1
EXHIBIT 1.1
DRAFT OF SEPTEMBER 18, 1997
2,200,000 SHARES
SCHLOTZSKY'S, INC.
COMMON STOCK
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UNDERWRITING AGREEMENT
St. Petersburg, Florida
September ___, 1997
Raymond James & Associates, Inc.
Morgan Keegan & Company, Inc.
Rauscher Pierce Refsnes, Inc.
As Representatives of the Several Underwriters
c/o Raymond James & Associates, Inc.
880 Carillon Parkway
St. Petersburg, Florida 33716
Dear Sirs:
Schlotzsky's, Inc., a Texas corporation (the "Company"), proposes
to issue and sell and certain persons named in Schedule II annexed hereto (the
"Firm Selling Shareholders") propose to sell to the underwriters named in
Schedule I annexed hereto (the "Underwriters") an aggregate of 2,200,000
shares of Common Stock, no par value (the "Common Stock"), of the Company, of
which 1,500,000 shares are to be issued and sold by the Company and an
aggregate of 700,000 shares are to be sold by the Selling Shareholders in the
respective amounts set forth in Schedule II hereto. The aggregate of 2,200,000
shares to be purchased from the Company and the Selling Shareholders are herein
called the "Firm Shares." In addition, the Company and certain of the Selling
Shareholders propose to grant to the Underwriters an option to purchase up to
330,000 additional shares of Common Stock (the "Additional Shares"), of which
up to 231,825 shares are to be issued and sold by the Company and up to an
aggregate of 98,175 shares are to be sold by such Selling Shareholders in the
respective amounts set forth in Schedule II hereto, in each case if the option
so granted is exercised as provided in Section 2 hereof. The Firm Shares and,
to the extent such option is exercised, the Additional Shares are hereinafter
collectively referred to as the "Shares." Raymond James & Associates, Inc.,
Morgan Keegan & Company, Inc. and Rauscher Pierce Refsnes, Inc. are acting as
the representatives of the several Underwriters and in such capacity are
hereinafter referred to as the "Representatives."
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The Company and the Selling Shareholders wish to confirm as
follows their agreement with you and the other several Underwriters, on whose
behalf you are acting, in connection with the several purchases of the Shares
from the Company and the Selling Shareholders.
SECTION 1. REGISTRATION STATEMENT AND PROSPECTUS. The Company
has prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Act"), a registration statement on Form S-1 (Registration
No. 333-34921), including a prospectus subject to completion, relating to the
Shares. Such registration statement (including all financial schedules and
exhibits), as amended at the time when it becomes effective and as thereafter
amended by any post effective amendment, is referred to in this Agreement as
the "Registration Statement." The term "Prospectus" as used in this Agreement
means (i) the prospectus in the form included in the Registration Statement on
the date upon which the Registration Statement is declared effective by the
Commission, or (ii) if the prospectus included in the Registration Statement on
the date upon which the Registration Statement is declared effective by the
Commission omits information in reliance upon Rule 430A under the Act and such
information is included in a prospectus filed with the Commission pursuant to
Rule 424(b) under the Act or as part of a post-effective amendment to the
Registration Statement after the Registration Statement becomes effective, the
prospectus as so filed, or (iii) if the prospectus included in the Registration
Statement on the date upon which the Registration Statement is declared
effective by the Commission omits information in reliance upon Rule 430A under
the Act and such information is included in a term sheet (as described in Rule
434(b) under the Act) filed with the Commission pursuant to Rule 424(b) under
the Act, the prospectus included in the Registration Statement and such term
sheet, taken together. Each prospectus subject to completion in the form
included in the Registration Statement that is used prior to the date upon
which the Registration Statement is declared effective by the Commission is
referred to in this Agreement as a "Prepricing Prospectus." If the Company
files a registration statement to register a portion of the Shares and relies
on Rule 462(b) for such registration statement to become effective upon filing
with the Commission (the "Rule 462 Registration Statement"), then any reference
to the "Registration Statement" shall be deemed to refer to both the
registration statement referred to above (Registration No. 333-34921) and the
Rule 462 Registration Statement, in each case as amended from time to time.
SECTION 2. AGREEMENTS TO SELL AND PURCHASE. Upon the basis of
the representations, warranties and agreements of the Company and the Selling
Shareholders herein contained and subject to all the terms and conditions set
forth herein, the Company hereby agrees to sell 1,500,000 Firm Shares to the
Underwriters and the Selling Shareholders, severally and not jointly, hereby
agree to sell an aggregate of 700,000 Firm Shares (each to sell the number of
Firm Shares set forth opposite the name of such Selling Shareholder in Schedule
II hereto) to the Underwriters and each Underwriter agrees, severally and not
jointly, to purchase from the Company and the Selling Shareholders at a
purchase price of $________ per Share (the "purchase price per Share"), the
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RAYMOND JAMES & ASSOCIATES, INC. Page 3
number of Firm Shares set forth opposite the name of such Underwriter in
Schedule I hereto (or such number of Firm Shares as adjusted pursuant to
Section 12 hereof).
Upon the basis of the representations, warranties and agreements
of the Company and the Selling Shareholders herein contained and subject to all
the terms and conditions set forth herein, the Company also agrees to sell up
to 231,825 Additional Shares to the Underwriters and certain Selling
Shareholders identified in Schedule II hereto, severally and not jointly, agree
to sell up to an aggregate of 98,175 Additional Shares (each to sell up to the
number of Additional Shares set forth opposite the name of such Selling
Shareholder in Schedule II hereto) to the Underwriters and, the Underwriters
shall have the one-time right for 30 days from the date upon which the
Registration Statement is declared effective by the Commission to purchase from
the Company and such Selling Shareholders up to 330,000 Additional Shares at
the purchase price per Share for the Firm Shares. The Additional Shares may be
purchased solely for the purpose of covering over-allotments made in connection
with the offering of the Firm Shares. If the Underwriters exercise the right
to purchase less than 330,000 Additional Shares, then (i) the Company agrees to
sell the Underwriters a number of Additional Shares which bears the same
proportion to the total number of Additional Shares specified in the notice to
the Company and the Selling Shareholders and pursuant to Section 4 hereof as
231,825 bears to 330,000 and (ii) certain Selling Shareholders identified in
Schedule II hereto agree to sell to the Underwriters the balance of the
Additional Shares (the "Remaining Additional Shares") specified in such notice,
and each such Selling Shareholder will sell a number of Remaining Additional
Shares (subject to such adjustments as you may determine to avoid fractional
shares) which bears the same proportion to the total number of Remaining
Additional Shares as the number of Additional Shares set forth opposite the
name of such Selling Shareholder in Schedule II hereto bears to 98,175. 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 as you may determine to avoid fractional shares) which bears the
same proportion to the number of Additional Shares to be sold as the number of
Firm Shares set forth opposite the name of such Underwriter in Schedule I
hereto (or such number of Firm Shares as adjusted pursuant to Section 12
hereof) bears to 2,200,000.
SECTION 3. TERMS OF PUBLIC OFFERING. The Company has been
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 and
initially to offer the Shares upon the terms set forth in the Prospectus.
SECTION 4. DELIVERY OF THE SHARES AND PAYMENT THEREFOR.
Delivery to the Underwriters of the Firm Shares and payment therefor shall be
made at the offices of Raymond James & Associates, Inc., 880 Carillon Parkway,
St. Petersburg, Florida, at 10:00 a.m., St. Petersburg, Florida time, three
business days after the date hereof (the "Closing Date"). The
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RAYMOND JAMES & ASSOCIATES, INC. Page 4
place of closing for the Firm Shares and the Closing Date may be varied by
agreement between you and the Company.
Delivery to the Underwriters of and payment for any Additional
Shares to be purchased by the Underwriters shall be made at the offices of
Raymond James & Associates, Inc., 880 Carillon Parkway, St. Petersburg,
Florida, at 10:00 a.m., St. Petersburg, Florida time, on such date (the
"Additional Closing Date") (which may be the same as the Closing Date but shall
in no event be earlier than the Closing Date nor earlier than three nor later
than ten business days after the giving of the notice hereinafter referred to),
as shall be specified in a written notice from you, on behalf of the
Underwriters to the Company, of the Underwriters' determination to purchase a
number, specified in such notice, of Additional Shares. Such notice may be
given to the Company by you at any time within 30 days after the date upon
which the Registration Statement is declared effective by the Commission. The
place of closing for the Additional Shares and the Additional Closing Date may
be varied by agreement between you and the Company.
Certificates for the Firm Shares and for any Additional Shares to
be purchased hereunder shall be registered in such names and in such
denominations as you shall request prior to 1:00 p.m, St. Petersburg, Florida
time, on the second business day preceding the Closing Date or the Additional
Closing Date, as the case may be. Such certificates shall be made available to
you in St. Petersburg, Florida for inspection and packaging not later than 9:30
a.m., St. Petersburg, Florida time, on the business day immediately preceding
the Closing Date or the Additional Closing Date, as the case may be. The
certificates evidencing the Firm Shares and any Additional Shares to be
purchased hereunder shall be delivered to you on the Closing Date or the
Additional Closing Date, as the case may be, against payment of the purchase
price therefor by wire transfer of same day funds to the order of the Company
and to the Company as custodian for the Selling Shareholders, respectively.
SECTION 5. AGREEMENTS OF THE COMPANY. The Company agrees with
the several Underwriters as follows:
(a) The Company will endeavor to cause the Registration
Statement to become effective and will advise you promptly and, if
requested by you, will confirm such advice in writing (i) when the
Registration Statement has become effective and when any post-effective
amendment thereto becomes effective, (ii) if Rule 430A under the Act is
employed, when the Prospectus or term sheet (as described in Rule 434(b)
under the Act) has been timely filed pursuant to Rule 424(b) under the
Act, (iii) of any request by the Commission for amendments or
supplements to the Registration Statement, any Prepricing Prospectus or
the Prospectus or for additional information, (iv) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the
Shares for offering or sale in any jurisdiction or the
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initiation (or threatened initiation) of any proceeding for such
purposes, and (v) within the period of time referred to in Section 5(e)
below, of any change in the Company's condition (financial or other),
business, business prospects, properties, net worth or results of
operations, or of any event that comes to the attention of the Company
that makes any statement made in the Registration Statement or the
Prospectus (as then amended or supplemented) untrue in any material
respect or that requires the making of any additions thereto or changes
therein in order to make the statements therein not misleading in any
material respect, or of the necessity to amend or supplement the
Prospectus (as then amended or supplemented) to comply with the Act or
any other law. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, the Company
will make every reasonable effort to obtain the withdrawal of such order
at the earliest possible time.
(b) The Company will furnish to you, without charge,
one signed copies of the Registration Statement as originally filed with
the Commission and of each amendment thereto, including financial
statements and all exhibits thereto, and will also furnish to you,
without charge, such number of conformed copies of the Registration
Statement as originally filed and of each amendment thereto as you may
reasonably request.
(c) The Company will not file any amendment to the
Registration Statement or make any amendment or supplement to the
Prospectus of which you shall not previously have been advised (with a
reasonable opportunity to review such amendment or supplement) or to
which you have reasonably objected after being so advised.
(d) Prior to the execution and delivery of this
Agreement, the Company has delivered or will deliver to you, without
charge, in such quantities as you have requested or may hereafter
reasonably request, copies of each form of the Prepricing Prospectus.
The Company consents to the use, in accordance with the provisions of
the Act and with the securities or Blue Sky laws of the jurisdictions in
which the Shares are offered by the several Underwriters and by dealers,
prior to the date of the Prospectus, of each Prepricing Prospectus so
furnished by the Company.
(e) As soon after the execution and delivery of this
Agreement as is practicable and thereafter from time to time for such
period as in the reasonable opinion of counsel for the Underwriters a
prospectus is required by the Act to be delivered in connection with
sales by any Underwriter or a dealer, the Company will deliver to each
Underwriter and each dealer, without charge, as many copies of the
Prospectus (and of any amendment or supplement thereto) as they may
reasonably request. The Company consents to the use of the Prospectus
(and of any amendment or supplement thereto) in accordance with the
provisions of the Act and with the securities or Blue Sky laws of the
jurisdictions in which
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the Shares are offered by the several Underwriters and by all dealers to
whom Shares may be sold, both in connection with the offering and sale
of the Shares and for such period of time thereafter as in the
reasonable opinion of counsel for the Underwriters the Prospectus is
required by the Act to be delivered in connection with sales by any
Underwriter or dealer. If during such period of time any event shall
occur that in the judgment of the Company or in the reasonable opinion
of counsel for the Underwriters is required to be set forth in the
Prospectus (as then amended or supplemented) or should be set forth
therein in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is
necessary to supplement or amend the Prospectus to comply with the Act
or any other law, the Company will forthwith prepare and file with the
Commission an appropriate supplement or amendment thereto, and will
furnish to each Underwriter and to each dealer who has previously
requested Prospectuses, without charge, a reasonable number of copies
thereof.
(f) The Company will cooperate with you and counsel for
the Underwriters in connection with the registration or qualification of
the Shares for offering and sale by the several Underwriters and by
dealers under the securities or Blue Sky laws of such jurisdictions as
you may reasonably designate and will file such consents to service of
process or other documents as may be reasonably necessary in order to
effect such registration or qualification; provided that in no event
shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action
which would subject it to service of process in suits, other than those
arising out of the offering or sale of the Shares, in any jurisdiction
where it is not now so subject. In the event that the qualification of
the Shares in any jurisdiction is suspended, the Company shall so advise
you promptly in writing.
(g) The Company will make generally available to its
security holders as soon as reasonably practicable a consolidated
earnings statement, which need not be audited, covering a period of at
least twelve months commencing after the effective date of the
Registration Statement (but in no event commencing later than 90 days
after such effective date), which consolidated earnings statement shall
satisfy the provisions of Section 11(a) of the Act.
(h) During the period of five years hereafter, the
Company will furnish to you as soon as practicable after the end of each
fiscal year, a copy of its annual report to shareholders for such year;
and the Company will furnish to you (i) as soon as available, a copy of
each report or definitive proxy statement of the Company filed with the
Commission under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or mailed to shareholders, and (ii) from time to time
such other information concerning the Company as you may reasonably
request.
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(i) If this Agreement shall terminate or shall be
terminated after execution pursuant to any provisions hereof (other than
pursuant to Section 13(i), (ii) or (iii) or as a result of a failure by
the Representatives or any Underwriter to fulfill their or its
obligations hereunder) or if this Agreement shall be terminated by the
Underwriters because of any failure or refusal on the part of the
Company to comply with the terms or fulfill any of the conditions of
this Agreement, the Company agrees to reimburse the Representatives for
all out-of-pocket expenses (including fees and expenses of counsel for
the Underwriters but excluding wages and salaries paid by the
Representatives) reasonably incurred by you in connection herewith.
(j) The Company will apply the net proceeds from the
sale of the Shares to be sold by it hereunder substantially in
accordance with the description set forth in the Prospectus under the
caption "Use of Proceeds."
(k) If Rule 430A under the Act is employed, the Company
will timely file the Prospectus or term sheet (as described in Rule
434(b) under the Act) pursuant to Rule 424(b) under the Act.
(l) The Company will not offer, sell, contract to sell
or otherwise dispose of any Common Stock or rights to purchase Common
Stock, or any securities convertible into or exercisable or exchangeable
for Common Stock except to the Underwriters pursuant to this Agreement,
for a period of 120 days after commencement of the public offering of
the Shares by the Underwriters without the prior written consent of the
Representatives; provided, however, that the Company may (i) issue
Common Stock upon the exercise of warrants or stock options outstanding
at the time of effectiveness of the Registration Statement and (ii) may
grant stock options pursuant to the Company's Third Amended and Restated
Stock Option Plan and the 1995 Nonemployee Directors Stock Option Plan.
(m) The Company will not, directly or indirectly, take
any action which would constitute, or any action designed or which might
reasonably be expected to cause or result in or constitute, under the
Act or otherwise, stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Shares.
(n) If at any time during the 25-day period after the
first date that any of the Shares are released by you for sale to the
public, any rumor, publication, or event relating to or affecting the
Company shall occur as a result of which in your opinion the market
price of the Common Stock (including the Shares) has been or is likely
to be materially affected (regardless of whether such rumor, publication
or event necessitates a supplement to or amendment of the Prospectus),
the Company will, after written notice from you advising the Company to
the effect set forth above, forthwith consult with you concerning the
advisability
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and substance of, and, if appropriate, disseminate, a press release or
other public statement responding to or commenting on such rumor,
publication, or event.
(o) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of its incorporation or the rules of
the Nasdaq Stock Market's National Market (the "Nasdaq National Market")
or any national securities exchange on which the Common Stock is listed,
a registrar (which, if permitted by applicable laws and rules, may be
the same entity as the transfer agent) for its Common Stock.
(p) The Company hereby agrees that this Agreement shall
be deemed, for all purposes, to have been made and entered into in
Pinellas County, Florida. The Company agrees that any dispute hereunder
shall be litigated solely in the Circuit Court of the State of Florida
in Pinellas County, Florida or in the United States District Court for
the Middle District of Florida, Tampa Division, and further agrees to
submit itself to the personal jurisdiction of such courts.
SECTION 6. AGREEMENTS OF THE SELLING SHAREHOLDERS. Each of the
Selling Shareholders, severally and not jointly, agrees with the several
Underwriters as follows:
(a) Such Selling Shareholder will not offer, sell,
contract to sell or otherwise dispose of any Common Stock or rights to
purchase Common Stock or any securities convertible into or exercisable
or exchangeable for Common Stock, except to the Underwriters pursuant to
this Agreement for a period of 120 days after commencement of the public
offering of the Shares by the Underwriters without the prior written
consent of the Representatives.
(b) Such Selling Shareholder will not, directly or
indirectly, take any action which would constitute, or any action
designed or which might reasonably be expected to cause or result in or
constitute, under the Act or otherwise, stabilization or manipulation of
the price of any security of the Company to facilitate the sale or
resale of the Shares.
SECTION 7. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to each Underwriter on the date hereof, and
shall be deemed to represent and warrant to each Underwriter on the Closing
Date and the Additional Closing Date, that:
(a) Each Prepricing Prospectus complied when so filed
in all material respects with the provisions of the Act, except that
this representation and warranty does not apply to statements in such
Prepricing Prospectus (or any amendment or supplement thereto) made in
reliance upon and in conformity with information relating to any
Underwriter
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furnished to the Company in writing by or on behalf of any Underwriter
through you expressly for use therein or in reliance upon and in
conformity with information relating to any Selling Shareholder
furnished to the Company in writing by or on behalf of any Selling
Shareholder expressly for use therein.
(b) The Commission has not issued any order preventing
or suspending the use of any Prepricing Prospectus, and the Prepricing
Prospectus included as part of the Registration Statement declared
effective by the Commission complied when so filed as to form in all
material respects with the requirements of the Act. The Registration
Statement, in the form in which it becomes effective and also in such
form as it may be when any post-effective amendment thereto shall become
effective, and the Prospectus, and any supplement or amendment thereto
when filed with the Commission under Rule 424(b) under the Act, will
comply when so filed in all material respects with the provisions of the
Act and will not at any such times contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that
this representation and warranty does not apply to statements in or
omissions from the Registration Statement or the Prospectus (or any
amendment or supplement thereto) made in reliance upon and in conformity
with information relating to any Underwriter furnished to the Company in
writing by or on behalf of any Underwriter through you expressly for use
therein or in reliance upon and in conformity with information relating
to any Selling Shareholder furnished to the Company in writing by or on
behalf of any Selling Shareholder expressly for use therein.
(c) The capitalization of the Company is as set forth
in the Prospectus as of the date set forth therein. All the outstanding
shares of Common Stock of the Company have been duly authorized and
validly issued, are fully paid and nonassessable and are free of any
preemptive or similar rights; the Shares to be issued and sold to the
Underwriters by the Company hereunder have been duly authorized and,
when issued and delivered to the Underwriters against payment therefor
in accordance with the terms hereof, will be validly issued, fully paid
and nonassessable and free of any preemptive or similar rights; the
capital stock of the Company conforms in all material respects to the
description thereof in the Registration Statement and the Prospectus (or
any amendment or supplement thereto); and the delivery of certificates
for the Shares pursuant to the terms of this Agreement and payment for
the Shares will pass valid and marketable title to the Shares, free and
clear of any voting trust arrangements, liens, encumbrances, equities,
claims or defects in title to the several Underwriters purchasing the
Shares in good faith and without notice of any lien, claim or
encumbrance.
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(d) The Company is a corporation duly organized and
validly existing in good standing under the laws of the State of Texas
with full corporate power and authority to own, lease and operate its
properties and to conduct its business as presently conducted and as
described in the Registration Statement and the Prospectus (and any
amendment or supplement thereto). Except for those jurisdictions where
the failure to so qualify would not, individually or in the aggregate,
have a material adverse effect on the condition (financial or other),
business, business prospects, properties, net worth or results of
operations of the Company and its Subsidiaries, taken as a whole, the
Company is not required, because of the nature of its properties or
conduct of its business, to register or qualify to conduct its business
in any other jurisdiction.
(e) Each of the subsidiaries of the Company identified
in Exhibit 22.1 to the Registration Statement (collectively, the
"Subsidiaries") is a corporation duly organized, validly existing and in
good standing in its jurisdiction of incorporation, with full corporate
power and authority to own, lease and operate its properties and to
conduct its business as presently conducted and as described in the
Registration Statement and the Prospectus (and any amendment or
supplement thereto). None of the Subsidiaries are required, because of
the nature of their properties or the conduct of their business, to
register or qualify to conduct their business in any other jurisdiction.
All of the outstanding shares of capital stock of each of the
Subsidiaries has been duly authorized and validly issued, are fully paid
and nonassessable, and are owned by the Company directly or indirectly
through one of the other Subsidiaries, free and clear of any lien,
adverse claim, security interest, equity or other encumbrance. Except
for the Subsidiaries, the Company does not own a material interest in or
control, directly or indirectly, any other corporation, partnership,
joint venture, association, trust or other business organization or
entity.
(f) There are no legal or governmental proceedings
pending or, to the knowledge of the Company, threatened, against the
Company or any of the Subsidiaries, or to which the Company or any of
the Subsidiaries, or to which any of their respective property, is
subject, that are required to be described in the Registration Statement
or the Prospectus (or any amendment or supplement thereto) but are not
described as required. Except as described in the Prospectus, there is
no action, suit, inquiry (to the Company's knowledge), proceeding, or
investigation (to the Company's knowledge) by or before any court or
governmental or other regulatory or administrative agency or commission
pending or, to the best knowledge of the Company, threatened against or
involving the Company or any Subsidiary relating to any product alleged
to have been made or sold by the Company or any Subsidiary and alleged
to have been unreasonably hazardous or defective, nor is there any basis
for such action, suit, inquiry, proceeding or investigation. There are
no agreements, contracts, indentures, leases or other instruments that
are required to be described in the Registration Statement or the
Prospectus (or any amendment or supplement
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thereto) or to be filed as an exhibit to the Registration Statement that
are not described or filed as required. All agreements, contracts,
indentures, leases or other instruments described in the Registration
Statement or the Prospectus (or any amendment or supplement thereto) or
filed as an exhibit to the Registration Statement have been duly
authorized, executed and delivered by the Company or a Subsidiary,
constitute valid and binding agreements of the Company or such
Subsidiary and are enforceable against the Company or such Subsidiary in
accordance with the terms thereof, except insofar as the enforceability
thereof may be limited by (i) bankruptcy, reorganization, insolvency,
fraudulent conveyance or transfer, moratorium or similar laws affecting
the enforcement of creditors' rights generally, and (ii) general
principles of equity (regardless of whether such is considered at law or
in equity).
(g) Neither the Company nor any of the Subsidiaries is
(i) in violation of (x) its certificate or articles of incorporation or
bylaws, or other organizational documents, or (y) any law, ordinance,
administrative or governmental rule or regulation applicable to the
Company or any of the Subsidiaries, except where the violation thereof
would not, individually or in the aggregate, have a material adverse
effect on the condition (financial or other), business, business
prospects, properties, net worth or results of operations of the Company
and its Subsidiaries, taken as a whole, or (z) any decree of any court
or governmental agency or body having jurisdiction over the Company or
any of the Subsidiaries, or (ii) in default in any material respect in
the performance of any obligation, agreement or condition contained in
any bond, debenture, note or any other evidence of indebtedness or in
any material agreement, indenture, lease or other instrument to which
the Company or any of the Subsidiaries is a party or by which any of
them or any of their respective properties may be bound.
(h) The execution and delivery of this Agreement and
the performance by the Company of its obligations under this Agreement
have been duly and validly authorized by the Company, and this Agreement
has been duly executed and delivered by the Company and constitutes the
valid and legally binding agreement of the Company, enforceable against
the Company in accordance with its terms, except insofar as the
enforceability hereof may be limited by (i) bankruptcy, reorganization,
insolvency, fraudulent conveyance or transfer, moratorium or similar
laws affecting the enforcement of creditors' rights generally, and (ii)
general principles of equity (regardless of whether such is considered
at law or in equity).
(i) None of the issuance and sale of the Shares to be
issued and sold by the Company, the execution, delivery or performance
of this Agreement by the Company nor the consummation by the Company of
the transactions contemplated hereby (i) is or may be void or voidable
by any person or entity, (ii) requires any consent, approval,
authorization or other order of or registration or filing with, any
court, regulatory body, administrative
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agency or other governmental body, agency or official (except such as
may be required for the registration of the Shares under the Act and
compliance with the securities or Blue Sky laws of various
jurisdictions, all of which will be, or have been, effected in
accordance with this Agreement) or conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under, the
certificate or articles of incorporation or bylaws, or other
organizational documents, of the Company or any of the Subsidiaries, or
(iii) conflicts or will conflict with or constitutes a breach of, or a
default under, any agreement, contract, indenture, lease or other
instrument to which the Company or any of the Subsidiaries is a party or
by which any of them or any of their respective properties may be bound,
or violates any statute, law, regulation or filing or judgment,
injunction, order or decree applicable to the Company or any of the
Subsidiaries or any of their respective properties, or results in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of the Subsidiaries pursuant to
the terms of any agreement or instrument to which any of them is a party
or by which any of them may be bound or to which any of the property or
assets of any of them is subject.
(j) Except as described in the Prospectus, each
contract, agreement or arrangement to which the Company or any of its
Subsidiaries is a party or by which any of them is bound, or to which
any of the property or assets of the Company or any of its Subsidiaries
is subject, which is material to the condition (financial or other),
business, business prospects, properties, net worth or results of
operations of the Company and its Subsidiaries, taken as a whole, has
been duly and validly authorized, executed and delivered by the Company
or such Subsidiary, as applicable, and neither the Company nor any of
its Subsidiaries is in breach or default in any material respect of any
obligation, agreement, covenant or condition contained in any such
contract, agreement or arrangement; none of such contracts, agreements
or arrangements has been assigned by the Company or any of its
Subsidiaries, and the Company knows of no present condition or fact
which would prevent compliance by the Company or any of its Subsidiaries
or any other party thereto with the terms of any such contract,
agreement or arrangement in all material respects; neither the Company
nor any of its Subsidiaries has any present intention to exercise any
rights that it may have to cancel any such contract, agreement or
arrangement or otherwise to terminate its rights and obligations
thereunder, and none of them has any knowledge that any other party to
any such contract, agreement or arrangement has any intention not to
render full performance in all material respects as contemplated by the
terms thereof.
(k) Except as described in the Prospectus, the Company
does not have outstanding and at the Closing Date (and the Additional
Closing Date, if applicable) will not have outstanding any options to
purchase, or any warrants to subscribe for, or any securities or
obligations convertible into or exchangeable for, or any contracts or
commitments to issue or sell, any shares of Common Stock or any such
warrants or convertible or exchangeable
13
RAYMOND JAMES & ASSOCIATES, INC. Page 13
securities or obligations. No holder of securities of the Company has
rights to the registration of any securities of the Company because of
the filing of the Registration Statement, except (i) with respect to the
Shares to be sold by the Selling Stockholders and (ii) any such rights
for which the Company has received valid and enforceable waivers or any
such rights which have lapsed pursuant to the terms of a registration
rights agreement.
(l) To the Company's knowledge, Coopers & Lybrand,
L.L.P., the certified public accountants who have certified the
financial statements filed as part of the Registration Statement and the
Prospectus (or any amendment or supplement thereto) are independent
public accountants as required by the Act.
(m) The financial statements, together with related
schedules and notes, forming part of the Registration Statement and the
Prospectus (and any amendment or supplement thereto), present fairly the
consolidated financial position, results of operations and changes in
financial position of the Company and the Subsidiaries on the basis
stated in the Registration Statement at the respective dates or for the
respective periods to which they apply; such statements and related
schedules and notes have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the
periods involved, except as disclosed therein; and the other financial
and statistical information and data set forth in the Registration
Statement and Prospectus (and any amendment or supplement thereto) is
accurately presented and prepared on a basis consistent with such
financial statements and the books and records of the Company.
(n) Except as disclosed in the Registration Statement
and the Prospectus (or any amendment or supplement thereto), subsequent
to the respective dates as of which such information is given in the
Registration Statement and the Prospectus (or any amendment or
supplement thereto), neither the Company nor any of the Subsidiaries has
incurred any liability or obligation, direct or contingent, or entered
into any transactions, not in the ordinary course of business, that is
material to the Company and the Subsidiaries, taken as a whole, and
there has not been material change in the capital stock, or material
increase in the short-term debt or long-term debt, of the Company or any
of the Subsidiaries, or any material adverse change, or any development
involving or which may reasonably be expected to involve a potential
future material adverse change, in the condition (financial or other),
business, business prospects, properties, net worth or results of
operations of the Company and the Subsidiaries, taken as a whole.
(o) The Company or each of the Subsidiaries, as the
case may be, has good and marketable title to all property (real and
personal) described in the Prospectus as being owned by them, free and
clear of all liens, claims, security interests or other encumbrances
except such as are described in the Registration Statement and the
Prospectus
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RAYMOND JAMES & ASSOCIATES, INC. Page 14
or in a document filed as an exhibit to the Registration Statement or
such as are not materially burdensome and do not interfere in any
material respect with the use of the property or the conduct of the
business of the Company and the Subsidiaries, taken as a whole, and the
property (real and personal) held under lease by each of the Company or
the Subsidiaries, as the case may be, is held by them under valid,
subsisting and enforceable leases with only such exceptions as in the
aggregate are not materially burdensome and do not interfere in any
material respect with the conduct of the business of the Company and the
Subsidiaries, taken as a whole.
(p) The Company has not distributed and will not
distribute prior to the Closing Date any offering material in connection
with the offering and sale of the Shares other than the Prepricing
Prospectus, the Registration Statement, the Prospectus and such other
materials permitted by the Act.
(q) The Company has not taken, directly or indirectly,
any action which constituted, or any action designed or which might
reasonably be expected to cause or result in or constitute, under the
Act or otherwise, stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Shares.
(r) The Company is not an "investment company," an
"affiliated person" of, or "promoter" or "principal underwriter" for an
investment company within the meaning of the Investment Company Act of
1940, as amended.
(s) The Company and each of the Subsidiaries have all
permits, licenses, franchises, approvals, consents and authorizations of
governmental or regulatory authorities or private persons or entities
(hereinafter "permit" or "permits") as are necessary to own their
properties and to conduct their business in the manner described in the
Prospectus, subject to such qualifications as may be set forth in the
Prospectus, except where the failure to have obtained any such permit
has not and will not have a material adverse effect upon the condition
(financial or other), business, business prospects, properties, net
worth or results of operations of the Company and the Subsidiaries,
taken as a whole; the Company and each of the Subsidiaries have
fulfilled and performed all of their material obligations with respect
to each such permit and no event has occurred which allows, or after
notice or lapse of time would allow, revocation or termination of any
such permit or result in any other material impairment of the rights of
the holder of any such permit, subject in each case to such
qualification as may be set forth in the Prospectus; and, except as
described in the Prospectus, such permits contain no restrictions that
are materially burdensome to the Company or any of the Subsidiaries.
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RAYMOND JAMES & ASSOCIATES, INC. Page 15
(t) The Company and each of the 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
the 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 comparable cost, except as disclosed in
the Registration Statement and the Prospectus.
(u) The Company and the Subsidiaries have complied and
will comply in all material respects with wage and hour determinations
issued by the U.S. Department of Labor under the Service Contract Act of
1965 and the Fair Labor Standards Act in paying its employees' salaries,
fringe benefits and other compensation for the performance of work or
other duties in connection with contracts with the U.S. government, and
have complied and will comply in all material respects with the
requirements of the Americans with Disabilities Act of 1990, the Family
and Medical Leave Act of 1993, the Employee Retirement Income Security
Act of 1974, the Civil Rights Act of 1964 (Title VII), the Age
Discrimination in Employment Act and state labor laws, each as amended,
except where the failure to comply with any such requirements has not,
and will not, have a material adverse effect on the condition (financial
or other) business, business prospects, properties, net worth or results
of operations of the Company and the Subsidiaries, taken as a whole.
The Company and the Subsidiaries have complied and will comply in all
material respects with the terms of all certifications and
representations made to the U.S. government in connection with the
submission of any bid or proposal or any contract. The Company and the
Subsidiaries have complied and will comply in all material respects with
their obligations under their agreements and contracts with the U.S.
government and agencies thereof, if any.
(v) The Company and the Subsidiaries maintain 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 authorizations; 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.
(w) Neither the Company nor any Subsidiary has,
directly or indirectly, at any time during the past five years (i) made
any unlawful contribution to any candidate for political office, or
failed to disclose fully any contribution in violation of law, or (ii)
made any payment to any federal, state or foreign governmental official,
or other person charged
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RAYMOND JAMES & ASSOCIATES, INC. Page 16
with similar public or quasi-public duties, other than payments required
or permitted by the laws of the United States or any jurisdiction
thereof or applicable foreign jurisdictions.
(x) The Company and the Subsidiaries have obtained all
permits, licenses and other authorizations, if any, which are required
under federal, state, regional, county, local and foreign statutes,
codes, ordinances and other laws relating to pollution or protection of
the environment, including laws relating to emissions, discharges,
releases, spilling, injecting, leaching, or disposing into the
environment or threatened releases of pollutants, contaminants,
chemicals or industrial, hazardous or toxic materials or wastes into the
environment (including, without limitation, ambient air, surface water,
ground water, land surface, or subsurface strata) or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage,
disposal, discharge into the environment, transport, or handling of
pollutants, contaminants, chemicals or industrial, hazardous or toxic
materials or wastes, or any regulation, rule, code, plan, order, decree,
judgment, injunction, notice or demand letter issued, entered,
promulgated, or approved thereunder ("Environmental Laws"). The Company
and the Subsidiaries are in material compliance with all terms and
conditions of all such permits, licenses, and authorizations, and are
also in material compliance with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in the Environmental Laws. There is
no pending or, to the best knowledge of the Company, after due inquiry,
threatened civil or criminal litigation, notice of violation, warning
letter or administrative proceeding relating in any way to the
Environmental Laws (including, without limitation, notices, demand
letters or claims under the Resource Conservation and Recovery Act of
1976, as amended ("RCRA"), the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), as
amended by the Superfund Amendments Reauthorization Act of 1987
("SARA"), the Toxic Substances Control Act of 1976, the Emergency
Planning and Community Right-to-Know Act of 1986, the Clean Water Act of
1977, and the Clear Air Act of 1966, all as amended, and similar
foreign, state, or local laws) involving the Company or any of the
Subsidiaries. There have not been and there are not any past, present,
or foreseeable future events, conditions, circumstances, activities,
practices, incidents, actions or plans which may interfere with or
prevent continued material compliance, or which may give rise to any
common law or legal material liability, or otherwise form the basis of
any present or future claim, action, demand, suit, proceeding, hearing,
study or investigation, based on or related to the manufacture,
processing, distribution, use, treatment, storage, disposal, arrangement
for disposal, transport, arrangement for transport or handling, or the
emission, discharge, release, or threatened release into the
environment, of any pollutant, contaminant, chemical or industrial,
hazardous or toxic material or waste, including, without limitation, any
material liability arising, or any material claim, action, demand, suit,
proceeding, hearing, study or investigation which may be brought, under
RCRA, CERCLA, SARA, or similar foreign, state, regional, county, or
local laws.
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RAYMOND JAMES & ASSOCIATES, INC. Page 17
(y) Except as otherwise disclosed in the Prospectus,
the Company and the Subsidiaries own and have full right, title and
interest in and to, or have valid licenses to use, each material trade
name, trademark, service mark, patent or copyright under which the
Company and the Subsidiaries conduct all or any portion of their
business, and neither the Company nor any of the Subsidiaries has
created any lien or encumbrance on, or granted any right or license with
respect to, any such trade name, trademark, service mark, patent or
copyright, except licenses to one or more of the Subsidiaries; except as
otherwise disclosed in the Prospectus, there is no claim pending against
the Company or any Subsidiary with respect to any trade name, trademark,
service mark, patent or copyright, and neither the Company nor any
Subsidiary has received notice that any trade name, trademark, service
mark, patent or copyright which it uses or has used in the conduct of
its business infringes upon or conflicts with the rights of any third
party.
(z) All offers and sales of the Company's and its
Subsidiaries' capital stock and debt or other securities prior to the
date hereof were made complied in all material respects with the Act and
all other applicable state and federal laws or regulations, or any
actions under the Act or any state or federal laws or regulations in
respect of any such offers or sales are effectively barred by effective
waivers or statutes of limitation.
(aa) All offers and sales of the Company's franchises
complied in all material respects with all applicable federal, state,
local and other laws.
(bb) All federal, state and local tax returns required
to be filed by or on behalf of the Company and each Subsidiary with
respect to all periods ended prior to the date of this Agreement have
been filed (or are the subject of valid extensions) with the appropriate
federal, state and local authorities and all such tax returns, as filed,
are accurate in all material respects except where the failure to file
such state and local tax returns would not, individually or in the
aggregate, have a material adverse effect on the condition (financial or
other), business, business prospects, properties, net worth or results
of operations of the Company and its Subsidiaries, taken as a whole.
All federal, state and local taxes (including estimated tax payments)
required to be shown on all such tax returns or claimed to be due from
or with respect to the business of the Company and each Subsidiary have
been paid or reflected as a liability on the financial statements of the
Company and the Subsidiaries for appropriate periods except where the
failure to pay or reflect as a liability such state and local taxes
would not, individually or in the aggregate, have a material adverse
effect on the condition (financial or other), business, business
prospects, properties, net worth or results of operations of the Company
and its Subsidiaries, taken as a whole. All deficiencies asserted as a
result of any federal, state or local tax audits have been paid or
finally settled and, except as previously disclosed to the
Representatives in writing, no issue has been raised in any such audit
which, by application of the same or similar principals, reasonably
could
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RAYMOND JAMES & ASSOCIATES, INC. Page 18
be expected to result in a proposed deficiency for any other period not
so audited. To the best knowledge of the Company, no state of facts
exists or has existed which would constitute grounds for the assessment
of any tax liability with respect to the periods which have not been
audited by appropriate federal, state or local authorities except for
such state and local tax liability which would not, individually or in
the aggregate, have a material adverse effect on the condition
(financial or other), business, business prospects, properties, net
worth or results of operations of the Company and its Subsidiaries,
taken as a whole. There are no outstanding agreements or waivers
extending the statutory period of limitation applicable to any federal,
state or local tax return for any period.
(cc) Except as disclosed in the Prospectus, there are no
outstanding loans, advances, or guarantees of indebtedness by the
Company or any Subsidiary to or for the benefit of any of its officers,
directors, or controlling persons, or any of the members of the families
of any of them which are required to be disclosed in the Prospectus.
SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE SELLING
SHAREHOLDERS. Each Selling Shareholder, severally and not jointly, represents
and warrants to each Underwriter on the date hereof, and shall be deemed to
represent and warrant to each Underwriter on the Closing Date and the
Additional Closing Date, that:
(a) Such Selling Shareholder now is, and at the time of
delivery by it of any Shares (whether the Closing Date or the Additional
Closing Date, as the case may be) will be, the lawful owner of the
number of Shares to be sold by such Selling Shareholder pursuant to this
Agreement and has, and at the time of delivery thereof will have, valid
and marketable title to the Shares to be sold by it.
(b) Upon delivery of and payment for the Shares
(whether at the Closing Date or the Additional Closing Date, as the case
may be) to be sold by such Selling Shareholder pursuant to this
Agreement, the Underwriters will acquire valid and marketable title to
such Shares free and clear of any claim, lien, encumbrance, security
interest, community property right, restriction on transfer or other
defect in title (other than any restriction on transfer imposed by the
Act and the securities or blue sky laws of certain jurisdictions).
(c) Such Selling Shareholder has and at the time of
delivery by it of any Shares (whether the Closing Date or the Additional
Closing Date, as the case may be) will have, full legal right, power and
capacity, and any approval required by law (other than any approval
required by the Act or the securities or blue sky laws of certain
jurisdictions), to sell, assign, transfer and deliver such Shares in the
manner provided in this Agreement.
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RAYMOND JAMES & ASSOCIATES, INC. Page 19
(d) Such Selling Shareholder has (i) executed and
delivered a Power of Attorney (the "Power of Attorney") appointing John
C. Wooley and Jeffrey J. Wooley, and each of them, as such Selling
Shareholder's attorneys-in-fact (the "Attorneys-in-Fact") with authority
to execute and deliver this Agreement on behalf of such Selling
Shareholder, to determine the purchase price to be paid by the
Underwriters to the Selling Shareholder as provided in Section 2 hereof
and to authorize the delivery of the Shares to be sold by such Selling
Shareholder in connection with this Agreement, and (ii) has executed and
delivered, or caused to be executed and delivered on such Selling
Shareholder's behalf, a Custody Agreement among the Company, as
custodian, and the Selling Shareholders (the "Custody Agreement"), and
in connection therewith such Selling Shareholder further represents,
warrants and agrees that such Selling Shareholder has deposited in
custody, under the Power of Attorney and Custody Agreement, certificates
in negotiable form for the Shares to be sold hereunder by such Selling
Shareholder, for the purpose of further delivery pursuant to this
Agreement.
(e) This Agreement, the Power of Attorney and the
Custody Agreement have been duly executed and delivered by such Selling
Shareholder and each is a legal, valid and binding agreement of such
Selling Shareholder enforceable in accordance with its terms, except
insofar as rights to indemnity and contribution may be limited by
federal and state securities laws and as the enforceability hereof and
thereof may be limited by (i) bankruptcy, reorganization, insolvency,
fraudulent conveyance or transfer, moratorium or similar laws affecting
the enforcement of creditors' rights generally, and (ii) general
principles of equity (regardless of whether such is considered at law or
in equity).
(f) When the Registration Statement becomes effective
and at all times subsequent thereto through the latest of the Closing
Date, the Additional Closing Date or the termination of the offering of
the Shares, the Registration Statement and Prospectus, and any
supplements or amendments thereto, insofar as they relate to such
Selling Shareholder or contain information furnished by such Selling
Shareholder for inclusion therein, will not contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(g) The sale of such Selling Shareholder's Shares
pursuant to this Agreement is not prompted by any information concerning
the Company which is not set forth in the Prospectus.
(h) Such Selling Shareholder has not, directly or
indirectly, (i) taken any action which constituted, or any action
designed or which might reasonably be expected to cause or result in or
constitute, under the Act or otherwise, stabilization or manipulation of
20
RAYMOND JAMES & ASSOCIATES, INC. Page 20
the price of any security of the Company to facilitate the sale or
resale of the Shares or (ii) since the filing of the Registration
Statement, bid for, purchased or paid anyone any compensation for
soliciting purchases of, the Shares.
SECTION 9. EXPENSES. The Company hereby agrees with the several
Underwriters that the Company will pay or cause to be paid the costs and
expenses associated with the following: (i) the preparation, printing or
reproduction, and filing with the Commission of the Registration Statement
(including financial statements and exhibits thereto), each Prepricing
Prospectus, the Prospectus, and each amendment or supplement to any of them;
(ii) the printing (or reproduction) and delivery (including postage, air
freight charges and charges for counting and packaging) of such copies of the
Registration Statement, each Prepricing Prospectus, the Prospectus, and all
amendments or supplements to any of them as may be reasonably requested for use
in connection with the offering and sale of the Shares as provided herein
during the period specified in Section 5(e) but not exceeding 180 days after
the effective date of the Registration Statement; (iii) the preparation,
printing, authentication, issuance and delivery of certificates for the Shares,
including any stamp taxes in connection with the offering of the Shares; (iv)
the printing (or reproduction) and delivery of this Agreement, [the preliminary
and supplemental Blue Sky Memoranda] and all other agreements or documents
printed (or reproduced) and delivered in connection with the offering of the
Shares; (v) the listing of the Shares on the Nasdaq National Market; [(vi) the
registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of the several states as provided in Section 5(f)
hereof (including the reasonable fees and expenses of counsel for the
Underwriters relating to the preparation, printing or reproduction, and
delivery of the preliminary and supplemental Blue Sky Memoranda and such
registration and qualification) subject to a maximum expense of $20,000;] (vii)
the filing fees and the reasonable fees and expenses of counsel for the
Underwriters in connection with any filings required to be made with the
National Association of Securities Dealers, Inc. in connection with the
offering; (viii) the transportation and other expenses incurred by or on behalf
of representatives of the Company in connection with the presentations to
prospective purchasers of the Shares; (ix) the fees and expenses of the
Company's accountants and the fees and expenses of counsel (including local and
special counsel and including counsel for the Selling Shareholders) for the
Company; and (x) the performance by the Company of its other obligations under
this Agreement. Notwithstanding the foregoing, in the event that the proposed
offering is terminated for the reasons set forth in Section 5(i) hereof, the
Company agrees to reimburse the Underwriters as provided in Section 5(i).
SECTION 10. INDEMNIFICATION AND CONTRIBUTION. The Company
agrees to indemnify and hold harmless you and each other Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15
of the Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages, liabilities and expenses (including reasonable costs
of investigation) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in any Prepricing Prospectus or
in the Registration Statement or the
21
RAYMOND JAMES & ASSOCIATES, INC. Page 21
Prospectus or in any amendment or supplement thereto, or arising out of or
based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
insofar as such losses, claims, damages, liabilities or expenses arise out of
or are based upon an untrue statement or omission or alleged untrue statement
or omission which has been made therein or omitted therefrom in reliance upon
and in conformity with the information relating to an Underwriter furnished in
writing to the Company by or on behalf of any Underwriter through you expressly
for use in connection therewith. The foregoing indemnity shall not inure to
the benefit of any Underwriter (or any person controlling such Underwriter) to
the extent that any such loss, claim, damage, liability or expense is based on
an untrue statement or omission or alleged untrue statement or omission in any
Prepricing Prospectus which was corrected in the Prospectus if the person
asserting any such loss, claim, damage, liability or expense purchased Shares
from such Underwriter but was not delivered or sent a copy of the Prospectus
within the time required under the Act (except that the provisions of this
sentence shall only apply if the Company furnished copies of the Prospectus to
such Underwriter or to the Representatives acting on behalf of such Underwriter
in requisite quantities and on a timely basis so as to permit the same to be
delivered or sent to such person within the time required).
Each Selling Shareholder, severally but not jointly, agrees to
indemnify and hold harmless you and each other Underwriter and each person, if
any, who controls any Underwriter within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act, from and against any and all losses, claims,
damages, liabilities and expenses (including reasonable costs of investigation)
arising out of or based upon any untrue statement or alleged untrue statement
of a material fact contained in any Prepricing Prospectus or in the
Registration Statement or the Prospectus or in any amendment or supplement
thereto, or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading, except insofar as such losses, claims, damages,
liabilities or expenses arise out of or are based upon an untrue statement or
omission or alleged untrue statement or omission which has been made therein or
omitted therefrom in reliance upon and in conformity with the information
relating to an Underwriter furnished in writing to the Company by or on behalf
of any Underwriter through you expressly for use in connection therewith.
Notwithstanding the foregoing, (i) the foregoing indemnity shall apply only to
information furnished in writing by or on behalf of such Selling Shareholder
expressly for use in the Registration Statement or Prospectus and (ii) such
Selling Shareholder shall not be responsible pursuant to this indemnity for
losses, expenses, liabilities or claims for an amount in excess of the proceeds
to be received by such Selling Shareholder (before deducting expenses) from the
sale of Shares sold by such Selling Shareholder hereunder. The foregoing
indemnity shall not inure to the benefit of any Underwriter (or any person
controlling such Underwriter) to the extent that any such loss, claim, damage,
liability or expense is based on an untrue statement or omission or alleged
untrue statement or omission in any Prepricing Prospectus which was corrected
in the
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RAYMOND JAMES & ASSOCIATES, INC. Page 22
Prospectus if the person asserting any such loss, claim, damage, liability or
expense purchased Shares from such Underwriter but was not delivered or sent a
copy of the Prospectus within the time required under the Act (except that the
provisions of this sentence shall only apply if the Company furnished copies of
the Prospectus to such Underwriter or to the Representatives acting on behalf
of such Underwriter in requisite quantities and on a timely basis so as to
permit the same to be delivered or sent to such person within the time
required).
If any action or claim shall be brought against any Underwriter
or any person controlling any Underwriter in respect of which indemnity may be
sought against the Company or the Selling Shareholders, such Underwriter or
such controlling person shall promptly notify in writing the party or parties
against whom indemnification is being sought (the "indemnifying party" or
"indemnifying parties"), and such indemnifying party or parties shall assume
the defense thereof, including the employment of counsel reasonably acceptable
to such Underwriter or such controlling person and payment of all fees and
expenses. Such Underwriter or any such controlling person shall have the right
to employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Underwriter or such controlling person unless (i) the indemnifying party
or parties has or have agreed in writing to pay such fees and expenses, (ii)
the indemnifying party or parties has or have failed to assume the defense and
employ counsel reasonably acceptable to the Underwriter or such controlling
person, or (iii) the named parties to any such action (including any impleaded
parties) include both such Underwriter or such controlling person and the
indemnifying party or parties, and such Underwriter or such controlling person
shall have been advised by its counsel that representation of such indemnified
party and any indemnifying party or parties by the same counsel would be
inappropriate under applicable standards of professional conduct (whether or
not such representation by the same counsel has been proposed) due to actual or
potential differing interests between them (in which case the indemnifying
party or parties shall not have the right to assume the defense of such action
on behalf of such Underwriter or such controlling person, it being understood,
however, that the Company shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys (in addition to
any local counsel) for all such Underwriters and controlling persons, which
firm shall be designated in writing by the Representatives and that all such
fees and expenses shall be reimbursed as they are incurred). The indemnifying
party or parties shall not be liable for any settlement of any such action
effected without its or their written consent, but if settled with such written
consent, or if there be a final judgment for the plaintiff in any such action,
the indemnifying party or parties agree to indemnify and hold harmless any
Underwriter and any such controlling person from and against any loss, claim,
damage, liability or expense by reason of such settlement or judgment, but in
the case of a judgment only to the extent stated in the immediately preceding
paragraph.
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Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement, the Selling Shareholders and any person who controls
the Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, to the same extent as the foregoing indemnity from the Company to
each Underwriter, but only with respect to information relating to such
Underwriter furnished in writing by or on behalf of such Underwriter through
you expressly for use in the Registration Statement, the Prospectus or any
Prepricing Prospectus, or any amendment or supplement thereto. If any action
or claim shall be brought or asserted against the Company, any of its
directors, any such officers, or any such controlling person based on the
Registration Statement, the Prospectus or any Prepricing Prospectus, or any
amendment or supplement thereto, and in respect of which indemnity may be
sought against any Underwriter pursuant to this paragraph, such Underwriter
shall have the rights and duties given to the Company by the preceding
paragraph (except that if the Company shall have assumed the defense thereof
such Underwriter shall not be required to do so, but may employ separate
counsel therein and participate in the defense thereof, but the fees and
expenses of such counsel shall be at such Underwriter's expense), and the
Company, its directors, any such officers, and any such controlling persons
shall have the rights and duties given to the Underwriters by the immediately
preceding paragraph.
In any event, the Company and the Selling Shareholders will not,
without the prior written consent of the Representatives, settle or compromise
or consent to the entry of any judgment in any proceeding or threatened claim,
action, suit or proceeding in respect of which indemnification may be sought
hereunder (whether or not the Representatives or any person who controls the
Representatives within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act is a party to such claim, action, suit or proceeding) unless
such settlement, compromise or consent includes an unconditional release of all
Underwriters and such controlling persons from all liability arising out of
such claim, action, suit or proceeding.
If the indemnification provided for in this Section 10 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then an indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages, liabilities or expenses (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Selling
Shareholders on the one hand and the Underwriters on the other hand from the
offering of the Shares or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company and the Selling Shareholders on the one hand
and the Underwriters on the other in connection with the statements or
omissions that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Selling Shareholders on the one hand
and the Underwriters on the other shall be deemed to be in the same
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RAYMOND JAMES & ASSOCIATES, INC. Page 24
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company and the Selling Shareholders bear to the
total underwriting discounts and commissions received by the Underwriters, in
each case as set forth in the table on the cover page of the Prospectus (or any
related term sheet used in reliance on Rule 434(b) under the Act); provided
that, in the event that the Underwriters shall have purchased any Additional
Shares hereunder, any determination of the relative benefits received by the
Company and the Selling Shareholders or the Underwriters from the offering of
the Shares shall include the net proceeds (before deducting expenses) received
by the Company and the Selling Shareholders, and the underwriting discounts and
commissions received by the Underwriters, from the sale of such Additional
Shares, in each case computed on the basis of the respective amounts set forth
in the notes to the table on the cover page of the Prospectus (or any related
term sheet used in reliance on Rule 434(b) under the Act). The relative fault
of the Company and the Selling Shareholders on the one hand 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 Company or the Selling Shareholders on the one hand
or by the Underwriters on the other hand and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. Notwithstanding the foregoing, no Selling Shareholder
shall be required to contribute any amount in excess of the proceeds to be
received by such Selling Shareholder (before deducting expenses) from the sale
of Shares sold by such Selling Shareholder hereunder.
The Company, the Selling Shareholders and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this
Section 10 was determined by a 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 the immediately preceding paragraph. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities and
expenses referred to in this Section 10 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 10, no Underwriter shall be required to contribute any amount in excess
of the amount by which the total price of the Shares underwritten by it and
distributed to the public exceeds the amount of any damages which 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 Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 10 are several in proportion to the respective numbers
of Firm Shares set forth opposite their names in Schedule I hereto (or such
numbers of Firm Shares increased as set forth in Section 12 hereof) and not
joint.
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RAYMOND JAMES & ASSOCIATES, INC. Page 25
Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 10 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 10 and the
representations and warranties of the Company and the Selling Shareholders set
forth in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Underwriter or
any person controlling any Underwriter, the Selling Shareholders, the Company,
its directors or officers or any person controlling the Company, (ii)
acceptance of any Shares and payment therefor hereunder, and (iii) any
termination of this Agreement. A successor to any Underwriter or any person
controlling any Underwriter, or to the Company, its directors or officers, or
any person controlling the Company, shall be entitled to the benefits of the
indemnity, contribution and reimbursement agreements contained in this Section
10.
SECTION 11. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The
several obligations of the Underwriters to purchase the Firm Shares hereunder
are subject to the following conditions:
(a) The Registration Statement shall have become
effective not later than 5:00 p.m., New York City time, on the date
hereof, or at such later date and time as shall be consented to in
writing by you, and all filings required by Rules 424(b) and 430A under
the Act shall have been timely made.
(b) Subsequent to the effective date of the
Registration Statement there shall not have occurred any change, or any
development involving, or which might reasonably be expected to involve,
a prospective material adverse change, in the condition (financial or
other), business, business prospects, properties, net worth or results
of operations of the Company and the Subsidiaries, taken as a whole, not
contemplated by the Prospectus (or any supplement thereto), that in your
reasonable opinion, as Representatives of the several Underwriters,
would materially and adversely affect the market for the Shares.
(c) You shall have received on the Closing Date (and
the Additional Closing Date, if any) an opinion of Hughes & Luce,
L.L.P., counsel for the Company and the Selling Shareholders, dated the
Closing Date (and the Additional Closing Date, if any), satisfactory to
you, to the effect that:
(i) Each of the Company and the Subsidiaries has
been duly incorporated and is validly existing as a corporation
in good standing under the laws of its jurisdiction of
incorporation with full corporate or other power and authority to
own and lease its properties and to conduct its business as
described in the Registration Statement and the Prospectus (and
any amendment or supplement thereto). All of the outstanding
shares of capital stock of each of the Subsidiaries
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RAYMOND JAMES & ASSOCIATES, INC. Page 26
have been duly authorized and validly issued, and are fully paid
and nonassessable, and are owned by the Company directly, or
indirectly through one of the other Subsidiaries, free and clear
of any security interest, or to the knowledge of such counsel,
any other voting trust arrangements, liens, encumbrances,
equities, claims or defects in title.
(ii) The authorized capital stock of the Company
conforms in all material respects as to legal matters to the
description thereof contained in the Prospectus under the heading
"Description of Capital Stock."
(iii) All shares of capital stock of the Company
outstanding prior to the issuance of the Shares to be issued and
sold by the Company hereunder have been duly authorized and
validly issued, are fully paid and nonassessable and are free of
any preemptive rights (statutory, contractual or otherwise) that
entitle or will entitle any person to acquire any Shares upon
issuance thereof by the Company.
(iv) All offers and sales of the Company's and
its Subsidiaries' capital stock prior to the date hereof were
made in compliance with the registration provisions of the Act
and the registration provisions of all other applicable state and
federal laws or regulations or any actions under the Act or any
state or federal laws or regulations in respect of any such
offers or sales are effectively barred by effective waivers or
statutes of limitation.
(v) The Shares to be issued and sold to the
Underwriters by the Company hereunder have been duly authorized
and, when issued and delivered to the Underwriters against
payment therefor in accordance with the terms hereof, will be
validly issued, fully paid and nonassessable and free of any
preemptive rights (statutory, contractual or otherwise) that
entitle or will entitle any person to acquire any Shares upon the
issuance thereof by the Company.
(vi) To the knowledge of such counsel, each of
the Selling Shareholders has good and valid title to the Shares
to be sold by such Selling Shareholder under this Agreement free
and clear of all liens, encumbrances, equities or claims, and
full right, power and authority to sell, assign, transfer and
deliver the Shares to be sold by such Selling Shareholder
hereunder.
(vii) Upon delivery of the Shares to be sold by
each of the Selling Shareholders against payment therefor in
accordance with the terms of this Agreement, good and valid title
to such Shares, free and clear of all liens, encumbrances,
equities or claims, will be transferred to each of the several
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RAYMOND JAMES & ASSOCIATES, INC. Page 27
Underwriters which has purchased such Shares in good faith and
without notice of any adverse claim within the meaning of the
Texas Business and Commerce Code.
(viii) The form of certificates for the Shares
conforms to the requirements of the applicable corporate laws of
the State of Texas.
(ix) The Registration Statement has become
effective under the Act and, to the knowledge of such counsel, no
stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose are
pending before or contemplated by the Commission.
(x) The Company has all requisite corporate
power and authority to enter into this Agreement and to issue,
sell and deliver the Shares to be sold by it to the Underwriters
as provided herein, and this Agreement has been duly authorized,
executed and delivered by the Company and is a valid, legal and
binding agreement of the Company enforceable in accordance with
its terms, except as enforceability may be limited by (i) any
bankruptcy, insolvency, moratorium and other laws of general
applicability affecting creditors rights generally, (ii)
limitations imposed by general principles of equity (regardless
of whether enforcement is considered in proceedings at law or in
equity) and (iii) limitations imposed under federal or state laws
on the enforceability of any provisions relating to
indemnification or contribution under this Agreement.
(xi) A Power of Attorney and a Custody Agreement
have been duly executed and delivered by or on behalf of each of
the Selling Shareholders and constitute valid and binding
agreements of each of the Selling Shareholders enforceable in
accordance with their terms, except as enforceability thereof may
be limited by (i) any bankruptcy, insolvency, moratorium and
other laws of general applicability affecting creditors rights
generally, (ii) limitations imposed by general principles of
equity (regardless of whether enforcement is considered in
proceedings at law or in equity), (iii) standards of commercial
reasonableness and good faith and (iv) limitations imposed under
federal or state laws on the enforceability of any provisions
relating to indemnification or contribution under this Agreement.
(xii) This Agreement has been duly executed and
delivered by or on behalf of each of the Selling Shareholders and
constitutes the valid and binding agreement of each of the
Selling Shareholders enforceable in accordance with its terms,
except as enforceability may be limited by (i) any bankruptcy,
insolvency, moratorium and other laws of general applicability
affecting creditors rights generally, (ii) limitations imposed by
general principles of equity (regardless of
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RAYMOND JAMES & ASSOCIATES, INC. Page 28
whether enforcement is considered in proceedings at law or in
equity), (iii) standards of commercial reasonableness and good
faith and (iv) limitations imposed under federal or state laws on
the enforceability of any provisions relating to indemnification
or contribution under this Agreement.
(xiii) Neither the Company nor any of the
Subsidiaries is in violation of its certificate or articles of
incorporation or bylaws, or other organizational documents, or to
the knowledge of such counsel, is in default in any material
respect in the performance of any obligation, agreement or
condition contained in any bond, indenture, note or other
evidence of indebtedness or in any other agreement material to
the Company and the Subsidiaries, taken as a whole, except as has
been disclosed in the Prospectus.
(xiv) Neither the offer, sale or delivery of the
Shares to be issued and sold by the Company, the execution,
delivery or performance of this Agreement, compliance by the
Company with all provisions hereof nor consummation by the
Company of the transactions contemplated hereby conflicts or will
conflict with or constitutes or will constitute a breach of, or a
default under, the certificate or articles of incorporation or
bylaws, or other organizational documents, of the Company or any
of the Subsidiaries or any agreement, indenture, lease or other
instrument to which the Company or any of the Subsidiaries is a
party or by which any of them or any of their respective
properties is bound that is made an exhibit to the Registration
Statement, or results or will result in the creation or
imposition of any lien, charge or encumbrance upon any material
property or assets of the Company or any of the Subsidiaries; nor
will any such action result in any violation of any existing law,
regulation, ruling (assuming compliance with all applicable state
securities and Blue Sky laws), judgment, injunction, order or
decree known to such counsel, applicable to the Company, the
Subsidiaries or any of their respective properties.
(xv) The sale of the Shares to be sold by each of
the Selling Shareholders hereunder and compliance by each of the
Selling Shareholders with all of the provisions of this
Agreement, the Power of Attorney and the Custody Agreement and
the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach or
violation of any terms or provisions of, or constitute a default
under, any statute, rule or regulation or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over any of the Selling Shareholders or the property
of any of the Selling Shareholders, or the provisions of the
articles of incorporation or bylaws or other organizational
documents of any Selling Shareholder if any Selling Shareholder
is a corporation, the articles of partnership or partnership
agreement if any Selling
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RAYMOND JAMES & ASSOCIATES, INC. Page 29
Shareholder is a partnership, or any trust instrument (or similar
document) if any Selling Shareholder is a trust.
(xvi) No consent, approval, authorization or other
order of, or registration or filing with, any court, regulatory
body, administrative agency or other governmental body, agency or
official is required on the part of the Company (except such as
have been obtained under the Act or such as may be required under
state securities or Blue Sky laws governing the purchase and
distribution of the Shares) for the valid issuance and sale of
the Shares to the Underwriters under this Agreement.
(xvii) No consent, approval, authorization or other
order of, or registration or filing with, any court, regulatory
body, administrative agency or other governmental body, agency or
official is required on the part of any of the Selling
Shareholders (except such as have been obtained under the Act or
such as may be required under state securities or Blue Sky laws
governing the purchase and distribution of the Shares) for the
valid sale of the Shares to the Underwriters under this
Agreement.
(xviii) The Registration Statement and the
Prospectus and any supplements or amendments thereto (except for
the financial statements and the notes thereto and the schedules
and other financial and statistical data included or incorporated
by reference therein, as to which such counsel need not express
any opinion) comply as to form in all material respects with the
requirements of the Act.
(xix) To the knowledge of such counsel, (A) other
than as described or contemplated in the Registration Statement
or the Prospectus (or any amendment or supplement thereto), there
are no legal or governmental proceedings pending or threatened
against the Company or any of the Subsidiaries, or to which the
Company or any of the Subsidiaries, or any of their respective
property, is subject, that are required to be described in the
Registration Statement or Prospectus (or any amendment or
supplement thereto) that are not described as required therein,
and (B) there are no agreements, contracts, indentures, leases or
other instruments, that are required to be described in the
Registration Statement or the Prospectus or to be filed as an
exhibit to the Registration Statement that are not described or
filed as required, as the case may be.
(xx) To the knowledge of such counsel, neither
the Company nor any of the Subsidiaries is in material violation
of any law, ordinance, administrative or governmental rule or
regulation applicable to the Company or any of the
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RAYMOND JAMES & ASSOCIATES, INC. Page 30
Subsidiaries or any of their respective properties, or of any
decree of any court or governmental agency or body having
jurisdiction over the Company or any of the Subsidiaries or any
of their respective properties, except where such violation does
not and will not have a material adverse effect on the condition
(financial or other), business, business prospects, properties,
net worth or results of operation of the Company and the
Subsidiaries, taken as a whole.
(xxi) Without opining as to any requirement to
qualify to transact business as a foreign corporation in any
jurisdiction, to the knowledge of such counsel, the Company and
each of the Subsidiaries have such permits, licenses franchises,
approvals, consents and authorizations of governmental or
regulatory authorities ("permits"), as are necessary to own their
properties and to conduct their business in the manner described
in the Prospectus, subject to such qualifications as may be set
forth in the Prospectus; the Company and each of the Subsidiaries
have fulfilled and performed all of their material obligations
with respect to such permits and no event has occurred which
allows, or after notice or lapse of time would allow, revocation
or termination thereof or result in any other material impairment
of the rights of the holder of any such permit, subject in each
case to such qualification as may be set forth in the Prospectus;
and, except as described in the Prospectus, such permits contain
no restrictions that are materially burdensome to the Company or
any of the Subsidiaries.
(xxii) Such counsel has reviewed all agreements,
contracts, indentures, leases or other documents or instruments
described in the Registration Statement and the Prospectus (other
than routine contracts entered into by the Company or any
Subsidiary for the purchase of materials or the sale of products,
entered into in the normal course of business) and such
agreements, contracts, indentures, leases or other documents or
instruments are fairly summarized or described therein, and filed
as exhibits thereto as required.
(xxiii) Such counsel has no reason to believe that
the descriptions in the Prospectus of statutes, regulations or
legal or governmental proceedings are other than accurate or fail
to present fairly the information required to be shown.
(xxiv) The Company is not an "investment company"
or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended.
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RAYMOND JAMES & ASSOCIATES, INC. Page 31
In rendering such opinion, counsel may rely, to the extent they
deem such reliance proper, as to matters of fact upon certificates of officers
of the Company, the Selling Shareholders and of government officials and upon
the Powers of Attorney and the Custody Agreement. Copies of all such
certificates shall be furnished to you and your counsel on the Closing Date
(and the Additional Closing Date, if applicable).
In rendering such opinion, in each case where such opinion is
qualified by "the knowledge of such counsel," such counsel may rely as to
matters of fact upon certificates of executive and other officers and employees
of the Company or its Subsidiaries as you and such counsel shall deem are
appropriate and such other procedures as you and such counsel shall mutually
agree; provided, however, in each such case, such counsel shall state that it
has no knowledge contrary to the information contained in such certificates or
developed by such procedures and knows of no reason why you should not
reasonably rely upon the information contained in such certificates or
developed by such procedures.
In addition to the opinion set forth above, such counsel shall
state that during the course of the preparation of the Registration Statement
and the Prospectus and the amendments thereto, nothing has come to the
attention of such counsel which has caused it to believe that the Registration
Statement or any amendment thereto (except for the financial statements and
other financial and statistical information contained therein or omitted
therefrom as to which no opinion need be expressed), at the time it became
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus as amended or
supplemented, as of the date of the opinion (except as aforesaid), contains an
untrue statement of a material fact or omits to state a material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
(d) You shall have received on the Closing Date (and
the Additional Closing Date, if any) an opinion of Baker & Botts,
L.L.P., counsel for the Underwriters, dated the Closing Date (and the
Additional Closing Date, if any), with respect to the issuance and sale
of the Firm Shares and the Additional Shares, if any, by the Company,
the Registration Statement and other related matters as you may
reasonably request and as is customary in underwritten offerings of
common equity securities and the Company and its counsel shall have
furnished to your counsel such documents as they may reasonably request
for the purpose of enabling them to pass upon such matters.
(e) You shall have received letters addressed to you
and dated the date hereof and the Closing Date (and the Additional
Closing Date, if any) from Coopers & Lybrand, L.L.P., independent
certified public accountants, substantially in the forms heretofore
approved by you.
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RAYMOND JAMES & ASSOCIATES, INC. Page 32
(f) (i) No stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings for
that purpose shall have been taken or, to the knowledge of the Company,
shall be contemplated by the Commission at or prior to the Closing Date;
(ii) there shall not have been any change in the capital stock of the
Company nor any material increase in the short-term or long-term debt of
the Company (other than in the ordinary course of business) from that
set forth or contemplated in the Registration Statement or the
Prospectus (or any amendment or supplement thereto), except as may
otherwise be stated in the Registration Statement and Prospectus (or any
amendment or supplement thereto), or any material adverse change
(present or potential future) in the condition (financial or other),
business, business prospects, properties, net worth or results of
operations of the Company and the Subsidiaries, taken as a whole; (iii)
the Company and the Subsidiaries shall not have any liabilities or
obligations, direct or contingent (whether or not in the ordinary course
of business) that are material to the Company and the Subsidiaries,
taken as a whole, other than those reflected in the Registration
Statement or the Prospectus (or any amendment or supplement thereto);
and (iv) all of the representations and warranties of the Company
contained in this Agreement shall be true and correct in all material
respects on as of the date hereof and on and as of the Closing Date (and
the Additional Closing Date, if any) as if made on and as of the Closing
Date (and the Additional Closing Date, if any), and you shall have
received a certificate, dated the Closing Date (and the Additional
Closing Date, if any) and signed by the chief executive officer and the
chief financial officer of the Company (or such other officers as are
acceptable to you) to the effect set forth in this Section 11(f) and in
Section 11(g) hereof.
(g) The Company shall not have failed in any material
respect at or prior to the Closing Date (and the Additional Closing
Date, if any) to have performed or complied with any of its agreements
herein contained and required to be performed or complied with by it
hereunder at or prior to the Closing Date (and the Additional Closing
Date, if any).
(h) The Company shall have furnished or caused to have
been furnished to you such further certificates and documents as you
shall have reasonably requested.
(i) At or prior to the Closing Date, you shall have
received the written commitment of each of the Company's directors and
executive officers and certain other shareholders previously identified
by you in writing to the Company or counsel for the Company not to
offer, sell, contract to sell or otherwise dispose of any shares of
Common Stock or rights to purchase Common Stock or any securities
convertible into or exercisable or exchangeable for, Common Stock, other
than in accordance with this Agreement for a period of 120 days after
commencement of the public offering of the Shares by the Underwriters
without the prior written consent of Raymond James & Associates, Inc.
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RAYMOND JAMES & ASSOCIATES, INC. Page 33
All such opinions, certificates, letters and other documents will
be in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to you.
The several obligations of the Underwriters to purchase
Additional Shares hereunder are subject to the satisfaction on and as of the
Additional Closing Date of the conditions set forth in this Section 11, except
that, if the Additional Closing Date is other than the Closing Date, the
certificates, opinions and letters referred to in paragraphs (c) through (i)
shall be dated in the Additional Closing Date and the opinions called for by
paragraphs (c) and (d) shall be revised to reflect the sale of Additional
Shares.
SECTION 12. EFFECTIVE DATE OF AGREEMENT. This Agreement shall
become effective upon the later of (a) the execution and delivery hereof by the
parties hereto, or (b) release of notification of the effectiveness of the
Registration Statement by the Commission.
If any one or more of the Underwriters shall fail or refuse to
purchase Firm Shares which it or they have agreed to purchase hereunder, and
the aggregate number of Firm 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 Firm Shares, each non-defaulting
Underwriter shall be obligated, severally, in the proportion which the number
of Firm Shares set forth opposite its name in Schedule I hereto bears to the
aggregate number of Firm Shares set forth opposite the names of all non-
defaulting Underwriters or in such other proportion as you may specify in the
Agreement Among Underwriters, to purchase the Firm Shares which such defaulting
Underwriter or Underwriters agreed, but failed or refused, to purchase. If 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 and arrangements
satisfactory to you, the Company for the purchase of such Firm Shares are not
made within 96 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Underwriter or the Company. In any
such case which does not result in termination of this Agreement, either you or
the Company 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 the Prospectus or any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any such
default of any such Underwriter under this Agreement.
SECTION 13. TERMINATION OF AGREEMENT. This Agreement shall be
subject to termination in your absolute discretion, without liability on the
part of any Underwriter to the Company by notice to the Company, if prior to
the Closing Date or the Additional Closing Date (if different from the Closing
Date and then only as to the Additional Shares), as the case may be, (i)
trading in securities generally on the New York Stock Exchange, American Stock
Exchange or the Nasdaq National Market shall have been suspended or materially
limited, (ii) trading of any
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RAYMOND JAMES & ASSOCIATES, INC. Page 34
securities of the Company, including the Shares, on the Nasdaq National Market
shall have been suspended or materially limited, whether as the result of a
stop order by the Commission or otherwise, (iii) a general moratorium on
commercial banking activities in New York, Texas, or Florida shall have been
declared by either federal or state authorities, (iv) there shall have occurred
any outbreak or escalation of hostilities or other international or domestic
calamity, crisis or change in political, financial or economic conditions or
other material event the effect of which on the financial markets of the United
States is such as to make it, in your judgment, impracticable or inadvisable to
market the Shares or to enforce contracts for the sale of the Shares, or (v)
the Company or any of the Subsidiaries shall have, in the sole reasonable
judgment of the Representatives, sustained any material loss or interference
with their respective businesses or properties from fire, flood hurricane,
accident, or other calamity, whether or not covered by insurance, or from any
labor disputes or any legal or governmental proceeding, or there shall have
been any material adverse change (including, without limitation, a material
change in management or control of the Company) in the condition (financial or
otherwise), business, business prospects, properties, net worth or results of
operations of the Company and the Subsidiaries, taken as a whole, except in
each case as described in, or contemplated by, the Prospectus (excluding any
amendment or supplement thereto). Notice of such cancellation shall be
promptly given to the Company and its counsel by telegraph or telephone and
shall be subsequently confirmed by letter.
SECTION 14. INFORMATION FURNISHED BY THE UNDERWRITERS. The last
paragraph of text on the front cover page of the Prospectus, the stabilizing
and passive market making legends appearing as the first and second paragraphs
of text on page 2 of the Prospectus, the information set forth in the table
under the caption "Underwriting" in the Prospectus and the information set
forth in the third and fourth paragraphs under the caption "Underwriting" in
the Prospectus, constitute all the information furnished by or on behalf of the
Underwriters through you or on your behalf as such information is referred to
in Sections 7(a), 7(b) and 10 hereof.
SECTION 15. MISCELLANEOUS. Except as otherwise provided in
Sections 5, 12 and 13 hereof, notice given pursuant to any of the provisions of
this Agreement shall be in writing and shall be delivered
(i) to the Company:
Schlotzsky's, Inc.
200 West 4th Street
Austin, Texas 78701
Attention: John C. Wooley, President
Facsimile: (512) 477-2897
35
RAYMOND JAMES & ASSOCIATES, INC. Page 35
with copy to:
Hughes & Luce, L.L.P.
111 Congress Avenue
Austin, Texas 78701
Attention: Phillip M. Slinkard, Esq.
Facsimile: (512) 482-6859
(ii) to the Underwriters:
Raymond James & Associates, Inc.
880 Carillon Parkway
St. Petersburg, Florida 33716
Attention: Gary A. Downing, Managing Director
Facsimile: (813) 573-8058
with copy to:
Baker & Botts, L.L.P.
2001 Ross Avenue
Dallas, Texas 75201
Attention: Douglass M. Rayburn, Esq.
Facsimile: (214) 953-6503
This Agreement has been and is solely for the benefit of the
several Underwriters, the Company, its directors and officers, the Selling
Shareholders and the other controlling persons referred to in Section 10
hereof, and their respective successors and assigns, to the extent provided
herein, and no other person shall acquire or have any right under or by virtue
of this Agreement. Neither of the terms "successor" and "successors and
assigns" as used in this Agreement shall include a purchaser from you of any of
the Shares in his status as such purchaser.
SECTION 16. APPLICABLE LAW; COUNTERPARTS. This Agreement shall
be governed by and construed in accordance with the laws of the State of
Florida, without reference to choice of law principles thereunder. This
Agreement may be signed in various counterparts which together shall constitute
one and the same instrument. This Agreement shall be effective when, but only
when, at least one counterpart hereof shall have been executed on behalf of
each party hereto.
36
RAYMOND JAMES & ASSOCIATES, INC. Page 36
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter and your acceptance shall constitute a binding agreement
between us.
Very truly yours,
SCHLOTZSKY'S, INC.
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
SELLING SHAREHOLDERS
Named in Schedule II hereto
By:
----------------------------------
(Attorney-in-Fact)
By:
----------------------------------
(Attorney-in-Fact)
37
CONFIRMED as of the date first above
mentioned, on behalf of itself and the other
several Underwriters named in Schedule I
hereto.
RAYMOND JAMES & ASSOCIATES, INC.
MORGAN KEEGAN & COMPANY, INC.
RAUSCHER PIERCE REFSNES, INC.
By: RAYMOND JAMES & ASSOCIATES, INC.
By:
----------------------------------------
Authorized Representative
38
SCHEDULE I
NUMBER
OF FIRM
NAME SHARES
- ---- --------
Raymond James & Associates, Inc . . . . . . . . . . . . . . .
Morgan Keegan & Company, Inc. . . . . . . . . . . . . . . . . .
Rauscher Pierce Refsnes, Inc. . . . . . . . . . . . . . . . . .
---------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,200,000
=========
39
SCHEDULE II
Number of Firm Maximum Number of
Shares to be Sold by Additional Shares to be
Name of Selling Shareholder Selling Shareholder Sold by Selling Shareholder
--------------------------- ------------------- ---------------------------
Buxtehude Holding B.V. 289,824 77,594
Getov Holding B.V. 227,468 0
John C. Wooley 87,500 13,125
Jeffrey J. Wooley 37,500 5,625
Raymond A. Rodriguez 12,208 1,831
Marybeth Zindrick 14,000 0
George and Maureen Miz 10,000 0
Larry and Elizabeth Johnson 10,000 0
Walter Ronemous 6,250 0
Richard Sutliff 4,000 0
Lawrence Kaplan 1,250 0
------- -------
700,000 98,175
======= =======