EXHIBIT 1.1
2,000,000 SHARES
TOTAL ENTERTAINMENT RESTAURANT CORP.
COMMON STOCK $0.01 PAR VALUE
UNDERWRITING AGREEMENT
DATED ____________________
TABLE OF CONTENTS
1. Representations and Warranties of the Company and the Selling Stockholders................................3
1.1. Effective Registration Statement....................................................................3
1.2. Contents of Registration Statement..................................................................3
1.3. Exchange Act Compliance.............................................................................3
1.4. Due Incorporation...................................................................................4
1.5. Subsidiaries........................................................................................4
1.6. Underwriting Agreement..............................................................................4
1.7. Description of Capital Stock........................................................................4
1.8. Authorized Stock....................................................................................4
1.9. Validly Issued Shares...............................................................................4
1.10. No Conflict.........................................................................................5
1.11. No Material Adverse Change..........................................................................5
1.12. Legal Proceedings; Exhibits.........................................................................5
1.13. Compliance with Securities Act......................................................................5
1.14. Not an Investment Company...........................................................................5
1.15. Compliance with Laws................................................................................6
1.16. No Environmental Costs..............................................................................6
1.17. No Registration Rights..............................................................................6
1.18. Cuban Business Statute..............................................................................6
1.19. Absence of Material Charges.........................................................................6
1.20. Good Title to Properties............................................................................6
1.21. Intellectual Property Rights........................................................................7
1.22. No Labor Disputes...................................................................................7
1.23. Insurance...........................................................................................7
1.24. Governmental Permits................................................................................7
1.25. Accounting Controls.................................................................................8
1.26. Listing of Common Stock.............................................................................8
1.27. Compliance with Food and Beverage Laws..............................................................8
1.28. Financial Statements................................................................................8
1.29. No Market Manipulation..............................................................................8
1.30. Employee Benefit Plans..............................................................................9
1.31. Taxes...............................................................................................9
1.32. Disclosure..........................................................................................9
1.33. Corporate Records...................................................................................9
1.34. Insider Transactions...............................................................................10
1.35. Margin Securities..................................................................................10
1.36. Transaction Fees...................................................................................10
1.37. Forward-Looking Statements.........................................................................10
1.38. No Prohibition of Subsidiaries from Paying Dividends or Making Other Distribution..................10
1.39. No Transfer Taxes or Other Fees....................................................................10
1.40. No Unlawful Contributions or Other Payments........................................................10
1.41. Distribution of Offering Materials by the Company..................................................11
2. Representations and Warranties of the Selling Stockholders..............................................11
2.1. Due Authorization..................................................................................11
2.2. Selling Stockholder Documents......................................................................11
2.3. No Conflict........................................................................................11
2.4. Validly Issued Shares..............................................................................12
2.5. Good Title to Shares...............................................................................12
2.6. Delivery of Common Shares..........................................................................12
2.7. No Registration Rights.............................................................................12
2.8. No Market Manipulation.............................................................................12
2.9. Disclosure by Selling Stockholder in Registration Statement........................................12
2.10. No Transfer Taxes or Other Fees....................................................................13
2.11. Distribution of Offering Materials by the Selling Stockholders.....................................13
2.12. Confirmation of Company Representations and Warranties.............................................13
3. Purchase and Sale Agreements............................................................................13
3.1. Firm Shares........................................................................................13
3.2. Additional Shares..................................................................................13
3.3. Market Standoff Provision..........................................................................14
3.4. Terms of Public Offering...........................................................................14
4. Payment and Delivery....................................................................................14
4.1. Firm Shares........................................................................................14
4.2. Additional Shares..................................................................................15
4.3. Delivery of Certificates...........................................................................15
5. Covenants of the Company................................................................................15
5.1. Furnish Copies of Registration Statement and Prospectus............................................15
5.2. Notification of Amendments or Supplements..........................................................15
5.3. Filings of Amendments or Supplements...............................................................16
5.4. Blue Sky Laws......................................................................................16
5.5. Earnings Statement.................................................................................16
5.6. Use of Proceeds....................................................................................16
5.7. Transfer Agent.....................................................................................16
5.8. Periodic Reporting Obligations.....................................................................16
5.9. Exchange Act Compliance............................................................................17
6. Conditions to the Underwriters' Obligations.............................................................17
6.1. Effective Registration Statement...................................................................17
6.2. Rule 462 Registration Statement....................................................................17
6.3. Prospectus Filed with Commission...................................................................17
6.4. No Stop Order......................................................................................17
6.5. No NASD Objection..................................................................................17
6.6. No Debt Downgrading................................................................................18
6.7. No Material Adverse Change.........................................................................18
6.8. Officer's Certificate..............................................................................18
6.9. Opinion of Company Counsel.........................................................................18
6.10. Opinion of Selling Stockholders Counsel............................................................18
6.11. Opinion of Underwriters Counsel....................................................................18
6.12. Accountant's Comfort Letter........................................................................19
6.13. Lock-Up Agreements.................................................................................19
6.14. Selling Stockholders Certificate...................................................................19
6.15. Selling Stockholder Documents......................................................................19
6.16. Additional Documents...............................................................................19
7. Expenses................................................................................................20
8. Indemnity and Contribution..............................................................................20
8.1. Indemnification of the Underwriters................................................................20
8.2. Indemnification by the Underwriters................................................................21
8.3. Indemnification Procedures.........................................................................21
8.4. Contribution Agreement...............................................................................22
8.5. Contribution Amounts.................................................................................23
8.6. Survival of Provisions...............................................................................23
8.7. Limitation of Selling Stockholder Liability..........................................................23
9. Effectiveness...........................................................................................24
10. Termination.............................................................................................24
11. Defaulting Underwriters.................................................................................24
12. Counterparts............................................................................................25
13. Headings; Table of Contents.............................................................................25
14. Notices.................................................................................................25
15. Successors..............................................................................................26
16. Partial Unenforceability................................................................................27
17. Governing Law...........................................................................................27
18. Consent to Jurisdiction.................................................................................27
19. Failure of the Selling Stockholders to Sell and Deliver Shares..........................................27
20. Entire Agreement........................................................................................28
21. Amendments..............................................................................................28
22. Sophisticated Parties...................................................................................28
SCHEDULE A.................................................................................................30
SCHEDULE B.................................................................................................31
EXHIBIT A.................................................................................................A-1
EXHIBIT B.................................................................................................B-1
EXHIBIT C.................................................................................................C-1
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▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners LLC
[Name of Other Representative]
As Representatives of the several Underwriters
c/o Thomas ▇▇▇▇▇▇ Partners LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Introduction.
Total Entertainment Restaurant Corp., a Delaware
corporation (the "COMPANY"), proposes to issue and sell to the several
underwriters named in Schedule A hereto (the "UNDERWRITERS"), and certain
stockholders of the Company (the "SELLING STOCKHOLDERS") named in Schedule B
hereto severally propose to sell to the several Underwriters, an aggregate of
2,000,000 shares of the common stock, par value $0.01 per share, of the Company
(the "FIRM SHARES"), of which 1,450,000 shares are to be issued and sold by the
Company and 550,000 shares are to be sold by the Selling Stockholders, with each
Selling Stockholder selling the number of shares set forth opposite such Selling
Stockholder's name in Schedule B hereto.
The Company also proposes to issue and sell to the several Underwriters
not more than an additional 300,000 shares of its common stock, par value $0.01
per share (the "ADDITIONAL SHARES"), if and to the extent that you shall have
determined to exercise, on behalf of the Underwriters, the right to purchase
such shares of common stock granted to the Underwriters in Section 3 hereof. The
Firm Shares and the Additional Shares are hereinafter collectively referred to
as the "SHARES". The shares of common stock, par value $0.01 per share, of the
Company to be outstanding after giving effect to the sales contemplated hereby
are hereinafter referred to as the "COMMON STOCK". The Company and the Selling
Stockholders are hereinafter sometimes collectively referred to as the
"SELLERS". ▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners LLC and __________ have agreed to act as
representatives of the several Underwriters (in such capacity, the
"REPRESENTATIVES") in connection with the offering and sale of the Shares.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-2 (file no. 333-_____),
including a prospectus, relating to the Shares. The registration statement as
amended at the time it becomes effective, including the information (if any)
deemed to be part of the registration statement at the time of effectiveness
pursuant to Rule 430A under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), and all documents incorporated or deemed to be incorporated
by reference therein is hereinafter referred to as the "REGISTRATION STATEMENT";
the prospectus in the form first used to confirm sales of Shares is hereinafter
referred to as the "PROSPECTUS". If the Company has filed a registration
statement to register additional shares of Common Stock pursuant to Rule 462(b)
under the Securities Act (the "RULE 462 REGISTRATION STATEMENT"), then any
reference herein to the term "REGISTRATION STATEMENT" shall be deemed to include
such Rule 462 Registration Statement. All references in this Agreement to the
Registration Statement, the Rule 462 Registration Statement, a
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preliminary prospectus, the Prospectus, or any amendments or supplements to any
of the foregoing, shall include any copy thereof filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval System
("▇▇▇▇▇").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement or the Prospectus (and all other references of like
import) shall be deemed to mean and include all such financial statements and
schedules and other information which is or is deemed to be incorporated by
reference in the Registration Statement or the Prospectus, as the case may be;
and all references in this Agreement to amendments or supplements to the
Registration Statement or the Prospectus shall be deemed to mean and include the
filing of any document under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), which is or is deemed to be incorporated by reference in
the Registration Statement or the Prospectus, as the case may be.
1. Representations and Warranties of the Company and the Selling
Stockholders.
The Company and each of the Selling Stockholders jointly and severally
represents and warrants to and agrees with each of the Underwriters that:
1.1. Effective Registration Statement.
The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect, and no
proceedings for such purpose are pending before or threatened by the Commission.
1.2. Contents of Registration Statement.
(a) The Registration Statement, when it became effective, did not
contain and, as amended or supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
(b) the Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the
Securities Act and the applicable rules and regulations of the Commission
thereunder and (c) the Prospectus does not contain and, as amended or
supplemented, if applicable, 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,
except that the representations and warranties set forth in this paragraph do
not apply to statements or omissions in the Registration Statement or the
Prospectus based upon information relating to any Underwriter furnished to the
Company in writing by such Underwriter through you expressly for use therein.
1.3. Exchange Act Compliance.
The documents incorporated or deemed to be incorporated by reference in
the Prospectus, at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), and, when read together with the other information in the Prospectus, at
the time the Registration Statement and any amendments thereto become effective
and at the Closing Date and the Option Closing Date, as the case may be, will
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the fact
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required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
1.4. Due Incorporation.
The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property and to
conduct its business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
1.5. Subsidiaries.
Each subsidiary of the Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation, has the corporate power and authority to own its property and
to conduct its business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole. All of the issued shares of capital stock of
each subsidiary of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable and are owned directly by the Company, free
and clear of all liens, encumbrances, equities or claims.
1.6.
Underwriting Agreement.
This Agreement has been duly authorized, executed and delivered by the
Company, and is a valid and binding agreement of the Company, enforceable in
accordance with its terms, except as rights to indemnification hereunder may be
limited by applicable law and except as the enforcement hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles.
1.7. Description of Capital Stock.
The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus.
1.8. Authorized Stock.
The shares of Common Stock (including the Shares to be sold by the
Selling Stockholders) outstanding prior to the issuance of the Shares to be sold
by the Company have been duly authorized and are validly issued, fully paid and
non-assessable.
1.9. Validly Issued Shares.
The Shares to be sold by the Company have been duly authorized and,
when issued and delivered in accordance with the terms of this Agreement, will
be validly issued, fully paid and
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non-assessable, and the issuance of such Shares will not be subject to any
preemptive or similar rights.
1.10. No Conflict.
The execution and delivery by the Company of, and the performance by
the Company of its obligations under, this Agreement will not contravene any
provision of applicable law or the certificate of incorporation or by-laws of
the Company or any agreement or other instrument binding upon the Company or any
of its subsidiaries that is material to the Company and its subsidiaries, taken
as a whole, or any judgment, order or decree of any governmental body, agency or
court having jurisdiction over the Company or any subsidiary, and no consent,
approval, authorization or order of, or qualification with, any governmental
body or agency is required for the performance by the Company of its obligations
under this Agreement, except such as may be required by the securities or Blue
Sky laws of the various states in connection with the offer and sale of the
Shares.
1.11. No Material Adverse Change.
There has not occurred any material adverse change, or any development
involving a prospective material adverse change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in the Prospectus (exclusive
of any amendments or supplements thereto subsequent to the date of this
Agreement).
1.12. Legal Proceedings; Exhibits.
There are no legal or governmental proceedings pending or threatened to
which the Company or any of its subsidiaries is a party or to which any of the
properties 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 so described or any statutes, regulations, contracts or other documents that
are required to be described or incorporated by reference in the Registration
Statement or the Prospectus or to be filed or incorporated by reference as
exhibits to the Registration Statement that are not described or filed or
incorporated as required.
1.13. Compliance with Securities Act.
Each preliminary prospectus filed as part of the registration statement
as originally filed or as part of any amendment thereto, or filed pursuant to
Rule 424 under the Securities Act, complied when so filed in all material
respects with the Securities Act and the applicable rules and regulations of the
Commission thereunder.
1.14. Not an Investment Company.
The Company is not and, after giving effect to the offering and sale of
the Shares and the application of the proceeds thereof as described in the
Prospectus, will not be an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended.
5
1.15. Compliance with Laws.
The Company and its subsidiaries (a) are in compliance with any and all
applicable foreign, federal, state and local laws and regulations relating to
the protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"), (b)
have received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and (c) are
in compliance with all terms and conditions of any such permit, license or
approval, except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals would not,
individually or in the aggregate, have a material adverse effect on the Company
and its subsidiaries, taken as a whole.
1.16. No Environmental Costs.
There are no costs or liabilities associated with Environmental Laws
(including, without limitation, any capital or operating expenditures required
for clean-up, closure of properties or compliance with Environmental Laws or any
permit, license or approval, any related constraints on operating activities and
any potential liabilities to third parties) which would, individually or in the
aggregate, have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
1.17. No Registration Rights.
There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the Company to
file a registration statement under the Securities Act with respect to any
securities of the Company or to require the Company to include such securities
with the Shares registered pursuant to the Registration Statement other than as
described in the Registration Statement and as have been waived in writing in
connection with the offering contemplated hereby.
1.18. Cuban Business Statute.
The Company and its subsidiaries have complied with all provisions of
Section 517.075, Florida Statutes relating to doing business with the Government
of Cuba or with any person or affiliate located in Cuba.
1.19. Absence of Material Charges.
Subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, (a) the Company and its
subsidiaries have not incurred any material liability or obligation, direct or
contingent, nor entered into any material transaction not in the ordinary course
of business; (b) the Company has not purchased any of its outstanding capital
stock, nor declared, paid or otherwise made any dividend or distribution of any
kind on its capital stock other than ordinary and customary dividends; and (c)
there has not been any material change in the capital stock, short-term debt or
long-term debt of the Company and its subsidiaries, except in each case as
described in the Prospectus.
1.20. Good Title to Properties.
The Company and its subsidiaries have good and marketable title in fee
simple to all real property and good and marketable title to all personal
property owned by them which is material to
6
the business of the Company and its subsidiaries, in each case free and clear of
all liens, encumbrances and defects except such as are described in the
Prospectus or such as do not materially affect the value of such property and do
not interfere with the use made and proposed to be made of such property by the
Company and its subsidiaries; and any real property and buildings held under
lease by the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries.
1.21. Intellectual Property Rights.
The Company and its subsidiaries own or possess, or can acquire on
reasonable terms, all material patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names currently employed by them in
connection with the business now operated by them, and neither the Company nor
any of its subsidiaries has received any notice of infringement of or conflict
with asserted rights of others with respect to any of the foregoing which,
individually or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a material adverse affect on the Company and its
subsidiaries, taken as a whole.
1.22. No Labor Disputes.
No material labor dispute with the employees of the Company or any of
its subsidiaries exists, or, to the knowledge of the Company, is imminent; and
the Company is not aware of any existing, threatened or imminent labor
disturbance by the employees of any of its principal suppliers, manufacturers or
contractors that could have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
1.23. Insurance.
The Company and its subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
are prudent and customary in the businesses in which they are engaged; and
neither the Company nor any of its subsidiaries has any reason to believe that
it will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
1.24. Governmental Permits.
The Company and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct their respective business, and
neither the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such certificate,
authorization or permit which, individually or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
7
1.25. Accounting Controls.
The Company and each of its subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (a)
transactions are executed in accordance with management's general or specific
authorizations; (b) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (c) access to assets is
permitted only in accordance with management's general or specific
authorization; and (d) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
1.26. Listing of Common Stock.
The Common Stock (including the Shares) is registered pursuant to
Section 12(g) of the Exchange Act and is listed on the Nasdaq National Market,
and the Company has taken no action designed to, or likely to have the effect
of, terminating the registration of the Common Stock under the Exchange Act or
delisting the Common Stock from the Nasdaq National Market, nor has the Company
received any notification that the Commission or the National Association of
Securities Dealers, Inc. (the "NASD") is contemplating terminating such
registration or listing.
1.27. Compliance with Food and Beverage Laws.
The Company and its subsidiaries are conducting their business in
compliance with the Fair Labor Standards Act, the rules and regulations of the
federal Food and Drug Administration, and all applicable federal, state and
local laws, rules and regulations of the jurisdictions in which the Company or
any of its subsidiaries are conducting business, including, without limitation,
all applicable local, state and federal laws and regulations governing health,
sanitation, safety, the purchase and sale of alcoholic beverages (including, but
not limited to, liquor licenses, "tied house" statutes and "dram shop"
statutes), environmental matters, zoning and land use, except where the failure
to be so in compliance would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole.
1.28. Financial Statements.
The consolidated financial statements of the Company and its
subsidiaries, together with the related notes, included in the Prospectus fairly
present in all material respects the consolidated financial position and the
consolidated results of operations and changes in financial position of the
Company and its subsidiaries at the respective dates or for the respective
periods therein specified. Such statements and related notes have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis. The summary and selected consolidated financial and operating
data included in the Registration Statement present fairly in all material
respects the information shown therein and such data have been compiled on a
basis consistent with the consolidated financial statements presented therein
and the books and records of the Company and its subsidiaries.
1.29. No Market Manipulation.
None of the Company, any of its officers, directors or affiliates or
any Selling Stockholders has taken or will take, directly or indirectly, any
action designed or intended to
8
stabilize or manipulate the price of any security of the Company, or that caused
or resulted in, or that might in the future reasonably be expected to cause or
result in, stabilization or manipulation of the price of any security of the
Company. The Company acknowledges that the Underwriters may engage in passive
market making transactions in the Shares on the Nasdaq National Market in
accordance with Regulation M under the Exchange Act.
1.30. Employee Benefit Plans.
No "prohibited transaction" (as defined in Section 406 of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA"), or Section 4975 of the
Internal Revenue Code of 1986, as amended from time to time (the "CODE")) or
"accumulated funding deficiency" (as defined in Section 302 of ERISA) or any of
the events set forth in Section 4043(b) of ERISA (other than events with respect
to which the thirty-day notice requirement under Section 4043 of ERISA has been
waived) has occurred with respect to any employee benefit plan that might
reasonably be expected to have a material adverse effect on the Company and its
subsidiaries, taken as a whole; each employee benefit plan of the Company or any
subsidiary is in compliance in all material respects with applicable law
including ERISA and the Code; neither the Company nor any Subsidiary has
incurred or expects to incur liability under Title IV of ERISA with respect to
the termination of, or withdrawal from, any "pension plan;" and each "pension
plan" (as defined in ERISA) for which the Company or any subsidiary would have
any liability that is intended to be qualified under Section 401(a) of the Code
is so qualified in all material respects and nothing has occurred, whether by
action or by failure to act, that could cause the loss of such qualification.
1.31. Taxes.
The Company and its subsidiaries (a) have filed all necessary, federal,
state, local and foreign income and franchise tax returns, (b) have paid all
federal, state, local and foreign taxes due and payable for which they are
liable, except to the extent that such taxes are being contested in good faith
and by appropriate proceedings, and (c) do not have any tax deficiency or claims
outstanding or assessed or, to the best of the Company's knowledge, proposed
against them that might reasonably be expected to have a material adverse effect
on the Company and its subsidiaries, taken as a whole.
1.32. Disclosure.
All descriptions of any leases, contracts, agreements or documents
contained in the Regulation Statement are accurate and complete descriptions of
such documents in all material respects.
1.33. Corporate Records.
The minute books of each of the Company and its subsidiaries have been
made available to the Underwriters and counsel for the Underwriters and such
books (a) contain a complete summary of all meetings and actions of the
directors and stockholders of the Company or such subsidiary, as the case may
be, since the time of its respective incorporation through the date of the
latest of such meeting and action and (b) accurately reflect all transactions
referred to in such minutes.
9
1.34. Insider Transactions.
No relationship, direct or indirect, exists between or among the
Company or any of its subsidiaries, on the one hand, and any director, officer,
stockholder, customer or supplier of the Company or any of its subsidiaries, on
the other hand, that is required to be described in the Prospectus and that is
not so described.
1.35. Margin Securities.
Neither the Company nor any of its subsidiaries owns any "margin
securities" as that term is defined in Regulation U of the Board of Governors of
the Federal Reserve System, and none of the proceeds of the sale of the Shares
will be used, directly or indirectly, for the purpose of purchasing and carrying
any margin security, for the purpose of reducing or retiring any indebtedness
that was originally incurred to purchase or carry any margin security or for any
other purpose that might cause any of the Shares to be considered a "purpose
credit" within the meanings of Regulation T, U or X of such Board of Governors.
1.36. Transaction Fees.
Neither the Company nor any of its subsidiaries is a party to any
contract, agreement or understanding with any person, other than this Agreement,
that would give rise to a valid claim against the Company, any of its
subsidiaries or the Underwriters for a brokerage commission, finder's fee or
like payment in connection with the offering and sale of the Shares.
1.37. Forward-Looking Statements.
No forward-looking statement (within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act) contained in the Prospectus
has been made or reaffirmed without a reasonable basis or has been disclosed
other than in good faith.
1.38. No Prohibition of Subsidiaries from Paying Dividends or Making
Other Distribution.
No subsidiary of the Company is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such subsidiary's capital stock, from repaying to the Company
any loans or advances to such subsidiary from the Company or from transferring
any of such subsidiary's property or assets to the Company or any other
subsidiary of the Company, except as described in or contemplated by the
Prospectus.
1.39. No Transfer Taxes or Other Fees.
There are no transfer taxes or other similar fees or charges under
federal law or the laws of any state, or any political subdivision thereof,
required to be paid in connection with the execution and delivery of this
Agreement or the issuance and sale by the Company of the Shares.
1.40. No Unlawful Contributions or Other Payments.
Neither the Company nor any of its subsidiaries nor any employee or
agent of the Company or any subsidiary, has made any contribution or other
payment to any official of, or
10
candidate for, any federal, state or foreign office in violation of any law or
of the character required to be disclosed in the Prospectus.
1.41. Distribution of Offering Materials by the Company.
Neither the Company nor any of its subsidiaries has distributed and
none of them will distribute, prior to the later of the Option Closing Date (as
defined below) and the completion of the Underwriters' distribution of the
Shares, any offering material in connection with the offering and sale of the
Shares by the Company other than a preliminary prospectus, the Prospectus or the
Registration Statement.
2. Representations and Warranties of the Selling Stockholders.
Each of the Selling Stockholders represents and warrants to and agrees
with each of the Underwriters that:
2.1. Due Authorization.
This Agreement has been duly authorized, executed and delivered by or
on behalf of such Selling Stockholder and is a valid and binding agreement of
such Selling Stockholder, enforceable in accordance with its terms, except as
rights to indemnification hereunder may be limited by applicable law and except
as the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles.
2.2. Selling Stockholder Documents.
The Power of Attorney and Custody Agreement (as defined below) has been
duly authorized, executed and delivered by such Selling Stockholder and is a
valid and binding agreement of such Selling Stockholder enforceable in
accordance with its terms, except as rights to indemnification thereunder may be
limited by applicable law and except as the enforcement thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles.
2.3. No Conflict.
The execution and delivery by such Selling Stockholder of, and the
performance by such Selling Stockholder of its obligations under, this Agreement
and the Power of Attorney and Custody Agreement signed by such Selling
Stockholder and the Company, as Custodian, relating to the deposit of the Shares
to be sold by such Selling Stockholder and appointing certain individuals as
such Selling Stockholder's attorneys-in-fact to the extent set forth therein,
relating to the transactions contemplated hereby and by the Registration
Statement (the "POWER OF ATTORNEY AND CUSTODY AGREEMENT") will not contravene
any provision of applicable law, or the articles or certificate of
incorporation, as applicable, or by-laws of such Selling Stockholder (if such
Selling Stockholder is a corporation), or any agreement or other instrument
binding upon such Selling Stockholder or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over such Selling
Stockholder, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by such Selling Stockholder of its obligations under this Agreement
or the Power of Attorney and Custody
11
Agreement of such Selling Stockholder, except such as may be required by the
securities or Blue Sky laws of the various states in connection with the offer
and sale of the Shares.
2.4. Validly Issued Shares.
The Shares to be sold by such Selling Stockholder pursuant to this
Agreement have been duly authorized and are validly issued, fully paid and
non-assessable.
2.5. Good Title to Shares.
Such Selling Stockholder has, and on each Closing Date will have, valid
title to the Shares to be sold by such Selling Stockholder and the legal right
and power, and all authorization and approval required by law, to enter into
this Agreement and the Power of Attorney and Custody Agreement and to sell,
transfer and deliver the Shares to be sold by such Selling Stockholder.
2.6. Delivery of Common Shares.
Delivery of the Shares to be sold by such Selling Stockholder pursuant
to this Agreement will pass title to such Shares free and clear of any security
interests, claims, liens, equities and other encumbrances.
2.7. No Registration Rights.
Such Selling Stockholder does not have any registration or other
similar rights to have any equity or debt securities registered for sale by the
Company under the Registration Statement or included in the offering
contemplated by this Agreement, other than as described in the Registration
Statement and as have been waived in writing in connection with the offering
contemplated hereby.
2.8. No Market Manipulation.
Such Selling Stockholder has not taken and will not take, directly or
indirectly, any action designed or intended to stabilize or manipulate the price
of any security of the Company, or that caused or resulted in, or that might in
the future reasonably be expected to cause or result in, stabilization or
manipulation of the price of any security of the Company. Such Selling
Stockholder acknowledges that the Underwriters may engage in passive market
making transactions in the Shares on the Nasdaq National Market in accordance
with Regulation M under the Exchange Act.
2.9. Disclosure by Selling Stockholder in Registration Statement.
(a) The Registration Statement, when it became effective, did not
contain and, as amended or supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
(b) the Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the
Securities Act and the applicable rules and regulations of the Commission
thereunder; and (c) the Prospectus does not contain and, as amended or
supplemented, if applicable, 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,
except that the representations and
12
warranties set forth in this paragraph 2.9 do not apply to statements or
omissions in the Registration Statement or the Prospectus based upon information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through you expressly for use therein.
2.10. No Transfer Taxes or Other Fees.
There are no transfer taxes or other similar fees or charges under
federal law or the laws of any state, or any political subdivision thereof,
required to be paid in connection with the execution and delivery of this
Agreement or the sale by such Selling Stockholder of the Shares.
2.11. Distribution of Offering Materials by the Selling Stockholders.
Such Selling Stockholder has not distributed and will not distribute,
prior to the later of the Option Closing Date and the completion of the
Underwriters' distribution of the Shares, any offering material in connection
with the offering and sale of the Shares by such Selling Stockholder other than
a preliminary prospectus, the Prospectus or the Registration Statement.
2.12. Confirmation of Company Representations and Warranties.
Such Selling Stockholder has no reason to believe that the
representations and warranties of the Company contained in Section 1 hereof are
not true and correct, is familiar with the Registration Statement and the
Prospectus and has no knowledge of any material fact, condition or information
not disclosed in the Registration Statement or the Prospectus which has had or
may have a material adverse effect on the Company and its subsidiaries, taken as
a whole, and is not prompted to sell any of the Shares by any information
concerning the Company which is not set forth in the Registration Statement and
the Prospectus.
3. Purchase and Sale Agreements.
3.1. Firm Shares.
Each Seller, severally and not jointly, hereby agrees to sell to the
several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from such
Seller at $______ a share (the "PURCHASE PRICE") the number of Firm Shares
(subject to such adjustments to eliminate fractional shares as you may
determine) that bears the same proportion to the number of Firm Shares to be
sold by such Seller as the number of Firm Shares set forth in Schedule A hereto
opposite the name of such Underwriter bears to the total number of Firm Shares.
3.2. Additional Shares.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Underwriters the Additional Shares, and the Underwriters shall have a
one-time right to purchase, severally and not jointly, up to 300,000 Additional
Shares at the Purchase Price. If you, on behalf of the Underwriters, elect to
exercise such option, you shall so notify the Company in writing not later than
thirty (30) days after the date of this Agreement, which notice shall specify
the number of Additional Shares to be purchased by the Underwriters and the date
on which such shares are to be purchased. Such date
13
may be the same as the Closing Date (as defined below) but not earlier than the
Closing Date nor later than ten (10) business days after the date of such
notice. Additional Shares may be purchased as provided in Section 4 hereof
solely for the purpose of covering over-allotments made in connection with the
offering of the Firm Shares. If any Additional Shares are to be purchased, each
Underwriter agrees, severally and not jointly, to purchase the number of
Additional Shares (subject to such adjustments to eliminate fractional shares as
you may determine) that bears the same proportion to the total number of
Additional Shares to be purchased as the number of Firm Shares set forth in
Schedule A hereto opposite the name of such Underwriter bears to the total
number of Firm Shares.
3.3. Market Standoff Provision.
Each Seller hereby agrees that, without the prior written consent of
▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners, it will not, during the period ending 90 days after the
date of the Prospectus, (a) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, lend, or otherwise transfer or dispose
of, directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or (b) enter
into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of the Common Stock, whether
any such transaction described in clause (a) or (b) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise. The
foregoing sentence shall not apply to (x) the Shares to be sold hereunder, (y)
the issuance by the Company of shares of Common Stock upon the exercise of
options outstanding on the date hereof of which the Underwriters have been
advised in writing and which is described in the Prospectus, or (z) any issuance
by the Company of shares of Common Stock upon the exercise of any options issued
under the Company's 1997 Directors' Stock Option Plan, as amended, or the
Company's 1997 Incentive and Nonqualified Stock Option Plan. In addition, each
Selling Stockholder, agrees that, without the prior written consent of ▇▇▇▇▇▇
▇▇▇▇▇▇ Partners LLC, it will not, during the period ending 90 days after the
date of the Prospectus, make any demand for, or exercise any right with respect
to, the registration of any shares of Common Stock or any security convertible
into or exercisable or exchangeable for Common Stock.
3.4. Terms of Public Offering.
The Sellers are advised by you that the Underwriters propose to make a
public offering of their respective portions of the Shares as soon after the
Registration Statement and this Agreement have become effective as in your
judgment is advisable. The Sellers are further advised by you that the Shares
are to be offered to the public initially at $_____________ a share (the "PUBLIC
OFFERING PRICE") and to certain dealers selected by you at a price that
represents a concession not in excess of $______ a share under the Public
Offering Price, and that any Underwriter may allow, and such dealers may
reallow, a concession, not in excess of $_____ a share, to any Underwriter or to
certain other dealers.
4. Payment and Delivery.
4.1. Firm Shares.
Payment for the Firm Shares to be sold by each Seller shall be made to
such Seller in immediately available funds against delivery of such Firm Shares
for the respective accounts of the
14
several Underwriters at 10:00 a.m.,
New York City time, on ____________, 2002,
or at such other time on the same or such other date, not later than _________,
2002, as shall be designated in writing by you. The time and date of such
payment are hereinafter referred to as the "CLOSING DATE".
4.2. Additional Shares.
Payment for any Additional Shares shall be made to the Company in
immediately available funds in
New York City against delivery of such Additional
Shares for the respective accounts of the several Underwriters at 10:00 a.m.,
New York City time, on the date specified in the notice described in Section 3.2
or at such other time on the same or on such other date, in any event not later
than _______, 2002, as shall be designated in writing by you. The time and date
of such payment are hereinafter referred to as the "OPTION CLOSING DATE".
4.3. Delivery of Certificates.
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than one (1) full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.
5. Covenants of the Company.
In further consideration of the agreements of the Underwriters herein
contained, the Company covenants with each Underwriter as follows:
5.1. Furnish Copies of Registration Statement and Prospectus.
To furnish to you, without charge, three signed copies of the
Registration Statement (including exhibits thereto) and for delivery to each
other Underwriter a conformed copy of the Registration Statement (without
exhibits thereto) and to furnish to you in
New York City, without charge, prior
to 10:00 a.m.,
New York City time, on the business day next succeeding the date
of this Agreement and during the period mentioned in Section 5(c) below, as many
copies of the Prospectus and any supplements and amendments thereto (including
any documents incorporated or deemed incorporated by reference therein) or to
the Registration Statement as you may reasonably request.
5.2. Notification of Amendments or Supplements.
Before amending or supplementing the Registration Statement or the
Prospectus (including any amendment or supplement through incorporation by
reference of any report filed under the Exchange Act), to furnish to you a copy
of each such proposed amendment or supplement and not to file any such proposed
amendment or supplement to which you reasonably object, and to file with the
Commission within the applicable period specified in Rule 424(b) under the
Securities Act any prospectus required to be filed pursuant to such rule.
15
5.3. Filings of Amendments or Supplements.
If, during such period after the first date of the public offering of
the Shares as in the opinion of counsel for the Underwriters the Prospectus is
required by law to be delivered in connection with sales by an Underwriter or
dealer (the "PROSPECTUS DELIVERY PERIOD"), any event shall occur or condition
exist as a result of which it is necessary to amend or supplement the Prospectus
in order to make the statements therein, in the light of the circumstances when
the Prospectus is delivered to a purchaser, not misleading, or if, in the
opinion of counsel for the Underwriters, it is necessary to amend or supplement
the Prospectus to comply with applicable law, forthwith to prepare, file with
the Commission and furnish, at its own expense, to the Underwriters and to the
dealers (whose names and addresses you will furnish to the Company) to which
Shares may have been sold by you on behalf of the Underwriters and to any other
dealers upon request, either amendments or supplements to the Prospectus so that
the statements in the Prospectus as so amended or supplemented will not, in the
light of the circumstances when the Prospectus is delivered to a purchaser, be
misleading or so that the Prospectus, as amended or supplemented, will comply
with law.
5.4. Blue Sky Laws.
To qualify the Shares for offer and sale under the securities or Blue
Sky laws of such jurisdictions as you shall reasonably request.
5.5. Earnings Statement.
To make generally available to its security holders as soon as
practicable, but in any event not later than eighteen (18) months after the
effective date of the Registration Statement (as defined in Rule 158(c) under
the Securities Act), an earnings statement of the Company and its subsidiaries
(which need not be audited) complying with Section 11(a) of the Securities Act
and the rules and regulations thereunder (including, at the option of the
Company, Rule 158).
5.6. Use of Proceeds.
The Company shall apply the net proceeds from the sale of the Shares
sold by it in the manner described under the caption "Use of Proceeds" in the
Prospectus.
5.7. Transfer Agent.
The Company shall engage and maintain, at its expense, a registrar and
transfer agent for the Common Stock.
5.8. Periodic Reporting Obligations.
During the Prospectus Delivery Period, the Company shall file, on a
timely basis, with the Commission and the Nasdaq National Market all reports and
documents required to be filed under the Exchange Act.
16
5.9. Exchange Act Compliance.
During the Prospectus Delivery Period, the Company will file all
documents required to be filed with the Commission pursuant to Section 13, 14 or
15 of the Exchange Act in the manner and within the time periods required by the
Exchange Act.
6. Conditions to the Underwriters' Obligations.
The obligations of the Sellers to sell the Shares to the several
Underwriters and the several obligations of the Underwriters to purchase and pay
for the Shares on the Closing Date are subject to the following conditions:
6.1. Effective Registration Statement.
The Registration Statement shall have become effective not later than
[__________],
New York City time, on the date hereof.
6.2. Rule 462 Registration Statement.
If the Company elects to rely upon Rule 462(b), the Company shall file
a Rule 462 Registration Statement with the Commission in compliance with Rule
462(b) by 10:00 P.M., Washington, D.C. time, on the date of this Agreement, and
the Company shall at the time of filing either pay to the Commission the filing
fee for the Rule 462 Registration Statement or give irrevocable instructions for
the payment of such fee pursuant to Rule 111(b) under the Securities Act.
6.3. Prospectus Filed with Commission.
The Company shall have filed the Prospectus with the Commission
(including the information required by Rule 430A under the Securities Act) in
the manner and within the time period required by Rule 424(b) under the
Securities Act; or the Company shall have filed a post-effective amendment to
the Registration Statement containing the information required by such Rule
430A, and such post-effective amendment shall have become effective.
6.4. No Stop Order.
No stop order suspending the effectiveness of the Registration
Statement, any Rule 462 Registration Statement, or any post-effective amendment
to the Registration Statement, shall be in effect and no proceedings for such
purpose shall have been instituted or threatened by the Commission.
6.5. No NASD Objection.
The NASD shall have raised no objection to the fairness and
reasonableness of the underwriting terms and arrangements.
17
6.6. No Debt Downgrading.
There shall not have occurred any downgrading, nor shall any notice
have been given of any intended or potential downgrading or of any review for a
possible change that does not indicate the direction of the possible change, in
the rating accorded any of the Company's securities by any "nationally
recognized statistical rating organization," as such term is defined for
purposes of Rule 436(g)(2) under the Securities Act.
6.7. No Material Adverse Change.
There shall not have occurred any change, or any development involving
a prospective change, in the condition, financial or otherwise, or in the
earnings, business or operations of the Company and its subsidiaries, taken as a
whole, from that set forth in the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement) that, in your
judgment, is material and adverse and that makes it, in your judgment,
impracticable to market the Shares on the terms and in the manner contemplated
in the Prospectus.
6.8. Officer's Certificate.
The Underwriters shall have received on the Closing Date a certificate,
dated the Closing Date and signed by the Chief Executive Officer or President of
the Company, to the effect set forth in Sections 6.4 and 6.7 above and to the
effect that the representations and warranties of the Company contained in this
Agreement are true and correct as of the Closing Date and that the Company has
complied with all of the agreements and satisfied all of the conditions on its
part to be performed or satisfied hereunder on or before the Closing Date.
6.9. Opinion of Company Counsel.
The Underwriters shall have received on the Closing Date an opinion of
Foulston Seifkin LLP, counsel for the Company, dated the Closing Date, the form
of which is attached hereto as Exhibit A. The opinion shall be rendered to the
Underwriters at the request of the Company and shall so state therein.
6.10. Opinion of Selling Stockholders Counsel.
The Underwriters shall have received on the Closing Date an opinion of
Foulston Seifkin LLP, counsel for the Selling Stockholders, dated the Closing
Date, the form of which is attached hereto as Exhibit B. The opinion shall be
rendered to the Underwriters at the request of the Selling Stockholders and
shall so state therein.
6.11. Opinion of Underwriters Counsel.
The Underwriters shall have received on the Closing Date an opinion of
▇▇▇▇▇▇ and ▇▇▇▇▇, LLP, counsel for the Underwriters, dated the Closing Date,
covering the matters referred to in Exhibit A, paragraphs (vi), (vii) and (ix)
(but only as to the statements in the Prospectus under "Description of Capital
Stock" and "Underwriters") and the statement after paragraph (xii). With respect
to the statement after paragraph (xii) of Exhibit A, such counsel may state that
their opinion and belief are based upon their participation in the preparation
of the Registration
18
Statement and Prospectus and any amendments or supplements thereto and review
and discussion of the contents thereof, but are without independent check or
verification, except as specified.
6.12. Accountant's Comfort Letter.
The Underwriters shall have received, on each of the date hereof and
the Closing Date, a letter dated the date hereof or the Closing Date, as the
case may be, in form and substance satisfactory to the Underwriters, from KPMG,
LLP, independent public accountants, containing statements and information of
the type ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial information
contained in the Registration Statement and the Prospectus; provided that the
letter delivered on the Closing Date shall use a "cut-off date" not earlier than
the date hereof.
6.13. Lock-Up Agreements.
The "lock-up" agreements, each substantially in the form of Exhibit C
hereto, between you and the officers and directors of the Company and the
Selling Stockholders, delivered to you on or before the date hereof, shall be in
full force and effect on the Closing Date.
6.14. Selling Stockholders Certificate.
The Underwriters shall have received on the Closing Date a certificate,
dated the Closing Date and signed by the Attorney-in-Fact of each Selling
Stockholder, to the effect that the representations and warranties of the
Selling Stockholders contained in this Agreement are true and correct as of the
Closing Date and that the Selling Stockholders have complied with all of the
agreements and satisfied all of the conditions on their part to be performed or
satisfied hereunder on or before the Closing Date.
6.15. Selling Stockholder Documents.
On the date hereof, the Company and the Selling Stockholders shall have
furnished for review by the Representatives copies of the Powers of Attorney and
Custody Agreements executed by each of the Selling Stockholders and such further
information, certificates and documents as the Representatives may reasonably
request.
6.16. Additional Documents.
On the Closing Date, the Representatives and counsel for the
Underwriters shall have received such information, documents and opinions as
they may reasonably require for the purposes of enabling them to pass upon the
issuance and sale of the Shares as contemplated herein, or in order to evidence
the accuracy of any of the representations and warranties, or the satisfaction
of any of the conditions or agreements, herein contained.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the satisfaction of each of the above conditions
on or prior to the Option Closing Date and to the delivery to you on the Option
Closing Date of such documents as you may reasonably request with respect to the
good standing of the Company, the due authorization and issuance of the
Additional Shares and other matters related to the issuance of the Additional
Shares.
19
7. Expenses.
Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, the Sellers agree to pay or cause
to be paid all expenses incident to the performance of their obligations under
this Agreement, including: (a) the fees, disbursements and expenses of the
Company's counsel, the Company's accountants and counsel for the Selling
Stockholders in connection with the registration and delivery of the Shares
under the Securities Act and all other fees or expenses in connection with the
preparation and filing of the Registration Statement, any preliminary
prospectus, the Prospectus and amendments and supplements to any of the
foregoing, including all printing costs associated therewith, and the mailing
and delivering of copies thereof to the Underwriters and dealers, in the
quantities hereinabove specified; (b) all costs and expenses related to the
transfer and delivery of the Shares to the Underwriters, including any transfer
or other taxes payable thereon; (c) the cost of printing or producing any Blue
Sky or legal investment memorandum in connection with the offer and sale of the
Shares under state securities laws and all expenses in connection with the
qualification of the Shares for offer and sale under state securities laws as
contemplated by Section 5.4 hereof, including filing fees and the reasonable
fees and disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky or legal investment
memorandum; (d) filing fees and the reasonable fees and disbursements of counsel
to the Underwriters incurred in connection with the review and qualification of
the offering of the Shares by the NASD; (e) all fees and expenses in connection
with the preparation and filing of the registration statement on Form 8-A
relating to the Common Stock and all costs and expenses incident to listing the
Shares on the Nasdaq National Market; (f) the cost of printing certificates
representing the Shares; (g) the costs and charges of any transfer agent,
registrar or depositary; (h) the costs and expenses of the Company relating to
investor presentations on any "road show" undertaken in connection with the
marketing of the offering of the Shares, including, without limitation, expenses
associated with the production of road show slides and graphics, fees and
expenses of any consultants engaged in connection with the road show
presentations with the prior approval of the Company, travel and lodging
expenses of the representatives and officers of the Company and any such
consultants, including the cost of any aircraft chartered in connection with the
road show, if any; (i) all expenses in connection with any offer and sale of the
Shares outside of the United States, including filing fees and the reasonable
fees and disbursements of counsel for the Underwriters in connection with offers
and sales outside of the United States; and (j) all other costs and expenses
incident to the performance of the obligations of the Company hereunder for
which provision is not otherwise made in this Section. It is understood,
however, that except as provided in this Section, Section 8 entitled "Indemnity
and Contribution", and the last paragraph of Section 11 below, the Underwriters
will pay all of their costs and expenses, including fees and disbursements of
their counsel and any advertising expenses connected with any offers they may
make.
The provisions of this Section shall not supersede or otherwise affect
any agreement that the Sellers may otherwise have for the allocation of such
expenses among themselves.
8. Indemnity and Contribution.
8.1. Indemnification of the Underwriters.
The Sellers jointly and severally agree to indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any and all losses, claims,
20
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you expressly
for use therein.
8.2. Indemnification by the Underwriters.
Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, the Selling Stockholders, the directors of the
Company, the officers of the Company who sign the Registration Statement and
each person, if any, who controls the Company or any Selling Stockholder within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
but only with reference to information relating to such Underwriter furnished to
the Company in writing by such Underwriter through you expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto.
8.3. Indemnification Procedures.
In case any proceeding (including any governmental investigation) shall
be instituted involving any person in respect of which indemnity may be sought
pursuant to this Section 8, such person (the "indemnified party") shall promptly
notify the person against whom such indemnity may be sought (the "indemnifying
party") in writing and the indemnifying party, upon request of the indemnified
party, shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (a) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (b) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for (x) the fees and expenses of
more than one separate firm (in addition to any local counsel) for all
Underwriters and all persons, if any, who control any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act; (y) the
21
fees and expenses of more than one separate firm (in addition to any local
counsel) for the Company, its directors, its officers who sign the Registration
Statement and each person, if any, who controls the Company within the meaning
of either such Section; and (z) the fees and expenses of more than one separate
firm (in addition to any local counsel) for all Selling Stockholders and all
persons, if any, who control any Selling Stockholder within the meaning of
either such Section, and that all such fees and expenses shall be reimbursed as
they are incurred. In the case of any such separate firm for the Underwriters
and such control persons of any Underwriters, such firm shall be designated in
writing by ▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners LLC. In the case of any such separate firm for
the Company, and such directors, officers and control persons of the Company,
such firm shall be designated in writing by the Company. In the case of any such
separate firm for the Selling Stockholders and such control persons of any
Selling Stockholders, such firm shall be designated in writing by the persons
named as attorneys-in-fact for the Selling Stockholders under the Powers of
Attorney. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (a) such settlement is
entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (b) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
8.4. Contribution Agreement.
To the extent the indemnification provided for in this Section 8 is
unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then each indemnifying party
under such paragraph, in lieu of indemnifying such indemnified party thereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (a) in such proportion as
is appropriate to reflect the relative benefits received by the indemnifying
party or parties on the one hand and the indemnified party or parties on the
other hand from the offering of the Shares or (b) if the allocation provided by
clause 8.6(a) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
8.6(a) above but also the relative fault of the indemnifying party or parties on
the one hand and of the indemnified party or parties on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Sellers on the one hand
and the Underwriters on the other hand in connection with the offering of the
Shares shall be deemed to be in the same respective proportions as the net
proceeds from the offering of the Shares (before deducting expenses) received by
each Seller and the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover of the
Prospectus, bear to the aggregate Public Offering Price of the Shares. The
relative fault of the Sellers on the one hand
22
and the Underwriters on the other hand 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 Sellers or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section 8 are several in proportion to the
respective number of Shares they have purchased hereunder, and not joint.
8.5. Contribution Amounts.
The Sellers and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 8 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in Section 8.6(a). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 8 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
8.6. Survival of Provisions.
The indemnity and contribution provisions contained in this Section 8
and the representations, warranties and other statements of the Company and the
Selling Stockholders contained in this Agreement shall remain operative and in
full force and effect regardless of (a) any termination of this Agreement, (b)
any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter, any Selling Stockholder or any person controlling
any Selling Stockholder, or the Company, its officers or directors or any person
controlling the Company and (c) acceptance of and payment for any of the Shares.
8.7. Limitation of Selling Stockholder Liability.
The liability of each Selling Stockholder under the indemnity
provisions of this Section 8 shall be limited to an amount equal to the initial
public offering price of the Shares sold by such Selling Stockholder, less the
underwriting discount, as set forth on the front cover page of the Prospectus.
The Company and the Selling Stockholders 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.
23
9. Effectiveness.
This Agreement shall become effective upon the execution and delivery
hereof by the parties hereto.
10. Termination.
This Agreement shall be subject to termination by notice given by you
to the Company, if (a) after the execution and delivery of this Agreement and
prior to the Closing Date (i) trading generally shall have been suspended or
materially limited on or by, as the case may be, any of the
New York Stock
Exchange, the American Stock Exchange, the National Association of Securities
Dealers, Inc., the Chicago Board of Options Exchange, the Chicago Mercantile
Exchange or the Chicago Board of Trade, (ii) trading of any securities of the
Company shall have been suspended on any exchange or in any over-the-counter
market, (iii) a general moratorium on commercial banking activities in
New York
or California shall have been declared by either federal authorities or
New York
or California state authorities or (iv) there shall have occurred any outbreak
or escalation of hostilities or any change in financial markets or any calamity
or crisis that, in your judgment, is material and adverse, or (v) in the
judgment of the Representatives, there shall have occurred any material adverse
change, or any development that could reasonably be expected to result in a
material adverse change, in the condition, financial or otherwise, or in the
earnings, business, operations or prospects, whether or not arising from
transactions in the ordinary course of business, of the Company and its
subsidiaries, taken as a whole; and (b) in the case of any of the events
specified in clauses 10(a)(i) through 10(a)(v), such event, individually or
together with any other such event, makes it, in your judgment, impracticable to
market the Shares on the terms and in the manner contemplated in the Prospectus.
11. Defaulting Underwriters.
If, on the Closing Date or the Option Closing Date, as the case may be,
any one or more of the Underwriters shall fail or refuse to purchase Shares that
it has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Shares set forth
opposite their respective names in Schedule A bears to the aggregate number of
Firm Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date; provided that in no event shall the number of
Shares that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 11 by an amount in excess of one-ninth of
such number of Shares without the written consent of such Underwriter. If, on
the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Shares to be purchased, and arrangements satisfactory to you, the Company and
the Selling Stockholders for the purchase of such Firm Shares are not made
within 36 hours after such default, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter, the Company or the
Selling Stockholders. In any such case either you or the relevant Sellers shall
have the right to postpone the Closing Date, but in no event for longer than
seven (7) days, in order that the required changes, if any, in the Registration
Statement and in the Prospectus or in any other documents or
24
arrangements may be effected. If, on the Option Closing Date, any Underwriter or
Underwriters shall fail or refuse to purchase Additional Shares and the
aggregate number of Additional Shares with respect to which such default occurs
is more than one-tenth of the aggregate number of Additional Shares to be
purchased, the non-defaulting Underwriters shall have the option to (a)
terminate their obligation hereunder to purchase Additional Shares or (b)
purchase not less than the number of Additional Shares that such non-defaulting
Underwriters would have been obligated to purchase in the absence of such
default. Any action taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of any Seller to comply with
the terms or to fulfill any of the conditions of this Agreement, or if for any
reason any Seller shall be unable to perform its obligations under this
Agreement, the Sellers will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
12. Counterparts.
This Agreement may be signed in counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument.
13. Headings; Table of Contents.
The headings of the sections of this Agreement and the table of
contents have been inserted for convenience of reference only and shall not be
deemed a part of this Agreement.
14. Notices.
All communications hereunder shall be in writing and shall be mailed,
hand delivered or telecopied and confirmed to the parties hereto as follows:
If to the Representatives:
▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
25
If to the Company:
Total Entertainment Restaurant Corporation
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: [____________]
Attention: [____________]
With a copy to:
Foulston Seifkin, LLP
Bank of America Center
▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: [____________]
Attention: [____________]
If to the Selling Stockholders:
Total Entertainment Restaurant Corporation
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: [____________]
Attention: [____________]
With a copy to:
Foulston Seifkin, LLP
Bank of America Center
▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: [____________]
Attention: [____________]
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
15. Successors.
This Agreement will inure to the benefit of and be binding upon the
parties hereto, including any substitute Underwriters pursuant to Section 11
hereof, and to the benefit of the officers and directors and controlling persons
referred to in Section 8, and in each case their respective successors, and no
other person will have any right or obligation hereunder. The term "successors,,
shall not include any purchaser of the Shares as such from any of the
Underwriters merely by reason of such purchase.
26
16. Partial Unenforceability.
The invalidity or unenforceability of any Section, paragraph or
provision of this Agreement shall not affect the validity or enforceability of
any other Section, paragraph or provision hereof. If any Section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, there shall be deemed to be made such minor changes (and only
such minor changes) as are necessary to make it valid and enforceable.
17. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF
NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO
BE PERFORMED IN SUCH STATE.
18. Consent to Jurisdiction.
Any legal suit, action or proceeding arising out of or based upon this
Agreement or the transactions contemplated hereby ("Related Proceedings") may be
instituted in the federal courts of the United States of America located in the
City and County of San Francisco or the courts of the State of California in
each case located in the City and County of San Francisco (collectively, the
"Specified Courts"), and each party irrevocably submits to the exclusive
jurisdiction (except for proceedings instituted in regard to the enforcement of
a judgment of any such court (a "Related Judgment"), as to which such
jurisdiction is non-exclusive) of such courts in any such suit, action or
proceeding. Service of any process, summons, notice or document by mail to such
party's address set forth above shall be effective service of process for any
suit, action or other proceeding brought in any such court. The parties
irrevocably and unconditionally waive any objection to the laying of venue of
any suit, action or other proceeding in the Specified Courts and irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any
such suit, action or other proceeding brought in any such court has been brought
in an inconvenient forum.
19. Failure of the Selling Stockholders to Sell and Deliver Shares.
If one or more of the Selling Stockholders shall fail to sell and
deliver to the Underwriters the Shares to be sold and delivered by such Selling
Stockholders at the Closing Date pursuant to this Agreement, then the
Underwriters may at their option, by written notice from the Representatives to
the Company and the Selling Stockholders, either (a) terminate this Agreement
without any liability on the part of any Underwriter or, except as provided in
Sections 7 and 8 hereof, the Company or the Selling Stockholders, or (b)
purchase the shares which the Company and other Selling Stockholders have agreed
to sell and deliver in accordance with the terms hereof. If one or more of the
Selling Stockholders shall fail to sell and deliver to the Underwriters the
Shares to be sold and delivered by such Selling Stockholders pursuant to this
Agreement at the Closing Date or the Option Closing Date, then the Underwriters
shall have the right, by written notice from the Representatives to the Company
and the Selling Stockholders, to postpone the Closing Date or the Option Closing
Date, as the case may be, but in no event for longer than seven (7) days in
order that the required changes, if any, to the Registration Statement and the
Prospectus or any other documents or arrangements may be effected.
27
20. Entire Agreement.
This Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter
hereof.
21. Amendments.
This Agreement may only be amended or modified in writing, signed by
all of the parties hereto, and no condition herein (express or implied) may be
waived unless waived in writing by each party whom the condition is meant to
benefit.
22. Sophisticated Parties.
Each of the parties hereto acknowledges that it is a sophisticated
business person who was adequately represented by counsel during negotiations
regarding the provisions hereof, including, without limitation, the
indemnification and contribution provisions of Section 8, and is fully informed
regarding said provisions. Each of the parties hereto further acknowledges that
the provisions of Section 8 hereto fairly allocate the risks in light of the
ability of the parties to investigate the Company, its affairs and its business
in order to assure that adequate disclosure has been made in the Registration
Statement, any preliminary prospectus and the Prospectus (and any amendments and
supplements thereto), as required by the Securities Act and the Exchange Act.
[Remainder of page intentionally left blank]
28
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
Very truly yours,
TOTAL ENTERTAINMENT RESTAURANT CORP.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
The Selling Stockholders
named in Schedule B hereto,
acting severally
By:
--------------------------------
Attorney-in-Fact
Accepted as of the date hereof:
▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners LLC
[NAME OF OTHER REPRESENTATIVE]
Acting severally on behalf
of themselves and the
several Underwriters named
in Schedule A hereto.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners LLC
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
29
SCHEDULE A
Number of Firm
Shares
Underwriter To Be Purchased
----------- ---------------
▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners LLC
[NAME OF OTHER REPRESENTATIVE]
[NAME OF OTHER UNDERWRITERS]
---------
Total 2,000,000
30
SCHEDULE B
Number of Firm
Shares
Selling Stockholder To Be Sold
------------------- --------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 180,000
▇▇▇▇▇▇▇▇ Family, LLC 20,000
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 75,000
Organized Capital II, Ltd. 100,000
▇▇▇▇▇▇ ▇▇▇▇▇ 150,000
▇. ▇▇▇▇▇ Hall, III 25,000
-------
Total 550,000
=======
31
EXHIBIT A
FORM OF LEGAL OPINION OF COMPANY COUNSEL
(i) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the state of Delaware, has the
corporate power and authority to own and lease its properties and to conduct its
business as described in the Prospectus and is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct of
its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(ii) Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to own
its property and to conduct its business as described in the Prospectus and is
duly qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
(iii) All of the issued shares of capital stock of each subsidiary of
the Company have been duly and validly authorized and issued, are fully paid and
non-assessable and are owned directly by the Company, free and clear of all
liens, encumbrances, equities or claims.
(iv) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus.
(v) The shares of Common Stock (including the Shares to be sold by the
Selling Stockholders) outstanding prior to the issuance of the Shares to be sold
by the Company have been duly authorized and are validly issued, fully paid and
non-assessable.
(vi) The Shares to be sold by the Company have been duly authorized
and, when issued and delivered in accordance with the terms of the
Underwriting
Agreement, will be validly issued, fully paid and non-assessable, and the
issuance of such Shares will not be subject to any preemptive or similar rights.
(vii) The
Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
(viii) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, the
Underwriting Agreement
will not contravene any provision of applicable law or the certificate of
incorporation or by-laws of the Company or, to the best of such counsel's
knowledge, any agreement or other instrument binding upon the Company or any of
its subsidiaries that is material to the Company and its subsidiaries, taken as
a whole, or, to the best of such counsel's knowledge, any judgment, order or
decree of any governmental body, agency or court having jurisdiction over the
Company or any subsidiary, and no consent, approval, authorization or order of,
or qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement, except such
as may be
A-1
required by the securities or Blue Sky laws of the various states in connection
with the offer and sale of the Shares.
(ix) The statements (A) in the Prospectus under the captions
"Description of Capital Stock" and "Underwriting" and (B) in the Registration
Statement in Item 15, in each case insofar as such statements constitute
summaries of the legal matters, documents or proceedings referred to therein,
fairly present the information called for with respect to such legal matters,
documents and proceedings and fairly summarize the matters referred to therein.
(x) To such counsel's knowledge, there are no legal or governmental
proceedings pending or threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties 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 so described or of any
statutes, regulations, contracts or other documents that are required to be
described or incorporated by reference in the Registration Statement or the
Prospectus or to be filed or incorporated by reference as exhibits to the
Registration Statement that are not described or filed or incorporated as
required.
(xi) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as described in
the Prospectus, will not be an "investment company" as such term is defined in
the Investment Company Act of 1940, as amended.
(xii) Each document filed by the Company pursuant to the Exchange Act
of 1934, as amended (the "EXCHANGE ACT"), (except for financial statements and
schedules and other financial and statistical data included therein as to which
such counsel need not express any opinion) and incorporated or deemed to be
incorporated by reference in the Prospectus complied when so filed as to form in
all material respects with the Exchange Act and such counsel has no reason to
believe that any of such documents, when they were so filed, contained an untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made when such documents where filed, not misleading.
Such counsel shall also state that (A) the Registration Statement and
Prospectus (except for financial statements and schedules and other financial
and statistical data included therein as to which such counsel need not express
any view) comply as to form in all material respects with the Securities Act of
1933, as amended, and the applicable rules and regulations of the Securities and
Exchange Commission thereunder, (B) no facts have come to the attention of such
counsel that would cause such counsel to believe that (except for financial
statements and schedules and other financial and statistical data as to which
such counsel need not express any belief) the Registration Statement therein at
the time the Registration Statement became effective contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and
(C) no facts have come to the attention of such counsel that would cause such
counsel to believe that (except for financial statements and schedules and other
financial and statistical data as to which such counsel need not express any
belief) the Prospectus contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
A-2
With respect to such statement, such counsel may state that their
opinion and belief are based upon their participation in the preparation of the
Registration Statement and Prospectus and any amendments or supplements thereto
and review and discussion of the contents thereof, but are without independent
check or verification, except as specified.
A-3
EXHIBIT B
FORM OF LEGAL OPINION OF SELLING STOCKHOLDERS COUNSEL
(i) The
Underwriting Agreement has been duly authorized, executed and
delivered by or on behalf of each of the Selling Stockholders.
(ii) The execution and delivery by each Selling Stockholder of, and the
performance by such Selling Stockholder of its obligations under, the
Underwriting Agreement and the Power of Attorney and Custody Agreement of such
Selling Stockholder will not contravene any provision of applicable law, or the
[articles/certificate] of incorporation or by-laws of such Selling Stockholder
(if such Selling Stockholder is a corporation), or, to such counsel's knowledge,
any agreement or other instrument binding upon such Selling Stockholder or, to
such counsel's knowledge, any judgment, order or decree of any governmental
body, agency or court having jurisdiction over such Selling Stockholder, and no
consent, approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by such Selling
Stockholder of its obligations under the
Underwriting Agreement or the Power of
Attorney and Custody Agreement of such Selling Stockholder, except such as may
be required by the securities or Blue Sky laws of the various states in
connection with offer and sale of the Shares.
(iii) Each of the Selling Stockholders has valid title to the Shares to
be sold by such Selling Stockholder and the legal right and power, and all
authorization and approval required by law, to enter into the
Underwriting
Agreement and the Power of Attorney and Custody Agreement of such Selling
Stockholder and to sell, transfer and deliver the Shares to be sold by such
Selling Stockholder.
(iv) The Power of Attorney and Custody Agreement of each Selling
Stockholder has been duly authorized, executed and delivered by such Selling
Stockholder and is a valid and binding agreement of such Selling Stockholder.
(v) Delivery of the Shares to be sold by each Selling Stockholder
pursuant to this Agreement will pass title to such Shares free and clear of any
security interests, claims, liens, equities and other encumbrances.
Such counsel shall also state that (A) the Registration Statement and
Prospectus (except for financial statements and schedules and other financial
and statistical data included therein as to which such counsel need not express
any view) comply as to form in all material respects with the Securities Act of
1933, as amended, and the applicable rules and regulations of the Securities and
Exchange Commission thereunder, (B) no facts have come to the attention of such
counsel that would cause such counsel to believe that (except for financial
statements and schedules and other financial and statistical data as to which
such counsel need not express any belief) the Registration Statement and the
prospectus included therein at the time the Registration Statement became
effective contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading and (C) no facts have come to the attention of
such counsel that would cause such counsel to believe that (except for financial
statements and schedules and other financial and statistical data as to which
such counsel need not express any belief) the Prospectus contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
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With respect to such statement, such counsel may state that their
opinion and belief are based upon their participation in the preparation of the
Registration Statement and Prospectus and any amendments or supplements thereto
and review and discussion of the contents thereof, but are without independent
check or verification, except as specified.
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▇▇▇▇ ▇▇ ▇▇▇▇-▇▇ ▇▇▇▇▇▇▇▇▇
, ▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
RE: LOCK-UP AGREEMENT (THE "AGREEMENT")
Ladies and Gentlemen:
The undersigned is an owner of record or beneficially of certain shares
of Common Stock, par value $.01 per share (the "COMMON STOCK"), of
Total
Entertainment Restaurant Corp., a Delaware corporation (the "COMPANY"), or
securities convertible into or exchangeable or exercisable for Common Stock. The
undersigned understands that you and the other Underwriters acting as
representatives, if any, (the "REPRESENTATIVES"), propose to enter into an
Underwriting Agreement, on behalf of the several Underwriters named in Schedule
A to such agreement (collectively, the "UNDERWRITERS"), with the Company and
certain holders of Common Stock providing for a public offering of the Common
Stock of the Company pursuant to a Registration Statement on form S-2 to be
filed with the Securities and Exchange Commission (the "PUBLIC OFFERING"). The
undersigned recognizes that the Public Offering will be of benefit to the
undersigned and will benefit the Company by, among other things, raising
additional capital for its operations. The undersigned acknowledges that you and
the other Underwriters are relying on the representations and agreements of the
undersigned contained in this letter in carrying out the Public Offering and in
entering into underwriting arrangements with the Company with respect to the
Public Offering.
To induce the Underwriters that may participate in the Public Offering
to continue their efforts in connection with the Public Offering, the
undersigned hereby agrees that, without the prior written consent of ▇▇▇▇▇▇
▇▇▇▇▇▇ Partners LLC (which consent may be withheld in its sole discretion), it
will not, during the period commencing on the date hereof and ending 90 days
after the date of the final prospectus relating to the Public Offering (the
"PROSPECTUS"), (1) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock, or (2) enter into any swap
or other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise. In addition, the
undersigned agrees that, without the prior written consent of ▇▇▇▇▇▇ ▇▇▇▇▇▇
Partners LLC (which consent may be withheld in its sole discretion), it will
not, during the period commencing on the date hereof and ending 90 days after
the date of the Prospectus, make any demand for or exercise any right with
respect to, the registration of any shares of Common Stock or any security
convertible into or
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exercisable or exchangeable for Common Stock. With respect to the Public
Offering, the undersigned waives any registration rights relating to
registration under the Securities Act of any Common Stock owned either of record
or beneficially by the undersigned, including any rights to receive notice of
the Public Offering.
The foregoing restrictions are expressly agreed to preclude the
undersigned from engaging in any hedging or other transaction which is designed
to or reasonably expected to lead to or result in a sale or disposition of the
Common Stock even if such Common Stock would be disposed of by someone other
than the undersigned. Such prohibited hedging or other transactions would
include without limitation any short sale or any purchase, sale or grant of any
right (including without limitation any put option or put equivalent position or
call option or call equivalent position) with respect to any of the Common Stock
or with respect to any security that includes, relates to, or derives any
significant part of its value from such Common Stock.
Notwithstanding the foregoing, the undersigned may transfer shares of
Common Stock (i) as a bona fide gift or gifts, provided that the donee or donees
thereof agree to be bound by the restrictions set forth herein, (ii) to any
trust for the direct or indirect benefit of the undersigned or the immediate
family of the undersigned, provided that the trustee of the trust agrees to be
bound by the restrictions set forth herein, and provided further that any such
transfer shall not involve a disposition for value, or (iii) to the Underwriters
pursuant to the Underwriting Agreement. For purposes of this Agreement,
"immediate family" shall mean any relationship by blood, marriage or adoption,
not more remote than first cousin. In addition, notwithstanding the foregoing,
if the undersigned is a corporation, the corporation may transfer the capital
stock of the Company to any wholly-owned subsidiary of such corporation;
provided, however, that in any such case, it shall be a condition to the
transfer that the transferee execute an agreement stating that the transferee is
receiving and holding such capital stock subject to the provisions of this
Agreement and there shall be no further transfer of such capital stock except in
accordance with this Agreement, and provided further that any such transfer
shall not involve a disposition for value.
The undersigned understands that whether or not the Public Offering
actually occurs depends on a number of factors, including stock market
conditions. The Public Offering will only be made pursuant to an Underwriting
Agreement, the terms of which are subject to negotiation among the Company and
the Underwriters.
The undersigned agrees and consents to the entry of stop transfer
instructions with the Company's transfer agent and registrar against the
transfer of shares of Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock held by the undersigned except in
compliance with the foregoing restrictions.
This Agreement is irrevocable and will be binding on the undersigned
and the respective successors, heirs, personal representatives, and assigns of
the undersigned.
Very truly yours,
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(Name)
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(Address)
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