transfer stamps) representing all of
the Securities to be sold by the Selling Stockholders have been placed in
custody under Custody Agreements (each, a "Custody Agreement") with American
Stock Transfer & Trust Company as Custodian (the "Custodian") and each Selling
Stockholder has duly executed and delivered a Power of Attorney (a "Power of
Attorney") appointing D. ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇, and
each of them, as such Selling Stockholder's attorneys-in-fact (the
"Attorneys-in-Fact") with authority to execute this Agreement and to deliver
this Agreement on behalf of such Selling Stockholder, to authorize the delivery
of the Securities to be sold by such Selling Stockholder hereunder and otherwise
to act on behalf of such Selling Stockholder in connection with the transactions
contemplated by this Agreement and such Custody Agreement. Each Selling
Stockholder agrees that the Securities represented by the certificates held in
custody for such Selling Stockholder under such Custody Agreement are subject to
the interests of the Underwriters hereunder and the arrangements made by such
Selling Stockholder for such custody, as well as the appointment by such Selling
Stockholder of the Attorneys-in-Fact, are, to that extent, irrevocable. Each
Selling Stockholder specifically agrees that its obligations hereunder shall not
be terminated, except as otherwise provided herein, by any act of such Selling
Stockholder, operation of law or otherwise, whether by the death or incapacity
of such Selling Stockholder or by the occurrence of any other event. If any
Selling Stockholder should die or become incapacitated or if any other such
event should occur before the delivery of the Securities hereunder, certificates
representing the Securities held in custody for such Selling Stockholder shall
be delivered pursuant to the terms and conditions of this Agreement and such
Custody Agreement, and the actions taken by the Attorneys-in-Fact pursuant to
such Power of Attorney shall be as valid as if such death, incapacity or other
event had not occurred, whether or not the Custodian or the Attorneys-in-Fact
shall have received notice of such death, incapacity or other event.
(c) It is understood that you, individually and not as the
Representatives, may (but shall not be obligated to) make payment on behalf of
any Underwriter or Underwriters for any of the Securities to be purchased by
such Underwriter or Underwriters. No such payment shall relieve such Underwriter
or Underwriters from any of its or their obligations hereunder.
2. Representations and Warranties. The Company represents and warrants
to, and agrees with, each of the several Underwriters that:
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(a) A registration statement on Form S-2 (File No. 333-46973)
with respect to the Securities has been prepared by the Company in conformity
with the requirements of the Securities Act of 1933, as amended (the "Act"), and
the applicable Rules and Regulations (as defined below) of the Securities and
Exchange Commission (the "Commission") and has been filed with the Commission;
such amendments to such registration statement, and such amended prospectuses
subject to completion, 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, and such amended
prospectuses subject to completion, as may hereafter be required. Copies of such
registration statement and each such amendment, each such related prospectus
subject to completion (collectively, the "Preliminary Prospectuses" and
individually, a "Preliminary Prospectus"), each document incorporated by
reference therein and each exhibit thereto have been delivered to you. For
purposes hereof, "Rules and Regulations" means the rules and regulations adopted
by the Commission under either the Act or the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), as applicable.
If the registration statement has been declared effective under the Act
by the Commission, the Company will prepare and promptly file with the
Commission, pursuant to subparagraph (1) or (4) of Rule 424(b) of the Rules and
Regulations under the Act or as part of a post-effective amendment to the
registration statement (including a final form of prospectus), the information
omitted from the registration statement pursuant to Rule 430A(a) of the Rules
and Regulations under the Act. If the registration statement has not been
declared effective under the Act by the Commission, the Company will prepare and
promptly file a further amendment to the registration statement, including a
final form of prospectus. The term "Registration Statement" as hereinafter used
in this Agreement shall mean such registration statement, including financial
statements, schedules and exhibits in the form in which it became or becomes
effective (including, if the Company omitted information from the registration
statement pursuant to Rule 430A(a) of the Rules and Regulations under the Act,
the information deemed to be a part of the registration statement at the time it
became effective pursuant to Rule 430A(b) of the Rules and Regulations under the
Act) and, in the event of any amendment thereto after the effective date of such
registration statement (the "Effective Date"), shall also mean (from and after
the effectiveness of such amendment) such registration statement as so amended,
together with any registration statement filed by the Company pursuant to Rule
462(b) under the Act. The term "Prospectus" as used in this Agreement shall mean
the prospectus relating to the Securities as included in such registration
statement at the time it became or becomes effective, except that if any revised
prospectus shall be provided to the Underwriters by the Company for use in
connection with the offering of the Securities that differs from the Prospectus
on file with the Commission at the time the registration statement became or
becomes effective (whether or not such revised prospectus is required to be
filed with the Commission pursuant to Rule 424(b)(3) of the Rules and
Regulations under the Act), the term "Prospectus" shall refer to such revised
prospectus from and after the time it is first provided to the Underwriters for
such use, together with the term sheet or abbreviated term sheet filed with the
Commission pursuant to Rule 424(b)(7) under the Act. Any reference herein to the
Registration Statement, the Prospectus, any amendment or supplement thereto or
any Preliminary Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein, and any reference herein to the terms
"amend," "amendment" or "supplement" with respect to the Registration Statement
or Prospectus shall be deemed to refer to and include the filing of any document
with the Commission deemed to be incorporated by reference therein.
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(b) Neither the Commission nor any state regulatory authority has
issued any order preventing or suspending the use of any Preliminary Prospectus,
at the time of filing thereof, or instituted proceedings for that purpose, and
each such Preliminary Prospectus, at the time of filing thereof, has conformed
in all material respects to the requirements of the Act and the Rules and
Regulations and, at the time of filing thereof, has not included any untrue
statement of a material fact or omitted to state any material fact necessary to
make the statements therein not misleading and at the time the Registration
Statement became or becomes effective and at all times subsequent thereto up to
and including the Firm Closing Date (as hereinafter defined) and any Option
Closing Date, and during such longer period as the Prospectus may be required to
be delivered in connection with sales by an Underwriter or a dealer, (i) the
Registration Statement and Prospectus, and any amendments or supplements
thereto, contained and will contain all material information required to be
included therein by the Act and the Rules and Regulations and conformed and will
conform in all material respects to the requirements of the Act and the Rules
and Regulations, and (ii) neither the Registration Statement nor the Prospectus,
nor any amendment or supplement thereto included or will include any untrue
statement of a material fact or omitted or will omit to state any material fact
required to be stated therein or necessary to make the statements therein in
light of the circumstances under which they were made not misleading. The
documents incorporated by reference in the Registration Statement, the
Prospectus, any amendment or supplement thereto or any Preliminary Prospectus,
when they became or become effective under the Act or were or are filed with the
Commission under the Exchange Act conformed or will conform in all material
respects with the requirements of the Act or the Exchange Act, as applicable,
and the Rules and Regulations, and as of the date any such document was or is
filed with the Commission under the Exchange Act such document did not, and on
the Firm Closing Date and on any Option Closing Date will not, omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading.
(c) The Company is a Delaware corporation in good standing under
the laws of the State of Delaware. Each of the subsidiaries of the Company (the
"Subsidiaries") has been duly organized and is validly existing in good standing
under the laws of its jurisdiction of organization; and each of its Subsidiaries
is (i) a corporation duly organized, validly existing and in good standing under
the laws of its state of incorporation or (ii) a partnership duly formed,
validly existing and in good standing under the laws of its state of formation,
operating pursuant to a valid and binding partnership agreement, duly and
validly authorized, executed and delivered by the parties thereto and
enforceable in accordance with its terms. The Company and each of its
Subsidiaries is duly licensed, registered or qualified to transact business and
in good standing as a foreign corporation or foreign partnership in all
jurisdictions in which the nature of the activities conducted by it or the
character of the assets owned or leased by it makes such licensing, registration
or qualification necessary, except where the failure to so license, register or
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 Subsidiaries considered as one enterprise (a "Material Adverse
Effect").
(d) The Company and each of its Subsidiaries have full power and
authority (corporate or partnership) to conduct all the activities conducted by
it, to own or lease their respective properties and conduct their respective
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businesses as described in the Registration Statement and the Prospectus; and
the Company has full power (corporate and other) to enter into this Agreement
and to carry out all the terms and provisions hereof to be carried out by it.
(e) The shares of capital stock owned by the Company which have
been issued by the Company's corporate Subsidiaries have been duly authorized
and validly issued, are fully paid and nonassessable and are owned beneficially
by the Company free and clear of any security interests, liens, encumbrances,
equities or claims. The issued partnership interests of those of the Company's
Subsidiaries which have been organized in partnership form (the "Partnership
Subsidiaries") have been duly authorized and validly issued in accordance with
the terms of the respective partnership agreements of the Partnership
Subsidiaries, and in the case of limited partnership interests, are fully paid
and nonassessable and are owned beneficially by the Company free and clear of
any security interests, liens, encumbrances, equities or claims. Except with
respect to the Subsidiaries, the Company does not own, and at the Firm Closing
Date will not own, directly or indirectly, any shares of stock or any other
equity or long-term debt securities of any corporation or have any equity
interest in any firm, partnership, joint venture, association or other entity.
Complete and correct copies of (i) the articles of incorporation and the bylaws
of the Company and all amendments thereto and (ii) the organizational documents
of each of the Subsidiaries have been delivered to the Representatives, and no
changes therein will be made without the prior written consent of the
Representatives subsequent to the date hereof and prior to the Firm Closing Date
or, if later, the Option Closing Date. A complete and correct copy of the
certificate of partnership and partnership agreement of each of the Company's
Partnership Subsidiaries and all amendments thereto have been delivered to the
Representatives, and no changes therein will be made without the prior written
consent of the Representatives subsequent to the date hereof and prior to the
Firm Closing Date or, if later, the Option Closing Date.
(f) The Company has an authorized capitalization as set forth in
the Prospectus. All of the issued shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid and nonassessable.
The Firm Securities have been duly authorized and at the Firm Closing Date,
after payment therefor in accordance herewith, will be validly issued, fully
paid and nonassessable. No holders of outstanding shares of capital stock of the
Company are entitled as such to any preemptive or other rights to subscribe for
any of the Securities, and no holders of securities of the Company are entitled
to have such securities registered under the Registration Statement, except
where such rights have been waived. Except as set forth in the Registration
Statement and the Prospectus, the Company does not have outstanding, and at the
Firm Closing Date and, if later, the Option Closing Date will not have
outstanding, any options to purchase, or any rights or warrants to subscribe
for, or any securities or obligations convertible into, or any contracts or
commitments to issue or sell, any shares of its capital stock or any such
warrants, convertible securities or obligations.
(g) The shares of capital stock of the Company conform to the
description thereof incorporated by reference in the Prospectus.
(h) The consolidated financial statements and schedules included
in the Registration Statement, each Preliminary Prospectus and the Prospectus
present fairly the financial condition of the Company, its Subsidiaries and
their respective predecessors as of the
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dates thereof and the consolidated results of operations, stockholders'
equity and cash flows of the Company and its predecessors for the periods
covered thereby, all in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the entire period involved,
except as otherwise disclosed therein. No other financial statements or
schedules of the Company, its Subsidiaries or any other entity are required by
the Act or the Rules and Regulations to be included in the Registration
Statement, the Preliminary Prospectus or the Prospectus. KPMG Peat Marwick LLP
("KPMG Peat Marwick" or the "Accountants"), who have reported on such financial
statements and schedules, are independent accountants with respect to the
Company and its Subsidiaries, as required by the Act and the Rules and
Regulations. The statements included in the Registration Statement with respect
to the Accountants pursuant to Rule 509 of Regulation S-K of the Rules and
Regulations are true and correct in all material respects.
(i) KPMG Peat Marwick, who have audited the financial statements
of the Company and its consolidated Subsidiaries and delivered their reports
with respect to the audited consolidated financial statements and schedules
incorporated in the Registration Statement and the Prospectus, are independent
public accountants with respect to the Company and its Subsidiaries, as required
by the Act, the Exchange Act and the related published rules and regulations
thereunder.
(j) The Company and its Subsidiaries maintain a system of
internal accounting control sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorization, (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with GAAP and to maintain accountability
for assets, (iii) access to assets is permitted only in accordance with
management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(k) The execution and delivery of this Agreement has been duly
authorized by the Company and this Agreement has been duly executed and
delivered by the Company and is the valid and binding agreement of the Company
enforceable against the Company in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights, to general principles
of equity and, with respect to indemnification, public policy.
(l) No legal or governmental proceedings are pending to which the
Company or any of its Subsidiaries is a party or to which the property of the
Company or any of its Subsidiaries is subject that are required to be described
in the Registration Statement or the Prospectus and are not described therein
and no such proceedings have been threatened against the Company or any of its
Subsidiaries or with respect to any of their respective properties; and no
contract or other document is required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to the Registration
Statement that is not described therein or filed as required.
(m) Since the respective dates as of which information is given
in the
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Registration Statement and the Prospectus, except as otherwise stated therein,
(i) 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, (ii) neither the Company nor any of
its Subsidiaries has incurred, nor will they have incurred any material
liabilities or obligations, direct or contingent, (iii) there have been no
transactions entered into by the Company or any of 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 (iv) there has
been no dividend or distribution of any kind declared, paid or made by the
Company on any of its shares of Common Stock.
(n) The issuance, offering and sale of the Securities to the
Underwriters by the Company pursuant to this Agreement, the compliance by the
Company with the other provisions of this Agreement and the consummation of the
other transactions herein contemplated do not (i) require the consent, approval,
authorization, registration or qualification of or with any governmental
authority, except such as have been obtained and such as may be required under
state securities or blue sky laws or (ii) conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, lease or other agreement or instrument
to which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries or any of their respective properties are
bound, or the charter documents or by-laws of the Company or any of its
Subsidiaries, or any statute or any judgment, decree, order, rule or regulation
of any court or other governmental authority or any arbitrator applicable to the
Company or any of its Subsidiaries, except for any breach, violation or default
which will not have a Material Adverse Effect.
(o) The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act").
(p) The Company and each of its Subsidiaries have good and
marketable title to all real properties, and interests in real property,
described in the Prospectus (including the documents incorporated by reference
therein) as owned by each of them, in each case free and clear of all liens,
charges, encumbrances and restrictions except such as are described in the
Registration Statement or such as do not materially adversely affect the value
of such property or interests or interfere with the use made or proposed to be
made of such property or interests by the Company and each of its Subsidiaries;
the Company has obtained satisfactory confirmations, except as is otherwise
described in the Registration Statement, that the Company and each of its
Subsidiaries has the foregoing title to such real property and interests in real
property; and any real property and buildings held under lease by the Company or
any of its Subsidiaries, as the case may be, under valid, binding and
enforceable leases conforming to any applicable description thereof set forth in
or the documents incorporated by reference into the Registration Statement and
the Prospectus, with such exceptions as do not interfere with the use made and
proposed to be made of such property and buildings by the Company, its
Subsidiaries or any third party.
(q) No statement, representation, warranty or covenant made by
the Company
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in this Agreement or made in any certificate or document required by this
Agreement to be delivered to the Representatives was or will be, when made,
inaccurate, untrue or incorrect in any material respect.
(r) Neither the Company nor any of its directors, officers or
controlling persons has taken, directly or indirectly, any action intended, or
which might reasonably be expected, to cause or result, under the Act or
otherwise, in, or which has constituted, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Securities.
(s) The Company has been advised by the American Stock Exchange
(the "AMEX") that the Securities will be listed for trading on the AMEX upon
official notice of issuance, and the Company knows of no reason or set of facts
which would adversely affect such approval.
(t) Neither the Company nor any of its Subsidiaries is involved
in any material labor dispute nor, to the best knowledge of the Company, is any
such dispute threatened.
(u) Neither the Company nor any of its Subsidiaries nor, to the
Company's best knowledge, any employee or agent of the Company or any Subsidiary
has made any payment of funds of the Company or any Subsidiary of the Company or
received or retained any funds in violation of any law, rule or regulation or of
a character required to be disclosed in the Prospectus.
(v) Any certificate signed by any officer of the Company and
delivered to the Representatives or to counsel for the Underwriters in
connection with the transactions contemplated by this Agreement shall be deemed
a representation and warranty by the Company to each Underwriter as to the
matters covered thereby
(w) The Company and each of its Subsidiaries has and will have at
the Firm Closing Date and the Option Closing Date (if any) all governmental
licenses, permits, consents, orders, approvals and other authorizations
(collectively, "Licenses") necessary to carry on their business and own their
properties as contemplated in the Prospectus, except where the failure to so
obtain such Licenses will not have a Material Adverse Effect. The Company and
each of its Subsidiaries has, and at the Firm Closing Date and the Option
Closing Date (if any) will have, complied in all material respects with all
laws, regulations and orders applicable to them or their business and
properties, except where the failure to so comply will not have a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries are, at the Firm
Closing Date and the Option Closing Date (if any), in default (nor has any event
occurred which, with notice or lapse of time or both, would constitute a
default) in the due performance and observation of any term, covenant or
condition of any indenture, mortgage, deed of trust, voting trust agreement,
loan agreement, bond, debenture, note agreement or other evidence of
indebtedness, lease, contract or other agreement or instrument (collectively, a
"contract or other agreement") to which they are a party or by which any of
their properties are bound or affected, except for any default which would not
have a Material Adverse Effect. To the best knowledge of the Company, no other
party under any such contract or other agreement is in default in any material
respect thereunder.
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There are no governmental proceedings or actions pending or threatened for the
purpose of suspending, modifying or revoking any License held by the Company or
any of it Subsidiaries. The Company is not in violation of any provision of its
articles of incorporation or bylaws. None of the Subsidiaries are in violation
of their organizational documents.
(x) There is no document or contract of a character required to
be described in the Registration Statement or the Prospectus or to be filed as
an exhibit to the Registration Statement which is not described or filed as
required. All contracts to which the Company or any of its Subsidiaries is a
party which are listed in Item 16 of the Registration Statement, have been duly
authorized, executed and delivered by the Company, constitute valid and binding
agreements of the Company and are enforceable against the Company in accordance
with the terms thereof.
(y) The Company and each of its Subsidiaries own, or are licensed
or otherwise have the full right to use all material trademarks and trade names
which are used in or necessary for the conduct of their business as may be
described in the Prospectus. To the Company's best knowledge, no claims have
been asserted by any person to the use of any such trademarks or trade names or
challenging or questioning the validity or effectiveness of any such trademark
or trade name. The use, in connection with the business and operations of the
Company or any of its Subsidiaries of such trademarks and trade names does not,
to the Company's knowledge, infringe on the rights of any person.
(z) The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility or self-insured against such
losses and risks and in such amounts as are prudent and customary in the
business in which they are engaged. Neither the Company nor any of its
Subsidiaries has been refused any insurance coverage sought or applied for; and
none of the Company or any of its Subsidiaries has any reason to believe that it
will not be able to renew their existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers or continue
to be self-insured as may be necessary to continue its business at a cost that
would not have a Material Adverse Effect.
(aa) The business, operations and facilities of the Company and
each of its Subsidiaries have been conducted in compliance with all applicable
laws, ordinances, rules, regulations, Licenses, permits, approvals, plans,
authorizations or requirements relating to occupational safety and health, or
pollution, or protection of health or the environment (including, without
limitation, those relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants or hazardous or toxic substances, materials
or wastes into ambient air, surface water, groundwater or land, or relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of chemical substances, pollutants, contaminants or
hazardous or toxic substances, materials or wastes, whether solid, gaseous or
liquid in nature) of any governmental department, commission, board, bureau,
agency or instrumentality of the United States, any state or political
subdivision thereof, or any foreign jurisdiction, and all applicable judicial or
administrative agency or regulatory decrees, awards, judgments and orders
relating thereto, except where such failure to comply would not, alone or in the
aggregate, have a Material Adverse Effect; and neither the Company nor any of
its Subsidiaries has received any notice from any governmental instrumentality
or any third party
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alleging any such violation thereof or liability thereunder (including, without
limitation, liability for costs of investigating or remediating sites containing
hazardous substances and/or damages to natural resources).
(bb) The Company and each of its Subsidiaries has filed all
foreign, federal, state and local tax returns that are required to be filed or
has requested extensions thereof and has paid all taxes required to be paid by
them or reserved adequately therefor and any other assessment, fine or penalty
levied against them, to the extent that any of the foregoing is due and payable.
(cc) Each officer and director of the Company has delivered to
▇▇▇▇▇▇▇▇ & Co. Inc. an agreement in the form set forth as Exhibit A hereto to
the effect that he or she will not, for a period of 90 days after the date
hereof, without the prior written consent of ▇▇▇▇▇▇▇▇ & Co. Inc., offer to sell,
sell, contract to sell, grant any option to purchase or otherwise dispose (or
announce any offer, sale, grant of any option to purchase or other disposition)
of any shares of Common Stock or securities convertible into, or exchangeable or
exercisable for, shares of Common Stock.
(dd) The Company and its officers and directors have not
distributed and will not distribute the Registration Statement, any Preliminary
Prospectus, the Prospectus or any other offering material in connection with the
offering and sale of the Securities. The Company and its officers and directors
have not taken, directly or indirectly, any action designed, or which might
reasonably be expected, to cause or result in, under the Act or otherwise, or
which has caused or resulted in, stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the Securities.
3. Representations and Warranties of the Selling Stockholders.
Each of the Selling Stockholders, jointly and severally, represents, warrants
and covenants to each Underwriter that:
(a) Such Selling Stockholder has full power and authority
to enter into this Agreement and to carry out all the terms and provisions
hereof to be carried out by it. All authorizations and consents necessary for
the execution and delivery by such Selling Stockholder of this Agreement have
been given. This Agreement has been duly authorized, executed and delivered by
or on behalf of such Selling Stockholder and constitutes a valid and binding
agreement of such Selling Stockholder and is enforceable against such Selling
Stockholder in accordance with the terms hereof, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws now or
hereafter in effect relating to or affecting creditors' rights generally or by
general principles of equity relating to the availability of remedies and except
as rights to indemnity or contribution may be limited by federal or state
securities laws and the public policy underlying such laws.
(b) Such Selling Stockholder has full power and authority
to enter into the Power of Attorney in the form heretofore furnished to the
Underwriters and the Custody Agreement in the form heretofore furnished to the
Underwriters and to carry out all the terms and provisions thereof to be carried
out by it. All authorizations and consents necessary for the
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execution and delivery by such Selling Stockholder and of the Power of Attorney
and the Custody Agreement have been given. Each of the Power of Attorney and the
Custody Agreement has been duly authorized, executed and delivered by such
Selling Stockholder and is enforceable against such Selling Stockholder in
accordance with the terms thereof, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws now or hereafter in effect
relating to or affecting creditors' rights generally or by general principles of
equity relating to the availability of remedies.
(c) Such Selling Stockholder now has, and at the time of
delivery thereof hereunder will have, (i) good and marketable title to the
Option Securities to be sold by such Selling Stockholder hereunder, free and
clear of any security interests, liens, encumbrances, equities or claims, and
(ii) full legal right and power, and all authorizations and approvals required
by law, to sell, transfer and deliver the Option Securities to the Underwriters
hereunder and to make the representations, warranties and agreements made by
such Selling Stockholder herein; and upon delivery of the Option Securities
hereunder, and assuming that each of the Underwriters acquires such Option
Securities in good faith without notice of any adverse claim (within the meaning
of the Uniform Commercial Code), the Underwriters will receive good and
marketable title to the Option Securities purchased by it from such Selling
Stockholder, free and clear of any security interests, liens, encumbrances,
equities or claims.
(d) On the Closing Date all stock transfer or other taxes
(other than income taxes) which are required to be paid in connection with the
sale and transfer of the Option Securities to be sold by such Selling
Stockholder to the several Underwriters hereunder will have been fully paid or
provided for by such Selling Stockholder and all laws imposing such taxes will
have been fully complied with.
(e) None of the execution, delivery or performance of this
Agreement, the Power of Attorney or the Custody Agreement and the consummation
of the transactions contemplated herein or therein by such Selling Stockholder
conflicts or will conflict with, or results or will result in any breach or
violation of any of the terms or provisions of, or constitute a default under,
or result in the creation or imposition of any security interests, liens,
encumbrances, equities or claims upon, any property or assets of such Selling
Stockholder pursuant to, (i) the terms of any contract or other agreement to
which such Selling Stockholder is a party or by which it is bound or to which
any of its properties is subject, which conflict, breach, violation or default
would adversely affect such Selling Stockholder's ability to perform its
obligations hereunder; (ii) any statute, rule or regulation of any governmental
authority having jurisdiction over such Selling Stockholder or any of its
activities or properties; or (iii) the terms of any judgment, decree or order of
any arbitration or governmental authority having such jurisdiction.
(f) No consent, approval, authorization or order of, or
any filing or declaration with, any governmental authority is required for the
consummation by such Selling Stockholder of the transactions on its part
contemplated herein, except such as have been obtained under the Act or the
Rules and Regulations and such as may be required under state securities or Blue
Sky laws or the bylaws and rules of the NASD in connection with the purchase and
distribution by the Underwriters of the Option Securities to be sold by such
Selling
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Stockholder.
(g) The sale of the Option Securities proposed to be sold
by such Selling Stockholder is not prompted by such Selling Stockholder's
knowledge of any material adverse information concerning the Company or any of
its Subsidiaries which is not set forth or described in the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence, in the
most recent Preliminary Prospectus).
(h) On the date that any Preliminary Prospectus was filed
with the Commission, the date the Prospectus is first filed with the Commission
pursuant to Rule 424(b) (if required), at all times subsequent to and including
the Closing Date and, if later, the Option Closing Date and when any
post-effective amendment to the Registration Statement becomes effective or any
amendment or supplement to the Prospectus is filed with the Commission, all
information with respect to such Selling Stockholder included in the
Registration Statement, each Preliminary Prospectus and the Prospectus (as
amended or as supplemented if the Company shall have filed with the Commission
any amendment or supplement thereto), did or will comply with all applicable
provisions of the Act and the Rules and Regulations and did or will contain all
statements required to be stated therein in accordance with the Act and the
Rules and Regulations. On the Effective Date and when any post-effective
amendment to the Registration Statement becomes effective, no information
regarding such Selling Stockholder included in the Registration Statement or any
such amendment did or will contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading. At the Effective Date, the
date the Prospectus or any amendment or supplement to the Prospectus is filed
with the Commission and at the Closing Date and, if later, the Option Closing
Date, the information regarding such Selling Stockholder included in the
Prospectus did not or will not contain 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.
(i) Such Selling Stockholder has no reason to believe that
the representations and warranties of the Company contained in Section 2 are not
true and correct in all material respects.
(j) Such Selling Stockholder has not distributed and will
not distribute the Registration Statement, any Preliminary Prospectus, the
Prospectus or any other offering material in connection with the offering and
sale of the Option Securities. Such Selling Stockholder has not taken, directly
or indirectly, any action designed, or which might reasonably be expected, to
cause or result in, under the Act or otherwise, or which has caused or resulted
in, stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Option Securities.
(k) Such Selling Stockholder does not have, nor has
obtained waiver prior to the date hereof, any preemptive right, co-sale right or
right of first refusal or other similar right to purchase any of the Securities
that are to be sold by the Company or any of the Selling Stockholders to the
Underwriters pursuant to this Agreement; and such Selling Stockholder does not
own any warrants, options or similar rights to acquire, and does not have any
right or
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arrangement to acquire, any capital stock, rights, warrants, options, or other
securities from the Company, other than those described in the Registration
Statement and the Prospectus.
4. Representations and Warranties of the Underwriters. Upon your
authorization of the release of the Firm Securities, the several Underwriters
propose to offer the Firm Securities for sale to the public upon the terms set
forth in the Prospectus.
5. Agreements. The Company (as to Sections 5(a) - (i)) and each Selling
Stockholder (as to Section 5(h)), jointly and severally, covenant and agree with
each of the Underwriters that:
(a) The Company will use its best efforts to cause the
Registration Statement and any amendment thereof, if not effective at the time
and date that this Agreement is executed and delivered by the parties hereto, to
become effective as promptly as possible; it will notify the Representatives,
promptly after it shall receive notice thereof, of the time when the
Registration Statement or any subsequent amendment to the Registration Statement
has become effective or any supplement to the Prospectus has been filed; if the
Company omitted information from the Registration Statement at the time it was
originally declared effective in reliance upon Rule 430A(a), the Company will
provide evidence satisfactory to the Representatives that the Prospectus
contains such information and has been filed, within the time period prescribed,
with the Commission pursuant to subparagraph (1) or (4) of Rule 424(b) of the
Rules and Regulations under the Act or as part of a post-effective amendment to
such Registration Statement as originally declared effective which is declared
effective by the Commission; if for any reason the filing of the final form of
Prospectus is required under Rule 424(b)(3) of the Rules and Regulations under
the Act, it will provide evidence satisfactory to the Representatives that the
Prospectus contains such information and has been filed with the Commission
within the time period prescribed; it will notify the Representatives promptly
of any request by the Commission for the amending or supplementing of the
Registration Statement or the Prospectus or for additional information; promptly
upon the Representatives' request, it will prepare and file with the Commission
any amendments or supplements to the Registration Statement or Prospectus which,
in the opinion of counsel for the several Underwriters ("Underwriters'
Counsel"), may be necessary or advisable so as to comply with all applicable
laws and regulations (including, without limitation, Section 11 under the Act
and Rule 10b-5 under the Exchange Act) in connection with the distribution of
the Securities by the Underwriters; it will promptly prepare and file with the
Commission, and promptly notify the Representatives of the filing of, any
amendments or supplements to the Registration Statement or Prospectus which may
be necessary to correct any statements or omissions, if, at any time when a
prospectus relating to the Securities is required to be delivered under the Act,
any event shall have occurred as a result of which the Prospectus or any other
prospectus relating to the Securities as then in effect would include an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading; in case any Underwriter is required so as to comply with
all applicable laws and regulations (including, without limitation, Section 11
under the Act and Rule 10b-5 under the Exchange Act) to deliver a prospectus
nine months or more after the Effective Date in connection with the sale of the
Securities, it will prepare promptly upon request, but at the expense of such
Underwriter, such amendment or amendments to the Registration Statement and such
prospectus or prospectuses as may be necessary to permit
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compliance with the requirements of Section 10(a)(3) of the Act; and it will
file no amendment or supplement to the Registration Statement or Prospectus
(other than any document required to be filed under the Exchange Act that upon
filing is deemed incorporated therein by reference) which shall not previously
have been submitted to the Representatives a reasonable time prior to the
proposed filing thereof or to which you shall reasonably object in writing or
which is not in compliance with the Act and the Rules and Regulations under the
Act. The Company will furnish to the Representatives at or prior to the filing
thereof a copy of any document that upon filing is deemed to be incorporated by
reference in the Registration Statement or Prospectus.
(b) The Company will advise the Representatives, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of any stop order by
the Commission suspending the effectiveness of the Registration Statement or of
the initiation or threat of any proceeding for that purpose; and it will
promptly use its best efforts to prevent the issuance of any stop order or to
obtain its withdrawal at the earliest possible moment if such stop order should
be issued.
(c) The Company will arrange for the qualification of the Securities for
offering and sale under the securities or blue sky laws of such jurisdictions as
the Representatives may designate and will continue such qualifications in
effect for as long as may be necessary to complete the distribution of the
Securities; provided, however, that in connection therewith the Company shall
not be required to qualify as a foreign corporation or to execute a general
consent to service of process in any jurisdiction.
(d) If, at any time when a prospectus relating to the Securities 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 a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, or if for any other reason it is necessary at
any time to amend or supplement the Prospectus to comply with the Act, the
Exchange Act or the respective rules or regulations of the Commission
thereunder, the Company will promptly notify the Representatives thereof and,
subject to Section 4(a) hereof, will prepare and file with the Commission, at
the Company's expense, an amendment to the Registration Statement or an
amendment or supplement to the Prospectus that corrects such statement or
omission or effects such compliance.
(e) The Company will, without charge, provide (i) to the Representatives
and to counsel for the Underwriters, upon request, a signed copy of the
registration statement originally filed with respect to the Securities and each
amendment thereto (in each case including exhibits thereto), (ii) to each
Underwriter, a conformed copy of such registration statement and each amendment
thereto (in each case without exhibits thereto) and (iii) so long as a
prospectus relating to the Securities is required to be delivered under the Act,
as many copies of the Prospectus or any amendment or supplement thereto as the
Representatives may reasonably request.
(f) The Company, as soon as practicable, will make generally available to
its security holders and to the Representatives a consolidated earnings
statement of the Company and its Subsidiaries (which need not be audited) that
satisfies the provisions of Section 11(a) of the Act
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and Rule 158 thereunder.
(g) The Securities will be listed on the AMEX, subject to notice of
issuance.
(h) The Company and its executive officers and directors and each
Selling Stockholder will not, directly or indirectly, offer, sell or otherwise
dispose of any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for, or any rights to purchase or acquire, Common
Stock for a period of 90 days after the date hereof without the prior written
consent of ▇▇▇▇▇▇▇▇ & Co. Inc.
(i) The Company intends to use the net proceeds from the sale of the
Securities sold by it hereunder as set forth under "Use of Proceeds" in the
Prospectus.
6. Expenses. The Company will pay all costs and expenses incident to the
performance of its obligations under this Agreement, whether or not the
transactions contemplated herein are consummated or this Agreement is terminated
pursuant to Section 11 hereof, including all costs and expenses incident to (i)
the printing or other production of all documents with respect to the
transactions, including any costs of printing the registration statement
originally filed with respect to the Securities and any amendment thereto and
the Prospectus and any amendment or supplement thereto, this Agreement and any
blue sky memoranda, the Custody Agreements and the Powers of Attorney (ii) all
arrangements relating to the delivery to the Underwriters of copies of the
foregoing documents, (iii) the fees and disbursements of the counsel,
accountants and any other experts or advisors retained by the Company, (iv)
preparation, issuance and delivery to the Underwriters of any certificates
evidencing the Securities, including transfer agent's and registrar's fees, (v)
the qualification of the Securities under state securities and blue sky laws,
including filing fees and fees and disbursements of counsel for the Underwriters
relating thereto, (vi) the filing fees of the Commission relating to the
Securities, (vii) the listing of the Securities on the AMEX, (viii) expenses of
Company personnel in connection with their attendance at meetings with
prospective investors in the Securities, and (ix) fees and expenses incurred in
connection with the review by the National Association of Securities Dealers,
Inc. ("NASD") of certain of the matters set forth in this Agreement, including
fees and disbursements of counsel for the Underwriters relating thereto. If the
sale of the Securities provided for herein is not consummated because any
condition to the obligations of the Underwriters set forth in Section 6 hereof
is not satisfied, because this Agreement is terminated pursuant to Section 11
hereof or because of any failure, refusal or inability on the part of the
Company to perform all obligations and satisfy all conditions on its part to be
performed or satisfied hereunder other than by reason of a default by any of the
Underwriters, the Company will reimburse the Underwriters upon demand for all
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
that shall have been incurred by them in connection with the proposed purchase
and sale of the Securities. The Company shall not in any event be liable to any
of the Underwriters for the loss of anticipated profits from the transactions
covered by this Agreement.
7. Conditions to the Underwriters' Obligations. The obligations of the
several Underwriters to purchase and pay for the Firm Securities shall be
subject, in the Representatives' sole discretion, to the accuracy in all
material respects of the representations and warranties of the Company contained
herein as of the date hereof and as of the Firm Closing Date as if made
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on and as of the Firm Closing Date, to the accuracy in all material respects of
the certificates of the Company's officers delivered pursuant to the provisions
hereof, to the performance by the Company of its covenants and agreements
hereunder and to the following additional conditions:
(a) The Prospectus shall have been filed with the
Commission in the manner and within the time period required by Rule 424(b)
under the Act; no stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereto and no order directed at any
document incorporated by reference in the Registration Statement or the
Prospectus or any amendment or supplement thereto shall have been issued and no
proceedings for that purpose shall have been instituted or threatened or, to the
knowledge of the Company or the Representatives, shall be contemplated by the
Commission; and the Company shall have complied with any request of the
Commission for additional information (to be included in the Registration
Statement or the Prospectus or otherwise).
(b) The Representatives shall have received an opinion,
dated the Firm Closing Date, of Kinsella, Boesch, Fujikawa and ▇▇▇▇▇ LLP, to the
effect that:
(i) Each of the Company and its Subsidiaries has been
duly organized and is validly existing in good standing under
the laws of its jurisdiction of organization and is duly
qualified to transact business as a foreign organization and is
in good standing under the laws of all other jurisdictions where
the ownership or leasing of its properties or the conduct of its
business requires such qualification, except where the failure
to be so qualified does not amount to a material liability or
disability to the Company and the Subsidiaries, taken as a
whole.
(ii) Each of the Company and its Subsidiaries has the
requisite corporate or equivalent power to own or lease its
properties and conduct its business as described in the
Registration Statement and the Prospectus. The Company has full
corporate power and authority to enter into the Underwriting
Agreement and to consummate the transactions provided for
therein. The Underwriting Agreement and the consummation of the
transactions provided for therein have been duly authorized by
the Company. The issuance and sale of the Securities to the
Underwriters by the Company pursuant to the Underwriting
Agreement, the compliance by the Company with the other terms of
the Underwriting Agreement, and the consummation of the other
transactions therein contemplated do not conflict with and will
not result in the violation by the Company of the provisions of
its Articles of Incorporation or Bylaws.
(iii) The Company has authorized capital stock as set
forth in the Prospectus. The outstanding shares of common stock
of the Company have been duly authorized and are validly issued,
fully paid and non-assessable and are free from preemptive
rights. To the best of such counsel's knowledge, there are no
outstanding options, warrants, or other rights calling for the
issuance of, and no commitment, plan or arrangement to issue or
register, any share of capital stock of the Company or the
Subsidiaries or any security convertible into or exchangeable
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for capital stock of the Company or the Subsidiaries other than
as disclosed in the Registration Statement and the Prospectus.
(iv) The Securities to be issued and sold by the Company
pursuant to the Underwriting Agreement have been duly authorized
and, when issued to and paid for by the Underwriters in
accordance with the terms of the Underwriting Agreement, will be
validly issued, fully paid and non-assessable, and free of
preemptive rights, or, to such counsel's knowledge, other
similar rights. The Securities have been duly authorized for
listing, subject to official notice of issuance, on the AMEX.
(v) The Underwriting Agreement has been executed and
delivered by the Company and, assuming due authorization, is a
valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, except (i) as limited
by the effect of bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
relating to or affecting the rights and remedies of creditors;
(ii) as limited by the effect of general principles of equity,
whether enforcement is considered in a proceeding in equity or
at law, and the discretion of the court before which any
proceeding therefor may be brought; and (iii) as limited by the
unenforceability under certain circumstances under law or court
decisions of provisions providing for the indemnification of or
contribution to an underwriter of securities as contrary to
public policy.
(vi) The issuance, offering and sale of the Securities
by the Company pursuant to this Underwriting Agreement, the
compliance by the Company with the other terms of this
Underwriting Agreement and the consummation by the Company of
the other transactions herein contemplated will not (i) result
in the violation by the Company of any statute, rule or
regulation (other than federal or state securities law, which
are specifically addressed elsewhere herein), (ii) violate any
court order or (iii) result in the breach of or a default under
any of the exhibits to the Registration Statement; and no
consent, approval, authorization or order of, or filing with,
any federal court or governmental agency is required for the
consummation of the issuance and sale of the Securities by the
Company pursuant to this Underwriting Agreement, except such as
have been obtained under the Act and such as may be required
under state securities laws in connection with the purchase and
distribution of such Securities by the Underwriters; provided,
however, that such counsel need express no opinion pursuant to
clauses (i), (ii) or (iii) of this paragraph as to any antifraud
laws which may be applicable.
(vii) The Registration Statement has become effective
under the Act, and to the best of such counsel's knowledge, no
stop order suspending the effectiveness of the Registration
Statement has been issued under the Act and no proceedings
therefor have been initiated or threatened by the Commission.
Any required filing of the Prospectus pursuant to Rule
424(b) under the Act has been made in accordance with Rule
424(b) under the Act.
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(viii) The Registration Statement and the Prospectus
comply as to form in all material respects with the requirements
for registration statements on Form S-2 under the Act and the
rules and regulations of the Commission thereunder (it being
understood, however, that such counsel need not express any
opinion with respect to the financial statements, schedules and
other financial and statistical data included in the
Registration Statement or the Prospectus and that, in passing
upon the compliance as to form of the Registration Statement and
the Prospectus, such counsel may assume that the statements made
therein are correct and complete).
(ix) To the best of such counsel's knowledge, there are
no contracts or documents of a character required under the Act
to be described in the Registration Statement or Prospectus or
to be filed as exhibits to the Registration Statement that are
not described and filed as required.
(x) To the best of such counsel's knowledge, there is no
suit, action or proceeding pending against the Company or its
properties, or by any court, administrative agency or
governmental authority that is required to be described in the
Registration Statement or the Prospectus that is not described
as required.
(xi) The Company is not an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
(xii) Any real property and buildings held under lease by
the Company or any of its Subsidiaries or leased by the Company
or any of its Subsidiaries to a third party are held or leased
by the Company or any of its Subsidiaries under valid, binding
and enforceable leases conforming to the description thereof set
forth in the Prospectus, with such exceptions as do not
interfere with the use made and proposed to be made of such
property and buildings by the Company or any of its Subsidiaries
or third parties.
(xiii) The statements set forth in the Prospectus under
the captions "Risk Factors," "The Company," "Business,"
"Management," "Principal and Selling Stockholders," "Certain
Transactions," and "Shares Eligible for Future Sale," insofar as
such statements constitute matters of law or legal conclusions,
have been reviewed by such counsel and are accurate in all
material respects. In addition, each of the transactions
described under "Certain Transactions" has been duly authorized
by all necessary action of the Company, including approvals
of the disinterested members of the Board of Directors of the
Company.
(xiv) No default exists, and no event has occurred which,
with notice or lapse of time or both, would constitute a default
in the due performance and observance of any term, covenant or
condition of any indenture, mortgage, deed of trust, lease or
other agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any of their respective properties is bound or
may be affected in any material adverse respect with regard to
property, business or operations of the Company and its
Subsidiaries.
(xv) The Power of Attorney and the Custody Agreement of
each Selling Stockholder have been duly authorized, executed and
delivered on behalf of such Selling Stockholder and are valid
instruments legally sufficient for the purposes intended.
(xvi) Each Selling Stockholder has full right, power and
authority to enter into and to perform its obligations under
this Agreement and to sell, transfer, assign and deliver the
Option Securities to be sold by such Selling Stockholder
hereunder.
(xvii) This Agreement has been duly authorized, executed
and delivered on behalf of the Selling Stockholder.
(xviii) Upon the delivery of and payment for the Option
Securities contemplated in this Agreement, and upon registration
of the Option Securities in the names of the Underwriters, the
Underwriters will have acquired good and valid title to the
Option Securities being sold by each Selling Stockholder free of
any pledge, lien, security interest, encumbrance, claim or
equitable interest, including any lien in favor of the Company
or any restriction on transfer imposed by the Company; and the
owner of the Option Securities being sold by each Selling
Stockholder hereunder, if other than the Selling Stockholder, is
precluded from asserting against such Underwriters the
ineffectiveness of any unauthorized endorsement.
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In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deem proper, on certificates of responsible
officers of the Company and public officials and, as to matters involving the
laws of jurisdictions in which such counsel are not admitted to practice, to the
extent satisfactory to counsel for the Underwriters, upon the opinion of local
counsel in such jurisdictions and in the case of the opinion described in
paragraph (i) above upon certificates of public officials. The foregoing opinion
shall also state that the Underwriters are justified in relying upon any such
opinion of such local counsel, and copies of the opinion of such local counsel
shall be delivered to the Representatives and counsel for the Underwriters.
In addition to the matters set forth above, such counsel shall also
state that in the course of the preparation of the Registration Statement and
the Prospectus, such counsel has participated in conferences with officers and
representatives of the Company and with the Company's independent auditors, your
representatives and your counsel, at which conferences the contents of the
Registration Statement and the Prospectus and related matters were discussed and
although they are not passing upon, and do not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Prospectus (except as set forth therein) and have
not made any independent check or verification thereof, during the course of
such participation (relying as to the factual matters underlying the
determination of materiality to a large extent upon the statements of officers
or other representatives of the Company), no facts came to their attention that
caused them to believe that the Registration Statement, as of the Effective Date
and as of the date of such opinion, contained or contains any untrue statement
of a material fact or omitted or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading or
that the Prospectus, as of its date and the date of such opinion, included or
includes any untrue statement of a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. It is understood that
such counsel will express no belief with respect to the financial statements,
the notes thereto and related schedules and other financial, numerical,
statistical and accounting data included or omitted from the Registration
Statement or the Prospectus.
References to the Registration Statement and the Prospectus in this
paragraph (b) shall include any amendment thereto at the date of such opinion.
(c) The Representatives shall have received an opinion,
dated the Firm Closing Date, of Stroock & Stroock & ▇▇▇▇▇ LLP, counsel for the
Underwriters, with respect to the issuance and sale of the Firm Securities, the
Registration Statement, the Prospectus, and such other related matters as the
Representatives may reasonably require, and the Company shall have furnished to
such counsel such documents as they may reasonably request for the purpose of
enabling them to pass upon such matters.
(d) The Representatives shall have received from KPMG Peat
Marwick a letter or letters dated, respectively, the date hereof and the Firm
Closing Date, in form and substance satisfactory to the Representatives, to the
effect that:
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(i) they are independent accountants with respect to the
Company within the meaning of the Act and the applicable rules
and regulations thereunder;
(ii) in their opinion, the audited combined financial
statements and schedules examined by them and included in the
Registration Statement and the Prospectus comply in form and in
all material respects with the applicable accounting
requirements of the Act and the related published rules and
regulations thereunder;
(iii) on the basis of a reading of the latest available
unaudited consolidated financial statements of the Company, a
reading of the unaudited amounts for revenues and total and per
share amounts of net income for the month of _____________ of
1998 and of the unaudited consolidated financial statements of
the Company for the periods from which such amount are derived,
carrying out certain specified procedures (which do not
constitute an examination made in accordance with generally
accepted auditing standards) that would not necessarily reveal
matters of significance with respect to the comments set forth
in this paragraph (iii), a reading of the minute books of the
stockholders, the board of directors and any committees thereof
of the Company and its Subsidiaries, and inquiries of certain
officials of the Company and its accounting matters, nothing
came to their attention that caused them to believe that at a
specific date not more than five business days prior to the date
of such letter, there were any changes in the capital stock or
long-term debt of the Company or its Subsidiaries or any
decreases in net current assets or stockholders' equity of the
Company and its Subsidiaries, in each case combined with amounts
shown on the December 31, 1997 audited consolidated balance
sheet included in the Registration Statement and the Prospectus,
or for the period from January 1, 1998 to such specified date
there were any decreases, as compared with the corresponding
period in the preceding quarter, in revenues, net income before
income taxes or total or per share amounts of net income of the
Company, except in all instances for changes, decreases or
increases set forth in such letter or as set forth in or
contemplated in the Prospectus;
(iv) they have carried out certain specified procedures
not constituting an audit, with respect to certain amounts,
percentages and financial information that are derived from the
general accounting records of the Company and its consolidated
Subsidiaries and are included in the Registration Statement and
the Prospectus under the captions "Capitalization," "Selected
Consolidated Financial Data," "Management's Discussion and
Analysis of Financial Condition and Results of Operations,"
"Business," "Management" and "Certain Transactions" and in the
Financial Statements Schedules of the Registration Statement,
and have compared such amounts, percentages and financial
information with such records of the Company and with
information derived from such records and have found them to be
in agreement, excluding any questions of legal interpretation.
In the event that the letters referred to above set forth any such
changes, decreases or
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increases, it shall be a further condition to the obligations of the
Underwriters that (A) such letters shall be accompanied by a written explanation
of the Company as to the significance thereof, unless the Representatives deem
such explanation unnecessary, and (B) such changes, decreases or increases do
not, in the sole judgment of the Representatives, make it impractical or
inadvisable to proceed with the purchase and delivery of the Securities as
contemplated by the Registration Statement, as amended as of the date hereof.
References to the Registration Statement and the Prospectus in this
paragraph (d) with respect to either letter referred to above shall include any
amendment thereto at the date of such letter.
(e) The Representatives shall have received a certificate,
dated the Firm Closing Date, of the Chief Executive Officer and the Chief
Financial Officer of the Company to the effect that:
(i) the representations and warranties of the Company in
this Agreement are true and correct as if made on and as of the
Firm Closing Date or the Option Closing Date, as the case may
be, and the Company has complied with all agreements and
covenants and satisfied all conditions contained in this
Agreement on its part to be performed or satisfied at or prior
to such Firm Closing Date or Option Closing Date, as the case
may be;
(ii) 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, to the best
of the Company's knowledge, are threatened under the Act;
(iii) none of the Registration Statement, the Prospectus
nor any amendment or supplement thereto includes any untrue
statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the
statements therein not misleading and neither the Preliminary
Prospectus nor any supplement thereto included any untrue
statement of a material fact or omitted to state any material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading; and
(iv) subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus, neither the Company nor any of the Subsidiaries have
incurred up to and including the Firm Closing Date or the Option
Closing Date, as the case may be, other than in the ordinary
course of their respective business or as otherwise disclosed in
the Prospectus, any material liabilities or obligations, direct
or contingent; the Company has not paid or declared any
dividends or other distributions on its capital stock; neither
the Company nor any of the Subsidiaries has entered into any
transactions not in the ordinary course of business; and there
has not been any material change in the capital stock or
long-term debt or any material increase in the short-term
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borrowings of the Company or any of the Subsidiaries; neither
the Company nor any of the Subsidiaries has sustained any
material loss or damage to its property or assets, whether or
not insured; there is no litigation that is pending or, to the
best knowledge of the Company, threatened against the Company or
any of the Subsidiaries that is required to be set forth in an
amended or supplemented Prospectus that has not been set forth;
and there has occurred no event required to be set forth in an
amended or supplemented Prospectus that has not been set forth.
References to the Registration Statement and the Prospectus in this
subsection (i) are to such documents as amended and supplemented at the date of
such certificate.
(f) The Representatives shall have received a certificate,
dated the Firm Closing Date, from each Selling Stockholder (which may be signed
by an Attorney-in-Fact) to the effect that:
(i) The Registration Statement and Prospectus and, if
any, each amendment and each supplement thereto contain all
statements required to be included therein regarding such
Selling Stockholder, and (A) as of the date of such certificate,
(x) the Registration Statement does not contain any untrue
statement of a material fact regarding such Selling Stockholder
or omit to state a material fact regarding such Selling
Stockholder required to be stated therein or necessary in order
to make the statements therein regarding such Selling
Stockholder not misleading and (y) the Prospectus does not
contain any untrue statement of a material fact regarding such
Selling Stockholder or omit to state a material fact regarding
such Selling Stockholder required to be stated therein or
necessary in order to make the statements therein regarding such
Selling Stockholder, in the light of the circumstances under
which they were made, not misleading and (B) since the Effective
Date no event has occurred as a result of which it is necessary
to amend or supplement the Prospectus in order to make the
statements therein regarding such Selling Stockholder not untrue
or misleading in any material respect;
(ii) Each of the representations and warranties of such
Selling Stockholder contained in this Agreement are, at the time
such certificate is delivered, true and correct in all material
respects; and
(iii) Each of the covenants required herein to be
performed by such Selling Stockholder on or prior to the date of
such certificate has been duly, timely and fully performed in
all material respects and each condition herein required to be
complied with such Selling Stockholder on or prior to the
delivery of such certificate has been duly, timely and full
complied with in all material respects.
(g) On or before the Firm Closing Date, the Representatives
and counsel for the Underwriters shall have received such further certificates,
documents or other information as they may have reasonably requested from the
Company and the Selling Stockholders.
(h) Prior to the commencement of the offering of the
Securities, the Securities shall have been accepted for listing on the AMEX.
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All opinions, certificates, letters and documents delivered pursuant to
this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Representatives and
counsel for the Underwriters. The Company and the Selling Stockholders shall
furnish to the Representatives such conformed copies of such opinions,
certificates, letters and documents in such quantities as the Representatives
and counsel for the Underwriters shall reasonably request.
The respective obligations of the several Underwriters to purchase and
pay for any Option Securities shall be subject, in their discretion, to each of
the foregoing conditions to purchase the Firm Securities, except that all
references to the Firm Securities and the Firm Closing Date shall be deemed to
refer to such Option Securities and the related Option Closing Date,
respectively.
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject under the Act, the
Exchange Act or otherwise, specifically including but not limited to losses,
claims, damages or liabilities related to negligence on the part of any
Underwriter, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any breach of any
representation, warranty, agreement or covenant of the Company herein contained
or any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading; and agrees to
reimburse each Underwriter for any legal or other expenses reasonably incurred
by it in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement,
any Preliminary Prospectus or the Prospectus, or any such amendment or
supplement, in reliance upon and in strict conformity with written information
furnished with respect to any Underwriter by such Underwriter expressly for use
in the Registration Statement, any Preliminary Prospectus or the Prospectus or
any amendment or supplement thereto, provided that such written information or
omissions only pertain to disclosures in the Registration Statement, any
Preliminary Prospectus or the Prospectus or any amendment or supplement thereto
directly relating to the transactions effected by the Underwriters in connection
with this offering, and provided further that the foregoing indemnity with
respect to any Preliminary Prospectus shall not inure to the benefit of any
Underwriter (or to the benefit of any person controlling such Underwriter) if
such untrue statement or omission or alleged untrue statement or omission made
in any Preliminary Prospectus is eliminated or remedied in the Prospectus and a
copy of the Prospectus has not been furnished to the person asserting any such
loss, claim, damage or liability at or prior to the written confirmation of the
sale of such Securities to such person.
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The indemnity agreement in this Section 8(a) shall extend upon the same
terms and conditions to, and shall inure to the benefit of each person, if any,
who controls any Underwriter within the meaning of the Act. This indemnity
agreement shall be in addition to any liabilities which the Company may
otherwise
(b) Each Selling Stockholder, severally and not jointly, agrees
to indemnify and hold harmless each Underwriter against any losses, claims,
damages or liabilities, joint or several, to which such Underwriter may become
subject under the Act, the Exchange Act or otherwise, specifically including
but not limited to losses, claims, damages or liabilities related to negligence
on the part of any Underwriter, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
breach of any representation, warranty, agreement or covenant made by such
Selling Stockholder herein contained or any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto,
or arise out of or based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading; and agrees to reimburse each Underwriter for any legal or other
expenses reasonably incurred by it in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that such Selling Stockholder shall not be liable in any such case to the
extent that any such loss, claim, damage or liability arise out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in the Registration Statement, any Preliminary Prospectus or the
Prospectus, or any such amendment or supplement, in reliance upon and in strict
conformity with written information furnished with respect to any Underwriter by
such Underwriter expressly for use in the Registration Statement, any
Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, provided that such written information or omissions only pertain to
disclosures in the Registration Statement, any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto directly relating to the
transactions effected by the Underwriters in connection with this offering, and
provided further that the foregoing indemnity with respect to any Preliminary
Prospectus shall not inure to the benefit of any Underwriter (or to the benefit
of any person controlling such Underwriter) if such untrue statement or omission
or alleged untrue statement or omission made in any Preliminary Prospectus is
eliminated or remedied in the Prospectus and a copy of the Prospectus has not
been furnished to the person asserting any such loss, claim, damage or liability
at or prior to the written confirmation of the sale of such Securities to such
person.
The indemnity agreement in this Section 8(a) shall extend upon the same
terms and conditions to, and shall inure to the benefit of each person, if any,
who controls any Underwriter within the meaning of the Act. This indemnity
agreement shall be in addition to any liabilities which such Selling
Stockholder may otherwise have. For purposes of this Agreement, such Selling
Stockholder acknowledges that the statements with respect to the public
offering of the Securities set forth under the heading "Underwriting" and the
stabilization legend in the Prospectus and the last paragraph on the outside
front cover page of the Prospectus have been furnished by the Underwriters
expressly for use therein and constitute the only information furnished in
writing by or on behalf of the Underwriters for inclusion in the Prospectus.
The liability of such Selling Stockholder under this Section 8(b) shall be
limited to an amount equal to the aggregate public offering price of the
Securities sold by such Selling Stockholder to the Underwriters. The Company
and such Selling Stockholder may agree, as among themselves and without
limiting the rights of the Underwriters under this Agreement, as to the
respective amounts of such liability for which they each shall be responsible.
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(c) Each Underwriter, severally and not jointly, will indemnify
and hold harmless the Company and each Selling Stockholder to the same extent as
the foregoing indemnity from the Company and each Selling Stockholder to the
Underwriters but only with respect to statements or omissions, if any, made in
the Registration Statement, any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto made in reliance upon, and in strict conformity
with, written information furnished with respect to any Underwriter by such
Underwriter expressly for use in the Registration Statement, any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto, provided
that such written information or omissions only pertain to disclosures in the
Registration Statement, any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto directly relating to the transactions effected
by the Underwriters in connection with this offering.
The indemnity agreement in this Section 8(c) shall extend upon the same
terms and conditions to, and shall inure to the benefit of, each officer and
director of the Company who has signed the Registration Statement. This
indemnity agreement shall be in addition to any liabilities which each
Underwriter may otherwise have. For purposes of this Agreement, the Company
acknowledges that the statements with respect to the public offering of the
Securities set forth under the heading "Underwriting" and the stabilization
legend in the Prospectus and the last paragraph on the outside front cover page
of the Prospectus have been furnished by the Underwriters expressly for use
therein and constitute the only information furnished in writing by or on behalf
of the Underwriters for inclusion in the Prospectus.
(d) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise than under
this Section 8. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party; provided, however, that if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be one or more
legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
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indemnifying party shall not have the right to direct the defense of such action
on behalf of such indemnified party or parties and such indemnified party or
parties shall have the right to select separate counsel to defend such action on
behalf of such indemnified party or parties. After notice from the indemnifying
party to such indemnified party of its election so to assume the defense thereof
and approval by such indemnified party of counsel appointed to defend such
action, the indemnifying party will not be liable to such indemnified party
under this Section 8 for any legal or other expenses, other than reasonable
costs of investigation, subsequently incurred by such indemnified party in
connection with the defense thereof, unless (i) the indemnified party shall have
employed separate counsel in accordance with the proviso to the next preceding
sentence (it being understood, however, that in connection with such action the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (in addition to local counsel) in any one action or separate
but substantially similar actions in the same jurisdiction arising out of the
same general allegations or circumstances, designated by the Representatives in
the case of paragraph (a) of this Section 8, representing the indemnified
parties under such paragraph (a) who are parties to such action or actions),
(ii) the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action, or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party. After such notice from the indemnifying party to such
indemnified party, the indemnifying party will not be liable for the costs and
expenses of any settlement of such action effected by such indemnified party
without the consent of the indemnifying party, (which consent shall not be
unreasonably withheld) unless such indemnified party waived its rights under
this Section 8 in which case the indemnified party may effect such a settlement
without such consent.
(e) In circumstances in which the indemnity agreement provided
for in the preceding paragraphs of this Section 8 is unenforceable or otherwise
unavailable or insufficient to hold harmless an indemnified party in respect of
any losses, claims, damages or liabilities (or actions in respect thereof), each
indemnifying party, in order to provide for just and equitable contribution,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect (i) the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the offering of the Securities or (ii) if
the allocation provided by the foregoing clause (i) is not permitted by
applicable law, not only such relative benefits but also the relative fault of
the indemnifying party or parties on the one hand and the indemnified party on
the other in connection with the statements or omissions or alleged statements
or omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof). The relative benefits received by the Company and
the Selling Stockholders on the one hand and the Underwriters on the other shall
be deemed to be in the same proportion as the total proceeds from the offering
(before deducting expenses) received by the Company and the Selling Stockholders
bear to the total underwriting discounts and commissions received by the
Underwriters. The relative fault of the parties shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, the Selling Stockholders or the
Underwriters, the parties' relative intents, knowledge, access to information
and opportunity to correct or prevent statement or omission,
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and any other equitable considerations appropriate in the circumstances. The
Company, the Selling Stockholders and the Underwriters agree that it would not
be equitable if the amount of such contribution were determined by pro rata or
per capita allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take into
account the equitable considerations referred to in the first sentence of this
paragraph (d). Notwithstanding any other provision of this paragraph (d), no
Underwriter shall be obligated to make contributions hereunder that in the
aggregate exceed the total underwriting discounts and commissions received by it
with respect to the Securities purchased by such Underwriter under this
Agreement, less the aggregate amount of any damages that such Underwriter has
otherwise been required to pay in respect of the same or any substantially
similar claim, and no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute hereunder are several in proportion to
their respective underwriting obligations and not joint, and contributions among
Underwriters shall be governed by the provisions of the Master Agreement Among
Underwriters. For purposes of this paragraph (e), each person, if any, who
controls an Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act shall have the same rights to contribution as such
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement, each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
shall have the same rights to contribution as the Company.
9. Default of Underwriters. If one or more Underwriters default
in their obligations to purchase Firm Securities or Option Securities hereunder
and the aggregate number of such Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase is ten percent or less of the
aggregate number of Firm Securities or Option Securities to be purchased by all
of the Underwriters at such time hereunder, the other Underwriters may make
arrangements satisfactory to the Representatives for the purchase of such
Securities by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representatives), but if no such arrangements are
made by the Firm Closing Date or the related Option Closing Date, as the case
may be, the other Underwriters shall be obligated severally in proportion to
their respective commitments hereunder to purchase the Firm Securities or Option
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase. If one or more Underwriters so default with respect to an aggregate
number of Securities that is more than ten percent of the aggregate number of
Firm Securities or Option Securities, as the case may be, to be purchased by all
of the Underwriters at such time hereunder, and if arrangements satisfactory to
the Representatives are not made within 36 hours after such default for the
purchase by other persons who may include one or more of the non-defaulting
Underwriters, including the Representatives) of the Securities with respect to
which such default occurs, this Agreement will terminate without liability on
the part of any non-defaulting Underwriter or the Company other than as provided
in Section 11 hereof. In the event of any default by one or more Underwriters as
described in this Section 8, the Representatives shall have the right to
postpone the Firm Closing Date or the Option Closing Date, as the case may be,
established as provided in Section 1 hereof for not more than seven business
days in order that any necessary changes may be made in the arrangements or
documents for the purchase and delivery of the Firm Securities or Option
Securities, as the case may be. As used in this Agreement, the term
"Underwriter"
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includes any person substituted for an Underwriter under this Section 8. Nothing
herein shall relieve any defaulting Underwriter from liability for its default.
10. Survival. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company, its
officers, the Selling Stockholders and the several Underwriters set forth in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement shall remain in full force and effect, regardless of (i) any
investigation made by or on behalf of the Company, any of its officers or
directors, any Selling Stockholder, any Underwriter or any controlling person
referred to in Section 8 hereof and (ii) delivery of and payment for the
Securities. The respective agreements, covenants, indemnities and other
statements set forth in Sections 6 and 8 hereof shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement.
11. Termination. This Agreement may be terminated with respect to
the Firm Securities or any Option Securities in the sole discretion of the
Representatives by notice to the Company given prior to the Firm Closing Date or
the related Option Closing Date, respectively, in the event that the Company or
any Selling Stockholder fails to perform its obligations and satisfy all
conditions on its part to be performed or satisfied hereunder at or prior
thereto or, if at or prior to the Firm Closing Date or such Option Closing Date,
respectively, the Representatives determines in its sole discretion that:
(a) trading in the Securities or trading in the Common
Stock shall have been suspended by the Commission or trading in securities
generally on the AMEX, New York Stock Exchange or the International Stock
Exchange of the United Kingdom shall have been suspended or minimum or maximum
prices shall have been established for the Common Stock on either such exchange;
(b) a banking moratorium shall have been declared by New
York, California, United Kingdom or United States authorities; or
(c) there shall have been (i) an outbreak or escalation of
hostilities between the United States or the United Kingdom and any foreign
power, (ii) an outbreak or escalation of any other insurrection or armed
conflict involving the United States or the United Kingdom or (iii) any other
calamity or crisis having an effect on the financial markets that makes it
impracticable or inadvisable to proceed with the public offering or the delivery
of the securities as contemplated by the Registration Statement.
12. Information Supplied by Underwriters. The statements set
forth in the last paragraph on the front cover page and under the heading
"Underwriting" in the Prospectus (to the extent such statements relate to the
Underwriters) constitute the only information furnished by any Underwriter
through the Representatives to the Company for the purposes of Sections 2 and
8(b) hereof.
13. Notices. All communications hereunder shall be in writing
and, if sent to any of the Underwriters, shall be mailed or delivered or
telegraphed and confirmed in writing to ▇▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, if sent to the Company, shall be mailed, delivered or
telegraphed and confirmed in writing to the Company at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Mr. ▇▇▇▇▇▇▇
▇'▇▇▇▇▇.
14. Successors. This Agreement shall inure to the benefit of and
shall be binding upon the several Underwriters, the Company and its respective
successors and legal representatives, and nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person any legal
or equitable right, remedy or claim under or in respect of this Agreement, or
any provisions herein contained, this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the indemnities of the Company contained in Section 8 of this Agreement shall
also be for the benefit of any person or persons who control any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
and (ii) the indemnities of the Underwriters contained in Section 8 of this
Agreement shall also be for the benefit of the directors of the Company, the
officers of the Company who have signed the Registration Statement and any
person or persons who control the Company within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act. No purchaser of Securities from any
Underwriter shall be deemed a successor because of such purchase.
15. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter shall constitute an agreement binding the Company and each of the
several Underwriters.
Very truly yours,
THE SPORTS CLUB COMPANY, INC.
By:
--------------------------------------
Name:
Title:
SELLING STOCKHOLDERS
By:
--------------------------------------
Attorney-in-Fact for the Selling
Stockholders named in Schedule I hereto
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
▇▇▇▇▇▇▇▇ & CO. INC.
PRUDENTIAL SECURITIES INCORPORATED
SUTRO & CO. INCORPORATED
For themselves and the other
several Underwriters, if any,
named in Schedule 1 to the
foregoing Agreement
By: ▇▇▇▇▇▇▇▇ & CO. INC.
By:
-------------------------------------
Name:
Title:
For itself and the other Representatives
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SCHEDULE 1
UNDERWRITERS' COMMITMENTS
Number of
Firm Securities
to be Purchased
from the Company
Underwriter
---------------------------------- ---------------------
▇▇▇▇▇▇▇▇ & Co. Inc.
Prudential Securities Incorporated
Sutro & Co. Incorporated
----------------
TOTAL .............. 6,000,000
=================
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SCHEDULE 2
SELLING STOCKHOLDERS
Number of
Option Securities to be Sold
----------------------------
The ▇▇▇▇▇ ▇. ▇▇▇▇▇ Irrevocable Trust dated January 4, 1993 (1)..........................50,000
The ▇▇▇▇▇ ▇. ▇▇▇▇▇ Irrevocable Trust dated January 4, 1993 (2)..........................50,000
----------
Total..................................................................................100,000
-------------------------------------------
(1) Address for notices:
c/o
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(2) Address for notices:
c/o
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EXHIBIT A
March __, 1998
▇▇▇▇▇▇▇▇▇ & CO. INC.
PRUDENTIAL SECURITIES INCORPORATED
SUTRO & CO. INCORPORATED
As Representatives of the
several Underwriters
c/▇ ▇▇▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned is an executive officer or director of the Sports club
company, Inc., a Delaware corporation (the "Company"). The undersigned
understands that the Company has filed a registration statement on Form S-2,
Registration No. 333-46973 (the "Registration Statement"), with the Securities
and Exchange Commission, together with the prospectus relating to the proposed
underwritten offering (the "Offering") by the Company of shares of Common
Stock, $.01 par value per share (the "Common Stock").
In order to induce the Company, you and the other underwriters of the
Offering, for which ▇▇▇▇▇▇▇▇▇ & Co. Inc., Prudential Securities Incorporated
and Sutro & Co. Incorporated intend to act as representatives, to proceed with
the Offering, the undersigned hereby agrees that the undersigned will not,
directly or indirectly, for a period of 90 days after the date hereof, without
the prior written consent of ▇▇▇▇▇▇▇▇▇ & Co. Inc., sell, offer to sell, contract
to sell, grant any option to purchase or otherwise dispose (or announce any
offer, sale, grant of any option to purchase or other disposition) of any
shares of Common Stock or any securities convertible into, or exercisable or
exchangeable for, shares of Common Stock.
This letter shall have no further force or effect if the Company and the
several Underwriters shall not have executed and delivered respective
underwriting agreements related to the Offering by April 30, 1998 or if any
underwriting agreement entered into by such parties shall be terminated prior
to the initial closing date provided for therein.
[Remainder of this page intentionally left blank.]
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This letter agreement shall not prohibit the undersigned from
transferring any shares of Common Stock to members of his or her immediate
family or to a trust for their benefit, provided that such persons or trust
agree to be bound by the terms hereof.
Very truly yours,
By:
----------------------
Name:
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