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EXHIBIT 1.1
2,000,000 UNITS CONSISTING OF 2,000,000 SHARES OF COMMON STOCK
AND
2,000,000 REDEEMABLE CLASS A COMMON STOCK PURCHASE WARRANTS
FAMOUS DAVE'S OF AMERICA, INC.
UNDERWRITING AGREEMENT
____________, 1996
R. J. Steichen & Company
801 Nicollet Mall
1100 Midwest Plaza West
Minneapolis, MN 55402
Ladies and Gentlemen:
Famous Dave's of America, Inc., a Minnesota corporation (the
"COMPANY"), proposes to issue and sell to you (the "UNDERWRITER"), an aggregate
of 2,000,000 Units ("UNITS"), each Unit consisting of one share of Common Stock
("COMMON STOCK") and one Redeemable Class A Common Stock Purchase Warrant (the
"WARRANT") exercisable for a period of four (4) years commencing on the
effective date of the Registration Statement to purchase one share of Common
Stock of the Company at a price of $8.50 per share. The Warrants shall be
immediately exercisable and are detachable and transferable commencing ten (10)
trading days after the effective date of the Registration Statement under the
Act or at any earlier time agreed to by the Underwriter and the Company. The
Warrants shall be redeemable at the option of the Company at $.01 per Warrant
upon thirty (30) days' prior notice in writing of the Company's intention to
redeem, provided that the average closing bid price for the Common Stock shall
have averaged in excess of 120% of the exercise price per share for any 20
consecutive trading days prior to such notice, on the such other terms set
forth in the Preliminary Prospectus (defined herein).
The 2,000,000 Units to be purchased from the Company are referred to
herein as the "FIRM UNITS." In addition, solely for the purpose of covering
overallotments with respect to the Firm Units, the Company proposes to grant to
the Underwriter, for its account, the option to purchase up to an additional
300,000 Units (the "OPTION UNITS"). The Firm Units and any Option Units
purchased pursuant to this Underwriting Agreement are herein referred to as the
"UNITS."
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The Company hereby confirms its agreement with respect to the purchase
of the Units by the Underwriter.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, the several Underwriter as
follows:
(a) The Company has prepared in conformity in all
material respects with the requirements of the Securities Act of 1933,
as amended (the "ACT"), and the applicable rules and regulations of
the Securities and Exchange Commission (the "COMMISSION") thereunder,
and has filed with the National Office of the Commission in
Washington, D.C., a registration statement on Form SB-2, File No.
333-____________, including a Prospectus relating to the Units, and
will file with the Commission before the effective date of the
registration statement one or more amendments thereto. Copies of such
registration statement and amendments (including all forms of the
preliminary prospectus) have been delivered to you. Any such
preliminary prospectus (as described in Rule 430 under the Act)
included at any time as part of such registration statement is herein
called a "PRELIMINARY PROSPECTUS." As used herein, the term
"REGISTRATION STATEMENT" shall, except where the context otherwise
requires, mean said registration statement (and all exhibits thereto)
as amended by all amendments filed prior to its effective date; and
the term "PROSPECTUS" shall, except where the context otherwise
requires, mean said final prospectus on file with the Commission when
the Registration Statement becomes effective (except that, if the
prospectus filed by the Company pursuant to Rule 424(b) under Act
shall differ from the prospectus included in the Registration
Statement, the term "PROSPECTUS" shall, except where the context
otherwise requires, mean the prospectus so filed pursuant to Rule
424(b) from and after the date on which it shall have been first
used.) Reference herein to the Registration Statement, to any
Preliminary Prospectus, to the Prospectus or to any amendment of or
supplement to the Prospectus includes all documents and information
incorporated therein by reference.
(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus, and each Preliminary
Prospectus, at the time of filing thereof with the Commission, did not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; PROVIDED, HOWEVER, that none of
the representations and warranties in this subparagraph shall apply to
statements in, or omissions from, any Preliminary Prospectus which are
based upon and conform to written information furnished to the Company
by or on behalf of any Underwriter through either or both of you
specifically for use in the preparation thereof.
(c) When the Registration Statement becomes effective and
at all times subsequent thereto up to each Closing Date and upon the
effective date of any post-effective amendment to the Registration
Statement, the Registration Statement and the Prospectus, and any
amendments thereof or supplements thereto, will in all material
respects conform to the requirements of the Act and of the applicable
rules and regulations of the Commission thereunder (the "RULES AND
REGULATIONS"). When the
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Registration Statement becomes effective and at all times subsequent
thereto, up to each closing date and the effective date of any past
effective amendment to the Registration Statement, neither the
Registration Statement (as amended, if the Company shall have filed
with the Commission any post-effective amendment thereto), nor the
Prospectus, will include an untrue statement of a material fact or
omit to state any material fact 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; PROVIDED,
HOWEVER, that the Company makes no representations or warranties as to
information contained in or omitted from the Registration Statement or
the Prospectus, or any such amendment or supplement, in reliance upon
and in conformity with written information furnished to the Company by
either or both of you specifically for use in the preparation thereof.
There is no contract or document required to be described in the
Registration Statement or Prospectus, or to be filed as an exhibit to
the Registration Statement, which was not described or filed as
required.
(d) [Deleted]
(e) Lund Koehler Cox & Company the accountants who have
examined certain financial statements and schedules of the Company,
filed and to be filed with the Commission as part of the Registration
Statement and the Prospectus, are independent public accountants
within the meaning of the Act and the Rules and Regulations. The
financial statements of the Company, together with related notes and
summaries thereof, set forth in the Registration Statement and
Prospectus, in all material respects present fairly the financial
position and results of operations and changes in financial position
of the Company as of the dates and for the periods indicated. All
such financial statements (including the related notes) have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods concerned.
(f) Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus, and
other than as described in the Registration Statement and Prospectus,
(i) the Company has not incurred any material liabilities or
obligations, contingent or otherwise, or entered into any material
transaction, except obligations incurred in the ordinary course of
business that in the aggregate are not material; (ii) the Company has
not paid or declared any dividend or other distribution on its Common
Stock; (iii) there has not been any change in the Common Stock or
increase in the long-term debt of the Company (including any
capitalized lease obligation), or any issuance of options, warrants,
or rights to purchase Common Stock of the Company, or any material
adverse change in the business, financial position, results of
operations, key personnel, capitalization, properties, or net worth of
the Company, considered as a whole; and (iv) no material loss or
damage (whether or not insured) to the property of the Company has
been sustained.
(g) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with full power and authority to own
its properties and conduct its business as it is currently being
carried on and as described in the Prospectus and is duly qualified to
do business as a
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foreign corporation and is in good standing in all states or
jurisdictions in which the ownership or lease of property or the
conduct of its business requires such qualification and in which the
failure to so qualify would have a material adverse effect on its
business condition (financial or other), or properties. The Company
has all necessary and material authorizations, approvals and orders of
and from all governmental regulatory officials and bodies to own its
properties and conduct its business as described in the Prospectus and
is conducting its business in substantial compliance with all
applicable laws, rules and regulations of the jurisdictions in which
it is conducting business.
(h) The Company is not in violation of its articles of
incorporation, bylaws, or other governing documents and is not in
default in the performance of any obligation, agreement or condition
contained in any lease agreement or in any bond, debenture, note or
any other evidence of indebtedness or in any material contract,
indenture, loan agreement or license where such default would have a
material adverse effect on the business condition (financial or other)
or properties of the Company, considered as a whole which violation or
default has not been waived. The consummation of the transactions
herein contemplated and the fulfillment of the terms hereof will not
conflict with or result in a material breach of any of the terms or
provisions of, or constitute a material default under, the articles of
incorporation or bylaws, or order governing documents of the Company,
or any indenture, mortgage, agreement or other instrument to which the
Company is a party or by which it is bound, or to which any property
of the Company is subject, or conflict with or violate any law or any
order, rule or regulation, applicable to the Company of any court, or
of any federal or state regulatory body or administrative agency,
having jurisdiction over the Company or any of its properties which
conflict, breach or default has not been waived.
(i) The Company has the duly authorized and outstanding
capitalization as set forth in the Prospectus, as of June 30, 1996.
The outstanding Common Stock of the Company are duly authorized and
validly issued, fully paid and nonassessable. The Common Stock of the
Company conform in all material respects in substance to all
statements in relation thereto contained in the Registration Statement
and the Prospectus. The Company has all requisite power and authority
(corporate and other) to issue, sell, and deliver the Units, including
the Common Stock issuable upon exercise of the Warrants in accordance
with and upon the terms and conditions set forth in this Agreement and
in the Registration Statement and Prospectus; and all corporate action
required to be taken by the Company for the due and proper
authorization, issuance, sale, and delivery of the Units, including
the Common Stock issuable upon exercise of the Warrants has been
validly and sufficiently taken.
(j) The Company has full legal power, right and authority
(corporate and other) to enter into this Underwriting Agreement and to
perform and discharge its obligations hereunder, and this Underwriting
Agreement has been duly authorized, executed and delivered on behalf
of the Company and is the valid and binding obligation of the Company,
subject, as to the enforcement of remedies, to applicable bankruptcy,
insolvency, moratorium and other laws affecting the rights of
creditors generally, and
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except as enforceability of the indemnification or contribution
provisions may be limited by federal or state securities laws or
principles of public policy.
(k) The Company will apply the proceeds of the sale of
the Units by it substantially to the purposes set forth in the
Prospectus.
(l) To the best of the Company's knowledge, no approval,
authorization, consent or order of any public board or body (other
than in connection with or in compliance with the provisions of the
Act and the securities or Blue Sky laws of various jurisdictions) is
legally required for the sale of the Units by the Company.
(m) The Company has no subsidiaries.
(n) The Company has good and marketable title, free and
clear of all liens, encumbrances, equities, charges or claims, to all
of the property, real and personal, described in the Registration
Statement and Prospectus as being owned by it, except as otherwise set
forth in the Registration Statement and Prospectus and except for such
as are not in the aggregate material in relation to the property of
the Company considered as a whole and do not materially affect the
value of such property, and, except as otherwise stated in the
Registration Statement and Prospectus, has valid and binding leases to
the real and/or personal property described in the Registration
Statement and Prospectus as under lease to it with such exceptions as
could not materially interfere with the conduct of the business.
(o) There are no actions, suits or proceedings or
investigations pending before any court or governmental agency,
authority or body to which the Company is a party or of which the
business or property of the Company is the subject which, if decided
adversely, would have a material adverse effect on the general
affairs, condition (financial or other), business, properties, net
worth, or results of operations of the Company, and, to the best of
the Company's knowledge, no such actions, suits or proceedings are
threatened.
(p) The Company has not taken or will not take, directly
or indirectly, any action designed to or which has constituted or
which might reasonably be expected to cause or result in the
stabilization or manipulation as defined in the Securities Exchange
Act of 1934, as amended, of the price of the Company's securities to
facilitate the sale or resale of the Units.
(q) The Company has not, directly or indirectly, at any
time during the past five years (i) made any contributions to any
candidate for political office, or failed to disclose fully any
contribution in violation of law, or (ii) made any payment to any
state, Federal or foreign governmental officer or official, or other
person charged with similar public or quasi-public duties, other than
payments required or permitted by applicable law.
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(r) Except as described in the Prospectus and to the best
knowledge of the Company, the Company owns or possesses the right to
utilize all the patents, patent applications, trademarks, service
marks, trade names, trademark registrations, service mark
registrations, copyrights, licenses, inventions, trade secrets, and
similar rights necessary for the present conduct of its business as
described in the Prospectus, without any known conflict with the
asserted rights of others in respect of such matters. Except as may
be stated in the Prospectus, the Company has not received any notice
of any infringement of, or license or similar fees for, any patents,
patent applications, trademarks, service marks, trade names, trademark
registrations, service mark registrations, copyrights, licenses,
inventions, trade secrets, or other similar rights of others, or any
claim with respect thereto, which would have a material adverse effect
on the business of the Company.
(s) The Company has filed all necessary federal, state
and foreign income and franchise tax returns or if not filed, has
obtained all necessary extensions and has paid all taxes as shown as
due on any such returns; and there is no material tax deficiency which
has been asserted against the Company, and, to the best of the
Company's knowledge, the Company has no material obligation to pay any
taxes except as may be stated in the Prospectus.
(t) All prior offers or sales of the securities of the
Company were exempt from registration under the Act and all applicable
state blue sky laws.
(u) No securities of the Company have been sold within
three years prior to the date hereof, except as set out in Item 26 of
Part II of the Registration Statement.
(v) The Company knows of no outstanding claims for
services in the nature of a finder's fee or origination fee with
respect to the sale of the Units or Underwriter's Warrants (defined
hereinafter) hereunder resulting from its acts for which the
Underwriter may be responsible. The Company will indemnify the
Underwriter for and hold the Underwriter harmless against any claim
for such finder's fees or origination fees.
(w) Each contract to which the Company is a party and
which is filed as a part of or incorporated by reference into the
Registration Statement has been duly and validly executed, is in full
force and effect in all material respects in accordance with its
terms, and none of such contracts have been assigned by the Company,
and the Company knows of no present situation or condition or fact
which would prevent compliance by the Company with the terms of such
contracts, as amended to date. Except for amendments or modifications
of such contracts in the ordinary course of business, the Company has
no intention of exercising any right which it may have to cancel any
of its obligations under any of such contracts, and has no knowledge
that any other party to any of such contracts has any intention not to
render full performance under such contracts.
(x) The Company maintains insurance which is in full
force and effect, of the types and in an amount, in the judgment of
the Company and except as otherwise
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disclosed in the Prospectus, which is reasonable for its present
business taking into account its operations and assets, including, but
not limited to, insurance covering all personal property owned or
leased by the Company against theft, damage, destruction, acts of
vandalism and all other risks customarily insured against.
(y) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or
specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain
accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and
(iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
2. PURCHASE OF THE UNITS BY THE UNDERWRITER.
(a) On the basis of the representations and warranties
herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to the Underwriter, and the
Underwriter agrees to purchase from the Company, the Firm Units. The
purchase price for each Firm Unit shall be $5.52 per Unit.
(b) The Company hereby grants to the Underwriter, for its
account, an option to purchase from the Company, solely for the
purpose of covering overallotments in the sale of Firm Units, all or
any portion of an aggregate of 300,000 Option Units for a period of 45
days from the date hereof at the same purchase price per Option Unit
as the purchase price per Firm Unit set forth in Section 2(a) above.
3. DELIVERY OF AND PAYMENT FOR UNITS. Delivery of certificates
for the Firm Units and payment therefor shall be made at the offices of Maslon
Edelman Borman & Brand, PLLP (or such other place as mutually may be agreed
upon), at 10:00 a.m., Minneapolis, Minnesota time, on or before the third full
business day following the effective date of the Registration Statement (the
"FIRST CLOSING DATE").
The option to purchase Option Units granted in Section 2(b) hereof may
be exercised at any time or from time-to-time during the 45-day term thereof by
written notice to the Company from you. Such notice shall set forth the
aggregate number of Option Units as to which the option is being exercised, and
the time and date, not earlier than either the First Closing Date or the second
business day after the day on which the option shall have been exercised but
not later than the third full business day after the date of such exercise, as
determined by you, when the Option Units are to be delivered (the "SECOND
CLOSING DATE"). Delivery and payment for such Option Units to be purchased by
you are to be at the offices set forth above for delivery and payment of the
Firm Units. The First Closing Date and the Second Closing Date are sometimes
herein individually called the "CLOSING DATE" and collectively called the
"CLOSING DATES."
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Delivery of facsimile certificates for the Units shall be made by or
on behalf of the Company to you against payment by you of the purchase price
therefor by wire transfer or certified or official bank check to the order of
the Company. The certificates for such Units shall be registered in such names
and denominations as you shall have requested at least two full business days
prior to the applicable Closing Date. Time shall be of the essence and
delivery at the time and place specified in this Agreement is a further
condition to your obligations hereunder.
4. COVENANTS OF THE COMPANY. The Company covenants and agrees
with each Underwriter that:
(a) The Company will use its best efforts to cause the
Registration Statement to become and remain effective, up to each
Closing Date. The Company will notify you promptly of any request by
the Commission for any amendment of or supplement to the Registration
Statement or the Prospectus or for additional information, will
prepare and file with the Commission, promptly upon your request, any
amendments of or supplements to the Registration Statement or
Prospectus which, in your reasonable opinion, may be necessary or
advisable in connection with the distribution of the Units; and will
not file any amendments and supplements to the Registration Statement
as originally filed with the Commission unless it shall first have
delivered copies of such amendments or supplements to you, or file any
such amendment or supplement to which you shall have reasonably
objected in writing to the Company. The Company will immediately
advise you by telephone, confirming such advice in writing (i) when
notice is received from the Commission that the Registration Statement
has become effective, (ii) of any order suspending the effectiveness
of the Registration Statement or of any proceedings or examination
under the Act, as soon as the Company is advised thereof, and (iii) of
any order or communication of any public authority addressed to the
Company suspending or threatening to suspend qualification of the
Units for sale in any state. The Company will use its best efforts to
prevent the issuance of any stop order or other such order, and,
should a stop order or other such order be issued, to obtain as soon
as possible the lifting thereof.
(b) If, at any time when a prospectus relating to the
Units is required to be delivered under the Act, any event shall have
occurred as a result of which, in the opinion of counsel for the
Company or in the reasonable opinion of counsel for you, the
Prospectus, as then amended or supplemented, includes an untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or if it is necessary at any time to amend or
supplement the Prospectus to comply with the Act, the Company will
notify you promptly and prepare and file with the Commission an
appropriate amendment or supplement.
(c) The Company will use its best efforts to take or
cause to be taken all necessary action and furnish to whomever you may
reasonably direct such information as may be required in qualifying
the Units for offering and sale under the Blue Sky or securities laws
of such states as you and the Company shall designate. The Company
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shall not, however, be required to register or qualify as a foreign
corporation or as a dealer in securities or, except as to matters and
transactions related to the offering or sale of the Units, consent to
service of process in any state.
(d) The Company will furnish to each of the several
Underwriter, from time to time and without charge, copies of the
Registration Statement, each Preliminary Prospectus, the Prospectus
(including all documents from which information is incorporated by
reference), and all amendments of and supplements to any of such
documents, in each case as soon as available and in such quantities as
you may from time to time reasonably request for the purposes
contemplated by the Act. The Company authorizes the several
Underwriter and all dealers to whom any of the Units may be sold by
the Underwriter to use the Preliminary Prospectuses and Prospectuses
supplied, as from time to time amended or supplemented, in connection
with the sale of the Units as and to the extent permitted by federal
and applicable state and local securities laws.
(e) The Company will furnish to each of you two copies of
the Registration Statement and all amendments thereof which are signed
and include all exhibits and schedules.
(f) The Company will for a period of five (5) years after
the Effective Date, furnish directly to you, and to each Underwriter
who may so request in writing, as soon as the same shall be sent to
shareholders generally, copies of all annual or interim shareholder
reports of the Company, and will, for the same period, also furnish
each of you, and to each Underwriter who may so request in writing,
with the following:
(i) two copies of any report, application, or
document (other than exhibits, which, however, will be
furnished on request) which the Company shall file with the
Commission or any securities exchange;
(ii) as soon as the same shall be sent to
shareholders generally, copies of each communication which
shall be sent to shareholders; and
(iii) from time to time such other information
concerning the Company as you may reasonably request, provided
that the Company shall not be required to furnish any
information pursuant hereto that is not furnished to its
shareholders or not otherwise made publicly available.
(g) The Company will, for a period of two (2) years after
the Effective Date, furnish directly to you, quarterly profit and loss
statements, reports of the Company's cash flow, and statements of
application of the proceeds of the offering contained in reports or
statements filed by the Company with the Commission.
(h) The Company will make generally available to its
security holders as soon as practicable, but in any event not later
than eighteen months after the effective date of the Registration
Statement, a statement of earnings of the Company (which need not be
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audited) complying with Section 11(a) of the Act and the rules and
regulations of the Commission thereunder (including at the option of
the Company Rule 158).
(i) Whether or not this Agreement becomes effective or is
terminated or cancelled or the sale of the Units to you is
consummated, and regardless of the reason for or cause of any such
termination, cancellation, or failure to consummate, the Company will
pay or cause to be paid (A) all expenses (including any transfer
taxes) incurred in connection with the delivery to you of the Units,
(B) all expenses and fees (including, without limitation, fees and
expenses of the Company's accountants and counsel, excluding, however,
fees of the Underwriter' counsel) in connection with the preparation,
printing, filing, delivery, and shipping of the Registration Statement
(including the financial statements therein and all amendments,
schedules, and exhibits thereto), each Preliminary Prospectus, the
Prospectus, and any amendment thereof or supplement thereto, (C) all
fees and expenses, including all Company counsel fees, (D) fees and
expenses of the Underwriter's counsel, incurred in connection with the
qualification of the Units for offering and sale by the Underwriter or
by dealers under the securities or Blue Sky laws of the states and
other jurisdictions which you and the Company mutually shall designate
in accordance with Section 4(c) hereof, (E) subject to the further
provisions of this Section 4(i), all fees and expenses, including all
counsel fees, excluding, however, fees of the Underwriter's counsel,
incurred in connection with the review of the offering by the National
Association of Securities Dealers, Inc. and listing fees, if any, (F)
all costs and expenses incident to qualification with The Nasdaq
SmallCap Market, (G) postage and express charges and other expenses in
connection with delivery of the Preliminary and Final Prospectus to
the Underwriter, and (G) all other costs and expenses incident to the
performance of their obligations hereunder that are not otherwise
specifically provided for herein. In addition to and not in lieu of
the foregoing, the Company shall pay to the Underwriter on each
Closing Date, for out-of-pocket expenses (including fees of
Underwriter's counsel), a nonaccountable expense allowance equal to
two percent (2%) of the aggregate purchase price for the Units sold to
the Underwriter on each Closing Date. If the Underwriter withdraws
from the sale of the Units as herein proposed for any reason other
than its inability to sell the Units and through no other fault of its
own, or if the sale of the Units as herein proposed is abandoned by
the Company, the Company will reimburse the Underwriter in the amount
of all accountable expenses (including fees and disbursements of
counsel) incurred by the Underwriter in connection with the
contemplated purchase, offer, and sale of the Units, including without
limitation, expenses incurred in their investigation, preparation to
market, and marketing of the Units, and in contemplation of performing
and in performance of its obligations hereunder, up to an aggregate of
$_______________, such expenses and fees to be evidenced by
appropriate receipts, invoices, or other documentation.
(j) The Company will cause each officer and director of
the Company, and Okabena Partnership K, to furnish to the Underwriter,
on or prior to the date of this Agreement, a letter or letters, in
form and substance satisfactory to counsel for the Underwriter,
pursuant to which each such person shall agree not to offer for sale,
sell, distribute or otherwise dispose of any securities of the Company
for a period of twelve
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(12) months from the date hereof as to David W. Anderson, Kathryn W.
Anderson and Okabena Partnership K, and for a period of six (6) months
from the date hereof as to all officers and directors of the Company
not mentioned immediately above.
(k) The Company will not, during the 180 days following
the effective date of the Registration Statement, except with your
prior written consent, offer for sale, sell, distribute, or otherwise
dispose of any Common Stock or sell or grant options, rights, or
warrants with respect to any Common Stock (except for the grants,
options, rights, warrants or convertible securities pursuant to the
Company's 1995 Stock Option and Incentive Compensation Plan),
otherwise than in accordance with this Agreement or as contemplated by
the Prospectus.
(l) The Company authorizes the Underwriter and all
dealers to whom any of the Units may be sold by the Underwriter in
connection with the distribution of the Units, to use the Prospectus
as from time to time amended or supplemented in connection with the
offering and sale of the Units and in accordance with the applicable
provisions of the Act and the applicable Rules and Regulations and
applicable state "blue sky" or securities laws.
(m) The Company shall not request an effective date nor
allow the Registration Statement to be declared effective without the
prior approval of the Underwriter.
(n) Within the time during which the Prospectus is
required to be delivered under the Act, the Company will comply, at
its own expense, with all requirements imposed upon it by the Act, by
the Rules and Regulations, by the Exchange Act, and by any order of
the Commission, so far as necessary to permit the continuance of sales
or dealings in the Units.
(o) The Company agrees to file with the Commission all
required reports on Form SR in accordance with the provisions of Rule
463 promulgated under the Act and to provide a copy of such reports to
the Underwriter and its counsel.
(p) The Company shall file an application and take all
other steps necessary to have the Units listed on The Nasdaq SmallCap
Market on or prior to the effective date of the Registration Statement
under the Act.
(q) The Company will reserve and keep available that
maximum number of its authorized but unissued shares of Common Stock
which are issuable upon exercise of Units and the Underwriter's
Warrant during the term of the Units and the Underwriter's Warrant.
(r) Prior to the Closing Date, no discussions will be
held by officers, directors or any other affiliate or associate of the
Company with any member of the news media and no news release or other
publicity about the Company will be permitted without prior approval
of the Company's and the Underwriter's respective legal counsel.
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(s) The Company shall have obtained a CUSIP number for
the Units (and its components) prior to the effective date of the
Registration Statement under the Act.
(t) The Company shall supply to the Underwriter, and its
legal counsel, at the Company's cost, one complete bound volume of all
of the documents relating to the public offering, within a reasonable
time after the Closing Date, not to exceed four (4) months. The
volume shall be hard cover bound in book format.
(u) The Company will apply the proceeds from the sale of
the Units by it to the purposes and in the manner set forth in the
Registration Statement and, pending such application, shall invest
such net proceeds only in one or more of the following, except as
otherwise provided by prior written consent of the Underwriter: (i)
interest-bearing obligations issued by the United States Government or
issued by an agency or instrumentality of the United States Government
and guaranteed by the United States Government and having a maturity
not in excess of one year, (ii) interest-bearing domestic commercial
paper having a maturity of not more than 365 days and, at the time of
purchase by the Company, rated investment grade by Moody's Investors
Service, Inc. or Standard & Poor's Corporation, (iii) interest-bearing
certificates of deposit issued by a commercial bank chartered by the
United States Government or by any state of the United States having
shareholders' equity of at least $500,000,000 except that the
foregoing notwithstanding, the Company may invest no more than
$100,000 of such net proceeds in certificates of deposit issued by any
such commercial bank regardless of shareholders' equity, and (iv)
shares or other units of interest in a registered open-ended
investment company the assets of which aggregate at least $200,000,000
and are invested solely in so-called "money market" obligations.
5. CONDITIONS OF UNDERWRITER' OBLIGATIONS. The obligations of
the several Underwriter herein shall be subject to the accuracy of the
representations and warranties on the part of the Company herein as of the date
hereof, and as of each Closing Date, to the accuracy of the written statements
of Company officers made pursuant to the provisions hereof, to the performance
by the Company of its obligations hereunder and to the following additional
conditions:
(a) The Registration Statement shall have become
effective not later than 5:00 P.M., Minneapolis, Minnesota time, on
the date of this Agreement or on such later time and date as shall be
satisfactory to the Underwriter, no stop order suspending the
effectiveness of the Registration Statement or any amendment thereof
or supplement or the qualification of the Units for offering or sale
shall have been issued and no proceedings for that purpose shall have
been instituted or shall be pending or, shall be threatened by the
Commission or by any state securities authority, and any request of
the Commission for additional information (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been
complied with to the Underwriter's satisfaction.
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(b) The Underwriter shall not have advised the Company
that the Registration Statement or Prospectus, or any amendment
thereof or supplement thereto, contains an untrue statement of fact
that, in the Underwriter's reasonable opinion, is material, or omits
to state a fact that, in your reasonable opinion, is material and is
required to be stated therein or is necessary to make the statements
therein not misleading provided that this Section 5(b) shall not apply
to statements in, or omissions from, the Registration Statement or
Prospectus, or any amendment thereof or supplement thereto that are
based upon and conform to written information provided by the
Underwriter specifically for use in the Registration Statement or
Prospectus.
(c) On or prior to each Closing Date, the form and
validity of the Units, the legality and sufficiency of the corporate
proceedings and matters relating to the incorporation of the Company
and other matters incident to the issuance of the Units, the form of
the Registration Statement and the Prospectus and of any amendments
thereof or supplements thereto filed prior to such Closing Date (other
than financial statements and schedules and other financial or
statistical data included therein), the authorization, execution, and
delivery of this Agreement and the description of the Units contained
in the Prospectus shall have been reasonably approved by the
Underwriter. In connection with such determination, the Company shall
have furnished to the Underwriter such documents as you may have
requested for the purpose of enabling the Underwriter to pass upon
such matters.
(d) On each Closing Date there shall have been furnished
to the Underwriter, the favorable opinion (addressed to the
Underwriter) of Maslon Edelman Borman & Brand, PLLP, counsel for the
Company, dated such Closing Date, and in form reasonably satisfactory
to counsel for the Underwriter, to the effect that:
(i) The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the
State of Minnesota, with corporate power and authority to own
or lease its properties and conduct its business as described
in the Prospectus. The Company has no subsidiaries other than
as described in the Prospectus.
(ii) The authorized capital stock of the Company as
of the date of this Agreement is as set forth in the
Prospectus. The outstanding shares of the Common Stock of the
Company have been duly authorized and validly issued and are
fully paid and nonassessable. The Units (and their
components) have been duly authorized and, upon issuance,
delivery and payment therefor as described in this Agreement,
will be validly issued, fully paid and nonassessable. The
shares of Common Stock underlying the Warrants have been duly
authorized and reserved for issuance and when issues, sold and
delivered in accordance with the terms of the Warrant, will be
validly issued, fully paid and nonassessable. The issuance,
sale and delivery of the Underwriter's Warrant has been duly
authorized and the shares (the "WARRANT SHARES") of Common
Stock issuable upon the exercise thereof have been reserved
for issuance upon such exercise. The Warrant Shares, when
issued, sold and delivered in accordance with the terms of
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the Underwriter's Warrant, will be validly issued, fully paid
and nonassessable. No preemptive rights of, or rights of
refusal in favor of, stockholders of the Company exist with
respect to the Units (or any component thereof), the
Underwriter's Warrant or the Warrant Shares, or the issue and
sale thereof, pursuant to the Company's Articles of
Incorporation or Bylaws.
(iii) The authorized securities of the Company
conforms as to legal matters in all material respects to the
description thereof set forth in the Prospectus under the
caption "Description of Securities." The certificates
representing the Warrants and the Common Stock are in proper
form under the Minnesota Business Corporation Act.
(iv) The Registration Statement has become effective
under the Securities Act and, to such counsel's knowledge, no
stop order suspending the effectiveness of the Registration
Statement or suspending or preventing the use of the
Prospectus is in effect and, to our knowledge, no proceedings
for that purpose have been instituted or are pending by the
Commission. The registration of the Company's securities on
Form 8-A has become effective under the Securities Exchange
Act of 1934, as amended, and no stop order suspending the
effectiveness of such registration, and, to such counsel's
knowledge, no proceedings for that purpose have been
instituted or are pending by the Commission.
(v) The Registration Statement and the Prospectus
comply as to form in all material respects with the
requirements of the Securities Act and with the Rules and
Regulations, except the financial statements, the notes
thereto and the related schedules and other financial and
statistical data contained therein, as to which we express no
opinion.
(vi) Counsel knows of no contracts, leases,
documents or pending legal proceedings that are required to be
described in the Prospectus or to be filed as exhibits to the
Registration Statement that are not so described or filed.
(vii) The Underwriting Agreement, the Warrant
Agreement and the Underwriter's Warrant have been duly
authorized by all requisite corporate action, executed and
delivered by the Company and constitute the valid and binding
obligations of the Company enforceable in accordance with
their respective terms.
(viii) The execution and delivery of the Underwriting
Agreement and the issue and sale of the Underwriter's Warrant,
the Units (and their components) and the shares underlying the
Warrant will not violate or conflict with the Articles of
Incorporation or the Bylaws of the Company or any material
provision of any material contract or instrument filed as an
exhibit to the Registration Statement to which the Company is
a party or by which the Company is bound (other than any
violation of or conflict with any financial tests or covenants
contained therein,
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as to which counsel need express no opinion) or any law
of the United States or the State of Minnesota, any rule or
regulation of any governmental authority or regulatory body of
the United States or the State of Minnesota, or any judgment,
order or decree known to us and applicable to the Company of
any court or governmental authority.
(ix) No holders of capital stock of the Company, or
securities convertible into capital stock of the Company, have
the right to cause the Company to include such holder's
capital stock in the Registration Statement pursuant to the
Company's Articles of Incorporation or Bylaws or any contract
or agreement.
(x) No consent, approval, authorization or order of,
and no notice to or filing with, any governmental agency or
body or any court is required to be obtained or made by the
Company for the issue and sale of the Units pursuant to the
Underwriting Agreement, except such as have been obtained or
made and such as may be required under applicable state
securities or blue sky laws or by the National Association of
Securities Dealers, Inc., as to which we express no opinion.
Although counsel to the Company cannot guarantee the
accuracy and completeness of the statements contained in the
Registration Statement or in the Prospectus, on the basis of
discussions and meetings with officers of the Company, representatives
of the Company's independent auditors, the Underwriter and counsel to
the Underwriter, our participation in the preparation of the
Registration Statement and the Prospectus, our examination of the
documents referred to in the Registration Statement and in the
Prospectus, and our procedures forming the basis of the opinions
expressed above, nothing came to our attention that led us to believe
that the Registration Statement, as of the date it was declared
effective, contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or that the Prospectus, as
of its date or on the date hereof, contained or contains an untrue
statement of a material fact or omitted or omits to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (provided that we express no view with respect to the
content of financial statements, the notes thereto and the related
schedules and other financial or statistical data included in the
Registration Statement or the Prospectus or as to statements in the
Registration Statement or Prospectus which are based on and conform to
written information furnished to the Company by or on your behalf
specifically for use in the preparation thereof).
In rendering such opinion, such counsel may rely (A) as to
questions of the law of jurisdictions other than the State of
Minnesota or the United States upon an opinion or opinions (dated the
Closing Date, addressed to the Underwriter and in form satisfactory to
the Underwriter) of counsel acceptable to the Underwriter and (B) as
to matters of fact, to the extent they deem proper, on certificates of
appropriate officers of
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the Company, of the transfer agent and registrar for the Units and of
public officials; PROVIDED, such opinions and certificates must be
attached to the opinion of counsel.
(e) At the time of execution of this Agreement, the
Underwriter shall have received from Lund Koehler Cox & Company a
letter dated the date of such execution, in form and substance
satisfactory to the Underwriter, to the effect that they are
independent accountants with respect to the Company within the meaning
of the Act and the applicable published instructions, and Regulations
thereunder, and further stating in effect that:
(i) In their opinion, the audited financial
statements included in the Registration Statement and
Prospectus covered by their report included therein, comply as
to form in all material respects with the applicable
requirements of the Act and the published instructions, and
Regulations, thereunder.
(ii) On the basis of (A) a reading of the minutes
of the shareholders' and directors' meetings of the Company,
since March 14, 1994, (B) inquiries of certain officials of
the Company responsible for financial and accounting matters,
(C) a reading of the Company's monthly operating statements
subsequent to March 14, 1994, and (D) other specified
procedures and inquiries (but not an audit in accordance with
generally accepted auditing standards), nothing came to their
attention causing them to believe that:
(1) that the unaudited financial
statements of the Company, contained in the
Prospectus and any amendment thereof or supplement
thereto, do not comply as to form, in all material
respects, with the applicable accounting requirements
of the Act and the published Rules and Regulations or
were not prepared in conformity with generally-
accepted accounting principles and practices applied
on a basis consistent in all material respects with
those followed in the preparation of, the audited
financial statements of the Company included therein;
or
(2) that the unaudited amounts of
revenues, income before provision for income taxes,
net income and ratio of earnings to fixed charges of
the Company contained in the Prospectus, or any
amendment thereof or supplement thereto, were not
derived from financial statements prepared in
conformity with generally-accepted accounting
principles and practices applied on a basis
consistent in all material respects with those
followed in the preparation of the audited financial
statements of the Company included therein; or
(3) that the unaudited pro forma
financial statements of the Company and
recently-acquired companies, if any, contained in the
Prospectus or any amendment thereof or supplement
thereto, were not properly compiled in accordance
with generally-accepted accounting
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principles or did not provide for all adjustments
necessary for a fair presentation of the information
purported to be shown thereby; or
(4) with respect to the period
subsequent to June 30, 1996, there were, at a
specified date, not more than five (5) business days
prior to the date of the letter, any changes or any
material increases or decreases in capital stock,
long-term or short-term debt or shareholders' equity,
decreases in net assets, net current assets, or net
worth or any material decrease, as compared with the
corresponding period of the prior year, in revenues
or net income of the Company as compared with the
amounts shown in the June 30, 1996 balance sheet
included in the Registration Statement, except as
disclosed or referred to in the Prospectus and
Registration Statement.
(iii) Certain information set forth on the cover of
the Prospectus and page 3 of the Prospectus, and in the
Prospectus under the headings "Prospectus Summary," "Summary
Financial Information," "Risk Factors," "Use of Proceeds,"
"Dilution," "Capitalization," "Management's Discussion and
Analysis of Financial Condition and Results of Operations,"
"Business," "Management," "Certain Transactions," "Principal
Shareholders," "Description of Securities" and "Shares
Eligible for Future Sale" and that are expressed in dollars
(or percentages derived from dollar amounts) or numbers have
been compared to accounting records of the Company which were
subject to the internal accounting controls of the Company and
are in agreement with such records or computations made
therefrom, excluding any questions of legal interpretation.
(f) The Underwriter shall have received from Lund Koehler
Cox & Company a letter dated as of each Closing Date, to the effect
that such accountants reaffirm, as of such Closing Date, and as though
made on such Closing Date, the statements made in the letter furnished
by such accountants pursuant to subparagraph (e) of this Section 5,
except that the specified date referred to in such letter will be a
date not more than five (5) business days prior to such Closing Date.
(g) At each Closing Date, the Company shall have
performed all material obligations and satisfied all material
conditions on its part to be performed or satisfied on or prior
thereto (except any condition satisfaction of which shall have been
waived as herein provided) and compliance with the provisions of this
subparagraph (g) shall be evidenced by a certificate of an executive
officer of the Company.
(h) On each Closing Date there shall have been furnished
to you a certificate, dated as of such Closing Date and addressed to
the Underwriter, signed by the principal executive officer and
principal financial officer of the Company to the effect that:
(i) the representations and warranties and covenants
of the Company in this Agreement are true and correct in all
material respects as if made at and as of such Closing Date
and the Company has complied in all material respects with
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all the agreements and satisfied all the material conditions
on its part to be performed or satisfied hereunder at or prior
to such Closing Date;
(ii) no stop order or other order suspending the
effectiveness of the Registration Statement or any amendment
or supplement thereto or the qualification of the Units for
offering or sale has been issued and no proceedings for that
purpose have been instituted or are pending or, to the
knowledge of the respective signers thereof, are threatened by
the Commission or any state or regulatory body;
(iii) neither the Registration Statement, as of the
date it was declared effective, nor the Prospectus, as of its
date and the Closing Date, included 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,
in light of the circumstances under which they were made, not
misleading; (B) since the effective date of the Registration
Statement, no event has occurred which should have been set
forth in an amendment or supplement to the Prospectus which
has not been set forth in such an amendment or supplement; (C)
subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus and except
as set forth in or contemplated by the Prospectus, the Company
has not incurred any material liability or obligation, direct
or contingent, whether or not in the ordinary course of
business, or entered into any material transaction, outside of
the ordinary course of business, and there has not been any
material change in the Common Stock, or any increase in the
short-term or long-term debt, including any capitalized lease
obligation (other than in the ordinary course of its business
and in an amount which is not material) or any issuance of
options, warrants, convertible securities or other rights to
purchase the Common Stock of the Company or any material
adverse change in the general affairs, business, key
personnel, capitalization or financial position of the Company
considered as a whole (other than the issuance of Common Stock
pursuant to existing options); and subsequent to the date of
the Underwriting Agreement, the Company has not sustained any
material loss or damage to its property or interference with
its business by strike, fire, flood, accident or other
calamity, whether or not any of the foregoing is insured, that
would have a material adverse effect upon the Company
considered as a whole, (D) the projection of the Company
previously presented to the Underwriter showing that the
Company will be able to meet the maintenance requirements for
listing on The Nasdaq National Market for a period of 24
months from the date hereof, were prepared in good faith and
continue to represent the signers' best present estimate of
the Company's financial condition following the Closing of the
sale of the Units.
(i) The Company shall deliver to the Underwriter a Blue
Sky Memorandum reasonably satisfactory to you from Doherty, Rumble &
Butler, P.A., confirming that all requisite action for the offer and
sale of the Units in all jurisdictions requested has been taken.
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(j) The Underwriter shall have received "lock up"
agreements, in form and substance acceptable to the Underwriter, from
(i) David W. Anderson and Kathryn W. Anderson, and Okabena Partnership
K, restricting the sale, assignment or other conveyance of any of
their securities of the Company without the prior written consent of
the Underwriter for a period of twelve (12) months from the effective
date of the Registration Statement under the Act; and (ii) from all
directors and officers of the Company (not included in (i) above)
restricting the sale, assignment or other conveyance of any securities
of the Company without the prior written consent of the Underwriter
for a period of six (6) months from the effective date of the
Registration Statement under the Act.
(k) The Company's Units (and the securities comprising
the Units) shall be listed on The Nasdaq SmallCap Market on or prior
to the effective date of the Registration Statement under the Act.
(l) Prior to the First Closing, the number of issued and
outstanding shares of common stock of the Company shall not exceed
3,356,250 shares, and there shall be no material change in the
capitalization of the Company without the prior written consent of the
Underwriter.
(m) The Company's Units (and the securities comprising
the Units) shall be registered under the Securities Exchange Act of
1934, as amended, pursuant to Form 8-A, on or prior to the effective
date of the Registration Statement under the Act.
(n) The Company shall have furnished to the Underwriter
and Doherty, Rumble & Butler, P.A., counsel for the Underwriter, such
further certificates and documents as the Underwriter's counsel may
reasonably request, relating to the fulfillment of the conditions set
forth in this Section 5.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
to the Underwriter and to counsel for the Underwriter. The Company will
furnish you with such conformed copies of such opinions, certificates, letters,
and other documents as you shall reasonably request. The Underwriter may waive
in writing the performance of any one or more of the conditions specified in
this Section 5 or extend the time for their performance.
If any of the conditions specified in this Section 5 shall not have
been fulfilled when and as required by this Agreement to be fulfilled, this
Agreement and all obligations of the Underwriter hereunder may be cancelled by
the Underwriter at, or at any time prior to, each Closing Date. Any such
cancellation shall be without liability of the Underwriter to the Company or
any liability of the Company to the Underwriter, except pursuant to Section
4(i) hereof. Notice of such cancellation shall be given to the Company in
writing, or by telefax or telephone confirmed in writing.
The Underwriter may waive in writing the performance of any one or
more of the foregoing conditions or extend the time for their performance.
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6. EFFECTIVE DATE AND TERMINATION.
(a) This Agreement shall become effective at immediately
after the time at which the Registration Statement shall have become
effective under the Act.
(b) Until the First Closing Date, this Agreement may be
terminated by you by giving notice to the Company, if (i) the Company
shall have sustained a loss or damage by fire, flood, accident, or
other calamity which is material to the property, business, or
condition (financial or other) of the Company considered as a whole,
any properties of the Company shall have become a party or subject to
litigation material to the Company considered as a whole, or there
shall have been, since the respective dates as of which information is
given in the Registration Statement or the Prospectus, any material
adverse change or development in the general affairs, condition
(financial or other), business, key personnel, capitalization,
properties, results of operations or net worth, of the Company
considered as a whole, whether or not arising in the ordinary course
of business, which loss, damage, or change, in your judgment or in the
reasonable judgment of a majority in interest of the several
Underwriter, shall render it inadvisable to proceed with the delivery
of the Units, whether or not such loss shall have been insured, (ii)
trading in securities generally on the New York Stock Exchange or the
American Stock Exchange or the over-the-counter market shall have been
suspended or minimum prices shall have been established on such
exchange or market by the Commission or by such exchange, (iii) a
general banking moratorium shall have been declared by federal or
state authorities, or (iv) there shall have been such a serious,
unusual and material adverse change in general economic, political, or
financial conditions or the effect of international conditions on the
financial markets in the United States shall be such as, in your
reasonable judgment or in the reasonable judgment of such majority in
interest of the several Underwriter, makes it inadvisable to proceed
with the delivery of the Units. Any termination of this Agreement
pursuant to this Section 6 shall be without liability of the Company
to the Underwriter, except as otherwise provided in Sections 4(i)
hereof, 7 and 8 hereof, and without liability of the Underwriter to
the Company, except as provided in Sections 7 and 8 hereof.
(c) Any notice referred to in this Section 6 may be given
at the address specified in Section 11 hereof in writing or by
telegraph or telephone, and if by telegraph or telephone, shall be
immediately confirmed in writing.
7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless the
Underwriter and each person, if any, who controls the Underwriter
within the meaning of the Act against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter or such
controlling person may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact made by the
Company in Section l hereof or contained (A) in the Registration
Statement, any
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Preliminary Prospectus, or the Prospectus, or any amendment thereof or
supplement thereto, or (B) in any Blue Sky application or other
document executed by the Company specifically for that purpose or
based upon and conforming to written information furnished by the
Company filed in any state or other jurisdiction in order to qualify
any or all of the Units under the securities laws thereof (any such
application, document or information being hereinafter called a "BLUE
SKY APPLICATION"), or (ii) the omission or alleged omission to state
in the Registration Statement, any Preliminary Prospectus, or the
Prospectus, or any amendment thereof or supplement thereto, or in any
Blue Sky Application a material fact 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; and will
reimburse the Underwriter, its officers and directors and each such
controlling person for any legal or other expenses reasonably incurred
by the Underwriter, its officers and directors or such controlling
person in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case to the extent, but only to
the extent, that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in reliance upon and in conformity
with written information furnished to the Company through you or on
your behalf specifically for use in the preparation of the
Registration Statement or any amendment thereof or supplement thereto,
or any such Blue Sky Application or any such Preliminary Prospectus or
the Prospectus or any such amendment thereof or supplement thereto;
and provided, further, that the foregoing indemnity agreement is
subject to the condition that, insofar as it relates to any untrue
statement, alleged untrue statement, omission or alleged omission made
in any Preliminary Prospectus but eliminated or remedied in the
Prospectus (as amended or supplemented), such indemnity agreement
shall not inure to the benefit of the Underwriter (or to the benefit
of any person who controls the Underwriter), if the person asserting
any loss, liability, claim or damage purchased the Units which are the
subject thereof and a copy of the Prospectus (as then supplemented or
amended) was not sent or given to such person with or prior to the
written confirmation of the sale of such Units to such person.
(b) The Underwriter will indemnify and hold harmless the
Company, each of its directors, each of its officers who has signed
the Registration Statement, and each person, if any, who controls the
Company within the meaning of the Act, against any losses, claims,
damages or liabilities, joint or several, to which the Company or any
such director or officer, or controlling person, may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of a
material fact contained (A) in the Registration Statement, any
Preliminary Prospectus, or the Prospectus, or any amendment thereof,
or supplement thereto, or (B) in any Blue Sky Application, or (ii) the
omission or alleged omission to state in the Registration Statement,
any Preliminary Prospectus, the Prospectus or any amendment thereof or
supplement thereto or in any Blue Sky Application a material fact
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, in each case to the extent,
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but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon
and in conformity with written information furnished to the Company
through you specifically for use with reference to the Underwriter in
the preparation of the Registration Statement or any amendment thereof
or supplement thereto or any such Blue Sky Application or any such
Preliminary Prospectus or the Prospectus or any such amendment thereof
or supplement thereto; and will reimburse the Company, any such
director or officer, or controlling person, for any legal or other
expenses reasonably incurred by the Company or any such director or
officer, or controlling person, in connection with investigating or
defending any such loss, claim, damage, liability or action. This
indemnity agreement will be in addition to any liability which the
Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under
this Section 7 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made
against any indemnifying party under this Section 7, notify in writing
the indemnifying party of the commencement thereof; no indemnification
shall be available to any party who shall fail to give notice as
provided in this Section 7(c) if the party to whom notice was not
given was unaware of the proceeding to which such notice would have
related and was prejudiced by the failure to give such notice, but the
omission so to notify such indemnifying party of any such action, suit
or proceeding shall not relieve it from any liability that it may have
to any indemnified party for contribution or otherwise than under this
section. In case any such action is brought against any indemnified
party, and the indemnified party notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein, and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel who shall be to the reasonable satisfaction of
such indemnified party, and (notwithstanding subparagraph (a) and (b)
of this Section 7) after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof,
the indemnifying party will not be liable to such indemnified party
under this Section 7 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation except as
provided below. The indemnified party shall have the right to employ
its counsel in any such action, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (i)
the employment of counsel by such indemnified party has been
authorized in writing by the indemnifying parties, (ii) the
indemnified party shall have reasonably concluded that there may be a
conflict of interest between the indemnifying parties, or any of them,
and the indemnified party in the conduct of the defense of such action
(in which case the indemnifying parties shall not have the right to
direct the defense of such action on behalf of the indemnified party)
or (iii) the indemnifying parties shall not have employed counsel to
assume the defense of such action within a reasonable time after
notice of the commencement thereof, in each of which cases the fees
and expenses of counsel shall be at the expense of the indemnifying
parties; provided, however, that the indemnifying parties shall not be
liable for the fees and expenses of more than one counsel for the
indemnified parties. Any such indemnifying party shall not be liable
to any such indemnified party on account
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of any settlement of any claim or action effected by the indemnified
party without the consent of such indemnifying party.
8. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which indemnification provided for in Section
7 is unavailable, each indemnifying party shall contribute to the aggregate
losses, claims, damages, expenses and liabilities to which the indemnified
parties may be subject in such proportion so that the Underwriter is
responsible for that portion (the "UNDERWRITING PORTION") represented by the
percentage that the underwriting commissions appearing on the cover page of the
Prospectus bear to the public offering price (net of Underwriting Commissions)
appearing thereon and the Company is responsible for the remaining portion (the
"RESIDUAL PORTION"); provided, however, (i) that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) will be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation; and (ii) if such allocation is not permitted by applicable
law, then the relative fault of the Company, its directors, officers and
controlling persons, on the one hand, and the Underwriter, its officers,
directors and its controlling persons, on the other, in connection with the
statements or omissions which resulted in such damages and other relevant
equitable considerations shall also be considered. The relative fault shall be
determined by reference to, among other things, whether in the case of an
untrue statement of a material fact or the omission to state a material fact,
such statement or omission relates to information supplied by the Company or by
the Underwriter and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such untrue statement or
omission. The Company and the Underwriter agree that it would not be just and
equitable if the respective obligations of the Company on the one hand, and the
Underwriter, on the other, to contribute pursuant to this Section 8 were to be
determined by pro rata or per capita allocation of the aggregate damages (even
if the Underwriter, its officers, directors and its controlling persons in the
aggregate 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 this Section 8. For purposes of this Section 8, the term
"DAMAGES" shall include any legal or other expense reasonably incurred by the
indemnified party in connection with investigating or defending any action or
claim that is the subject of the contribution provisions of this Section 8.
Notwithstanding the provisions of this Section 8, the Underwriter, its
officers, directors and its controlling persons in the aggregate shall not be
required to contribute any amount in excess of the amount by which the total
purchase price of the Units purchased by it, directly or indirectly, from the
Company pursuant to this Agreement exceeds the amount of any damages that the
Underwriter, its officers, directors and its controlling persons in the
aggregate have otherwise been required to pay by reason of such untrue
statement or omission. For purposes of this Section 8, each person, if any,
who controls the Underwriter within the meaning of the Act shall have the same
rights to contribution as the Underwriter, and each person, if any, who
controls the Company within the meaning of the Act, each officer who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company. Each party entitled to
contribution agrees that, upon the service of a summons or other initial legal
process upon it in any action instituted against it in respect of which
contribution may be sought, it will promptly give written notice of such
service to the party or parties from whom contribution may be sought, but the
omission so to notify such party or parties of any such service shall not
relieve the party from whom contribution may be sought
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from any obligation it may have hereunder or otherwise. In case any such
action, suit, or proceeding is brought against any party, and such person so
notifies a contributing party of the commencement thereof, the contributing
party will be entitled to participate therein with the notifying party and any
other contributing party similarly notified.
9. SURVIVAL OF INDEMNITIES, CONTRIBUTION, WARRANTIES AND
REPRESENTATIONS. The respective indemnity and contribution agreements of the
Company and the Underwriter contained in Sections 7 and 8 hereof, the
representations, warranties, and covenants of the Company contained in Sections
1 and 4 hereof and the representations and warranties of the Underwriter
contained in Section 14 hereof shall remain operative and in full force and
effect, regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of the Underwriter or the Company or any of
their respective directors or officers, or any controlling person referred to
in said Sections 7 and 8, and shall survive the delivery of, and payment for,
the Units.
10. NOTICES. Except as otherwise expressly provided in this
Agreement, all notices and other communications hereunder shall be in writing
and, if given to the Underwriter, shall be mailed, delivered or telefaxed to R.
J. Steichen & Company, 801 Nicollet Mall, 1100 Midwest Plaza West, Minneapolis,
MN 55402, Attention: President, with a copy to Girard P. Miller, Doherty,
Rumble & Butler, P.A., 150 South Fifth Street, Suite 3500, Minneapolis, MN
55402, or if given to the Company, shall be mailed, delivered or telefaxed to
it at Famous Dave's of America, Inc., 12700 Industrial Boulevard, Suite 60,
Plymouth, MN 55441, Attention: President, with a copy to William M. Mower,
Maslon Edelman Borman & Brand, PLLP, 90 South Seventh Street, Suite 3300,
Minneapolis, MN 55402.
11. UNDERWRITER'S WARRANTS. Upon payment of a purchase price of
$50 by the Underwriter, the Company will issue and deliver to R. J. Steichen &
Company, for its account, Warrants to purchase Units in an amount equal to 10%
of the number of Firm Units purchased by the Underwriter in the offering. Such
Warrants shall be issued on the Closing Date, in an amount equal to 200,000
Units and shall be dated as of the Closing Date. Such Warrants shall be
exercisable commencing one (1) year after the Effective Date for a period of
three years thereafter at a price equal to 120% of the per Unit offering price.
Such Warrant shall contain such terms and conditions as contained in the form
of Underwriter's Warrant attached hereto and labeled Appendix A.
12. INFORMATION FURNISHED BY UNDERWRITER. The statements relating
to stabilization activities of the Underwriter on the inside front cover of the
Preliminary Prospectus and the Prospectus, and under the caption "UNDERWRITING"
in any Preliminary Prospectus and in the Prospectus, and, to the extent the
same relate to you, in any Blue Sky application, constitute the written
information furnished by or on behalf of you referred to in Section 1 hereof
and in paragraphs (a) and (b) of Section 7 hereof.
13. PARTIES. This Agreement is made solely for the benefit of the
Underwriter, the Company, any director, officer, or controlling person referred
to in Sections 7 and 8 hereof, and their respective personal representatives,
successors and assigns, and no other person shall acquire or have any right by
virtue of this Agreement. The term "personal representatives,
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successors and assigns," as used in this Agreement, shall not include any
purchaser of Units (as such purchaser) from the Underwriter.
14. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE UNDERWRITER.
The Underwriter represents, warrants to and agrees with the Company that:
(a) The Underwriter is a corporation duly incorporated
and validly existing in good standing under the laws of the
jurisdiction in which it is incorporated.
(b) The Underwriter is duly registered as a broker-dealer
under the Securities Exchange Act of 1934, as amended, and under the
Securities laws of Minnesota and of such other states in which it
intends to offer or sell the Units, if such registration is required
in any such other state, and is a member in good standing of the
National Association of Securities Dealers, Inc., and no proceedings
have been initiated or threatened to suspend any such registration or
membership.
(c) The execution, delivery and performance of this
Agreement by the Underwriter, and the consummation of the transactions
contemplated hereby, have been duly authorized by the Underwriter, and
at the time of its execution, performance, or consummation, will not
constitute or result in any breach or violation of any of the terms,
provisions or conditions of, or constitute a default under, any
federal statute or regulation (including, without limitation, the net
capital requirements under Rule 15c-1 of the Securities Exchange Act
of 1934) or any statute or regulation of any state in which it intends
to offer or sell the Units, or any order, judgment, decree, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Underwriter or any of its activities or
property; and other than registration of the Units under the Act and
applicable states securities laws and subject to the favorable review
by the National Association of Securities Dealers, Inc., no consent,
approval, authorization or order of any court or governmental agency
or body is required for the consummation of the transactions
contemplated hereby.
(d) There is not now pending or threatened against any of
the Underwriter or any control person of an Underwriter any action or
proceeding of which you have been advised, either in any court of
competent jurisdiction or before the Commission, National Association
of Securities Dealers, Inc. or the securities authorities of any
state, based upon any action or failure to act on the part of the
Underwriter or any controlling person of an Underwriter that would
restrict the Underwriter's ability to perform its obligations
hereunder.
(e) The Units will be offered by the Underwriter only to
persons resident in Minnesota and such other states as are mutually
designated by the Underwriter and the Company pursuant to Section 4(c)
hereof. All of such persons shall be persons and entities for whom
the purchase of the Units is a suitable investment and the Underwriter
shall employ or engage no Selected Dealer, sales person, agent or
representative in the offer or sale of the Units, which sales person,
agent or representative is not properly
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registered and licensed for the purpose of such offer or sale. All
such registrations and licenses shall remain in full force and effect
until after the Closing Dates.
(f) The Underwriter agrees that neither the Underwriter
nor any officer or other person employed by the Underwriter or any
Selected Dealer will provide any information or make any
representations to offerees of the Units, other than such information
and representations as are either contained in the Prospectus or the
Registration Statement or are not inconsistent with information set
forth in the Prospectus or the Registration Statement.
(g) The Underwriter agrees that in the event the
Underwriter learns of any circumstances or fact which it believes
would make any Preliminary Prospectus, the Prospectus, or the
Registration Statement inaccurate or misleading in any material
respect, it will immediately bring such circumstances or facts to the
attention of the Company.
15. GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Minnesota.
FAMOUS DAVE'S OF AMERICA, INC.
By _____________________________________________
Its _______________________________________
"COMPANY"
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written:
R. J. STEICHEN & COMPANY
By _________________________________
Authorized Officer
____________________________________
Print Name
"UNDERWRITER"
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