<PAGE> 1
1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 28, 1997 or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number: 0-29410
IL FORNAIO (AMERICA) CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 94-2766571
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1000 SANSOME STREET, SUITE 200
SAN FRANCISCO, CALIFORNIA 94111
(Address of principal executive offices) (Zip Code)
(415) 986-1505
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [ ] Yes [x] No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
As of October 31, 1997, there were 5,807,891 shares outstanding of the
Registrant's Common Stock ($.001 par value).
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IL FORNAIO (AMERICA) CORPORATION
QUARTERLY REPORT ON FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Page
Number
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Balance Sheets - September 28, 1997 and
December 29, 1996.............................................................3
Statements of Income-Three months and
Nine months ended September 28, 1997 and September 29, 1996...................4
Statements of Cash Flows-Nine months ended
September 28, 1997 and September 29, 1996.....................................5
Notes to Financial Statements-September 28, 1997.................................6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations......................................................7
Part II. OTHER INFORMATION
Item 2. Changes in Securities
Item 6. Exhibits and Reports on Form 8-K
</TABLE>
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3
Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
IL FORNAIO (AMERICA) CORPORATION
BALANCE SHEETS
(in thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
SEPTEMBER 28, DECEMBER 29,
1997 1996
------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ 487 $ 1,003
Restricted cash 312 338
Short-term investment securities 12,320 698
Accounts receivable 1,146 1,271
Inventories 1,589 1,351
Prepaid expenses and other assets 878 1,064
Deferred tax assets, net 579 579
-------- --------
Total current assets 17,311 6,304
-------- --------
Property and equipment, net 27,032 26,179
Deferred tax assets, net 1,927 1,927
Other assets 472 445
======== ========
Total assets $ 46,742 $ 34,855
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,934 $ 2,292
Accrued expenses 5,323 3,704
Current portion of debt -- 150
-------- --------
Total current liabilities 7,257 6,146
-------- --------
Reserve for store closures 382 346
Deferred lease incentives 4,955 5,427
Commitments
Stockholders' equity:
Preferred stock, $.001 par value;
5,000,000 shares authorized; none and
2,308,196 shares issued and
outstanding, respectively -- 16,885
Common stock, $.001 par value; 20,000,000
Shares authorized; 5,582,891 and 1,611,766
Shares issued and outstanding, respectively 6 7,980
Additional paid-in capital 34,181 --
Accumulated deficit (39) (1,929)
-------- --------
Total stockholders' equity 34,148 22,936
-------- --------
Total liabilities and stockholders' equity $ 46,742 $ 34,855
======== ========
</TABLE>
See notes to financial statements
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4
IL FORNAIO (AMERICA) CORPORATION
STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
----------------------------- -----------------------------
September 28, September 29, September 28, September 29,
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Restaurants $ 16,409 $ 12,784 $ 48,525 $ 37,517
Wholesale bakeries 1,586 1,504 4,736 4,395
Retail bakeries -- 884 311 3,484
-------- -------- -------- --------
Total revenues 17,995 15,172 53,572 45,396
-------- -------- -------- --------
Costs and expenses:
Cost of sales 4,196 3,735 12,546 11,008
Operating expenses 10,405 8,748 31,108 26,317
Depreciation and amortization 951 995 2,878 2,929
General and administrative expenses 1,506 1,203 4,462 3,526
Provision for store closures -- -- (470) --
-------- -------- -------- --------
Total costs and expenses 17,058 14,681 50,524 43,780
-------- -------- -------- --------
Income from operations 937 491 3,048 1,616
Other (income) expenses:
Interest income (57) (51) (168) (124)
Interest expense -- 8 2 37
-------- -------- -------- --------
Total other (income)
expenses, net (57) (43) (166) (87)
-------- -------- -------- --------
Income before provision for
income taxes 994 534 3,214 1,703
Provision for income taxes 411 222 1,326 698
======== ======== ======== ========
Net income $ 583 $ 312 $ 1,888 $ 1,005
======== ======== ======== ========
Net income per share:
Primary $ 0.12 $ 0.07 $ 0.39 $ 0.22
Fully-diluted $ 0.12 $ 0.07 $ 0.38 $ 0.22
Weighted average number of common
stock and common stock equivalents
Primary 5,275 5,020 5,019 5,015
Fully-diluted 5,281 5,020 5,142 5,015
</TABLE>
See notes to financial statements
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5
IL FORNAIO (AMERICA) CORPORATION
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Nine months Nine months
ended ended
September 28, September 29,
1997 1996
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,888 $ 1,005
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,878 2,929
Amortization of deferred lease incentives (472) (311)
Provision for store closures (470) --
Gain on sale of property and equipment (300) (72)
Retirement of fixed assets 271 180
Changes in:
Restricted cash 26 (31)
Accounts receivable 125 71
Inventories (238) 13
Prepaid expenses and other assets 707 42
Other assets (27) 16
Accounts payable (358) (105)
Accrued expenses 1,619 (516)
-------- -------
Net cash provided by operating activities 5,649 3,221
-------- -------
Cash flows from investing activities:
Capital expenditures (4,793) (3,626)
Proceeds from sale of property and equipment 1,081 626
Purchases of short-term investments (11,622) (599)
-------- -------
Net cash used in investing activities (15,334) (3,599)
-------- -------
Cash flows from financing activities:
Payments on debt (150) (450)
Proceeds from the issuance of common stock, net 9,295 133
Exercise of stock options 24 39
-------- -------
Net cash provided by (used in)
financing activities 9,169 (278)
-------- -------
Decrease in cash and equivalents (516) (656)
Cash and equivalents, beginning of period 1,003 1,379
======== =======
Cash and equivalents, end of period $ 487 $ 723
======== =======
</TABLE>
See notes to financial statements
<PAGE> 6
6
IL FORNAIO (AMERICA) CORPORATION
Notes to Condensed Financial Statements
(Unaudited)
1. Organization and Basis of Presentation
Il Fornaio (America) Corporation (the "Company") is engaged in
restaurant operations and the production and sale of Italian bakery products for
the wholesale and retail market. As of September 28, 1997, the Company owned and
operated 13 Italian white tablecloth restaurants and five wholesale bakeries
located in California. Eleven of the restaurants and all of the wholesale
bakeries are located in California. One restaurant is located in Portland and
one restaurant is located in Las Vegas.
The accompanying condensed unaudited financial statements of the Company
for the three months and nine months ended September 28, 1997 and September 29,
1996, respectively, have been prepared in accordance with generally accepted
accounting principles, and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Certain information and footnote disclosures, normally included
in financial statements prepared in accordance with generally accepted
accounting principles, have been condensed or omitted pursuant to such rules and
regulations. It is suggested that these interim condensed financial statements
be read in conjunction with the Company's most recent audited financial
statements and notes thereto included in the Company's Prospectus dated
September 18, 1997, filed with the Securities and Exchange Commission as part of
its Registration Statement on Form S-1 (No. 333-23605)(the "Prospectus"). In the
opinion of management, all adjustments (which include only normal recurring
adjustments) necessary for a fair presentation of the financial position,
results of operations and cash flows for the interim periods presented have been
made. The interim financial information herein is not necessarily indicative of
results for any future interim periods or for the full fiscal year ending
December 28, 1997.
2. Cash Equivalents and Short-Term Investment Securities
Cash and equivalents-The Company considers all highly liquid debt
instruments which are not actively traded and have a maturity of three
months or less to be cash equivalents.
Short-term investment securities- The Company generally considers all
short-term debt investment securities which are actively traded to be
available for sale. For short-term investment securities classified as
available for sale at September 28, 1997 and December 29, 1996, costs
approximate market.
3. Earnings Per Share
Net income per share is computed using the weighted average number of
common shares and dilutive common equivalent shares attributable to convertible
preferred stock and stock options outstanding during the period.
<PAGE> 7
7
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings per Share, which is required to be adopted in the
Company's financial statements for the fiscal year ending December 28, 1997.
Under the Statement, primary earnings per share ("EPS") computed in accordance
with Accounting Principle Board Opinion No. 15 will be replaced with a new
simpler calculation called "basic EPS" and the Company will be required to
restate comparative EPS amounts for all prior periods. Under the new
requirements, basic EPS for the three and nine month periods ended September 28,
1997 and September 29, 1996 will not change significantly from primary EPS as
disclosed. Fully diluted EPS is not anticipated to change significantly for 1997
but will be renamed "diluted EPS". The Company plans to implement the Statement
in the fourth quarter of 1997.
4. Stockholders' Equity
On September 24, 1997, each outstanding share of Series B, C, E and F
preferred stock was converted into 1.262 shares of common stock upon the closing
of the Company's initial public offering.
On September 24, 1997, the Company issued and sold an aggregate of 1.0
million shares of common stock pursuant to an initial public offering at $11.00
per share which closed on September 18, 1997. The net proceeds to the Company,
after payment of underwriting fees and offering expenses were approximately $9.1
million.
On October 1, 1997, the Company issued and sold an aggregate of 225,000
shares of Common Stock at $11.00 per share pursuant to the exercise by the
underwriters of their over-allotment option under the Underwriting Agreement.
The net proceeds of approximately $2.3 million initially have been used to
purchase short-term investment securities.
5. Reclassifications
Certain amounts for December 29, 1996 have been reclassified to conform
to the September 28, 1997 financial statement presentation. These
reclassifications have no effect on previously reported net income or
stockholders' equity.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following Management's Discussion and Analysis of Financial
Condition and Results of Operations contains forward-looking statements that
involve risks and uncertainties. Such forward looking statements may be deemed
to include the timing of anticipated restaurant openings, the projected
investment and costs required for future restaurants and the adequacy of
anticipated sources of cash to fund the Company's future capital requirements
through 1998. Words such as "believes," "anticipates," "expects," "intends" and
similar expressions are intended to identify forward-looking statements, but are
not the exclusive means of identifying such statements. Actual events or results
may differ materially from the results discussed in the forward-looking
statements. Factors that might cause such a difference include, but are not
limited to, those risks and uncertainties discussed below, as well as other
risks set forth under the caption "Risk Factors" in the Company's Prospectus.
The following discussion should be
<PAGE> 8
8
read in conjunction with the Financial Statements and the Notes thereto included
in Item 1 of this Quarterly Report on Form 10-Q and in the Prospectus.
OVERVIEW
The Company's revenues consist of restaurant sales and wholesale bakery
sales and, prior to February 1997, free-standing retail bakery sales. Comparable
restaurant sales are calculated to include a new restaurant only after their
first full month following the eighteenth month of its operation. Comparable
restaurant revenues may fluctuate significantly as a result of a variety of
factors. See "Factors Affecting Operating Results" below.
Cost of sales is composed primarily of the cost of food and beverages.
Operating expenses include payroll and fringe benefit costs, occupancy costs,
marketing costs and other store-level costs. The majority of these costs are
variable and are expected to increase with sales volume. Occupancy costs include
both a fixed and percentage portion of rent. Depreciation and amortization
includes the amortization of pre-opening costs associated with the opening of
new locations. The Company capitalizes pre-opening expenses for each of its new
units and amortizes such costs over the 12-month period following the opening of
the unit. Pre-opening costs consist of direct costs related to hiring and
training the initial workforce and certain other direct costs related to opening
new restaurants.
General and administrative expenses are composed of expenses associated
with all corporate and administrative functions that support existing operations
and provide an infrastructure to support future growth, including management and
staff salaries, employee benefits, travel, information systems and training and
market research. Certain expenses of recruiting and training unit management
personnel are also included as general and administrative expenses.
<PAGE> 9
9
RESULTS OF OPERATIONS FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 28,
1997, COMPARED TO THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 29, 1996
The following table set forth unaudited operating results for the three
and nine-month periods ended September 28, 1997 and September 29, 1996,
respectively, as a percentage of sales in each of these periods. This data has
been derived from the unaudited financial statements.
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 28, September 29, September 28, September 29,
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Restaurants 91.2% 84.3% 90.6% 82.6%
Wholesale bakeries 8.8 9.9 8.8 9.7
Retail bakeries -- 5.8 0.6 7.7
----- ----- ----- -----
Total revenues 100.0 100.0 100.0 100.0
----- ----- ----- -----
Costs and expenses:
Cost of sales 23.3 24.6 23.4 24.2
Operating expenses 57.8 57.7 58.1 58.0
Depreciation and amortization 5.3 6.6 5.4 6.4
General and administrative expenses 8.4 7.9 8.3 7.8
Provision for store closures -- -- (0.9) --
----- ----- ----- -----
Total costs and expenses 94.8 96.8 94.3 96.4
----- ----- ----- -----
Income from operations 5.2 3.2 5.7 3.6
Other (income) expenses:
Interest income (0.3) (0.3) (0.3) (0.2)
Interest expense -- -- -- --
----- ----- ----- -----
Total other (income)
expenses, net (0.3) (0.3) (0.3) (0.2)
----- ----- ----- -----
Income before provision
for income taxes 5.5 3.5 6.0 3.8
Provision for income taxes 2.3 1.5 2.5 1.6
===== ===== ===== =====
Net income 3.2% 2.0% 3.5% 2.2%
===== ===== ===== =====
</TABLE>
Revenues increased by 18.6% to $18.0 million for the third quarter of 1997 from
$15.2 million for the third quarter of 1996 and by 18% to $53.6 million for the
first nine months of 1997 from $45.4 million for the first nine months of 1996.
The increases primarily reflected a 9.5% increase in comparable restaurant sales
for the third quarter of 1997 and a 7.2% increase in comparable restaurant sales
for the first nine months of 1997. The increase in revenues was also
attributable to additional sales of $2.5 million for the third quarter of 1997
and $11 million for the first nine months of 1997 from two new restaurants,
including one that opened in January 1997. These factors more than offset the
$884,000 decrease in revenues for the third quarter of 1997 and $3.2 million
decrease for the first nine months of 1997 attributable to the disposition of
four free-standing retail bakeries in 1996 and the disposition of the four
remaining free-standing retail bakeries in February 1997.
Cost of sales decreased as a percentage of revenues to 23.3% for the third
quarter of 1997 and 23.4% for the first nine months of 1997 compared to 24.6%
and 24.2% for the respective comparable periods in 1996 primarily as a result of
a menu price increase in December 1996 as well as improved purchasing
capabilities and stable food and beverage prices during the 1997 period.
<PAGE> 10
10
Operating expenses as a percentage of revenues increased slightly to 57.8% for
the third quarter of 1997 and 58.1% for the first nine months of 1997 compared
to 57.7% and 58.0% for the respective comparable periods in 1996. Depreciation
and amortization decreased as a percentage of revenues to 5.3% for the third
quarter of 1997 and 5.4% for the first nine months of 1997 compared to 6.6% and
6.4% for the respective comparable periods in 1996, primarily reflecting
increased revenues in the 1997 periods.
General and administrative expenses increased as a percentage of revenues to
8.4% for the third quarter of 1997 and 8.3% for the first nine months of 1997
compared to 7.9% and 7.8% for the respective comparable periods in 1996. This
increase was primarily due to the accrual of higher performance-based management
bonuses in the 1997 periods and, to a lesser extent, higher market research
costs.
As a result of the disposition of the Costa Mesa restaurant in June 1997, the
Company recorded in the nine months ended September 28, 1997, a $470,000 pre-tax
reversal of the provision for store closures originally recorded in 1993.
Interest expense decreased in the third quarter and the first nine months of
1997 as a result of repayment in full in March 1997 of a term loan held by a
commercial bank. Interest income increased in the third quarter of 1997 and
first nine months of 1997 compared to the same periods, respectively, in 1996 as
a result of the Company's investments of cash generated from operations.
The provisions for income taxes in the third quarter and first nine months of
1997 and 1996, respectively, are based upon the Company's estimated effective
tax rate.
Net income for the third quarter of 1997 increased by $271,000, or 86.9%, to
$583,000 from $312,000 for the third quarter of 1996. Net income per share for
the third quarter of 1997 was $0.12 per share versus $0.07 for the comparable
period in 1996. The pro-forma net income per share upon adoption of SFAS 128 for
the third quarter of 1997 will be $0.11.
For the first nine months of 1997, net income increased by $883,000, or 87.9%,
to $1.9 million from $1.0 million for the same period of 1996. Net income per
share for the first nine months of 1997 was $0.38 per share versus $0.22 for the
comparable period in 1996.
FACTORS AFFECTING OPERATING RESULTS
The Company's business is subject to a number of challenges and risks
including, among other things, the risks associated with the Company's pursuit
of a more aggressive growth strategy, risks related to the Company's relatively
small operations base and the geographic concentration of the Company's
restaurants, uncertainties associated with possible changes in food and labor
costs and the potential impact of governmental regulation, risks related to the
Company's dependence on its key personnel, uncertainties related to the
intensely competitive nature of the restaurant business, as well as potential
liabilities associated with long-term leases. In addition, a number of
scientists have predicted unusually adverse weather conditions for this winter,
especially on the West Coast, and if these predictions are correct, such
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adverse weather conditions could have a material adverse effect on the Company's
business, financial condition and results of operations.
The Company's quarterly operating results may fluctuate significantly as
a result of a variety of factors, including general economic conditions,
consumer confidence in the economy, changes in consumer preferences, competitive
factors, weather conditions, the timing of new restaurant openings and related
expenses, net sales contributed by new restaurants, the Company's ability to
execute its business strategy, and increases or decreases in comparable
restaurant revenues. Due to the foregoing factors, results for any one quarter
are not necessarily indicative of results to be expected for any other quarter
or for any year and, from time to time in the future, the Company's results of
operations may be below the expectations of public market analysts and
investors. Comparable restaurant sales results may also vary from period to
period as a result of similar factors. These and other risk factors are
discussed in more detail in the Company's Prospectus under the caption "Risk
Factors."
LIQUIDITY AND CAPITAL RESOURCES
At September 28, 1997, the Company had $13.1 million in cash, cash equivalents
and short-term investment securities, including approximately $9.1 million in
net proceeds from the Company's initial public offering which closed on
September 24, 1997. In October 1997, the Company received approximately $2.3
million in net proceeds as a result of the exercise by the underwriters of the
offering of their option to purchase additional shares to cover over-allotments.
For the periods presented, the Company has funded its capital requirements
primarily with cash flow generated from new and existing restaurant operations.
The cash flow from operations increased to $5.6 million for the first nine
months of 1997 from $3.2 million during the same period in 1996, due primarily
to the increase in comparable restaurant sales and the addition of new
restaurants. As of September 28, 1997, the Company had a credit agreement which
provided for a $3.0 million line of credit. In October 1997, this credit
agreement line was raised to $5.0 million. The Company had no borrowings
outstanding under the credit line during these periods.
Net cash provided by financing activities was $9.2 million for the first nine
months of 1997 as compared with the use of $278,000 in cash for the same period
in 1996. The difference related primarily to the receipt of $9.1 million in net
proceeds from the initial public offering. The term loan held by a commercial
bank was repaid in full in March 1997.
Capital expenditures were $4.8 million for the first nine months of 1997 as
compared to $3.6 million in the first nine months of 1996. To date in 1997, the
Company has opened one restaurant and one wholesale bakery and has completed the
renovation of one of its existing restaurants. Additionally, the Company is
currently in the process of constructing two additional restaurants. The Company
intends to open one of these restaurants in 1997. Total capital expenditures are
expected to be approximately $6.0 million in 1997. The Company expects that its
planned future restaurants will require, on average, a total investment by the
Company per restaurant, net of anticipated landlord contributions, of
approximately $1.7 million, with additional average pre-opening costs per
restaurant of approximately $200,000.
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12
The Company's future capital requirements and the adequacy of its
available funds will depend on many factors, including the pace of expansion,
the size of restaurants developed and the nature of the arrangements negotiated
with landlords. Although no assurance can be given, the Company believes that
anticipated cash flow from operations, borrowings under the credit agreement and
proceeds from the initial public offering will be sufficient to fund its capital
requirements, including planned expansion and ongoing maintenance and renovation
of existing restaurants, at least through 1998. In the event that additional
capital is required, the Company may seek to raise that capital through public
or private equity or debt financings. There can be no assurance that such
capital will be available on favorable terms, if at all.
INFLATION
The primary inflationary factors affecting the Company's operations are
food and labor costs. A large number of the Company's restaurant personnel are
paid at rates based on the applicable minimum wage, and increases in the minimum
wage directly affect the Company's labor costs. To date, inflation has not had a
material impact on the Company's operations. The minimum wage increased under
recent federal legislation to $5.15 an hour in September 1997 and will increase
in California to $5.75 an hour in March 1998.
Part II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(a) During the period, the Board of Directors of the Company adopted an
amendment to the Company's By-laws to provide that special meetings of
stockholders may be called only by the Company's Chairman of the Board, Chief
Executive Officer or a majority of the Board of Directors.
(d) The Company's Registration Statement of Form S-1 covering the sale
of 1,725,000 shares of Common Stock (No. 333-23605) (the "Registration
Statement") was declared effective by the Commission on September 18, 1997. The
offering commenced on September 19, 1997. All of the shares registered under the
Registration Statement were sold prior to termination of the offering. The
managing underwriters of the offering were Montgomery Securities and BT Alex
Brown. The shares were sold to the public at a price of $11.00 per share. The
number and aggregate offering price to the public of shares sold for the
accounts of the Company and certain selling stockholders of the Company was as
follows:
<TABLE>
<CAPTION>
Shares Sold Aggregate Offering Price
----------- ------------------------
<S> <C> <C>
For the account of
the Company* 1,225,000 $13,475,000
</TABLE>
<PAGE> 13
13
<TABLE>
<S> <C> <C>
For the account of
the selling stockholders 500,000 $ 5,550,000
</TABLE>
- ----------------
* Includes 225,000 shares sold on October 1, 1997 upon exercise of the
underwriters' over-allotment option for an aggregate offering price to
the public of $2,475,000.
- ----------------
The aggregate amount of expenses incurred for the Company's account in
connection with the issuance and distribution of the Common Stock registered
(including shares issued upon exercise of the underwriters' over-allotment
option on October 1, 1997) was as follows:
<TABLE>
<S> <C>
Underwriting discounts and commissions.............................. $ 943,250
Other expenses**.................................................... $1,158,806
----------
Total expenses**................................................ $2,102,056
==========
</TABLE>
- ----------------
** Estimated
None of such expenses were paid to affiliates, directors or officers of the
Company, associates of officers or directors or persons or entities owning 10%
or more of any class of equity securities of the Company.
The estimated net proceeds to the Company of the offering (including the net
proceeds from the sale of shares issued upon exercise of the underwriter's
over-allotment option on October 1, 1997) were $11.4 million. From the effective
date of the offering to September 28, 1997 all of the net proceeds were invested
in short-term, investment-grade, interest-bearing securities.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 By-laws, as amended, of the Company
10.1 Underwriting Agreement, dated September 18, 1997, between
the Company and the Representatives of the Underwriters
11.1 Calculation of net income per share
27.1 Financial Data Schedule
<PAGE> 14
14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Il Fornaio (America) Corporation
Date: November 7, 1997 By: /s/ LAURENCE B. MINDEL
--------------------------------------------
Laurence B. Mindel
Chairman of the Board and Chief
Executive Officer and
(Principal Executive Officer)
Date: November 7, 1997 By: /s/ PAUL J. KELLEY
--------------------------------------------
Paul J. Kelley
Vice President, Finance and Secretary
(Principal Financial and Accounting Officer)
<PAGE> 1
Exhibit 3.1
BYLAWS
OF
IL FORNAIO (AMERICA) DELAWARE CORPORATION
(A DELAWARE CORPORATION)
<PAGE> 2
BYLAWS
OF
IL FORNAIO (AMERICA) DELAWARE CORPORATION
(A DELAWARE CORPORATION)
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the corporation
in the State of Delaware shall be in the City of Dover, County of Kent.
SECTION 2. OTHER OFFICES. The corporation shall also have and maintain
an office or principal place of business at such place as may be fixed by the
Board of Directors, and may also have offices at such other places, both within
and without the State of Delaware as the Board of Directors may from time to
time determine or the business of the corporation may require.
ARTICLE II
CORPORATE SEAL
SECTION 3. CORPORATE SEAL. The corporate seal shall consist of a die
bearing the name of the corporation and the inscription, "Corporate
Seal-Delaware." Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE III
STOCKHOLDERS' MEETINGS
SECTION 4. PLACE OF MEETINGS. Meetings of the stockholders of the
corporation shall be held at such place, either within or without the State of
Delaware, as may be designated from time to time by the Board of Directors, or,
if not so designated, then at the office of the corporation required to be
maintained pursuant to Section 2 hereof.
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SECTION 5. ANNUAL MEETING.
(a) The annual meeting of the stockholders of the corporation,
for the purpose of election of directors and for such other business as may
lawfully come before it, shall be held on such date and at such time as may be
designated from time to time by the Board of Directors.
(b) At an annual meeting of the stockholders, only such business
shall be conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be: (A) specified in
the notice of meeting (or any supplement thereto) given by or at the direction
of the Board of Directors, (B) otherwise properly brought before the meeting by
or at the direction of the Board of Directors, or (C) otherwise properly brought
before the meeting by a stockholder. For business to be properly brought before
an annual meeting by a stockholder, the stockholder must have given timely
notice thereof in writing to the Secretary of the corporation. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the corporation not later than the close of
business on the sixtieth (60th) day nor earlier than the close of business on
the ninetieth (90th) day prior to the first anniversary of the preceding year's
annual meeting; provided, however, that in the event that no annual meeting was
held in the previous year or the date of the annual meeting has been changed by
more than thirty (30) days from the date contemplated at the time of the
previous year's proxy statement, notice by the stockholder to be timely must be
so received not earlier than the close of business on the ninetieth (90th) day
prior to such annual meeting and not later than the close of business on the
later of the sixtieth (60th) day prior to such annual meeting or, in the event
public announcement of the date of such annual meeting is first made by the
corporation fewer than seventy (70) days prior to the date of such annual
meeting, the close of business on the tenth (10th) day following the day on
which public announcement of the date of such meeting is first made by the
corporation. A stockholder's notice to the Secretary shall set forth as to each
matter the stockholder proposes to bring before the annual meeting: (i) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (ii) the name
and address, as they appear on the corporation's books, of the stockholder
proposing such business, (iii) the class and number of shares of the corporation
which are beneficially owned by the stockholder, (iv) any material interest of
the stockholder in such business and (v) any other information that is required
to be provided by the stockholder pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), in his capacity as
a proponent to a stockholder proposal. Notwithstanding the foregoing, in order
to include information with respect to a stockholder proposal in the proxy
statement and form of proxy for a stockholder's meeting, stockholders must
provide notice as required by the regulations promulgated under the 1934 Act.
Notwithstanding anything in these Bylaws to the contrary, no business shall be
conducted at any annual meeting except in accordance with the procedures set
forth in this paragraph (b). The chairman of the annual meeting shall, if the
facts warrant, determine and declare at the meeting that business was not
properly brought before the meeting and in accordance with the provisions of
this paragraph (b), and, if he should so determine, he shall so declare at the
meeting that any such business not properly brought before the meeting shall not
be transacted.
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(c) Only persons who are nominated in accordance with the
procedures set forth in this paragraph (c) shall be eligible for election as
directors. Nominations of persons for election to the Board of Directors of the
corporation may be made at a meeting of stockholders by or at the direction of
the Board of Directors or by any stockholder of the corporation entitled to vote
in the election of directors at the meeting who complies with the notice
procedures set forth in this paragraph (c). Such nominations, other than those
made by or at the direction of the Board of Directors, shall be made pursuant to
timely notice in writing to the Secretary of the corporation in accordance with
the provisions of paragraph (b) of this Section 5. Such stock- holder's notice
shall set forth (i) as to each person, if any, whom the stockholder proposes to
nominate for election or re-election as a director: (A) the name, age, business
address and residence address of such person, (B) the principal occupation or
employment of such person, (C) the class and number of shares of the corporation
which are beneficially owned by such person, (D) a description of all
arrangements or understandings between the stockholder and each nominee and any
other person or persons (naming such person or persons) pursuant to which the
nominations are to be made by the stockholder, and (E) any other information
relating to such person that is required to be disclosed in solicitations of
proxies for election of directors, or is otherwise required, in each case
pursuant to Regulation 14A under the 1934 Act (including without limitation such
person's written consent to being named in the proxy statement, if any, as a
nominee and to serving as a director if elected); and (ii) as to such
stockholder giving notice, the information required to be provided pursuant to
paragraph (b) of this Section 5. At the request of the Board of Directors, any
person nominated by a stockholder for election as a director shall furnish to
the Secretary of the corporation that information required to be set forth in
the stockholder's notice of nomination which pertains to the nominee. No person
shall be eligible for election as a director of the corporation unless nominated
in accordance with the procedures set forth in this paragraph (c). The chairman
of the meeting shall, if the facts warrant, determine and declare at the meeting
that a nomination was not made in accordance with the procedures prescribed by
these Bylaws, and if he should so determine, he shall so declare at the meeting,
and the defective nomination shall be disregarded.
(d) For purposes of this Section 5, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act.
SECTION 6. SPECIAL MEETINGS.
(a) Special meetings of the stockholders of the corporation may
be called, for any purpose or purposes, by (i) the Chairman of the Board of
Directors, (ii) the Chief Executive Officer, or (iii) the Board of Directors
pursuant to a resolution adopted by a majority of the total number of authorized
directors (whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board of
Directors for adoption), and shall be held at such place, on such date, and at
such time as the Board of Directors, shall fix.
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(b) If a special meeting is called by any person or persons other
than the Board of Directors, the request shall be in writing, specifying the
general nature of the business proposed to be transacted, and shall be delivered
personally or sent by registered mail or by telegraphic or other facsimile
transmission to the Chairman of the Board of Directors, the Chief Executive
Officer, or the Secretary of the corporation. No business may be transacted at
such special meeting otherwise than specified in such notice. The Board of
Directors shall determine the time and place of such special meeting, which
shall be held not less than thirty-five (35) nor more than one hundred twenty
(120) days after the date of the receipt of the request. Upon determination of
the time and place of the meeting, the officer receiving the request shall cause
notice to be given to the stockholders entitled to vote, in accordance with the
provisions of Section 7 of these Bylaws. If the notice is not given within sixty
(60) days after the receipt of the request, the person or persons requesting the
meeting may set the time and place of the meeting and give the notice. Nothing
contained in this paragraph (b) shall be construed as limiting, fixing, or
affecting the time when a meeting of stockholders called by action of the Board
of Directors may be held.
SECTION 7. NOTICE OF MEETINGS. Except as otherwise provided by law or
the Certificate of Incorporation, written notice of each meeting of stockholders
shall be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting to each stockholder entitled to vote at such meeting, such
notice to specify the place, date and hour and purpose or purposes of the
meeting. Notice of the time, place and purpose of any meeting of stockholders
may be waived in writing, signed by the person entitled to notice thereof,
either before or after such meeting, and will be waived by any stockholder by
his attendance thereat in person or by proxy, except when the stockholder
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Any stockholder so waiving notice of such meeting shall be
bound by the proceedings of any such meeting in all respects as if due notice
thereof had been given.
SECTION 8. QUORUM. At all meetings of stockholders, except where
otherwise provided by statute or by the Certificate of Incorporation, or by
these Bylaws, the presence, in person or by proxy duly authorized, of the
holders of a majority of the outstanding shares of stock entitled to vote shall
constitute a quorum for the transaction of business. In the absence of a quorum,
any meeting of stockholders may be adjourned, from time to time, either by the
chairman of the meeting or by vote of the holders of a majority of the shares
represented thereat, but no other business shall be transacted at such meeting.
The stockholders present at a duly called or convened meeting, at which a quorum
is present, may continue to transact business until adjournment, notwithstanding
the withdrawal of enough stockholders to leave less than a quorum. Except as
otherwise provided by law, the Certificate of Incorporation or these Bylaws, all
action taken by the holders of a majority of the vote cast, excluding
abstentions, at any meeting at which a quorum is present shall be valid and
binding upon the corporation; provided, however, that directors shall be elected
by a plurality of the votes of the shares present in person or represented by
proxy at the meeting and entitled to vote on the election of directors. Where a
separate vote by a class or classes or series is required, except where
otherwise provided by the statute or by the Certificate of Incorporation or
these Bylaws, a majority of the outstanding
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shares of such class or classes or series, present in person or represented by
proxy, shall constitute a quorum entitled to take action with respect to that
vote on that matter and, except where otherwise provided by the statute or by
the Certificate of Incorporation or these Bylaws, the affirmative vote of the
majority (plurality, in the case of the election of directors) of the votes
cast, including abstentions, by the holders of shares of such class or classes
or series shall be the act of such class or classes or series.
SECTION 9. ADJOURNMENT AND NOTICE OF ADJOURNED MEETINGS. Any meeting of
stockholders, whether annual or special, may be adjourned from time to time
either by the chairman of the meeting or by the vote of a majority of the shares
casting votes, excluding abstentions. When a meeting is adjourned to another
time or place, notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken. At
the adjourned meeting, the corporation may transact any business which might
have been transacted at the original meeting. If the adjournment is for more
than thirty (30) days or if after the adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
SECTION 10. VOTING RIGHTS. For the purpose of determining those
stockholders entitled to vote at any meeting of the stockholders, except as
otherwise provided by law, only persons in whose names shares stand on the stock
records of the corporation on the record date, as provided in Section 12 of
these Bylaws, shall be entitled to vote at any meeting of stockholders. Every
person entitled to vote shall have the right to do so either in person or by an
agent or agents authorized by a proxy granted in accordance with Delaware law.
An agent so appointed need not be a stockholder. No proxy shall be voted after
three (3) years from its date of creation unless the proxy provides for a longer
period.
SECTION 11. JOINT OWNERS OF STOCK. If shares or other securities having
voting power stand of record in the names of two (2) or more persons, whether
fiduciaries, members of a partnership, joint tenants, tenants in common, tenants
by the entirety, or otherwise, or if two (2) or more persons have the same
fiduciary relationship respecting the same shares, unless the Secretary is given
written notice to the contrary and is furnished with a copy of the instrument or
order appointing them or creating the relationship wherein it is so provided,
their acts with respect to voting shall have the following effect: (a) if only
one (1) votes, his act binds all; (b) if more than one (1) votes, the act of the
majority so voting binds all; (c) if more than one (1) votes, but the vote is
evenly split on any particular matter, each faction may vote the securities in
question proportionally, or may apply to the Delaware Court of Chancery for
relief as provided in the General Corporation Law of Delaware, Section 217(b).
If the instrument filed with the Secretary shows that any such tenancy is held
in unequal interests, a majority or even-split for the purpose of subsection (c)
shall be a majority or even-split in interest.
SECTION 12. LIST OF STOCKHOLDERS. The Secretary shall prepare and make,
at least ten (10) days before every meeting of stockholders, a complete list of
the stockholders entitled to vote at said meeting, arranged in alphabetical
order, showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open
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to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not
specified, at the place where the meeting is to be held. The list shall be
produced and kept at the time and place of meeting during the whole time thereof
and may be inspected by any stockholder who is present.
SECTION 13. ACTION WITHOUT MEETING.
(a) Unless otherwise provided in the Certificate of
Incorporation, any action required by statute to be taken at any annual or
special meeting of the stockholders, or any action which may be taken at any
annual or special meeting of the stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted.
(b) Every written consent shall bear the date of signature of
each stockholder who signs the consent, and no written consent shall be
effective to take the corporate action referred to therein unless, within sixty
(60) days of the earliest dated consent delivered to the corporation in the
manner herein required, written consents signed by a sufficient number of
stockholders to take action are delivered to the corporation by delivery to its
registered office in the State of Delaware, its principal place of business or
an officer or agent of the corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to a
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested.
(c) Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing. If the action which is consented
to is such as would have required the filing of a certificate under any section
of the General Corporation Law of the State of Delaware if such action had been
voted on by stockholders at a meeting thereof, then the certificate filed under
such section shall state, in lieu of any statement required by such section
concerning any vote of stockholders, that written notice and written consent
have been given as provided in Section 228 of the General Corporation Law of
Delaware.
(d) Notwithstanding the foregoing, no such action by written
consent may be taken following the closing of the initial public offering
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the "1933 Act"), covering the offer and sale of Common Stock
of the corporation (the "Initial Public Offering").
SECTION 14. ORGANIZATION.
(a) At every meeting of stockholders, the Chairman of the Board
of Directors, or, if a Chairman has not been appointed or is absent, the
President, or, if the President is
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absent, a chairman of the meeting chosen by a majority in interest of the
stockholders entitled to vote, present in person or by proxy, shall act as
chairman. The Secretary, or, in his absence, an Assistant Secretary directed to
do so by the President, shall act as secretary of the meeting.
(b) The Board of Directors of the corporation shall be entitled
to make such rules or regulations for the conduct of meetings of stockholders as
it shall deem necessary, appropriate or convenient. Subject to such rules and
regulations of the Board of Directors, if any, the chairman of the meeting shall
have the right and authority to prescribe such rules, regulations and procedures
and to do all such acts as, in the judgment of such chairman, are necessary,
appropriate or convenient for the proper conduct of the meeting, including,
without limitation, establishing an agenda or order of business for the meeting,
rules and procedures for maintaining order at the meeting and the safety of
those present, limitations on participation in such meeting to stockholders of
record of the corporation and their duly authorized and constituted proxies and
such other persons as the chairman shall permit, restrictions on entry to the
meeting after the time fixed for the commencement thereof, limitations on the
time allotted to questions or comments by participants and regulation of the
opening and closing of the polls for balloting on matters which are to be voted
on by ballot. Unless and to the extent determined by the Board of Directors or
the chairman of the meeting, meetings of stockholders shall not be required to
be held in accordance with rules of parliamentary procedure.
ARTICLE IV
DIRECTORS
SECTION 15. NUMBER AND TERM OF OFFICE. The authorized number of
directors of the corporation shall be fixed in accordance with the Certificate
of Incorporation. Directors need not be stockholders unless so required by the
Certificate of Incorporation. If for any cause, the directors shall not have
been elected at an annual meeting, they may be elected as soon thereafter as
convenient at a special meeting of the stockholders called for that purpose in
the manner provided in these Bylaws.
SECTION 16. POWERS. The powers of the corporation shall be exercised,
its business conducted and its property controlled by the Board of Directors,
except as may be otherwise provided by statute or by the Certificate of
Incorporation.
SECTION 17. CLASSES OF DIRECTORS.
Subject to the rights of the holders of any series of Preferred Stock to
elect additional directors under specified circumstances, following the closing
of the Initial Public Offering, the directors shall be divided into three
classes designated as Class I, Class II and Class III, respectively. Directors
shall be assigned to each class in accordance with a resolution or resolutions
adopted by the Board of Directors. At the first annual meeting of stockholders
following the closing of the Initial Public Offering, the term of office of the
Class I directors shall expire and Class I directors shall be elected for a full
term of three years. At the second
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annual meeting of stockholders following the Closing of the Initial Public
Offering, the term of office of the Class II directors shall expire and Class II
directors shall be elected for a full term of three years. At the third annual
meeting of stockholders following the Closing of the Initial Public Offering,
the term of office of the Class III directors shall expire and Class III
directors shall be elected for a full term of three years. At each succeeding
annual meeting of stockholders, directors shall be elected for a full term of
three years to succeed the directors of the class whose terms expire at such
annual meeting.
Notwithstanding the foregoing provisions of this Article, each director
shall serve until his successor is duly elected and qualified or until his
death, resignation or removal. No decrease in the number of directors
constituting the Board of Directors shall shorten the term of any incumbent
director.
SECTION 18. VACANCIES. Unless otherwise provided in the Certificate of
Incorporation, any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other causes and any newly created
directorships resulting from any increase in the number of directors, shall
unless the Board of Directors determines by resolution that any such vacancies
or newly created directorships shall be filled by stockholders, be filled only
by the affirmative vote of a majority of the directors then in office, even
though less than a quorum of the Board of Directors. Any director elected in
accordance with the preceding sentence shall hold office for the remainder of
the full term of the director for which the vacancy was created or occurred and
until such director's successor shall have been elected and qualified. A vacancy
in the Board of Directors shall be deemed to exist under this Bylaw in the case
of the death, removal or resignation of any director.
SECTION 19. RESIGNATION. Any director may resign at any time by
delivering his written resignation to the Secretary, such resignation to specify
whether it will be effective at a particular time, upon receipt by the Secretary
or at the pleasure of the Board of Directors. If no such specification is made,
it shall be deemed effective at the pleasure of the Board of Directors. When one
or more directors shall resign from the Board of Directors, effective at a
future date, a majority of the directors then in office, including those who
have so resigned, shall have power to fill such vacancy or vacancies, the vote
thereon to take effect when such resignation or resignations shall become
effective, and each Director so chosen shall hold office for the unexpired
portion of the term of the Director whose place shall be vacated and until his
successor shall have been duly elected and qualified.
SECTION 20. REMOVAL.
Subject to the rights of the holders of any series of Preferred Stock,
the Board of Directors or any individual director may be removed from office at
any time (i) with cause by the affirmative vote of the holders of a majority of
the voting power of all the then-outstanding shares of voting stock of the
corporation, entitled to vote at an election of directors (the "Voting Stock")
or (ii) without cause by the affirmative vote of the holders of at least
sixty-six and two-thirds percent (66 2/3%) of the voting power of all the
then-outstanding shares of the Voting Stock.
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SECTION 21. MEETINGS.
(a) ANNUAL MEETINGS. The annual meeting of the Board of Directors
shall be held immediately before or after the annual meeting of stockholders and
at the place where such meeting is held. No notice of an annual meeting of the
Board of Directors shall be necessary and such meeting shall be held for the
purpose of electing officers and transacting such other business as may lawfully
come before it.
(b) REGULAR MEETINGS. Except as hereinafter otherwise provided,
regular meetings of the Board of Directors shall be held in the office of the
corporation required to be maintained pursuant to Section 2 hereof. Unless
otherwise restricted by the Certificate of Incorporation, regular meetings of
the Board of Directors may also be held at any place within or without the State
of Delaware which has been designated by resolution of the Board of Directors or
the written consent of all directors.
(c) SPECIAL MEETINGS. Unless otherwise restricted by the
Certificate of Incorporation, special meetings of the Board of Directors may be
held at any time and place within or without the State of Delaware whenever
called by the Chairman of the Board, the President or any two of the directors.
(d) TELEPHONE MEETINGS. Any member of the Board of Directors, or
of any committee thereof, may participate in a meeting by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
by such means shall constitute presence in person at such meeting.
(e) NOTICE OF MEETINGS. Notice of the time and place of all
special meetings of the Board of Directors shall be orally or in writing, by
telephone, facsimile, telegraph or telex, during normal business hours, at least
twenty-four (24) hours before the date and time of the meeting, or sent in
writing to each director by first class mail, charges prepaid, at least three
(3) days before the date of the meeting. Notice of any meeting may be waived in
writing at any time before or after the meeting and will be waived by any
director by attendance thereat, except when the director attends the meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
(f) WAIVER OF NOTICE. The transaction of all business at any
meeting of the Board of Directors, or any committee thereof, however called or
noticed, or wherever held, shall be as valid as though had at a meeting duly
held after regular call and notice, if a quorum be present and if, either before
or after the meeting, each of the directors not present shall sign a written
waiver of notice. All such waivers shall be filed with the corporate records or
made a part of the minutes of the meeting.
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SECTION 22. QUORUM AND VOTING.
(a) Unless the Certificate of Incorporation requires a greater
number and except with respect to indemnification questions arising under
Section 43 hereof, for which a quorum shall be one-third of the exact number of
directors fixed from time to time in accordance with the Certificate of
Incorporation, a quorum of the Board of Directors shall consist of a majority of
the exact number of directors fixed from time to time by the Board of Directors
in accordance with the Certificate of Incorporation; provided, however, at any
meeting whether a quorum be present or otherwise, a majority of the directors
present may adjourn from time to time until the time fixed for the next regular
meeting of the Board of Directors, without notice other than by announcement at
the meeting.
(b) At each meeting of the Board of Directors at which a quorum
is present, all questions and business shall be determined by the affirmative
vote of a majority of the directors present, unless a different vote be required
by law, the Certificate of Incorporation or these Bylaws.
SECTION 23. ACTION WITHOUT MEETING. Unless otherwise restricted by the
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and such writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
SECTION 24. FEES AND COMPENSATION. Directors shall be entitled to such
compensation for their services as may be approved by the Board of Directors,
including, if so approved, by resolution of the Board of Directors, a fixed sum
and expenses of attendance, if any, for attendance at each regular or special
meeting of the Board of Directors and at any meeting of a committee of the Board
of Directors. Nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity as an officer,
agent, employee, or otherwise and receiving compensation therefor.
SECTION 25. COMMITTEES.
(a) EXECUTIVE COMMITTEE. The Board of Directors may by resolution
passed by a majority of the whole Board of Directors appoint an Executive
Committee to consist of one (1) or more members of the Board of Directors. The
Executive Committee, to the extent permitted by law and provided in the
resolution of the Board of Directors shall have and may exercise all the powers
and authority of the Board of Directors in the management of the business and
affairs of the corporation, including without limitation the power or authority
to declare a dividend, to authorize the issuance of stock and to adopt a
certificate of ownership and merger, and may authorize the seal of the
corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to amending the
Certificate of Incorporation (except that a committee may, to the extent
authorized in the resolution or resolutions providing for the issuance of shares
of stock adopted by the Board of
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Directors fix the designations and any of the preferences or rights of such
shares relating to dividends, redemption, dissolution, any distribution of
assets of the corporation or the conversion into, or the exchange of such shares
for, shares of any other class or classes or any other series of the same or any
other class or classes of stock of the corporation or fix the number of shares
of any series of stock or authorize the increase or decrease of the shares of
any series), adopting an agreement of merger or consolidation, recommending to
the stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending the
bylaws of the corporation.
(b) OTHER COMMITTEES. The Board of Directors may, by resolution
passed by a majority of the whole Board of Directors, from time to time appoint
such other committees as may be permitted by law. Such other committees
appointed by the Board of Directors shall consist of one (1) or more members of
the Board of Directors and shall have such powers and perform such duties as may
be prescribed by the resolution or resolutions creating such committees, but in
no event shall such committee have the powers denied to the Executive Committee
in these Bylaws.
(c) TERM. Each member of a committee of the Board of Directors
shall serve a term on the committee coexistent with such member's term on the
Board of Directors. The Board of Directors, subject to the provisions of
subsections (a) or (b) of this Bylaw may at any time increase or decrease the
number of members of a committee or terminate the existence of a committee. The
membership of a committee member shall terminate on the date of his death or
voluntary resignation from the committee or from the Board of Directors. The
Board of Directors may at any time for any reason remove any individual
committee member and the Board of Directors may fill any committee vacancy
created by death, resignation, removal or increase in the number of members of
the committee. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee, and, in addition, in the absence or
disqualification of any member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or disqualified
member.
(d) MEETINGS. Unless the Board of Directors shall otherwise
provide, regular meetings of the Executive Committee or any other committee
appointed pursuant to this Section 25 shall be held at such times and places as
are determined by the Board of Directors, or by any such committee, and when
notice thereof has been given to each member of such committee, no further
notice of such regular meetings need be given thereafter. Special meetings of
any such committee may be held at any place which has been determined from time
to time by such committee, and may be called by any director who is a member of
such committee, upon written notice to the members of such committee of the time
and place of such special meeting given in the manner provided for the giving of
written notice to members of the Board of Directors of the time and place of
special meetings of the Board of Directors. Notice of any special meeting of any
committee may be waived in writing at any time before or after
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the meeting and will be waived by any director by attendance thereat, except
when the director attends such special meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. A majority of the
authorized number of members of any such committee shall constitute a quorum for
the transaction of business, and the act of a majority of those present at any
meeting at which a quorum is present shall be the act of such committee.
SECTION 26. ORGANIZATION. At every meeting of the directors, the
Chairman of the Board of Directors, or, if a Chairman has not been appointed or
is absent, the President, or if the President is absent, the most senior Vice
President, or, in the absence of any such officer, a chairman of the meeting
chosen by a majority of the directors present, shall preside over the meeting.
The Secretary, or in his absence, an Assistant Secretary directed to do so by
the President, shall act as secretary of the meeting.
ARTICLE V
OFFICERS
SECTION 27. OFFICERS DESIGNATED. The officers of the corporation shall
include, if and when designated by the Board of Directors, the Chairman of the
Board of Directors, the Chief Executive Officer, the President, one or more Vice
Presidents, the Secretary, the Chief Financial Officer, the Treasurer, the
Controller, all of whom shall be elected at the annual organizational meeting of
the Board of Directors. The Board of Directors may also appoint one or more
Assistant Secretaries, Assistant Treasurers, Assistant Controllers and such
other officers and agents with such powers and duties as it shall deem
necessary. The Board of Directors may assign such additional titles to one or
more of the officers as it shall deem appropriate. Any one person may hold any
number of offices of the corporation at any one time unless specifically
prohibited therefrom by law. The salaries and other compensation of the officers
of the corporation shall be fixed by or in the manner designated by the Board of
Directors.
SECTION 28. TENURE AND DUTIES OF OFFICERS.
(a) GENERAL. All officers shall hold office at the pleasure of
the Board of Directors and until their successors shall have been duly elected
and qualified, unless sooner removed. Any officer elected or appointed by the
Board of Directors may be removed at any time by the Board of Directors. If the
office of any officer becomes vacant for any reason, the vacancy may be filled
by the Board of Directors.
(b) DUTIES OF CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of
the Board of Directors, when present, shall preside at all meetings of the
stockholders and the Board of Directors. The Chairman of the Board of Directors
shall perform other duties commonly incident to his office and shall also
perform such other duties and have such other powers as the Board of Directors
shall designate from time to time. If there is no President, then the
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Chairman of the Board of Directors shall also serve as the Chief Executive
Officer of the corporation and shall have the powers and duties prescribed in
paragraph (c) of this Section 28.
(c) DUTIES OF PRESIDENT. The President shall preside at all
meetings of the stockholders and at all meetings of the Board of Directors,
unless the Chairman of the Board of Directors has been appointed and is present.
Unless some other officer has been elected Chief Executive Officer of the
corporation, the President shall be the chief executive officer of the
corporation and shall, subject to the control of the Board of Directors, have
general supervision, direction and control of the business and officers of the
corporation. The President shall perform other duties commonly incident to his
office and shall also perform such other duties and have such other powers as
the Board of Directors shall designate from time to time.
(d) DUTIES OF VICE PRESIDENTS. The Vice Presidents may assume and
perform the duties of the President in the absence or disability of the
President or whenever the office of President is vacant. The Vice Presidents
shall perform other duties commonly incident to their office and shall also
perform such other duties and have such other powers as the Board of Directors
or the President shall designate from time to time.
(e) DUTIES OF SECRETARY. The Secretary shall attend all meetings
of the stockholders and of the Board of Directors and shall record all acts and
proceedings thereof in the minute book of the corporation. The Secretary shall
give notice in conformity with these Bylaws of all meetings of the stockholders
and of all meetings of the Board of Directors and any committee thereof
requiring notice. The Secretary shall perform all other duties given him in
these Bylaws and other duties commonly incident to his office and shall also
perform such other duties and have such other powers as the Board of Directors
shall designate from time to time. The President may direct any Assistant
Secretary to assume and perform the duties of the Secretary in the absence or
disability of the Secretary, and each Assistant Secretary shall perform other
duties commonly incident to his office and shall also perform such other duties
and have such other powers as the Board of Directors or the President shall
designate from time to time.
(f) DUTIES OF CHIEF FINANCIAL OFFICER. The Chief Financial
Officer shall keep or cause to be kept the books of account of the corporation
in a thorough and proper manner and shall render statements of the financial
affairs of the corporation in such form and as often as required by the Board of
Directors or the President. The Chief Financial Officer, subject to the order of
the Board of Directors, shall have the custody of all funds and securities of
the corporation. The Chief Financial Officer shall perform other duties commonly
incident to his office and shall also perform such other duties and have such
other powers as the Board of Directors or the President shall designate from
time to time. The President may direct the Treasurer or any Assistant Treasurer,
or the Controller or any Assistant Controller to assume and perform the duties
of the Chief Financial Officer in the absence or disability of the Chief
Financial Officer, and each Treasurer and Assistant Treasurer and each
Controller and Assistant Controller shall perform other duties commonly incident
to his office and shall also perform such other duties and have such other
powers as the Board of Directors or the President shall designate from time to
time.
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SECTION 29. DELEGATION OF AUTHORITY. The Board of Directors may from
time to time delegate the powers or duties of any officer to any other officer
or agent, notwithstanding any provision hereof.
SECTION 30. RESIGNATIONS. Any officer may resign at any time by giving
written notice to the Board of Directors or to the President or to the
Secretary. Any such resignation shall be effective when received by the person
or persons to whom such notice is given, unless a later time is specified
therein, in which event the resignation shall become effective at such later
time. Unless otherwise specified in such notice, the acceptance of any such
resignation shall not be necessary to make it effective. Any resignation shall
be without prejudice to the rights, if any, of the corporation under any
contract with the resigning officer.
SECTION 31. REMOVAL. Any officer may be removed from office at any time,
either with or without cause, by the affirmative vote of a majority of the
directors in office at the time, or by the unanimous written consent of the
directors in office at the time, or by any committee or superior officers upon
whom such power of removal may have been conferred by the Board of Directors.
ARTICLE VI
EXECUTION OF CORPORATE INSTRUMENTS AND VOTING
OF SECURITIES OWNED BY THE CORPORATION
SECTION 32. EXECUTION OF CORPORATE INSTRUMENTS. The Board of Directors
may, in its discretion, determine the method and designate the signatory officer
or officers, or other person or persons, to execute on behalf of the corporation
any corporate instrument or document, or to sign on behalf of the corporation
the corporate name without limitation, or to enter into contracts on behalf of
the corporation, except where otherwise provided by law or these Bylaws, and
such execution or signature shall be binding upon the corporation.
Unless otherwise specifically determined by the Board of Directors or
otherwise required by law, promissory notes, deeds of trust, mortgages and other
evidences of indebtedness of the corporation, and other corporate instruments or
documents requiring the corporate seal, and certificates of shares of stock
owned by the corporation, shall be executed, signed or endorsed by the Chairman
of the Board of Directors, or the President or any Vice President, and by the
Secretary or Treasurer or any Assistant Secretary or Assistant Treasurer. All
other instruments and documents requiring the corporate signature, but not
requiring the corporate seal, may be executed as aforesaid or in such other
manner as may be directed by the Board of Directors.
All checks and drafts drawn on banks or other depositaries on funds to
the credit of the corporation or in special accounts of the corporation shall be
signed by such person or persons as the Board of Directors shall authorize so to
do.
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Unless authorized or ratified by the Board of Directors or within the
agency power of an officer, no officer, agent or employee shall have any power
or authority to bind the corporation by any contract or engagement or to pledge
its credit or to render it liable for any purpose or for any amount.
SECTION 33. VOTING OF SECURITIES OWNED BY THE CORPORATION. All stock and
other securities of other corporations owned or held by the corporation for
itself, or for other parties in any capacity, shall be voted, and all proxies
with respect thereto shall be executed, by the person authorized so to do by
resolution of the Board of Directors, or, in the absence of such authorization,
by the Chairman of the Board of Directors, the Chief Executive Officer, the
President, or any Vice President.
ARTICLE VII
SHARES OF STOCK
SECTION 34. FORM AND EXECUTION OF CERTIFICATES. Certificates for the
shares of stock of the corporation shall be in such form as is consistent with
the Certificate of Incorporation and applicable law. Every holder of stock in
the corporation shall be entitled to have a certificate signed by or in the name
of the corporation by the Chairman of the Board of Directors, or the President
or any Vice President and by the Treasurer or Assistant Treasurer or the
Secretary or Assistant Secretary, certifying the number of shares owned by him
in the corporation. Any or all of the signatures on the certificate may be
facsimiles. In case any officer, transfer agent, or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent, or registrar before such certificate is
issued, it may be issued with the same effect as if he were such officer,
transfer agent, or registrar at the date of issue. Each certificate shall state
upon the face or back thereof, in full or in summary, all of the powers,
designations, preferences, and rights, and the limitations or restrictions of
the shares authorized to be issued or shall, except as otherwise required by
law, set forth on the face or back a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, designations,
preferences and relative, participating, optional, or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights. Within a reasonable time after
the issuance or transfer of uncertificated stock, the corporation shall send to
the registered owner thereof a written notice containing the information
required to be set forth or stated on certificates pursuant to this section or
otherwise required by law or with respect to this section a statement that the
corporation will furnish without charge to each stockholder who so requests the
powers, designations, preferences and relative participating, optional or other
special rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights. Except as
otherwise expressly provided by law, the rights and obligations of the holders
of certificates representing stock of the same class and series shall be
identical.
SECTION 35. LOST CERTIFICATES. A new certificate or certificates shall
be issued in place of any certificate or certificates theretofore issued by the
corporation alleged to have been lost,
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stolen, or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen, or destroyed. The
corporation may require, as a condition precedent to the issuance of a new
certificate or certificates, the owner of such lost, stolen, or destroyed
certificate or certificates, or his legal representative, to advertise the same
in such manner as it shall require or to give the corporation a surety bond in
such form and amount as it may direct as indemnity against any claim that may be
made against the corporation with respect to the certificate alleged to have
been lost, stolen, or destroyed.
SECTION 36. TRANSFERS.
(a) Transfers of record of shares of stock of the corporation
shall be made only upon its books by the holders thereof, in person or by
attorney duly authorized, and upon the surrender of a properly endorsed
certificate or certificates for a like number of shares.
(b) The corporation shall have power to enter into and perform
any agreement with any number of stockholders of any one or more classes of
stock of the corporation to restrict the transfer of shares of stock of the
corporation of any one or more classes owned by such stockholders in any manner
not prohibited by the General Corporation Law of Delaware.
SECTION 37. FIXING RECORD DATES.
(a) In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix, in advance, a record date,
which record date shall not precede the date upon which the resolution fixing
the record date is adopted by the Board of Directors, and which record date
shall not be more than sixty (60) nor less than ten (10) days before the date of
such meeting. If no record date is fixed by the Board of Directors, the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the day next preceding the
day on which notice is given, or if notice is waived, at the close of business
on the day next preceding the day on which the meeting is held. A determination
of stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
SECTION 38. REGISTERED STOCKHOLDERS. The corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and shall not
be bound to recognize any equitable or other claim to or interest in such share
or shares on the part of any other person whether or not it shall have express
or other notice thereof, except as otherwise provided by the laws of Delaware.
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ARTICLE VIII
OTHER SECURITIES OF THE CORPORATION
SECTION 39. EXECUTION OF OTHER SECURITIES. All bonds, debentures and
other corporate securities of the corporation, other than stock certificates
(covered in Section 34), may be signed by the Chairman of the Board of
Directors, the President or any Vice President, or such other person as may be
authorized by the Board of Directors, and the corporate seal impressed thereon
or a facsimile of such seal imprinted thereon and attested by the signature of
the Secretary or an Assistant Secretary, or the Chief Financial Officer or
Treasurer or an Assistant Treasurer; provided, however, that where any such
bond, debenture or other corporate security shall be authenticated by the manual
signature, or where permissible facsimile signature, of a trustee under an
indenture pursuant to which such bond, debenture or other corporate security
shall be issued, the signatures of the persons signing and attesting the
corporate seal on such bond, debenture or other corporate security may be the
imprinted facsimile of the signatures of such persons. Interest coupons
appertaining to any such bond, debenture or other corporate security,
authenticated by a trustee as aforesaid, shall be signed by the Treasurer or an
Assistant Treasurer of the corporation or such other person as may be authorized
by the Board of Directors, or bear imprinted thereon the facsimile signature of
such person. In case any officer who shall have signed or attested any bond,
debenture or other corporate security, or whose facsimile signature shall appear
thereon or on any such interest coupon, shall have ceased to be such officer
before the bond, debenture or other corporate security so signed or attested
shall have been delivered, such bond, debenture or other corporate security
nevertheless may be adopted by the corporation and issued and delivered as
though the person who signed the same or whose facsimile signature shall have
been used thereon had not ceased to be such officer of the corporation.
ARTICLE IX
DIVIDENDS
SECTION 40. DECLARATION OF DIVIDENDS. Dividends upon the capital stock
of the corporation, subject to the provisions of the Certificate of
Incorporation, if any, may be declared by the Board of Directors pursuant to law
at any regular or special meeting. Dividends may be paid in cash, in property,
or in shares of the capital stock, subject to the provisions of the Certificate
of Incorporation.
SECTION 41. DIVIDEND RESERVE. Before payment of any dividend, there may
be set aside out of any funds of the corporation available for dividends such
sum or sums as the Board of Directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the Board of Directors shall think
conducive to the interests of the corporation, and the Board of Directors may
modify or abolish any such reserve in the manner in which it was created.
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ARTICLE X
FISCAL YEAR
SECTION 42. FISCAL YEAR. The fiscal year of the corporation shall be
fixed by resolution of the Board of Directors.
ARTICLE XI
INDEMNIFICATION
SECTION 43. INDEMNIFICATION OF DIRECTORS, EXECUTIVE OFFICERS, OTHER
OFFICERS, EMPLOYEES AND OTHER AGENTS.
(a) DIRECTORS AND EXECUTIVE OFFICERS. The corporation shall
indemnify its directors and executive officers (for the purposes of this Article
XI, "executive officers shall have the meaning defined in Rule 3b-7 promulgated
under the 1934 Act) to the fullest extent not prohibited by the Delaware General
Corporation Law; provided, however, that the corporation may modify the extent
of such indemnification by individual contracts with its directors and executive
officers; and, provided, further, that the corporation shall not be required to
indemnify any director or executive officer in connection with any proceeding
(or part thereof) initiated by such person unless (i) such indemnification is
expressly required to be made by law, (ii) the proceeding was authorized by the
Board of Directors of the corporation, (iii) such indemnification is provided by
the corporation, in its sole discretion, pursuant to the powers vested in the
corporation under the Delaware General Corporation Law or (iv) such
indemnification is required to be made under subsection (d).
(b) OTHER OFFICERS, EMPLOYEES AND OTHER AGENTS. The corporation
shall have power to indemnify its other officers, employees and other agents as
set forth in the Delaware General Corporation Law.
(c) EXPENSES. The corporation shall advance to any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director or executive
officer, of the corporation, or is or was serving at the request of the
corporation as a director or executive officer of another corporation,
partnership, joint venture, trust or other enterprise, prior to the final
disposition of the proceeding, promptly following request therefor, all expenses
incurred by any director or executive officer in connection with such proceeding
upon receipt of an undertaking by or on behalf of such person to repay said
amounts if it should be determined ultimately that such person is not entitled
to be indemnified under this Bylaw or otherwise.
Notwithstanding the foregoing, unless otherwise determined pursuant to paragraph
(e) of this Bylaw, no advance shall be made by the corporation to an executive
officer of the corporation
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(except by reason of the fact that such executive officer is or was a director
of the corporation in which event this paragraph shall not apply in any action,
suit or proceeding, whether civil, criminal, administrative or investigative, if
a determination is reasonably and promptly made (i) by the Board of Directors by
a majority vote of a quorum consisting of directors who were not parties to the
proceeding, or (ii) if such quorum is not obtainable, or, even if obtainable, a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, that the facts known to the decision-making party at the time
such determination is made demonstrate clearly and convincingly that such person
acted in bad faith or in a manner that such person did not believe to be in or
not opposed to the best interests of the corporation.
(d) ENFORCEMENT. Without the necessity of entering into an
express contract, all rights to indemnification and advances to directors and
executive officers under this Bylaw shall be deemed to be contractual rights and
be effective to the same extent and as if provided for in a contract between the
corporation and the director or executive officer. Any right to indemnification
or advances granted by this Bylaw to a director or executive officer shall be
enforceable by or on behalf of the person holding such right in any court of
competent jurisdiction if (i) the claim for indemnification or advances is
denied, in whole or in part, or (ii) no disposition of such claim is made within
ninety (90) days of request therefor. The claimant in such enforcement action,
if successful in whole or in part, shall be entitled to be paid also the expense
of prosecuting his claim. In connection with any claim for indemnification, the
corporation shall be entitled to raise as a defense to any such action that the
claimant has not met the standards of conduct that make it permissible under the
Delaware General Corporation Law for the corporation to indemnify the claimant
for the amount claimed. In connection with any claim by an executive officer of
the corporation (except in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
executive officer is or was a director of the corporation) for advances, the
corporation shall be entitled to raise a defense as to any such action clear and
convincing evidence that such person acted in bad faith or in a manner that such
person did not believe to be in or not opposed to the best interests of the
corporation, or with respect to any criminal action or proceeding that such
person acted without reasonable cause to believe that his conduct was lawful.
Neither the failure of the corporation (including its Board of Directors,
independent legal counsel or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant is
proper in the circumstances because he has met the applicable standard of
conduct set forth in the Delaware General Corporation Law, nor an actual
determination by the corporation (including its Board of Directors, independent
legal counsel or its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that claimant has not met the applicable standard of conduct.
(e) NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any person
by this Bylaw shall not be exclusive of any other right which such person may
have or hereafter acquire under any statute, provision of the Certificate of
Incorporation, Bylaws, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding office. The corporation is specifically
authorized to enter into individual contracts with any or all of its directors,
officers, employees or agents
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respecting indemnification and advances, to the fullest extent not prohibited by
the Delaware General Corporation Law.
(f) SURVIVAL OF RIGHTS. The rights conferred on any person by
this Bylaw shall continue as to a person who has ceased to be a director,
officer, employee or other agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(g) INSURANCE. To the fullest extent permitted by the Delaware
General Corporation Law, the corporation, upon approval by the Board of
Directors, may purchase insurance on behalf of any person required or permitted
to be indemnified pursuant to this Bylaw.
(h) AMENDMENTS. Any repeal or modification of this Bylaw shall
only be prospective and shall not affect the rights under this Bylaw in effect
at the time of the alleged occurrence of any action or omission to act that is
the cause of any proceeding against any agent of the corporation.
(i) SAVING CLAUSE. If this Bylaw or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
corporation shall nevertheless indemnify each director and executive officer to
the full extent not prohibited by any applicable portion of this Bylaw that
shall not have been invalidated, or by any other applicable law.
(j) CERTAIN DEFINITIONS. For the purposes of this Bylaw, the
following definitions shall apply:
(1) The term "proceeding" shall be broadly construed
and shall include, without limitation, the investigation, preparation,
prosecution, defense, settlement, arbitration and appeal of, and the giving of
testimony in, any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative.
(2) The term "expenses" shall be broadly construed and
shall include, without limitation, court costs, attorneys' fees, witness fees,
fines, amounts paid in settlement or judgment and any other costs and expenses
of any nature or kind incurred in connection with any proceeding.
(3) The term the "corporation" shall include, in addition
to the resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had power and authority to
indemnify its directors, officers, and employees or agents, so that any person
who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position under
the provisions of this Bylaw with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
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(4) References to a "director," "executive officer,"
"officer," "employee," or "agent" of the corporation shall include, without
limitation, situations where such person is serving at the request of the
corporation as, respectively, a director, executive officer, officer, employee,
trustee or agent of another corporation, partnership, joint venture, trust or
other enterprise.
(5) References to "other enterprises" shall include
employee benefit plans; references to "fines" shall include any excise taxes
assessed on a person with respect to an employee benefit plan; and references to
"serving at the request of the corporation" shall include any service as a
director, officer, employee or agent of the corporation which imposes duties on,
or involves services by, such director, officer, employee, or agent with respect
to an employee benefit plan, its participants, or beneficiaries; and a person
who acted in good faith and in a manner he reasonably believed to be in the
interest of the participants and beneficiaries of an employee benefit plan shall
be deemed to have acted in a manner "not opposed to the best interests of the
corporation" as referred to in this Bylaw.
ARTICLE XII
NOTICES
SECTION 44. NOTICES.
(a) NOTICE TO STOCKHOLDERS. Whenever, under any provisions of
these Bylaws, notice is required to be given to any stockholder, it shall be
given in writing, timely and duly deposited in the United States mail, postage
prepaid, and addressed to his last known post office address as shown by the
stock record of the corporation or its transfer agent.
(b) NOTICE TO DIRECTORS. Any notice required to be given to any
director may be given by the method stated in subsection (a), or by facsimile,
telex or telegram, except that such notice other than one which is delivered
personally shall be sent to such address as such director shall have filed in
writing with the Secretary, or, in the absence of such filing, to the last known
post office address of such director.
(c) AFFIDAVIT OF MAILING. An affidavit of mailing, executed by a
duly authorized and competent employee of the corporation or its transfer agent
appointed with respect to the class of stock affected, specifying the name and
address or the names and addresses of the stockholder or stockholders, or
director or directors, to whom any such notice or notices was or were given, and
the time and method of giving the same, shall in the absence of fraud, be prima
facie evidence of the facts therein contained.
(d) TIME NOTICES DEEMED GIVEN. All notices given by mail, as
above provided, shall be deemed to have been given as at the time of mailing,
and all notices given by facsimile, telex or telegram shall be deemed to have
been given as of the sending time recorded at time of transmission.
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(e) METHODS OF NOTICE. It shall not be necessary that the same
method of giving notice be employed in respect of all directors, but one
permissible method may be employed in respect of any one or more, and any other
permissible method or methods may be employed in respect of any other or others.
(f) FAILURE TO RECEIVE NOTICE. The period or limitation of time
within which any stockholder may exercise any option or right, or enjoy any
privilege or benefit, or be required to act, or within which any director may
exercise any power or right, or enjoy any privilege, pursuant to any notice sent
him in the manner above provided, shall not be affected or extended in any
manner by the failure of such stockholder or such director to receive such
notice.
(g) NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL.
Whenever notice is required to be given, under any provision of law or of the
Certificate of Incorporation or Bylaws of the corporation, to any person with
whom communication is unlawful, the giving of such notice to such person shall
not be required and there shall be no duty to apply to any governmental
authority or agency for a license or permit to give such notice to such person.
Any action or meeting which shall be taken or held without notice to any such
person with whom communication is unlawful shall have the same force and effect
as if such notice had been duly given. In the event that the action taken by the
corporation is such as to require the filing of a certificate under any
provision of the Delaware General Corporation Law, the certificate shall state,
if such is the fact and if notice is required, that notice was given to all
persons entitled to receive notice except such persons with whom communication
is unlawful.
(h) NOTICE TO PERSON WITH UNDELIVERABLE ADDRESS. Whenever notice
is required to be given, under any provision of law or the Certificate of
Incorporation or Bylaws of the corporation, to any stockholder to whom (i)
notice of two consecutive annual meetings, and all notices of meetings or of the
taking of action by written consent without a meeting to such person during the
period between such two consecutive annual meetings, or (ii) all, and at least
two, payments (if sent by first class mail) of dividends or interest on
securities during a twelve-month period, have been mailed addressed to such
person at his address as shown on the records of the corporation and have been
returned undeliverable, the giving of such notice to such person shall not be
required. Any action or meeting which shall be taken or held without notice to
such person shall have the same force and effect as if such notice had been duly
given. If any such person shall deliver to the corporation a written notice
setting forth his then current address, the requirement that notice be given to
such person shall be reinstated. In the event that the action taken by the
corporation is such as to require the filing of a certificate under any
provision of the Delaware General Corporation Law, the certificate need not
state that notice was not given to persons to whom notice was not required to be
given pursuant to this paragraph.
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ARTICLE XIII
AMENDMENTS
SECTION 45. AMENDMENTS. Subject to paragraph (h) of Section 43 of the
Bylaws, the Bylaws may be altered or amended or new Bylaws adopted by the
affirmative vote of at least sixty-six and two-thirds percent (66-2/3%) of the
voting power of all of the then-outstanding shares of the Voting Stock. The
Board of Directors shall also have the power to adopt, amend, or repeal Bylaws.
ARTICLE XIV
LOANS TO OFFICERS
SECTION 46. LOANS TO OFFICERS. The corporation may lend money to, or
guarantee any obligation of, or otherwise assist any officer or other employee
of the corporation or of its subsidiaries, including any officer or employee who
is a Director of the corporation or its subsidiaries, whenever, in the judgment
of the Board of Directors, such loan, guarantee or assistance may reasonably be
expected to benefit the corporation. The loan, guarantee or other assistance may
be with or without interest and may be unsecured, or secured in such manner as
the Board of Directors shall approve, including, without limitation, a pledge of
shares of stock of the corporation. Nothing in these Bylaws shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
23.
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ARTICLE I OFFICES...................................................................... 1
Section 1. Registered Office................................................ 1
Section 2. Other Offices.................................................... 1
ARTICLE II CORPORATE SEAL............................................................... 1
Section 3. Corporate Seal................................................... 1
ARTICLE III STOCKHOLDERS' MEETINGS....................................................... 1
Section 4. Place Of Meetings................................................ 1
Section 5. Annual Meeting................................................... 2
Section 6. Special Meetings................................................. 3
Section 7. Notice Of Meetings............................................... 4
Section 8. Quorum........................................................... 4
Section 9. Adjournment And Notice Of Adjourned Meetings..................... 5
Section 10. Voting Rights.................................................... 5
Section 11. Joint Owners Of Stock............................................ 5
Section 12. List Of Stockholders............................................. 5
Section 13. Action Without Meeting........................................... 6
Section 14. Organization..................................................... 6
ARTICLE IV DIRECTORS.................................................................... 7
Section 15. Number And Term Of Office........................................ 7
Section 16. Powers........................................................... 7
Section 17. Classes Of Directors............................................. 7
Section 18. Vacancies........................................................ 8
Section 19. Resignation...................................................... 8
Section 20. Removal.......................................................... 8
Section 21. Meetings......................................................... 9
(a) Annual Meetings.................................................. 9
(b) Regular Meetings................................................. 9
(c) Special Meetings................................................. 9
(d) Telephone Meetings............................................... 9
(e) Notice Of Meetings............................................... 9
(f) Waiver Of Notice................................................. 9
Section 22. Quorum And Voting................................................ 10
Section 23. Action Without Meeting........................................... 10
Section 24. Fees And Compensation............................................ 10
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Section 25. Committees.................................................... 10
(a) Executive Committee........................................... 10
(b) Other Committees.............................................. 11
(c) Term.......................................................... 11
(d) Meetings...................................................... 11
Section 26. Organization.................................................. 12
ARTICLE V OFFICERS.................................................................. 12
Section 27. Officers Designated........................................... 12
Section 28. Tenure And Duties Of Officers................................. 12
(a) General....................................................... 12
(b) Duties Of Chairman Of The Board Of Directors.................. 12
(c) Duties Of President........................................... 13
(d) Duties Of Vice Presidents..................................... 13
(e) Duties Of Secretary........................................... 13
(f) Duties Of Chief Financial Officer............................. 13
Section 29. Delegation Of Authority....................................... 14
Section 30. Resignations.................................................. 14
Section 31. Removal....................................................... 14
ARTICLE VI EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES
OWNED BY THE CORPORATION.................................................. 14
Section 32. Execution Of Corporate Instruments............................ 14
Section 33. Voting Of Securities Owned By The Corporation................. 15
ARTICLE VII SHARES OF STOCK........................................................... 15
Section 34. Form And Execution Of Certificates............................ 15
Section 35. Lost Certificates............................................. 15
Section 36. Transfers..................................................... 16
Section 37. Fixing Record Dates........................................... 16
Section 38. Registered Stockholders....................................... 16
ARTICLE VIII OTHER SECURITIES OF THE CORPORATION....................................... 17
Section 39. Execution Of Other Securities................................. 17
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ARTICLE IX DIVIDENDS................................................................. 17
Section 40. Declaration Of Dividends...................................... 17
Section 41. Dividend Reserve.............................................. 17
ARTICLE X FISCAL YEAR............................................................... 18
Section 42. Fiscal Year................................................... 18
ARTICLE XI INDEMNIFICATION........................................................... 18
Section 43. Indemnification Of Directors, Executive Officers, Other Officers,
Employees And Other Agents.................................... 18
(a) Directors and Executive Officers.............................. 18
(b) [Other] Officers, Employees and Other Agents.................. 18
(c) Expenses...................................................... 18
(d) Enforcement................................................... 19
(e) Non-Exclusivity Of Rights..................................... 19
(f) Survival Of Rights............................................ 20
(g) Insurance..................................................... 20
(h) Amendments.................................................... 20
(i) Saving Clause................................................. 20
(j) Certain Definitions........................................... 20
ARTICLE XII NOTICES................................................................... 21
Section 44. Notices....................................................... 21
(a) Notice To Stockholders........................................ 21
(b) Notice To directors........................................... 21
(c) Affidavit Of Mailing.......................................... 21
(d) Time Notices Deemed Given..................................... 21
(e) Methods Of Notice............................................. 22
(f) Failure To Receive Notice..................................... 22
(g) Notice To Person With Whom Communication Is Unlawful.......... 22
(h) Notice To Person With Undeliverable Address................... 22
ARTICLE XIII AMENDMENTS................................................................ 23
Section 45. Amendments.................................................... 23
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ARTICLE XIV LOANS TO OFFICERS......................................................... 23
Section 46. Loans To Officers............................................. 23
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Exhibit 10.1
[EXECUTION COPY]
1,500,000 SHARES
IL FORNAIO (AMERICA) CORPORATION
COMMON STOCK
UNDERWRITING AGREEMENT
DATED SEPTEMBER 18, 1997
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Section 1. Representations and Warranties................................................. 2
(A) Representations and Warranties of the Company.................................. 2
Compliance with Registration Requirements................................... 2
Offering Materials Furnished to Underwriters................................ 3
Distribution of Offering Material By the Company............................ 3
The Underwriting Agreement.................................................. 3
Authorization of the Common Shares.......................................... 4
No Applicable Registration or Other Similar Rights.......................... 4
No Material Adverse Change.................................................. 4
Independent Accountants..................................................... 4
Preparation of the Financial Statements..................................... 4
Incorporation and Good Standing of the Company.............................. 5
Capitalization and Other Capital Stock Matters.............................. 5
Stock Exchange Listing...................................................... 6
Non-Contravention of Existing Instruments; No Further Authorizations or
Approvals Required................................................... 6
No Material Actions or Proceedings.......................................... 7
Intellectual Property Rights................................................ 7
All Necessary Permits, etc.................................................. 7
Title to Properties......................................................... 7
Tax Law Compliance.......................................................... 8
Company Not an "Investment Company."........................................ 8
Insurance................................................................... 8
No Price Stabilization or Manipulation...................................... 8
Related Party Transactions.................................................. 8
(B) Representations and Warranties of the Selling Stockholders.................... 9
The Underwriting Agreement.................................................. 9
The Custody Agreement and Power of Attorney................................. 9
Title to Common Shares to be Sold; All Authorizations Obtained.............. 9
Delivery of the Common Shares to be Sold.................................... 10
Non-Contravention; No Further Authorizations or Approvals Required.......... 10
No Registration or Other Similar Rights..................................... 10
No Further Consents, etc.................................................... 10
Disclosure Made by Such Selling Stockholder in the Prospectus............... 11
No Price Stabilization or Manipulation...................................... 11
Section 2. Purchase, Sale and Delivery of the Common Shares............................... 11
The Firm Common Shares...................................................... 11
The First Closing Date...................................................... 12
The Optional Common Shares; the Second Closing Date......................... 12
Public Offering of the Common Shares........................................ 13
Payment for the Common Shares............................................... 13
Delivery of the Common Shares............................................... 13
Delivery of Prospectus to the Underwriters.................................. 14
Section 3. Additional Covenants........................................................... 14
(A) Covenants of the Company...................................................... 14
Representatives' Review of Proposed Amendments and Supplements.............. 14
Securities Act Compliance................................................... 14
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Amendments and Supplements to the Prospectus and Other Securities Act
Matters.............................................................. 15
Copies of any Amendments and Supplements to the Prospectus.................. 15
Blue Sky Compliance......................................................... 15
Use of Proceeds............................................................. 16
Transfer Agent.............................................................. 16
Earning Statement........................................................... 16
Periodic Reporting Obligations.............................................. 16
Agreement Not To Offer or Sell Additional Securities........................ 16
Future Reports to the Representatives....................................... 17
(B) Covenants of the Selling Stockholders......................................... 17
Agreement Not to Offer or Sell Additional Securities........................ 17
Delivery of Forms W-8 and W-9............................................... 18
Section 4. Payment of Expenses............................................................ 18
Section 5. Conditions of the Obligations of the Underwriters.............................. 19
Accountants' Comfort Letter................................................. 20
Compliance with Registration Requirements; No Stop Order; No
Objection from NASD.................................................. 20
No Material Adverse Change.................................................. 20
Opinion of Counsel for the Company.......................................... 21
Opinion of Counsel for the Underwriters..................................... 21
Officers' Certificate....................................................... 21
Bring-down Comfort Letter................................................... 21
Opinion of Counsel for the Selling Stockholders............................. 22
Selling Stockholders' Certificate........................................... 22
Selling Stockholders' Documents............................................. 22
Lock-Up Agreement from Stockholders of the Company.......................... 22
Additional Documents........................................................ 23
Section 6. Reimbursement of Underwriters' Expenses........................................ 23
Section 7. Indemnification................................................................ 23
Indemnification of the Underwriters......................................... 23
Indemnification by the Underwriters......................................... 26
Notifications and Other Indemnification Procedures.......................... 27
Settlements................................................................. 28
Section 8. Contribution................................................................... 28
Section 9. Default of One or More of the Several Underwriters............................. 30
Section 10. Termination of this Agreement................................................. 31
Section 11. Representations and Indemnities to Survive Delivery........................... 32
Section 12. Notices....................................................................... 32
Section 13. Successors.................................................................... 33
Section 14. Partial Unenforceability...................................................... 33
Section 15. Governing Law Provisions...................................................... 33
Governing Law............................................................... 33
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Consent to Jurisdiction..................................................... 33
Section 16. Failure of One or More of the Selling Stockholders to Sell and Deliver
Common Shares................................................................. 34
Section 17. General Provisions............................................................ 34
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UNDERWRITING AGREEMENT
September 18, 1997
MONTGOMERY SECURITIES
BT ALEX. BROWN INCORPORATED
As Representatives of the several Underwriters
c/o MONTGOMERY SECURITIES
600 Montgomery Street
San Francisco, California 94111
Ladies and Gentlemen:
INTRODUCTORY. Il Fornaio (America) Corporation, a California
corporation to be reincorporated as a Delaware corporation prior to the First
Closing Date (the "Reincorporation") (references herein to the "Company" shall
mean the California corporation prior to the Reincorporation and the Delaware
corporation immediately after the Reincorporation), proposes to issue and sell
to the several underwriters named in Schedule A (the "Underwriters") an
aggregate of 1,000,000 shares of its Common Stock, no par value (the "Common
Stock"); and the stockholders of the Company named in Schedule B (collectively,
the "Selling Stockholders") severally propose to sell to the Underwriters an
aggregate of 500,000 shares of Common Stock. The 1,000,000 shares of Common
Stock to be sold by the Company and the 500,000 shares of Common Stock to be
sold by the Selling Stockholders are collectively called the "Firm Common
Shares." In addition, the Company has granted to the Underwriters an option to
purchase up to an additional 225,000 shares (the "Optional Common Shares") of
Common Stock, as provided in Section hereof. The Firm Common Shares and, if and
to the extent such option is exercised, the Optional Common Shares are
collectively called the "Common Shares." Montgomery Securities and BT Alex.
Brown Incorporated have agreed to act as representatives of the several
Underwriters (in such capacity, the "Representatives") in connection with the
offering and sale of the Common Shares.
The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-1
(File No. 333-23605), which contains a form of prospectus to be used in
connection with the public offering and sale of the Common Shares. Such
registration statement, as amended, including the financial statements, exhibits
and schedules thereto, in the form in which it was declared effective by the
Commission under the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (collectively, the "Securities Act"),
including any information deemed to be a part thereof at the time of
effectiveness pursuant
<PAGE> 6
to Rule 430A or Rule 434 under the Securities Act, is called the "Registration
Statement." Any registration statement filed by the Company pursuant to Rule
462(b) under the Securities Act is called the "Rule 462(b) Registration
Statement," and from and after the date and time of filing of the Rule 462(b)
Registration Statement the term "Registration Statement" shall include the Rule
462(b) Registration Statement. Such prospectus, in the form first used by the
Underwriters to confirm sales of the Common Shares, is called the "Prospectus";
provided, however, if the Company has, with the consent of Montgomery
Securities, elected to rely upon Rule 434 under the Securities Act, the term
"Prospectus" shall mean the Company's prospectus subject to completion (each, a
"preliminary prospectus") dated August 22, 1997 (such preliminary prospectus is
called the "Rule 434 preliminary prospectus"), together with the applicable term
sheet (the "Term Sheet") prepared and filed by the Company with the Commission
under Rules 434 and 424(b) under the Securities Act and all references in this
Agreement to the date of the Prospectus shall mean the date of the Term Sheet.
All references in this Agreement to the Registration Statement, the Rule 462(b)
Registration Statement, a preliminary prospectus, the Prospectus or the Term
Sheet, or any amendments or supplements to any of the foregoing, shall include
any copy thereof filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval System ("EDGAR").
The Company and each of the Selling Stockholders hereby confirm
their respective agreements with the Underwriters as follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES.
A) REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents, warrants and covenants to each Underwriter as follows:
i) Compliance with Registration Requirements. The Registration
Statement and any Rule 462(b) Registration Statement have been declared
effective by the Commission under the Securities Act. The Company
warrants that it has complied to the Commission's satisfaction with all
requests of the Commission for additional or supplemental information.
The Company warrants that no stop order suspending the effectiveness of
the Registration Statement or any Rule 462(b) Registration Statement is
in effect and no proceedings for such purpose have been instituted or
are pending or, to the best knowledge of the Company, are contemplated
or threatened by the Commission.
Each preliminary prospectus and the Prospectus when filed
complied in all material respects with the Securities Act and, if filed
by electronic transmission pursuant to EDGAR (except as may be permitted
by Regulation S-T under the
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Securities Act), was identical to the copy thereof delivered to the
Underwriters for use in connection with the offer and sale of the Common
Shares. Each of the Registration Statement, any Rule 462(b) Registration
Statement and any post-effective amendment thereto, at the time it
became effective complied, and through the Prospectus Delivery Period
(as defined in Section hereof) will comply, in all material respects
with the Securities Act and did not and will not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading. The Prospectus, as amended or supplemented, as of its date
did not, and through the Prospectus Delivery Period will not, contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The
representations and warranties set forth in the two immediately
preceding sentences do not apply to statements in or omissions from the
Registration Statement, any Rule 462(b) Registration Statement, or any
post-effective amendment thereto, or the Prospectus, or any amendments
or supplements thereto, made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company in
writing by the Representatives expressly for use therein. There are no
contracts or other documents required by the Securities Act to be
described in the Prospectus or to be filed as exhibits to the
Registration Statement which have not been described or filed as
required.
ii) Offering Materials Furnished to Underwriters. The Company
has delivered to the Representatives two complete manually signed copies
of the Registration Statement and of each consent and certificate of
experts filed as a part thereof, and conformed copies of the
Registration Statement (without exhibits) and preliminary prospectuses
and the Prospectus, as amended or supplemented, in such quantities and
at such places as the Representatives have reasonably requested for each
of the Underwriters.
iii) Distribution of Offering Material By the Company. The
Company has not distributed and will not distribute, prior to the later
of the Second Closing Date (as defined below) and the completion of the
Underwriters' distribution of the Common Shares, any offering material
in connection with the offering and sale of the Common Shares other than
a preliminary prospectus, the Prospectus or the Registration Statement.
iv) The Underwriting Agreement. This Agreement has been duly
authorized, executed and delivered by, and is a valid and binding
agreement of, the Company, enforceable in accordance with its terms,
except as rights to indemnification hereunder may be limited by
applicable law and except as the enforcement hereof may be limited by
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bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by
general equitable principles.
v) Authorization of the Common Shares. The Common Shares to be
purchased by the Underwriters from the Company have been duly authorized
for issuance and sale pursuant to this Agreement and, when issued and
delivered by the Company and paid for by the Underwriters pursuant to
this Agreement, will be validly issued, fully paid and nonassessable.
vi) No Applicable Registration or Other Similar Rights. There
are no persons with registration or other similar rights to have any
equity or debt securities registered for sale under the Registration
Statement or included in the offering contemplated by this Agreement,
except for such rights as have been duly waived.
vii) No Material Adverse Change. Except as otherwise disclosed
in the Prospectus, subsequent to the respective dates as of which
information is given in the Prospectus: (i) there has been no material
adverse change, or any development that could reasonably be expected to
result in a material adverse change, in the condition, financial or
otherwise, or in the earnings, business, operations or prospects,
whether or not arising from transactions in the ordinary course of
business, of the Company (any such change is called a "Material Adverse
Change") (other than, for purposes of this representation and warranty
only, adverse changes resulting solely from general economic conditions
or conditions affecting generally the industry in which the Company
operates); (ii) the Company has not incurred any material liability or
obligation, indirect, direct or contingent, not in the ordinary course
of business nor entered into any material transaction or agreement not
in the ordinary course of business; and (iii) there has been no dividend
or distribution of any kind declared, paid or made by the Company on any
class of capital stock or repurchase or redemption by the Company of any
class of capital stock.
viii) Independent Accountants. Deloitte & Touche LLP, who have
expressed their opinion with respect to the financial statements (which
term as used in this Agreement includes the related notes thereto) and
supporting schedules filed with the Commission as a part of the
Registration Statement and included in the Prospectus, are independent
public or certified public accountants as required by the Securities
Act.
ix) Preparation of the Financial Statements. The financial
statements filed with the Commission as a part of the Registration
Statement and included in the Prospectus present fairly the financial
position of the Company as of and at the dates indicated and the results
of its operations and cash flows for the periods specified. The
supporting
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schedules included in the Registration Statement present fairly the
information required to be stated therein. Such financial statements and
supporting schedules have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis throughout
the periods involved, except as may be expressly stated in the related
notes thereto. No other financial statements or supporting schedules are
required to be included in the Registration Statement. The financial
data set forth in the Prospectus under the captions "Prospectus
Summary--Summary Financial and Operating Data," "Selected Financial and
Operating Data" and "Capitalization" fairly present the information set
forth therein on a basis consistent with that of the audited financial
statements contained in the Registration Statement.
x) Incorporation and Good Standing of the Company. The Company
has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the jurisdiction of its incorporation
and has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus
and, in the case of the Company, to enter into and perform its
obligations under this Agreement. The Company is duly qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required (including
California (after the Reincorporation), Colorado, Nevada, Oregon and
Washington) whether by reason of the ownership or leasing of property or
the conduct of business, except for such jurisdictions (other than
California, Colorado, Nevada, Oregon and Washington) where the failure
to so qualify or to be in good standing would not, individually or in
the aggregate, result in a Material Adverse Change. The Company has no
subsidiaries. The Company will be reincorporated in Delaware prior to
the First Closing Date.
xi) Capitalization and Other Capital Stock Matters. The
authorized, issued and outstanding capital stock of the Company is as
set forth in the Prospectus under the caption "Capitalization" (other
than for subsequent issuances, if any, pursuant to employee benefit
plans described in the Prospectus or upon exercise of outstanding
warrants described in the Prospectus), except as described in the
opinion dated January 27, 1993, issued by Cooley Godward LLP in
connection with the sale of 730,664 shares of the Company's Series F
Preferred Stock (the "Exceptions"). The Common Stock (including the
Common Shares) conforms in all material respects to the description
thereof contained in the Prospectus. Except for the Exceptions, all of
the issued and outstanding shares of Common Stock (including the shares
of Common Stock owned by Selling Stockholders) have been duly authorized
and validly issued, are fully paid and nonassessable and have been
issued in compliance with federal and state securities laws. None of the
outstanding shares of
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<PAGE> 10
Common Stock were issued in violation of any preemptive rights, rights
of first refusal or other similar rights to subscribe for or purchase
securities of the Company, except as described in the Exceptions. There
are no authorized or outstanding options, warrants, preemptive rights,
rights of first refusal or other rights to purchase, or equity or debt
securities convertible into or exchangeable or exercisable for, any
capital stock of the Company other than those accurately described in
the Prospectus. The description of the Company's stock option, stock
bonus and other stock plans or arrangements, and the options or other
rights granted thereunder, set forth in the Prospectus accurately and
fairly presents in all material respects the information required by the
Securities Act to be shown with respect to such plans, arrangements,
options and rights.
xii) Stock Exchange Listing. The Common Shares have been
approved for inclusion on the Nasdaq National Market, subject only to
official notice of issuance.
xiii) Non-Contravention of Existing Instruments; No Further
Authorizations or Approvals Required. The Company is not in violation of
its charter or by-laws or in default (or, with the giving of notice or
lapse of time, would be in default) ("Default") under any indenture,
mortgage, loan or credit agreement, note, contract, franchise, lease or
other instrument to which the Company is a party or by which it may be
bound, or to which any of the property or assets of the Company is
subject (each, an "Existing Instrument"), except for such Defaults as
would not, individually or in the aggregate, result in a Material
Adverse Change. The Company's execution, delivery and performance of
this Agreement and consummation of the transactions contemplated hereby
and by the Prospectus (i) have been duly authorized by all necessary
corporate action and will not result in any violation of the provisions
of the charter or by-laws of the Company, (ii) will not conflict with or
constitute a breach of, or Default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company pursuant to, or require the consent of any other
party to, any Existing Instrument, except for such conflicts, breaches,
Defaults, liens, charges or encumbrances as would not, individually or
in the aggregate, result in a Material Adverse Change and (iii) will not
result in any violation of any law, administrative regulation or
administrative or court decree applicable to the Company. No consent,
approval, authorization or other order of, or registration or filing
with, any court or other governmental or regulatory authority or agency,
is required for the Company's execution, delivery and performance of
this Agreement and consummation of the transactions contemplated hereby
and by the Prospectus, except such as have been obtained or made by the
Company and are in full force and effect under the Securities Act, and
except applicable state
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<PAGE> 11
securities or blue sky laws and from the National Association of
Securities Dealers, Inc. (the "NASD").
xiv) No Material Actions or Proceedings. There are no legal or
governmental actions, suits or proceedings pending or, to the best of
the Company's knowledge, threatened (i) against or, to the Company's
knowledge, affecting the Company, (ii) which has as the subject thereof
any officer or director (with respect to actions or inactions in his
capacity as officer or director) of, or property owned or leased by, the
Company or (iii) relating to environmental or discrimination matters,
where in any such case (A) there is a reasonable possibility that such
action, suit or proceeding might be determined adversely to the Company
and (B) any such action, suit or proceeding, if so determined adversely,
would reasonably be expected to result in a Material Adverse Change or
adversely affect the consummation of the transactions contemplated by
this Agreement. No labor dispute with the employees of the Company
exists or, to the best of the Company's knowledge, is threatened or
imminent which would reasonably be expected to result in a Material
Adverse Change.
xv) Intellectual Property Rights. The Company owns or possesses
sufficient trademarks, trade names, patent rights, copyrights, licenses,
approvals, trade secrets and other similar rights (collectively,
"Intellectual Property Rights") reasonably necessary to conduct its
business as now conducted; and the expected expiration of any of such
Intellectual Property Rights would not result in a Material Adverse
Change. The Company has not received any notice of infringement or
conflict with asserted Intellectual Property Rights of others, which
infringement or conflict, if the subject of an unfavorable decision,
would result in a Material Adverse Change.
xvi) All Necessary Permits, etc. The Company possesses such
valid and current certificates, authorizations or permits issued by the
appropriate state, federal or foreign regulatory agencies or bodies
necessary to conduct its business, and the Company has not received any
notice of proceedings relating to the revocation or modification of, or
non-compliance with, any such certificate, authorization or permit
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would reasonably be expected to result in a
Material Adverse Change.
xvii) Title to Properties. The Company has good and marketable
title to all the properties and assets reflected as owned in the
financial statements referred to in Section above (or elsewhere in the
Prospectus), in each case free and clear of any security interests,
mortgages, liens, encumbrances, equities, claims and other defects,
except such as do not materially and adversely affect the value of such
property and do not materially interfere with the use made or
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proposed to be made of such property by the Company. The real property,
improvements, equipment and personal property held under lease by the
Company are held under valid and enforceable leases, with such
exceptions as are not material and do not materially interfere with the
use made or proposed to be made of such real property, improvements,
equipment or personal property by the Company.
xviii) Tax Law Compliance. The Company has filed all necessary
federal, state and foreign income and franchise tax returns and has paid
all taxes shown as due thereon and any taxes required to have been paid
by it in any subsequent period and, if due and payable, any related or
similar assessment, fine or penalty levied against it. To the best of
the Company's knowledge, the Company has made adequate charges, accruals
and reserves in the applicable financial statements referred to in
Section above in respect of all federal, state and foreign income and
franchise taxes for all periods as to which the tax liability of the
Company has not been finally determined.
xix) Company Not an "Investment Company." The Company has been
advised of the rules and requirements under the Investment Company Act
of 1940, as amended (the "Investment Company Act"). The Company is not,
and after receipt of payment for the Common Shares will not be, an
"investment company" within the meaning of Investment Company Act and
will use its commercially reasonable efforts to conduct its business in
a manner so that it will not become subject to the Investment Company
Act.
xx) Insurance. The Company is insured by recognized institutions
with policies in such amounts and with such deductibles and covering
such risks as are generally deemed adequate and customary for its
business, except as disclosed in the Prospectus. The Company has no
reason to believe that it will not be able (i) to renew its existing
insurance coverage as and when such policies expire or (ii) to obtain
comparable coverage from similar institutions as may be necessary or
appropriate to conduct its business as now conducted and at a cost that
would not result in a Material Adverse Change. The Company has not been
denied any insurance coverage which it has sought or for which it has
applied.
xxi) No Price Stabilization or Manipulation. The Company has not
taken and will not take, directly or indirectly, any action designed to
or that might be reasonably expected to cause or result in stabilization
or manipulation of the price of the Common Stock to facilitate the sale
or resale of the Common Shares.
xxii) Related Party Transactions. There are no business
relationships or related-party transactions involving the Company or any
other person required to be
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described in the Prospectus which have not been described as required.
Any certificate signed by an officer of the Company and delivered
to the Representatives or to counsel for the Underwriters expressly for use in
connection with the Closing shall be deemed to be a representation and warranty
by the Company to each Underwriter as to the matters set forth therein.
B) REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS. Each
Selling Stockholder represents, warrants and covenants to each Underwriter as
follows:
i) The Underwriting Agreement. This Agreement has been duly
authorized, executed and delivered by or on behalf of such Selling
Stockholder and is a valid and binding agreement of such Selling
Stockholder, enforceable in accordance with its terms, except as rights
to indemnification hereunder may be limited by applicable law and except
as the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors or by general equitable
principles.
ii) The Custody Agreement and Power of Attorney. Each of the (i)
Custody Agreement signed by such Selling Stockholder and BankBoston,
N.A., as custodian (the "Custodian"), relating to the deposit of the
Common Shares to be sold by such Selling Stockholder (the "Custody
Agreement") and (ii) Power of Attorney appointing certain individuals
named therein as such Selling Stockholder's attorneys-in-fact (each, an
"Attorney-in-Fact") to the extent set forth therein relating to the
transactions contemplated hereby and by the Prospectus (the "Power of
Attorney"), of such Selling Stockholder has been duly authorized,
executed and delivered by or on behalf of such Selling Stockholder and
is a valid and binding agreement of such Selling Stockholder,
enforceable in accordance with its terms, except as rights to
indemnification thereunder may be limited by applicable law and except
as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors or by general equitable
principles.
iii) Title to Common Shares to be Sold; All Authorizations
Obtained. Such Selling Stockholder has, and on the First Closing Date
will have, good and valid title to all of the Common Shares which may be
sold by such Selling Stockholder pursuant to this Agreement on such date
and the legal right and power, and all authorizations and approvals
required by law and under its charter or by-laws, partnership agreement,
trust agreement or other organizational documents to enter into this
Agreement and its Custody Agreement and Power of Attorney, to sell,
transfer and deliver all of the
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<PAGE> 14
Common Shares which may be sold by such Selling Stockholder pursuant to
this Agreement and to comply with its other obligations hereunder and
thereunder.
iv) Delivery of the Common Shares to be Sold. Delivery of and
payment for the Common Shares which are sold by such Selling Stockholder
pursuant to this Agreement will pass good and valid title to such Common
Shares, free and clear of any security interest, mortgage, pledge, lien,
encumbrance or other claim.
v) Non-Contravention; No Further Authorizations or Approvals
Required. The execution and delivery by or on behalf of such Selling
Stockholder of, and the performance by such Selling Stockholder of its
obligations under, this Agreement, the Custody Agreement and the Power
of Attorney will not contravene or conflict with, result in a breach of,
or constitute a Default under, or require the consent of any other party
to, the charter or by-laws, partnership agreement, trust agreement or
other organizational documents of such Selling Stockholder or any other
agreement or instrument to which such Selling Stockholder is a party or
by which it is bound or under which it is entitled to any right or
benefit, any provision of applicable law or any judgment, order, decree
or regulation applicable to such Selling Stockholder of any court,
regulatory body, administrative agency, governmental body or arbitrator
having jurisdiction over such Selling Stockholder, except where any of
the foregoing shall not have an adverse effect on the Selling
Stockholder's ability to validly transfer to the Underwriters title to
the Common Shares free and clear of any security interest, mortgage,
pledge, lien, encumbrance or other claim, or to otherwise perform its
obligations hereunder. No consent, approval, authorization or other
order of, or registration or filing with, any court or other
governmental authority or agency, is required for the consummation by
such Selling Stockholder of the transactions contemplated in this
Agreement, except such as have been obtained or made and are in full
force and effect under the Securities Act, and except applicable state
securities or blue sky laws and from the NASD.
vi) No Registration or Other Similar Rights. Such Selling
Stockholder does not have any registration or other similar rights to
have any equity or debt securities registered for sale by the Company
under the Registration Statement or included in the offering
contemplated by this Agreement.
vii) No Further Consents, etc. No consent, approval or waiver is
required under any instrument or agreement to which such Selling
Stockholder is a party or by which it is bound or under which it is
entitled to any right or benefit, in connection with the offering, sale
or purchase by the Underwriters of any of the Common Shares which may be
sold by
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<PAGE> 15
such Selling Stockholder under this Agreement or the consummation by
such Selling Stockholder of any of the other transactions contemplated
hereby, except where any of the foregoing shall not have an adverse
effect on the Selling Stockholder's ability to validly transfer to the
Underwriters title to the Common Shares free and clear of any security
interest, mortgage, pledge, lien, encumbrance or other claim, or to
otherwise perform its obligations hereunder.
viii) Disclosure Made by Such Selling Stockholder in the
Prospectus. All information furnished by or on behalf of such Selling
Stockholder in writing expressly for use in the Registration Statement
and Prospectus is, and on the First Closing Date and the Second Closing
Date will be, true, correct, and complete in all material respects, and
does not, and on the First Closing Date and the Second Closing Date will
not, contain any untrue statement of a material fact or omit to state
any material fact necessary to make such information not misleading.
Such Selling Stockholder confirms as accurate the number of shares of
Common Stock set forth opposite such Selling Stockholder's name in the
Prospectus under the caption "Principal and Selling Stockholders" (both
prior to and after giving effect to the sale of the Common Shares).
ix) No Price Stabilization or Manipulation. Such Selling
Stockholder has not taken and will not take, directly or indirectly, any
action designed to or that might be reasonably expected to cause or
result in stabilization or manipulation of the price of the Common Stock
to facilitate the sale or resale of the Common Shares.
Any certificate signed by or on behalf of any Selling Stockholder
and delivered to the Representatives or to counsel for the Underwriters
expressly for use in connection with the Closing shall be deemed to be a
representation and warranty by such Selling Stockholder to each Underwriter as
to the matters covered thereby.
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE COMMON SHARES.
A) The Firm Common Shares. Upon the terms herein set forth, (i)
the Company agrees to issue and sell to the several Underwriters an aggregate of
1,000,000 Firm Common Shares and (ii) each Selling Stockholder agrees to sell to
the several Underwriters, severally and not jointly, that number of Firm Common
Shares set forth opposite such Selling Stockholder's name on Schedule B. On the
basis of the representations, warranties and agreements herein contained, and
upon the terms but subject to the conditions herein set forth, the Underwriters
agree, severally and not jointly, to purchase from the Company and the Selling
Stockholders the respective number of Firm Common Shares set forth
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<PAGE> 16
opposite their names on Schedule A. The purchase price per Firm Common Share to
be paid by the several Underwriters to the Company and the Selling Stockholders
shall be $11.00 per share.
B) The First Closing Date. Delivery of certificates for the Firm
Common Shares to be purchased by the Underwriters and payment therefor shall be
made at the offices of Montgomery Securities, 600 Montgomery Street, San
Francisco, California (or such other place as may be agreed to by the Company
and the Representatives) at 6:00 a.m. San Francisco time, on Wednesday,
September 24, 1997, or such other time and date not later than 10:30 a.m. San
Francisco time, on Wednesday, October 8, 1997 as the Representatives shall
designate by notice to the Company (the time and date of such closing are called
the "First Closing Date"). The Company and the Selling Stockholders hereby
acknowledge that circumstances under which the Representatives may provide
notice to postpone the First Closing Date as originally scheduled include, but
are in no way limited to, any determination by the Company or the
Representatives to recirculate to the public copies of an amended or
supplemented Prospectus or a delay as contemplated by the provisions of Section
hereof.
C) The Optional Common Shares; the Second Closing Date. In
addition, on the basis of the representations, warranties and agreements herein
contained, and upon the terms but subject to the conditions herein set forth,
the Company hereby grants an option to the several Underwriters to purchase,
severally and not jointly, up to an aggregate of 225,000 Optional Common Shares
from the Company at the purchase price per share to be paid by the Underwriters
for the Firm Common Shares. The option granted hereunder is for use by the
Underwriters solely in covering any over-allotments in connection with the sale
and distribution of the Firm Common Shares. The option granted hereunder may be
exercised at any time (but not more than once) upon notice by the
Representatives to the Company, which notice may be given at any time within 30
days from the date of this Agreement. Such notice shall set forth (i) the
aggregate number of Optional Common Shares as to which the Underwriters are
exercising the option, (ii) the names and denominations in which the
certificates for the Optional Common Shares are to be registered and (iii) the
time, date and place at which such certificates will be delivered (which time
and date may be simultaneous with, but not earlier than, the First Closing Date;
and in such case the term "First Closing Date" shall refer to the time and date
of delivery of certificates for the Firm Common Shares and the Optional Common
Shares). Such time and date of delivery, if subsequent to the First Closing
Date, is called the "Second Closing Date" and shall be determined by the
Representatives and shall not be earlier than three nor later than five full
business days after delivery of such notice of exercise. If any Optional Common
Shares are to be purchased, (a) each Underwriter agrees, severally and not
jointly, to purchase the number of Optional Common Shares (subject to such
adjustments to eliminate fractional shares as the Representatives may determine)
that bears the same proportion to the total number of Optional Common Shares to
be purchased as the number of Firm Common Shares set forth on Schedule A
opposite the name of such Underwriter bears to the total number of Firm Common
Shares and (b) the Company agrees to sell the number of Optional Common Shares
to be purchased by the Underwriters. The Representatives may cancel the option
at any
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<PAGE> 17
time prior to its expiration by giving written notice of such cancellation
to the Company.
D) Public Offering of the Common Shares. The Representatives
hereby advise the Company and the Selling Stockholders that the Underwriters
intend to offer for sale to the public, as described in the Prospectus, their
respective portions of the Common Shares as soon after this Agreement has been
executed and the Registration Statement has been declared effective as the
Representatives, in their sole judgment, have determined is advisable and
practicable.
E) Payment for the Common Shares. Payment for the Common Shares
to be sold by the Company shall be made at the First Closing Date (and, if
applicable, at the Second Closing Date) by wire transfer of immediately
available funds to the order of the Company. Payment for the Common Shares to be
sold by the Selling Stockholders shall be made at the First Closing Date by wire
transfer of immediately available funds to the order of the Custodian.
It is understood that the Representatives have been authorized,
for their own accounts and the accounts of the several Underwriters, to accept
delivery of and receipt for, and make payment of the purchase price for, the
Firm Common Shares and any Optional Common Shares the Underwriters have agreed
to purchase. Montgomery Securities, individually and not as a Representative of
the Underwriters, may (but shall not be obligated to) make payment for any
Common Shares to be purchased by any Underwriter whose funds shall not have been
received by the Representatives by the First Closing Date or the Second Closing
Date, as the case may be, for the account of such Underwriter, but any such
payment shall not relieve such Underwriter from any of its obligations under
this Agreement.
Each Selling Stockholder hereby agrees that (i) it will pay all
stock transfer taxes, stamp duties and other similar taxes, if any, payable in
connection with the sale or delivery of the Common Shares to be sold by such
Selling Stockholder to the several Underwriters, or otherwise in connection with
the performance of such Selling Stockholder's obligations hereunder and (ii) the
Custodian is authorized to deduct for such payment any such amounts from the
proceeds to such Selling Stockholder hereunder and to hold such amounts for the
account of such Selling Stockholder with the Custodian under the Custody
Agreement.
F) Delivery of the Common Shares. The Company and the Selling
Stockholders shall deliver, or cause to be delivered, to the Representatives for
the accounts of the several Underwriters certificates for the Firm Common Shares
to be sold by them at the First Closing Date, against the irrevocable release of
a wire transfer of immediately available funds for the amount of the purchase
price therefor. The Company shall also deliver, or cause to be delivered, to the
Representatives for the accounts of the several Underwriters, certificates for
the Optional Common Shares
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<PAGE> 18
the Underwriters have agreed to purchase at the First Closing Date or the Second
Closing Date, as the case may be, against the irrevocable release of a wire
transfer of immediately available funds for the amount of the purchase price
therefor. The certificates for the Common Shares shall be in definitive form and
registered in such names and denominations as the Representatives shall have
requested at least two full business days prior to the First Closing Date (or
the Second Closing Date, as the case may be) and shall be made available for
inspection on the business day preceding the First Closing Date (or the Second
Closing Date, as the case may be) at a location in New York, New York as the
Representatives may designate. Time shall be of the essence, and delivery at the
time and place specified in this Agreement is a further condition to the
obligations of the Underwriters.
G) Delivery of Prospectus to the Underwriters. Not later than
12:00 p.m. on the second business day following the date the Common Shares are
released by the Underwriters for sale to the public, the Company shall deliver
or cause to be delivered copies of the Prospectus in such quantities and at such
places as the Representatives shall request.
SECTION 3. ADDITIONAL COVENANTS.
A) COVENANTS OF THE COMPANY. The Company further covenants and agrees
with each Underwriter as follows:
i) Representatives' Review of Proposed Amendments and
Supplements. During such period beginning on the date hereof and ending
on the later of (1) the First Closing Date, (2) the date 25 days after
the offering date, as such term is defined in Rule 174(d) under the
Securities Act, or (3) such date, as in the opinion of counsel for the
Underwriters, the Prospectus is no longer required by law to be
delivered in connection with sales by an Underwriter or dealer (the
"Prospectus Delivery Period"), prior to amending or supplementing the
Registration Statement (including any registration statement filed under
Rule 462(b) under the Securities Act) or the Prospectus, the Company
shall furnish to the Representatives for review a copy of each such
proposed amendment or supplement, and the Company shall not file any
such proposed amendment or supplement to which the Representatives
reasonably object.
ii) Securities Act Compliance. After the date of this Agreement,
the Company shall promptly advise the Representatives in writing (i) of
the receipt of any comments of, or requests for additional or
supplemental information from, the Commission, (ii) of the time and date
of any filing of any post-effective amendment to the Registration
Statement or any amendment or supplement to any preliminary prospectus
or the Prospectus, (iii) of the time and date that any post-effective
amendment to the Registration Statement becomes
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<PAGE> 19
effective and (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto or of any order preventing or
suspending the use of any preliminary prospectus or the Prospectus, or
of any proceedings to remove, suspend or terminate from listing or
quotation the Common Stock from any securities exchange upon which it is
listed for trading or included or designated for quotation, or of the
threatening or initiation of any proceedings for any of such purposes.
If the Commission shall enter any such stop order at any time, the
Company will use its best efforts to obtain the lifting of such order at
the earliest possible moment. Additionally, the Company agrees that it
shall comply with the provisions of Rules 424(b), 430A and 434, as
applicable, under the Securities Act and will use its reasonable efforts
to confirm that any filings made by the Company under such Rule 424(b)
were received in a timely manner by the Commission.
iii) Amendments and Supplements to the Prospectus and Other
Securities Act Matters. If, during the Prospectus Delivery Period, any
event shall occur or condition exist as a result of which it is
necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, or if in the
opinion of the Representatives or counsel for the Underwriters it is
otherwise necessary to amend or supplement the Prospectus to comply with
law, the Company agrees to promptly prepare (subject to Section hereof),
file with the Commission and furnish at its own expense to the
Underwriters and to dealers, amendments or supplements to the Prospectus
so that the statements in the Prospectus as so amended or supplemented
will not, in the light of the circumstances when the Prospectus is
delivered to a purchaser, be misleading or so that the Prospectus, as
amended or supplemented, will comply with law.
iv) Copies of any Amendments and Supplements to the Prospectus.
The Company agrees to furnish the Representatives, without charge,
during the Prospectus Delivery Period, as many copies of the Prospectus
and any amendments and supplements thereto as the Representatives may
reasonably request.
v) Blue Sky Compliance. The Company shall cooperate with the
Representatives and counsel for the Underwriters to qualify or register
the Common Shares for sale under (or obtain exemptions from the
application of) the state securities or blue sky laws or Canadian
provincial securities laws of those jurisdictions designated by the
Representatives, shall comply with such laws and shall continue such
qualifications, registrations and exemptions in effect so long as
required for the distribution of the Common Shares. The Company shall
not be required to qualify as a
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<PAGE> 20
foreign corporation or to take any action that would subject it to
general service of process in any such jurisdiction where it is not
presently qualified or where it would be subject to taxation as a
foreign corporation. The Company will advise the Representatives
promptly of the suspension of the qualification or registration of (or
any such exemption relating to) the Common Shares for offering, sale or
trading in any jurisdiction or any initiation or threat of any
proceeding for any such purpose, and in the event of the issuance of any
order suspending such qualification, registration or exemption, the
Company shall use its best efforts to obtain the withdrawal thereof at
the earliest possible moment.
vi) Use of Proceeds. The Company shall apply the net proceeds
from the sale of the Common Shares sold by it in the manner described
under the caption "Use of Proceeds" in the Prospectus.
vii) Transfer Agent. The Company shall engage and maintain, at
its expense, a registrar and transfer agent for the Common Stock.
viii) Earning Statement. As soon as practicable, the Company
will make generally available to its security holders and to the
Representatives an earning statement (which need not be audited)
covering the twelve-month period ending September 30, 1998 that
satisfies the provisions of Section 11(a) of the Securities Act.
ix) Periodic Reporting Obligations. During the Prospectus
Delivery Period the Company shall file, on a timely basis, with the
Commission and the Nasdaq National Market all reports and documents
required to be filed under the Securities and Exchange Act of 1934, as
amended (the "Exchange Act"). Additionally, the Company shall file with
the Commission all reports on Form SR as may be required under Rule 463
under the Securities Act.
x) Agreement Not To Offer or Sell Additional Securities. During
the period of 180 days following the date of the Prospectus, the Company
will not, without the prior written consent of Montgomery Securities
(which consent may be withheld at the sole discretion of Montgomery
Securities), directly or indirectly, sell, offer, contract or grant any
option to sell, pledge, transfer or establish an open "put equivalent
position" within the meaning of Rule 16a-1(h) under the Exchange Act, or
otherwise dispose of or transfer, or announce the offering of, or file
any registration statement under the Securities Act in respect of, any
shares of Common Stock, options or warrants to acquire shares of the
Common Stock or securities exchangeable or exercisable for or
convertible into shares of Common Stock (other than as contemplated by
this Agreement with respect to the Common Shares); provided, however,
that the Company may file a
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registration statement on Form S-8 with respect to, and may issue shares
of its Common Stock or options to purchase its Common Stock, or Common
Stock upon exercise of options or warrants, pursuant to any stock
option, stock bonus or other stock plan or arrangement described in the
Prospectus, but only if the holders of such shares, options, warrants or
shares issued upon exercise of such options or warrants, agree in
writing not to, directly or indirectly, sell, offer, contract or grant
any option to sell (including without limitation any short sale),
pledge, transfer, establish an open "put equivalent position" within the
meaning of Rule 16a-1(h) under the Exchange Act, or otherwise dispose of
(including by devise or descent unless such devisees or descendants take
subject to such agreement) any such shares or options during such 180
day period without the prior written consent of Montgomery Securities
(which consent may be withheld at the sole discretion of the Montgomery
Securities) (a "Lock-Up Agreement"); provided, further that,
notwithstanding the foregoing proviso, the Company may issue shares of
its Common Stock upon exercise of outstanding options or warrants
disclosed in the Prospectus without having first obtained a Lock-Up
Agreement from such option or warrant holder, so long as the Company
shall have used its commercially reasonable efforts to obtain such
Lock-Up Agreement from such holder prior to such exercise.
xi) Future Reports to the Representatives. During the period of
five years hereafter the Company will furnish to the Representatives at
600 Montgomery Street, San Francisco, CA 94111 Attention: Michael G.
Mueller: (i) as soon as practicable after the end of each fiscal year,
copies of the Annual Report of the Company containing the balance sheet
of the Company as of the close of such fiscal year and statements of
income, stockholders' equity and cash flows for the year then ended and
the opinion thereon of the Company's independent public or certified
public accountants; (ii) as soon as practicable after the filing
thereof, copies of each proxy statement, Annual Report on Form 10-K,
Quarterly Report on Form 10-Q, Current Report on Form 8-K or other
report filed by the Company with the Commission, the NASD or any
securities exchange; and (iii) as soon as available, copies of any
report or communication of the Company mailed generally to holders of
its Common Stock.
B) COVENANTS OF THE SELLING STOCKHOLDERS. Each Selling Stockholder
further covenants and agrees with each Underwriter:
i) Agreement Not to Offer or Sell Additional Securities. Such
Selling Stockholder will not, without the prior written consent of
Montgomery Securities (which consent may be withheld at the sole
discretion of Montgomery Securities), directly or indirectly, sell,
offer, contract or grant any option to sell (including without
limitation any short sale), pledge, transfer, establish an open "put
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<PAGE> 22
equivalent position" within the meaning of Rule 16a-1(h) under the
Exchange Act, or otherwise dispose of (including by devise or descent
unless such devisees or descendants take subject to such agreement) any
shares of Common Stock, options or warrants to acquire shares of Common
Stock, or securities exchangeable or exercisable for or convertible into
shares of Common Stock currently or hereafter owned either of record or
beneficially (as defined in Rule 13d-3 under the Exchange Act) by the
undersigned, or publicly announce the undersigned's intention to do any
of the foregoing, for a period commencing on the date hereof and
continuing through the close of trading on the date 180 days after the
date of the Prospectus.
The foregoing paragraph shall not prohibit (i) bona fide gifts
made to any person or entity or (ii) distributions by a Selling
Stockholder to its partners (if the Selling Stockholder is a
partnership) or shareholders (if the Selling Stockholder is a
corporation); provided that such donee or distributee agrees in writing
to be bound by the provisions of this subsection as if it were the
Selling Stockholder named therein, which written agreement shall have
been executed and delivered to Montgomery Securities prior to such gift
or distribution.
ii) Delivery of Forms W-8 and W-9. To deliver to the
Representatives prior to the First Closing Date a properly completed and
executed United States Treasury Department Form W-8 (if the Selling
Stockholder is a non-United States person) or Form W-9 (if the Selling
Stockholder is a United States Person).
Montgomery Securities, on behalf of the several Underwriters,
may, in its sole discretion, waive in writing the performance by the Company or
any Selling Stockholder of any one or more of the foregoing covenants or extend
the time for their performance.
SECTION 4. PAYMENT OF EXPENSES. The Company agrees to pay all
costs, fees and expenses incurred in connection with the performance of its and
the Selling Stockholders' obligations (other than the Selling Stockholders'
obligations relating to underwriting discounts and commissions applicable to
sales by the Selling Stockholders, transfer taxes, personal taxes and any fees
and expenses of counsel engaged by the Selling Stockholders other than Cooley
Godward LLP, which discounts and commissions, transfer taxes, personal taxes and
fees of such counsel shall be paid by such Selling Stockholders) hereunder and
in connection with the transactions contemplated hereby, including without
limitation (i) all expenses incident to the issuance and delivery of the Common
Shares (including all printing and engraving costs), (ii) all fees and expenses
of the registrar and transfer agent of the Common Stock, (iii) all necessary
issue, transfer and other stamp taxes in connection with the issuance and sale
of the Common
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Shares to the Underwriters, (iv) all fees and expenses of the Company's counsel,
independent public or certified pubic accountants and other advisors, (v) all
costs and expenses incurred in connection with the preparation, printing,
filing, shipping and distribution of the Registration Statement (including
financial statements, exhibits, schedules, consents and certificates of
experts), each preliminary prospectus and the Prospectus, and all amendments and
supplements thereto, and this Agreement, (vi) all filing fees, attorneys' fees
and expenses incurred by the Company or the Underwriters in connection with
qualifying or registering (or obtaining exemptions from the qualification or
registration of) all or any part of the Common Shares for offer and sale under
the state securities or blue sky laws or the provincial securities laws of
Canada, and, if requested by the Representatives, preparing and printing a "Blue
Sky Survey" or memorandum, and any supplements thereto, advising the
Underwriters of such qualifications, registrations and exemptions, (vii) the
filing fees incident to, and the reasonable fees and expenses of counsel for the
Underwriters in connection with, the NASD's review and approval of the
Underwriters' participation in the offering and distribution of the Common
Shares, (viii) the fees and expenses associated with including the Common Stock
on the Nasdaq National Market, and (ix) all other fees, costs and expenses
referred to in Item 13 of Part II of the Registration Statement. Except as
provided in this Section , Section , Section and Section hereof, the
Underwriters shall pay their own expenses, including the fees and disbursements
of their counsel.
This Section shall not affect or modify any separate, valid
agreement relating to the allocation of payment of expenses between the Company,
on the one hand, and the Selling Stockholders, on the other hand.
SECTION 5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the several Underwriters to purchase and pay for the Common
Shares as provided herein on the First Closing Date and, with respect to the
Optional Common Shares, the Second Closing Date, shall be subject to the
accuracy of the representations and warranties (except that, with respect to
clause (i) of Section hereof, subsequent to the respective dates as of which
information is given in the Prospectus, there shall not have been any Material
Adverse Change, except as otherwise disclosed in the Prospectus or in the
certificate delivered pursuant to Section hereof, which exception shall not
affect the availability of the condition set forth in Section hereof) on the
part of the Company and the Selling Stockholders set forth in Sections and
hereof as of the date hereof and as of the First Closing Date as though then
made and, with respect to the Optional Common Shares, as of the Second Closing
Date as though then made, to the timely performance by the Company and the
Selling Stockholders of their respective covenants and other obligations
hereunder, and to each of the following additional conditions:
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<PAGE> 24
A) Accountants' Comfort Letter. On the date hereof, the
Representatives shall have received from Deloitte & Touche LLP, independent
public or certified public accountants for the Company, a letter dated the date
hereof addressed to the Underwriters, in form and substance satisfactory to the
Representatives, containing statements and information of the type ordinarily
included in accountant's "comfort letters" to underwriters, delivered according
to Statement of Auditing Standards No. 72 (or any successor bulletin), with
respect to the audited and unaudited financial statements and certain financial
information contained in the Registration Statement and the Prospectus (and the
Representatives shall have received an additional 10 conformed copies of such
accountants' letter for each of the several Underwriters).
B) Compliance with Registration Requirements; No Stop Order; No
Objection from NASD. As of the First Closing Date and, with respect to the
Optional Common Shares, the Second Closing Date:
i) the Company shall have filed the Prospectus with the
Commission (including the information required by Rule 430A under the
Securities Act) in the manner and within the time period required by
Rule 424(b) under the Securities Act; or the Company shall have filed a
pre- or post-effective amendment to the Registration Statement
containing the information required by such Rule 430A, and such pre- or
post-effective amendment shall have become effective; or, if the Company
elected to rely upon Rule 434 under the Securities Act and obtained the
Representatives' consent thereto, the Company shall have filed a Term
Sheet with the Commission in the manner and within the time period
required by such Rule 424(b);
ii) no stop order suspending the effectiveness of the
Registration Statement, any Rule 462(b) Registration Statement, or any
post-effective amendment to the Registration Statement, shall be in
effect and no proceedings for such purpose shall have been instituted or
threatened by the Commission; and
iii) the NASD shall have raised no objection to the
fairness and reasonableness of the underwriting terms and arrangements.
C) No Material Adverse Change. For the period from and after the
date of this Agreement and prior to the First Closing Date and, with respect to
the Optional Common Shares, the Second Closing Date, in the judgment of the
Representatives there shall not have occurred any Material Adverse Change that
makes it impracticable to market the Common Shares in the manner and on the
terms described in the Prospectus.
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D) Opinion of Counsel for the Company. On each of the First
Closing Date and the Second Closing Date the Representatives shall have received
the favorable opinion of Cooley Godward LLP, counsel for the Company, dated as
of such Closing Date, the form of which is attached as Exhibit A (and the
Representatives shall have received an additional 10 conformed copies of such
counsel's legal opinion for each of the several Underwriters).
E) Opinion of Counsel for the Underwriters. On each of the First
Closing Date and the Second Closing Date the Representatives shall have received
the favorable opinion of Orrick, Herrington & Sutcliffe LLP, counsel for the
Underwriters, dated as of such Closing Date, with respect to the matters set
forth in paragraphs (i), (vii), (viii), (ix) and (x) and the next-to-last
paragraph of Exhibit A (and the Representatives shall have received an
additional 10 conformed copies of such counsel's legal opinion for each of the
several Underwriters).
F) Officers' Certificate. On each of the First Closing Date and
the Second Closing Date the Representatives shall have received a written
certificate executed by the Chairman of the Board and Chief Executive Officer of
the Company and the Vice President, Finance, Chief Financial Officer and
Secretary of the Company, dated as of such Closing Date, to the effect set forth
in subsection hereof, and further to the effect that:
i) except as otherwise stated in such certificate, for
the period from and after the date of this Agreement and prior to such
Closing Date, there has not occurred any Material Adverse Change;
ii) the representations, warranties and covenants of the
Company set forth in Section of this Agreement are true and correct with
the same force and effect as though expressly made on and as of such
Closing Date, except, with respect solely to clause (i) of Section , as
otherwise stated in such certificate; and
iii) the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied at
or prior to such Closing Date.
G) Bring-down Comfort Letter. On each of the First Closing Date
and the Second Closing Date the Representatives shall have received from
Deloitte & Touche LLP, independent public or certified public accountants for
the Company, a letter dated such date, in form and substance satisfactory to the
Representatives, to the effect that they reaffirm the statements made in the
letter furnished by them pursuant to subsection hereof, except that the
specified date referred to therein for the carrying out of procedures shall be
no more than three business days prior to the First Closing Date or Second
Closing Date, as the case may be (and the Representatives shall have received an
additional 10 conformed
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copies of such accountants' letter for each of the several Underwriters).
H) Opinion of Counsel for the Selling Stockholders. On the First
Closing Date the Representatives shall have received the favorable opinion of
Cooley Godward LLP, counsel for those Selling Stockholders who are individuals,
and the favorable opinions of the respective counsels of each of the other
Selling Stockholders, each dated as of such Closing Date, the forms of which are
attached as Exhibit B-1 and Exhibit B-2 (with such modifications as are
acceptable to the Representatives), respectively (and the Representatives shall
have received an additional 10 conformed copies of each such counsel's legal
opinion for each of the several Underwriters).
I) Selling Stockholders' Certificate. On the First Closing Date
the Representatives shall have received a written certificate executed by the
Attorney-in-Fact of each Selling Stockholder, dated as of such Closing Date, to
the effect that:
i) the representations, warranties and covenants of such
Selling Stockholder set forth in Section of this Agreement are true and
correct with the same force and effect as though expressly made by such
Selling Stockholder on and as of such Closing Date; and
ii) such Selling Stockholder has complied with all the
agreements and satisfied all the conditions on its part to be performed
or satisfied at or prior to such Closing Date.
J) Selling Stockholders' Documents. On or before the date
hereof, the Company and the Selling Stockholders shall have furnished for review
by the Representatives copies of the Powers of Attorney and Custody Agreements
executed by each of the Selling Stockholders and such further information,
certificates and documents as the Representatives may reasonably request.
K) Lock-Up Agreement from Stockholders of the Company. On or
before the date hereof, the Company shall have furnished to the Representatives
(i) an agreement in the form of Exhibit C hereto from each director and officer
and from beneficial owners of Common Stock, options or warrants to purchase
Common Stock or any securities convertible into Common Stock representing 89% of
the Common Stock on a fully diluted basis, and (ii) evidence satisfactory to the
Representatives that beneficial owners of Common Stock, options or warrants to
purchase Common Stock or any securities convertible into Common Stock
representing an additional 9% of the Common Stock on a fully diluted basis are
subject to contractual restrictions on the transfer of their securities. In each
case, such agreements shall be in full force and effect on each of the First
Closing Date and the Second Closing Date.
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L) Additional Documents. On or before each of the First Closing
Date and the Second Closing Date, the Representatives and counsel for the
Underwriters shall have received such information, documents and opinions as
they may reasonably require for the purposes of enabling them to pass upon the
issuance and sale of the Common Shares as contemplated herein, or in order to
evidence the accuracy of any of the representations and warranties, or the
satisfaction of any of the conditions or agreements, herein contained.
If any condition specified in this Section hereof is not
satisfied when and as required to be satisfied, this Agreement may be terminated
by the Representatives by notice to the Company and the Selling Stockholders at
any time on or prior to the First Closing Date and, with respect to the Optional
Common Shares, at any time prior to the Second Closing Date, which termination
shall be without liability on the part of any party to any other party, except
that Section , Section , Section and Section hereof shall at all times be
effective and shall survive such termination.
SECTION 6. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If this
Agreement is terminated by the Representatives pursuant to Section , Section
(i)(a), (iv), (v) or Section hereof, or if the sale to the Underwriters of the
Common Shares on the First Closing Date is not consummated because of any
refusal, inability or failure on the part of the Company or the Selling
Stockholders to perform any agreement herein or to comply with any provision
hereof, the Company agrees to reimburse the Representatives and the other
Underwriters, severally, upon demand for all out-of-pocket expenses that shall
have been reasonably incurred by the Representatives and the Underwriters in
connection with the proposed purchase and the offering and sale of the Common
Shares, including but not limited to reasonable fees and disbursements of
counsel, printing expenses, travel expenses, postage, facsimile and telephone
charges. Notwithstanding the foregoing sentence, the Representatives and the
other Underwriters shall not be entitled to such reimbursement of expenses in
the event that this Agreement is terminated by the Representatives (i) pursuant
to Section 5(C) or 10(iv), as a result of adverse changes resulting solely from
general economic conditions or conditions affecting generally the industry in
which the Company operates, or (ii) pursuant to Section 10(v), so long as the
event causing such termination shall not have interfered or be reasonably likely
to interfere materially with the conduct of the business and operations of the
Company regardless of whether or not such loss shall have been insured.
SECTION 7. INDEMNIFICATION.
A) Indemnification of the Underwriters. The Company agrees to
indemnify and hold harmless each Underwriter, its officers and employees, and
each person, if any, who controls any Underwriter within the meaning of the
Securities Act and the
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Exchange Act against any loss, claim, damage, liability or expense, as incurred,
to which such Underwriter or such controlling person may become subject, under
the Securities Act, the Exchange Act or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Company), insofar as such loss, claim, damage, liability or expense (or actions
in respect thereof as contemplated below) arises out of or is based (i) upon any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, or any amendment thereto, including any information
deemed to be a part thereof pursuant to Rule 430A or Rule 434 under the
Securities Act, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not
misleading; or (ii) upon any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; or (iii)
in whole or in part upon any inaccuracy in the representations and warranties of
the Company or the Selling Stockholders contained herein (provided that, for
purposes of the indemnification set forth herein, the representations and
warranties given in Section hereof shall be deemed to have been made, in each
case, without reference to the Exceptions (as defined therein)); or (iv) in
whole or in part upon any failure of the Company or the Selling Stockholders to
perform their respective obligations hereunder or under law; and to reimburse
each Underwriter and each such controlling person for any and all expenses
(including the fees and disbursements of counsel chosen by Montgomery
Securities) as such expenses are reasonably incurred by such Underwriter or such
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action; provided, however, that the foregoing indemnity agreement shall not
apply to any loss, claim, damage, liability or expense to the extent, but only
to the extent, arising out of or based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Company and the Selling
Stockholders by the Representatives expressly for use in the Registration
Statement, any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto); and provided, further, that with respect to any preliminary
prospectus, the foregoing indemnity agreement shall not inure to the benefit of
any Underwriter from whom the person asserting any loss, claim, damage,
liability or expense purchased Common Shares, or any person controlling such
Underwriter, if copies of the Prospectus were timely delivered to the
Underwriter pursuant to Section hereof and a copy of the Prospectus (as then
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Underwriter
to such person, if required by law so to have been delivered, at or prior to the
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written confirmation of the sale of the Common Shares to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, claim, damage, liability or expense.
Each Selling Stockholder, severally and not jointly, agrees to
indemnify and hold harmless the Company, each Underwriter, the directors,
officers, employees and agents of the Company and each Underwriter, and each
person, if any, who controls the Company or any Underwriter within the meaning
of the Securities Act or the Exchange Act against any loss, claim, damage,
liability or expense, as incurred, to which the Company, such Underwriter or
such controlling person may become subject, under the Securities Act, the
Exchange Act or other federal or state statutory law or regulation, or at common
law or otherwise (including in settlement of any litigation, if such settlement
is effected with the written consent of such Selling Stockholder), insofar as
such loss, claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based (i) upon any untrue statement or
alleged untrue statement of a material fact contained in any information
provided by such Selling Stockholder specifically for use in the preparation of
the Registration Statement, or any amendment thereto, including any information
deemed to be a part thereof pursuant to Rule 430A or Rule 434 under the
Securities Act, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not
misleading; or (ii) upon any untrue statement or alleged untrue statement of a
material fact contained in any information provided by such Selling Stockholder
specifically for use in the preparation of any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; or (iii) in whole or in part upon any inaccuracy in the
representations and warranties of such Selling Stockholder contained herein; or
(iv) in whole or in part upon any failure of the such Selling Stockholder to
perform its obligations hereunder or under law; and to reimburse the Company,
each Underwriter and each such controlling person for any and all expenses
(including the fees and disbursements of counsel chosen by Montgomery
Securities) as such expenses are reasonably incurred by the Company, such
Underwriter or such controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; provided, however, that the foregoing indemnity
agreement shall not apply to any loss, claim, damage, liability or expense to
the extent, but only to the extent, arising out of or based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the
Company and the Selling Stockholders by the Representatives expressly for use in
the Registration Statement, any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto); and provided, further, that with respect to
any preliminary prospectus, the
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foregoing indemnity agreement shall not inure to the benefit of any Underwriter
from whom the person asserting any loss, claim, damage, liability or expense
purchased Common Shares, or any person controlling such Underwriter, if copies
of the Prospectus were timely delivered to the Underwriter pursuant to Section
hereof and a copy of the Prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) was not sent
or given by or on behalf of such Underwriter to such person, if required by law
so to have been delivered, at or prior to the written confirmation of the sale
of the Common Shares to such person, and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss, claim,
damage, liability or expense; and provided, further, that the liability of each
Selling Stockholder to the Company, the Underwriters or any other person shall
be limited to an amount equal to the net proceeds received (after deducting
underwriters' discounts and commissions) by such Selling Stockholder from the
sale of the Common Shares contemplated hereby.
The indemnity agreement set forth in this Section shall be in
addition to any liabilities that the Company and the Selling Stockholders may
otherwise have.
B) Indemnification by the Underwriters. Each Underwriter agrees,
severally and not jointly, to indemnify and hold harmless the Company, each of
its directors, each of its officers who signed the Registration Statement, the
Selling Stockholders and each person, if any, who controls the Company or any
Selling Stockholder within the meaning of the Securities Act or the Exchange
Act, against any loss, claim, damage, liability or expense, as incurred, to
which the Company, or any such director, officer, Selling Stockholder or
controlling person may become subject, under the Securities Act, the Exchange
Act, or other federal or state statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of such Underwriter), insofar as such loss,
claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based upon any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or arises out of or is based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in the Registration Statement, any preliminary
prospectus, the Prospectus (or any amendment or supplement thereto), in reliance
upon and in conformity with written information furnished to the Company and the
Selling Stockholders by the Representatives expressly for use therein; and to
reimburse the Company, or any such director, officer, Selling Stockholder or
controlling person for any legal and other expense reasonably incurred by the
Company, or any such
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director, officer, Selling Stockholder or controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action. Each of the Company and each of the
Selling Stockholders, hereby acknowledges that the only information that the
Underwriters have furnished to the Company and the Selling Stockholders
expressly for use in the Registration Statement, any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto) are the statements set
forth (A) as the first paragraph on the inside front cover page of the
Prospectus concerning stabilization by the Underwriters and (B) in the table in
the first paragraph and as the second paragraph, the third sentence of the sixth
paragraph, the seventh paragraph, the eight paragraph and the ninth paragraph
under the caption "Underwriting" in the Prospectus; and the Underwriters confirm
that such statements are correct. The indemnity agreement set forth in this
Section shall be in addition to any liabilities that each Underwriter may
otherwise have.
C) Notifications and Other Indemnification Procedures. Promptly
after receipt by an indemnified party under this Section of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section , notify
the indemnifying party in writing of the commencement thereof, but the omission
so to notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party for contribution or otherwise than under
the indemnity agreement contained in this Section or to the extent it is not
prejudiced as a proximate result of such failure. In case any such action is
brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it shall elect,
jointly with all other indemnifying parties similarly notified, by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that a conflict may arise between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of such indemnifying
party's election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in
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connection with the defense thereof unless (i) the indemnified party shall have
employed separate counsel in accordance with the proviso to the next preceding
sentence (it being understood, however, that the indemnifying party shall not be
liable for the expenses of more than one separate counsel (together with local
counsel), approved by the indemnifying party (Montgomery Securities in the case
of Section and Section hereof), representing the indemnified parties who are
parties to such action) or (ii) the indemnifying party shall not have employed
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement of the
action, in each of which cases the fees and expenses of counsel shall be at the
expense of the indemnifying party.
D) Settlements. The indemnifying party under this Section shall
not be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for reasonable fees and expenses of counsel as contemplated by
Section hereof, the indemnifying party agrees that it shall be liable for any
reasonable settlement of any proceeding effected without its written consent if
(i) such settlement is entered into more than 60 days after receipt by such
indemnifying party of the aforesaid request and 30 days after receipt of notice
of the terms of such settlement and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement; provided that, the indemnified party shall promptly
reimburse any amounts paid to or on behalf of such indemnified party in the
event such indemnification obligation is ultimately determined to be improper
whether by a court or is in excess of amounts agreed upon through negotiation
between the parties. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement, compromise or consent
to the entry of judgment in any pending or threatened action, suit or proceeding
in respect of which any indemnified party is or could have been a party and
indemnity was or could have been sought hereunder by such indemnified party,
unless such settlement, compromise or consent includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such action, suit or proceeding.
SECTION 8. CONTRIBUTION.
If the indemnification provided for in Section hereof is for any
reason held to be unavailable to or otherwise insufficient to hold harmless an
indemnified party in respect of any losses, claims, damages, liabilities or
expenses referred to
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therein, then each indemnifying party shall contribute to the aggregate amount
paid or payable by such indemnified party, as incurred, as a result of any
losses, claims, damages, liabilities or expenses referred to therein (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and each Selling Stockholder severally and not jointly, on the one hand,
and the Underwriters, on the other hand, from the offering of the Common Shares
pursuant to this Agreement 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 each Selling Stockholder severally
and not jointly, on the one hand, and the Underwriters, on the other hand, in
connection with the statements or omissions or inaccuracies in the
representations and warranties herein which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant equitable
considerations provided, however, that in no case shall any Selling Stockholder
be liable or responsible for any amount in excess of the net proceeds received
(after deducting the Underwriters' discounts and commissions) by such Selling
Stockholder in the offering, provided, further, that the Company shall be
responsible for any amounts that would have been allocable to a Selling
Stockholder but for such limitation. The relative benefits received by the
Company and the Selling Stockholders, on the one hand, and the Underwriters, on
the other hand, in connection with the offering of the Common Shares pursuant to
this Agreement shall be deemed to be in the same respective proportions as the
total net proceeds from the offering of the Common Shares pursuant to this
Agreement (before deducting expenses) received by the Company and the Selling
Stockholders, and the total underwriting discount received by the Underwriters,
in each case as set forth on the front cover page of the Prospectus (or, if Rule
434 under the Securities Act is used, the corresponding location on the Term
Sheet) bear to the aggregate initial public offering price of the Common Shares
as set forth on such cover. The relative fault of the Company and each Selling
Stockholder, on the one hand, and the Underwriters, on the other hand, shall be
determined by reference to, among other things, whether any such untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact or any such inaccurate or alleged inaccurate
representation or warranty relates to information supplied by the Company or a
Selling Stockholder, on the one hand, or 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.
The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section hereof, any legal or
other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim. The provisions set forth in
Section hereof with respect to notice of commencement of any
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action shall apply if a claim for contribution is to be made under this Section
; provided, however, that no additional notice shall be required with respect to
any action for which notice has been given under Section hereof for purposes of
indemnification.
The Company, the Selling Stockholders and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this Section
were determined by pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in this Section .
Notwithstanding the provisions of this Section , no Underwriter
shall be required to contribute any amount in excess of the underwriting
discount received by such Underwriter in connection with the Common Shares
underwritten by it. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section are several, and not joint, in proportion to their respective
underwriting commitments as set forth opposite their names in Schedule A. For
purposes of this Section , each officer and employee of an Underwriter and each
person, if any, who controls an Underwriter within the meaning of the Securities
Act and the Exchange Act shall have the same rights to contribution as such
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company with the meaning of the Securities Act and the Exchange Act shall have
the same rights to contribution as the Company.
SECTION 9. DEFAULT OF ONE OR MORE OF THE SEVERAL UNDERWRITERS.
If, on the First Closing Date or the Second Closing Date, as the case may be,
any one or more of the several Underwriters shall fail or refuse to purchase
Common Shares that it or they have agreed to purchase hereunder on such date,
and the aggregate number of Common Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase does not exceed 10% of the
aggregate number of the Common Shares to be purchased on such date, the other
Underwriters shall be obligated, severally, in the proportions that the number
of Firm Common Shares set forth opposite their respective names on Schedule A
bears to the aggregate number of Firm Common Shares set forth opposite the names
of all such non-defaulting Underwriters, or in such other proportions as may be
specified by the Representatives with the consent of the non-defaulting
Underwriters, to purchase the Common Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date. If, on the
First Closing Date or the Second Closing Date, as the case may be, any one or
more of the Underwriters shall fail or refuse to purchase Common Shares and
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the aggregate number of Common Shares with respect to which such default occurs
exceeds 10% of the aggregate number of Common Shares to be purchased on such
date, and arrangements satisfactory to the Representatives and the Company for
the purchase of such Common Shares are not made within 48 hours after such
default, this Agreement shall terminate without liability of any party to any
other party except that the provisions of Section , Section , Section and
Section hereof shall at all times be effective and shall survive such
termination. In any such case either the Representatives or the Company shall
have the right to postpone the First Closing Date or the Second Closing Date, as
the case may be, but in no event for longer than seven days in order that the
required changes, if any, to the Registration Statement and the Prospectus or
any other documents or arrangements may be effected.
As used in this Agreement, the term "Underwriter" shall be deemed
to include any person substituted for a defaulting Underwriter under this
Section . Any action taken under this Section shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
SECTION 10. TERMINATION OF THIS AGREEMENT. Prior to the First
Closing Date this Agreement may be terminated by the Representatives by notice
given to the Company and the Selling Stockholders if at any time (i)(a) trading
or quotation in any of the Company's securities shall have been suspended or
limited by the Commission or by the Nasdaq Stock Market, or (b) trading in
securities generally on either the Nasdaq Stock Market or the New York Stock
Exchange shall have been suspended or limited, or minimum or maximum prices
shall have been generally established on any of such stock exchanges by the
Commission or the NASD; (ii) a general banking moratorium shall have been
declared by any of federal, New York, Delaware or California authorities; (iii)
there shall have occurred any outbreak or escalation of national or
international hostilities or any crisis or calamity, or any change in the United
States or international financial markets, or any substantial change or
development involving a prospective substantial change in United States' or
international political, financial or economic conditions, as in the judgment of
the Representatives is material and adverse and makes it impracticable to market
the Common Shares in the manner and on the terms described in the Prospectus or
to enforce contracts for the sale of securities; (iv) in the judgment of the
Representatives there shall have occurred any Material Adverse Change that makes
it impracticable to market the Common Shares in the manner and on the terms
described in the Prospectus; or (v) the Company shall have sustained a loss by
strike, fire, flood, earthquake, accident or other calamity of such character as
in the judgment of the Representatives would be reasonably likely to interfere
materially with the conduct of the business and operations of the Company
regardless of whether or not such loss shall have been insured. Any termination
pursuant to this Section shall be without liability on the part of (a) the
Company or the Selling
-31-
<PAGE> 36
Stockholders to any Underwriter, except that the Company shall be obligated to
reimburse the expenses of the Representatives and the Underwriters pursuant to
Sections and hereof, (b) any Underwriter to the Company or the Selling
Stockholders, or (c) any party hereto to any other party except that the
provisions of Section and Section hereof shall at all times be effective and
shall survive such termination.
SECTION 11. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY.
The respective indemnities, agreements, representations, warranties and other
statements of the Company, its officers, the Selling Stockholders and the
several Underwriters set forth in or made pursuant to this Agreement will remain
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter or the Company or any of its or their partners, officers or
directors or any controlling person, or the Selling Stockholders, as the case
may be, and will survive delivery of and payment for the Common Shares sold
hereunder and any termination of this Agreement.
SECTION 12. NOTICES. All communications hereunder shall be in
writing and shall be mailed, hand delivered or telecopied and confirmed to the
parties hereto as follows:
If to the Representatives:
Montgomery Securities
600 Montgomery Street
San Francisco, California 94111
Facsimile: 415-249-5558
Attention: Richard A. Smith
with a copy to:
Montgomery Securities
600 Montgomery Street
San Francisco, California 94111
Facsimile: (415) 249-5553
Attention: David A. Baylor, Esq.
If to the Company:
Il Fornaio (America) Corporation
1000 Sansome Street
San Francisco, California 94111
Facsimile: (415) 956-2879
Attention: Laurence B. Mindel
If to the Selling Stockholders:
BankBoston, N.A.
150 Royall Street
Mail Stop 45-02-62
-32-
<PAGE> 37
Canton, Massachusetts 02021
Facsimile: (617) 575-2420
Attention: Carole McHugh
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
SECTION 13. SUCCESSORS. This Agreement will inure to the benefit
of and be binding upon the parties hereto, including any substitute Underwriters
pursuant to Section hereof, and to the benefit of the employees, officers and
directors and controlling persons referred to in Section and Section
hereof, and in each case their respective successors, and personal
representatives, and no other person will have any right or obligation
hereunder. The term "successors" shall not include any purchaser of the Common
Shares as such from any of the Underwriters merely by reason of such purchase.
SECTION 14. PARTIAL UNENFORCEABILITY. The invalidity or
unenforceability of any Section, paragraph or provision of this Agreement shall
not affect the validity or enforceability of any other Section, paragraph or
provision hereof. If any Section, paragraph or provision of this Agreement is
for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
SECTION 15. GOVERNING LAW PROVISIONS.
A) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
B) Consent to Jurisdiction. Any legal suit, action or proceeding
arising out of or based upon this Agreement or the transactions contemplated
hereby ("Related Proceedings") may be instituted in the federal courts of the
United States of America located in the City and County of San Francisco or the
courts of the State of California in each case located in the City and County of
San Francisco (collectively, the "Specified Courts"), and each party irrevocably
submits to the exclusive jurisdiction (except for proceedings instituted in
regard to the enforcement of a judgment of any such court (a "Related
Judgment"), as to which such jurisdiction is non-exclusive) of such courts in
any such suit, action or proceeding. Service of any process, summons, notice or
document by mail to such party's address set forth above shall be effective
service of process for any suit, action or other proceeding brought in any such
court. The parties irrevocably and unconditionally waive any objection to the
laying of venue of any suit, action or other proceeding in the Specified Courts
and irrevocably and unconditionally waive and agree not to
-33-
<PAGE> 38
plead or claim in any such court that any such suit, action or other proceeding
brought in any such court has been brought in an inconvenient forum. Each party
not located in the United States irrevocably appoints CT Corporation System,
which currently maintains a San Francisco office at 49 Stevenson Street, San
Francisco, California 94105, United States of America, as its agent to receive
service of process or other legal summons for purposes of any such suit, action
or proceeding that may be instituted in any state or federal court in the City
and County of San Francisco.
SECTION 16. FAILURE OF ONE OR MORE OF THE SELLING STOCKHOLDERS TO
SELL AND DELIVER COMMON SHARES. If (A) one or more of the Selling Stockholders
shall fail to sell and deliver to the Underwriters the Common Shares to be sold
and delivered by such Selling Stockholders at the First Closing Date pursuant to
this Agreement and (B) the Company shall fail or be unable to sell and deliver
to the Underwriters an additional amount of Common Shares equal to the number of
Common Shares to be sold and delivered by such Selling Stockholder at the First
Closing Date without delay, then the Underwriters may at their option, by
written notice from the Representatives to the Company and the Selling
Stockholders, either (i) terminate this Agreement without any liability on the
part of any Underwriter or, except as provided in Sections , , and hereof, the
Company or the Selling Stockholders, or (ii) purchase the shares which the
Company and other Selling Stockholders have agreed to sell and deliver in
accordance with the terms hereof. If one or more of the Selling Stockholders
shall fail to sell and deliver to the Underwriters the Common Shares to be sold
and delivered by such Selling Stockholders pursuant to this Agreement at the
First Closing Date, then the Underwriters shall have the right, by written
notice from the Representatives to the Company and the Selling Stockholders, to
postpone the First Closing Date, but in no event for longer than seven days in
order that the required changes, if any, to the Registration Statement and the
Prospectus or any other documents or arrangements may be effected.
SECTION 17. GENERAL PROVISIONS. This Agreement constitutes the
entire agreement of the parties to this Agreement and supersedes all prior
written or oral and all contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof. This Agreement may be
executed in two or more counterparts, each one of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement may not be amended or modified unless in writing by
all of the parties hereto, and no condition herein (express or implied) may be
waived unless waived in writing by each party whom the condition is meant to
benefit. The Table of Contents and the Section headings herein are for the
convenience of the parties only and shall not affect the construction or
interpretation of this Agreement.
-34-
<PAGE> 39
Each of the parties hereto acknowledges that it is a
sophisticated business person who was adequately represented by counsel during
negotiations regarding the provisions hereof, including, without limitation, the
indemnification provisions of Section hereof and the contribution provisions of
Section hereof, and is fully informed regarding said provisions. Each of the
parties hereto further acknowledges that the provisions of Sections and hereof
fairly allocate the risks in light of the ability of the parties to investigate
the Company, its affairs and its business in order to assure that adequate
disclosure has been made in the Registration Statement, any preliminary
prospectus and the Prospectus (and any amendments and supplements thereto), as
required by the Securities Act and the Exchange Act.
[Signature Page Next]
-35-
<PAGE> 40
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company and the Custodian the enclosed
copies hereof, whereupon this instrument, along with all counterparts hereof,
shall become a binding agreement in accordance with its terms.
Very truly yours,
IL FORNAIO (AMERICA) CORPORATION
By: /s/ Laurence B. Mindel
-------------------------------------
Laurence B. Mindel
Chairman of the Board and
Chief Executive Officer
SELLING STOCKHOLDERS
By: /s/ Laurence B. Mindel
-------------------------------------
(Attorney-in-fact)
-36-
<PAGE> 41
The foregoing Underwriting Agreement is hereby confirmed and
accepted by the Representatives in San Francisco, California as of the date
first above written.
MONTGOMERY SECURITIES
BT ALEX. BROWN INCORPORATED
Acting as Representatives of the several Underwriters named in the attached
Schedule A.
By: MONTGOMERY SECURITIES
By: /s/ Richard A. Smith
--------------------------------
Authorized Signatory
-37-
<PAGE> 42
SCHEDULE A
<TABLE>
<CAPTION>
============================================================
NUMBER OF
FIRM COMMON
SHARES TO BE
UNDERWRITERS PURCHASED
- ------------------------------------------------------------
<S> <C>
Montgomery Securities 510,000
- ------------------------------------------------------------
BT Alex. Brown Incorporated 510,000
- ------------------------------------------------------------
Donaldson, Lufkin & Jenrette Securities
Corporation 80,000
- ------------------------------------------------------------
Robertson, Stephens & Company LLC 80,000
- ------------------------------------------------------------
Schroder & Co. Inc. 80,000
- ------------------------------------------------------------
Arnhold and S. Bleichroeder, Inc. 40,000
- ------------------------------------------------------------
Cruttenden Roth Incorporated 40,000
- ------------------------------------------------------------
Fahnestock & Co. Inc. 40,000
- ------------------------------------------------------------
Hampshire Securities Corporation 40,000
- ------------------------------------------------------------
Raymond James & Associates, Inc. 40,000
- ------------------------------------------------------------
H.C. Wainwright & Co., Inc. 40,000
- ------------------------------------------------------------
Total 1,500,000
- ------------------------------------------------------------
============================================================
</TABLE>
<PAGE> 43
SCHEDULE B
<TABLE>
<CAPTION>
===============================================
NUMBER OF
FIRM COMMON
SHARES TO BE
SELLING STOCKHOLDER SOLD
- -----------------------------------------------
<S> <C>
Douglas Appleton
c/o Donald L. Schwarz
Schroder & Co.
10877 Wilshire Blvd., 5th Floor
Los Angeles, CA 90024 5,000
- -----------------------------------------------
Candice E. Appleton
c/o Donald L. Schwarz
Schroder & Co.
10877 Wilshire Blvd., 5th Floor
Los Angeles, CA 90024 5,000
- -----------------------------------------------
Andrew D. Berkey II
230 No. Rockingham Avenue
Los Angeles, CA 90049 3,000
- -----------------------------------------------
Stephen W. Bershad
645 Madison Avenue, 9th Floor
New York, NY 10022 12,620
- -----------------------------------------------
Dennis Bookshester
1325 W. Astor
Chicago, IL 60610 6,310
- -----------------------------------------------
Collingwood Partners
c/o Richard D. Angel
Daniel H. Renberg and Associates
8383 Wilshire Blvd., Suite 926
Beverly Hills, CA 90211 25,240
- -----------------------------------------------
Dorskind 1982 Trust
c/o Albert A. Dorskind
807 N. Roxbury Drive
Beverly Hills, CA 90210 3,000
- -----------------------------------------------
Phyllis and Donald Epstein
c/o Donald L. Schwarz
Schroder & Co.
10877 Wilshire Blvd., 5th Floor
Los Angeles, CA 90024 5,000
===============================================
</TABLE>
<PAGE> 44
<TABLE>
===============================================
<S> <C>
Aaron R. Eshman
c/o Wertheim Schroder & Co., Inc.
10877 Wilshire Blvd., Suite 500
Los Angeles, CA 90024 4,000
- -----------------------------------------------
Oak Brook Bank, Trustee Custodian
FBO Arthur P. Frigo IRA
c/o Sherri M. Nugent
Oak Brook Bank
1400 W. 16th Street
Oak Brook, IL 60523 6,310
- -----------------------------------------------
Barry Goldfarb
1460 Moraga Drive
Los Angeles, CA 90049 12,620
- -----------------------------------------------
Bernard A. Greenberg
Rosenfeld, Meyer & Susman, LLP
9601 Wilshire Blvd., 4th Floor
Beverly Hills, CA 90210 3,000
- -----------------------------------------------
InterWest Entrepreneurs
c/o Karen Wilson
InterWest Partners
3000 Sand Hill Road
Menlo Park, CA 94025 631
- -----------------------------------------------
InterWest Partners I
c/o Karen Wilson
InterWest Partners
3000 Sand Hill Road
Menlo Park, CA 94025 17,709
- -----------------------------------------------
InterWest Partners II
c/o Karen Wilson
InterWest Partners
3000 Sand Hill Road
Menlo Park, CA 94025 17,807
- -----------------------------------------------
InterWest Partners IV
c/o Karen Wilson
InterWest Partners
3000 Sand Hill Road
Menlo Park, CA 94025 25,967
- -----------------------------------------------
Marilyn Karsten
10580 Wilshire Blvd., #66
Los Angeles, CA 90024 3,000
- -----------------------------------------------
C. Joseph LaBonte
c/o Jenny Craig, Inc.
11355 N. Torrey Pines Road
La Jolla, CA 92038 3,046
===============================================
</TABLE>
<PAGE> 45
<TABLE>
============================================================================
<S> <C>
C. Joseph LaBonte Defined Benefit Plan
c/o Jenny Craig, Inc.
11355 N. Torrey Pines Road
La Jolla, CA 92038 6,894
- ----------------------------------------------------------------------------
Edward N. Levine
16 Somerset Lane
Mill Valley, CA 94941 8,000
- ----------------------------------------------------------------------------
Mark T. Lindee
Schroder & Co.
10877 Wilshire Blvd., 5th Floor
Los Angeles, CA 90024 6,000
- ----------------------------------------------------------------------------
Delaware Charter Guaranteed Trust Co.
FBO Jerry Magnin
The Magnin Co., Inc.
444 N. Rodeo Drive
Beverly Hills, CA 90210 3,000
- ----------------------------------------------------------------------------
Jerry Allan Magnin and Lois Magnin
Declaration of Trust
The Magnin Co., Inc.
444 N. Rodeo Drive
Beverly Hills, CA 90210 12,620
- ----------------------------------------------------------------------------
Master Trust Pursuant to Hewlett Packard
Deferred Profit Sharing Plan and
Supplemental Pension Plan
Cheryl Gorman
Hewlett Packard-1900
1501 N. Page Mill Labs, Bldg. 1U
Palo Alto, CA 94304 25,240
- ----------------------------------------------------------------------------
Mayfield V
2800 Sand Hill Road
Menlo Park, CA 94025
Attn: George A. Pavlov 18,470
- ----------------------------------------------------------------------------
Mayfield Associates
Mayfield Associates Fund
2800 Sand Hill Road
Menlo Park, CA 94025
Attn: George A. Pavlov 770
- ----------------------------------------------------------------------------
Joseph and Ann H. Nadel, Trustees of the Joseph Nadel
and Ann H. Nadel Revocable Living Trust dated August 23, 1995
Berger Nadel & Vannelli
One California Street, Suite 2750
San Francisco, CA 94111 3,000
============================================================================
</TABLE>
<PAGE> 46
<TABLE>
============================================================================
<S> <C>
Delaware Charter Guarantee & Trust, Trustee
FBO Donald L. Schwarz IRA
Schroder & Co.
10877 Wilshire Blvd., 5th Floor
Los Angeles, CA 90024
Attn: Donald Schwarz 4,000
- ----------------------------------------------------------------------------
Sequoia Capital Growth Fund
c/o Tom Stephenson
Sequoia Capital
3000 Sand Hill Road, Bldg. 4, Suite 280
Menlo Park, CA 94025 21,872
- ----------------------------------------------------------------------------
Sequoia Technology Partners III
c/o Tom Stephenson
Sequoia Capital
3000 Sand Hill Road, Bldg. 4, Suite 280
Menlo Park, CA 94025 1,396
- ----------------------------------------------------------------------------
Wells Fargo & Company
444 Market Street
San Francisco, CA 94111
Attn: Alan J. Pabst 219,478
- ----------------------------------------------------------------------------
Wilderess Associates
844 Moraga Drive
Los Angeles, CA 90049
Attn: Richard Sandler 10,000
- ----------------------------------------------------------------------------
Total 500,000
- ----------------------------------------------------------------------------
============================================================================
</TABLE>
<PAGE> 47
EXHIBIT A(1)
Opinion of counsel for the Company to be delivered pursuant to
Section of the Underwriting Agreement.
References to the Prospectus in this Exhibit A include any
supplements thereto at the Closing Date.
i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware.
ii) The Company has the requisite corporate power and authority
to own, lease and operate its property and assets and to conduct its
business as described in the Prospectus and to enter into and perform
its obligations under the Underwriting Agreement.
iii) The Company is duly qualified as a foreign corporation to
transact business and is in good standing in California, Colorado,
Nevada, Oregon and Washington and, to the best of such counsel's
knowledge, is not required to qualify as a foreign corporation to do
business in any other jurisdiction in the United States (other than
California, Colorado, Nevada, Oregon and Washington) where the failure
to so qualify or to be in good standing would, individually or in the
aggregate, result in a Material Adverse Change.
iv) The Company has __________ authorized shares of capital
stock, consisting of __________ shares of Common Stock and __________
shares of Preferred Stock. Immediately prior to the date of this opinion
letter, there were __________ shares of Common Stock, __________ shares
of Series A Preferred Stock, __________ shares of Series B Preferred
Stock, __________ shares of Series C Preferred Stock, __________ shares
of Series D Preferred Stock, __________ shares of Series E Preferred
Stock and __________ shares of Series F Preferred Stock issued and
outstanding. Except as described in Section "Capitalization and Other
Stockholder Matters" in the Underwriting Agreement (the "Exceptions"),
all of the outstanding shares of Common Stock (including the shares of
Common Stock owned by Selling Stockholders) have been duly authorized
and validly issued, are fully paid and nonassessable. The form of
certificate used to evidence shares of the Company's common stock
included as Exhibit 4.2 to the Registration Statement is in due and
proper form under Delaware law, and complies with all applicable
requirements of the certificate of incorporation
- --------
(1) The final opinion in draft form must be attached as Exhibit A at the time
this Agreement is executed.
A-1
<PAGE> 48
and by-laws of the Company and the General Corporation Law of the State
of Delaware.
v) Except as disclosed in the Prospectus and the Exceptions, to
the best of such counsel's knowledge, there are no outstanding options,
warrants or other rights calling for the issuance of, and no commitments
to issue any shares of capital stock of the Company or any security
convertible into or exchangeable for capital stock of the Company.
vi) Except as described in the Exceptions, no stockholder of the
Company or any other person has any preemptive right, right of first
refusal or other similar right to subscribe for or purchase securities
of the Company arising (i) by operation of the certificate of
incorporation or by-laws of the Company or under the General Corporation
Law of the State of Delaware or, (ii) to the best of such counsel's
knowledge, under any agreement to which the Company is a party.
vii) The Underwriting Agreement has been duly authorized,
executed and delivered by, and is a valid and binding agreement of, the
Company, enforceable in accordance with its terms, except as rights to
indemnification and contribution thereunder may be limited by applicable
laws and except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, arrangement, moratorium or other similar
laws relating to or affecting creditors' rights generally and subject to
general equity principles and to limitations on availability of
equitable relief, including specific performance.
viii) The [Firm] Common Shares to be purchased by the
Underwriters from the Company have been duly authorized for issuance and
sale pursuant to the Underwriting Agreement and, when issued and
delivered by the Company pursuant to the Underwriting Agreement against
payment of the consideration set forth therein, will be validly issued,
fully paid and nonassessable.
ix) [Each of] the Registration Statement [and the Rule 462(b)
Registration Statement, if any,] has been declared effective by the
Commission under the Securities Act of 1933, as amended, including the
rules and regulations promulgated thereunder (collectively, the
"Securities Act"). To the best knowledge of such counsel, no stop order
suspending the effectiveness of [either of] the Registration Statement
[or the Rule 462(b) Registration Statement, if any,] has been issued
under the Securities Act and no proceedings for such purpose have been
instituted or are pending or threatened by the Commission. Any required
filing of the Prospectus [and any supplement thereto] pursuant to Rule
424(b) under the Securities Act has been made in the manner and within
the time period required by such Rule 424(b).
A-2
<PAGE> 49
x) The Registration Statement[, including any Rule 462(b)
Registration Statement,] the Prospectus, and each amendment or
supplement to the Registration Statement and the Prospectus, as of their
respective effective or issue dates (other than the financial
statements, notes thereto and related statements, schedules and other
financial and statistical information included therein or in exhibits to
or excluded from the Registration Statement, as to which no opinion need
be rendered) comply as to form in all material respects with the
applicable requirements of the Securities Act.
xi) The Common Shares have been approved for inclusion on the
Nasdaq National Market, subject only to official notice of issuance.
xii) The statements (i) in the Prospectus under the captions
"Management--Board Composition," "Management--Board Committees,"
"Management--Employment Agreement," "Management--Employee Benefit
Plans," "Certain Transactions," "Description of Capital Stock" and
"Shares Eligible for Future Sale" and (ii) in Item 14 of the
Registration Statement, insofar as such statements constitute matters of
law, summaries of legal matters, the Company's certificate of
incorporation or by-law provisions, documents or legal proceedings, or
legal conclusions, has been reviewed by such counsel and fairly
summarize, to the extent required under the Securities Act the matters
referred to therein.
xiii) To the best knowledge of such counsel, there are no legal
or governmental actions, suits or proceedings pending or threatened
which are required, under the Securities Act, to be disclosed in the
Registration Statement, other than those disclosed therein.
xiv) To the best knowledge of such counsel, there are no
Existing Instruments required to be described or referred to in the
Registration Statement or to be filed as exhibits thereto under the
Securities Act other than those described or referred to therein or
filed as exhibits thereto.
xv) No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental authority
or agency, is required for the Company's execution, delivery and
performance of the Underwriting Agreement and the Company's consummation
of the transactions contemplated thereby and by the Prospectus, except
as required under the Securities Act, applicable state securities or
blue sky laws and the clearance of such offering with the NASD.
xvi) The execution and delivery of the Underwriting Agreement by
the Company and the performance by the Company of its obligations
thereunder (other than performance by the Company of its obligations
under the indemnification and
A-3
<PAGE> 50
contribution sections of the Underwriting Agreement, as to which no
opinion need be rendered) (i) have been duly authorized by all necessary
corporate action on the part of the Company; (ii) will not result in any
violation of the provisions of the charter or by-laws of the Company;
(iii) will not constitute a material breach of, or material Default
under or result in the creation or imposition of any material lien,
charge or encumbrance upon any property or assets of the Company under
any material Existing Instrument; or (iv) to the best knowledge of such
counsel, will not result in any violation of any law, administrative
regulation or administrative or court decree applicable to the Company,
which would materially and adversely affect the Company, its assets,
financial condition or operations.
xvii) No persons have registration or other similar rights under
the Company's certificate of incorporation, by-laws or any agreement or
contract, known to such counsel and to which the Company is a party, to
have any equity or debt securities registered for sale under the
Registration Statement or included in the offering contemplated by the
Underwriting Agreement.
xviii) To the best knowledge of such counsel, the Company is not
in violation of its Certificate of Incorporation or by-laws.
In addition, such counsel shall state that they have participated
in conferences with officers and other representatives of the Company,
representatives of the independent public or certified public accountants for
the Company and with representatives of the Underwriters at which the contents
of the Registration Statement and the Prospectus, and any supplements or
amendments thereto, and related matters were discussed and, although such
counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus (other than as specified in paragraph
above), and any supplements or amendments thereto, on the basis of the
foregoing, nothing has come to their attention which would lead them to believe
that [either] the Registration Statement [or any amendments thereto], at the
time the Registration Statement [or such amendments] 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 of its date or at the First Closing Date
or the Second Closing Date, as the case may be, contained an untrue statement of
a material fact or omitted to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading (it being understood that such counsel need express no
belief as to the financial statements schedules and other financial and
statistical information, included in the Registration Statement or the
Prospectus or any amendments or supplements thereto).
A-4
<PAGE> 51
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other than the
General Corporation Law of the State of Delaware, the General Corporation Law of
the State of California or the federal law of the United States, to the extent
they deem proper and specified in such opinion, upon the opinion (which shall be
dated the First Closing Date or the Second Closing Date, as the case may be,
shall be satisfactory in form and substance to the Underwriters, shall expressly
state that the Underwriters may rely on such opinion as if it were addressed to
them and shall be furnished to the Representatives) of other counsel of good
standing whom they believe to be reliable and who are satisfactory to counsel
for the Underwriters; provided, however, that such counsel shall further state
that they believe that they and the Underwriters are justified in relying upon
such opinion of other counsel, and (B) as to matters of fact, to the extent they
deem proper, on certificates of responsible officers of the Company and public
officials.
A-5
<PAGE> 52
EXHIBIT B-1(2)
Opinion for Individual Selling Stockholders
The opinion of such counsel pursuant to Section shall be rendered
to the Representatives at the request of the Company and shall so state therein.
References to the Prospectus in this Exhibit B-1 include any supplements thereto
at the Closing Date.
i) The Underwriting Agreement has been duly executed and
delivered by or on behalf of, and is a valid and binding agreement of,
each Selling Stockholder, enforceable in accordance with its terms,
except as rights to indemnification and contribution thereunder may be
limited by applicable law and except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally and
subject to general equity principles and to limitations on availability
of equitable relief, including specific performance.
ii) To the best of such counsel's knowledge, the execution and
delivery by each Selling Stockholder of, and the performance by such
Selling Stockholder of its obligations under, the Underwriting Agreement
and its Custody Agreement and its Power of Attorney will not violate or
contravene any provision of applicable law or regulation (except for
applicable state securities or blue sky laws as to which no opinion need
be expressed).
iii) To the best of such counsel's knowledge, each Selling
Stockholder has record title to all of the Common Shares which may be
sold by such Selling Stockholder under the Underwriting Agreement.
iv) Each of the Custody Agreement and Power of Attorney of each
Selling Stockholder has been executed and delivered by such Selling
Stockholder and is a valid and binding agreement of such Selling
Stockholder, enforceable in accordance with its terms, except as rights
to indemnification and contribution thereunder may be limited by
applicable law and except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally and subject to
general equity principles and to limitations on availability of
equitable relief, including specific performance.
v) Assuming that the Underwriters purchase the Common Shares
which are sold by each Selling Stockholder pursuant to
- -----------
(2) The final opinion in draft form must be attached as Exhibit B-1 at the time
this Agreement is executed.
B-1-1
<PAGE> 53
the Underwriting Agreement for value, in good faith and without notice
of any adverse claim, the delivery of such Common Shares pursuant to the
Underwriting Agreement will pass good and valid title to such Common
Shares, free and clear of any adverse claim.
vi) To the best of such counsel's knowledge, no consent,
approval, authorization or other order of, or registration or filing
with, any court or governmental authority or agency, is required for the
consummation by each Selling Stockholder of the transactions
contemplated in the Underwriting Agreement, except as required under the
Securities Act of 1933, as amended, the rules and regulations
promulgated thereunder, applicable state securities or blue sky laws,
and from the NASD.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other than the
General Corporation Law of the State of Delaware, the General Corporation Law of
the State of California or the federal law of the United States, to the extent
they deem proper and specified in such opinion, upon the opinion (which shall be
dated the First Closing Date shall be satisfactory in form and substance to the
Underwriters, shall expressly state that the Underwriters may rely on such
opinion as if it were addressed to them and shall be furnished to the
Representatives) of other counsel of good standing whom they believe to be
reliable and who are satisfactory to counsel for the Underwriters; provided,
however, that such counsel shall further state that they believe that they and
the Underwriters are justified in relying upon such opinion of other counsel,
and (B) as to matters of fact, to the extent they deem proper, on certificates
of the Selling Stockholders and public officials.
B-1-2
<PAGE> 54
EXHIBIT B-2(3)
Opinion for Corporate Selling Stockholders
(to be rendered by such entity's regular counsel
acceptable to the Underwriters)
The opinion of such counsel pursuant to Section shall be rendered
to the Representatives at the request of the Company and shall so state therein.
References to the Prospectus in this Exhibit B-2 include any supplements thereto
at the Closing Date.
i) The Underwriting Agreement has been duly authorized, executed
and delivered by or on behalf of, and is a valid and binding agreement
of, each Selling Stockholder, enforceable in accordance with its terms,
except as rights to indemnification and contribution thereunder may be
limited by applicable law and except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally and
subject to general equity principles and to limitations on availability
of equitable relief, including specific performance.
ii) The execution and delivery by each Selling Stockholder of,
and the performance by such Selling Stockholder of its obligations
under, the Underwriting Agreement and its Custody Agreement and its
Power of Attorney will not contravene or conflict with, result in a
breach of, or constitute a default under, the charter or by-laws,
partnership agreement, trust agreement or other organizational
documents, as the case may be, of such Selling Stockholder, or, to the
best of such counsel's knowledge, violate or contravene any provision of
applicable law or regulation (except for the Securities Act, applicable
state securities or blue sky laws as to which no opinion need be
expressed), or, to the best of such counsel's knowledge, violate, result
in a breach of or constitute a default under the terms of any other
agreement or instrument to which such Selling Stockholder is a party or
by which it is bound, or any judgment, order or decree applicable to
such Selling Stockholder of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction over such
Selling Stockholder.
iii) To the best of such counsel's knowledge, each Selling
Stockholder has record title to all of the Common Shares which may be
sold by such Selling Stockholder under the Underwriting Agreement and
has the corporate, partnership or trust right and power, and all
authorizations and approvals required under its charter and by-laws,
partnership
- ----------
(3) The final opinion in draft form must be attached as Exhibit B-2 at the time
this Agreement is executed.
B-2-1
<PAGE> 55
agreement, trust agreement or other organizational documents, as the
case may be, to enter into the Underwriting Agreement and its Custody
Agreement and its Power of Attorney, to sell, transfer and deliver all
of the Common Shares which may sold by such Selling Stockholder under
the Underwriting Agreement and to comply with its other obligations
under the Underwriting Agreement, its Custody Agreement and its Power of
Attorney.
iv) Each of the Custody Agreement and Power of Attorney of each
Selling Stockholder has been duly authorized, executed and delivered by
such Selling Stockholder and is a valid and binding agreement of such
Selling Stockholder, enforceable in accordance with its terms, except as
rights to indemnification and contribution thereunder may be limited by
applicable law and except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally and subject to
general equity principles and to limitations on availability of
equitable relief, including specific performance.
v) Assuming that the Underwriters purchase the Common Shares
which are sold by each Selling Stockholder pursuant to the Underwriting
Agreement for value, in good faith and without notice of any adverse
claim, the delivery of such Common Shares pursuant to the Underwriting
Agreement will pass good and valid title to such Common Shares, free and
clear of any adverse claim.
vi) To the best of such counsel's knowledge, no consent,
approval, authorization or other order of, or registration or filing
with, any court or governmental authority or agency, is required for the
consummation by each Selling Stockholder of the transactions
contemplated in the Underwriting Agreement, except as required under the
Securities Act of 1933, as amended, the rules and regulations
promulgated thereunder, applicable state securities or blue sky laws,
and from the NASD.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other than the
General Corporation Law of the State of Delaware, the General Corporation Law of
the [state or commonwealth of the entity's organization] or the federal law of
the United States, to the extent they deem proper and specified in such opinion,
upon the opinion (which shall be dated the First Closing Date shall be
satisfactory in form and substance to the Underwriters, shall expressly state
that the Underwriters may rely on such opinion as if it were addressed to them
and shall be furnished to the Representatives) of other counsel of good standing
whom they believe to be reliable and who are satisfactory to counsel for the
Underwriters; provided, however, that such counsel shall further state that they
believe that they and the Underwriters are justified in relying upon such
opinion of other counsel, and
B-2-2
<PAGE> 56
(B) as to matters of fact, to the extent they deem proper, on certificates of
the Selling Stockholders and public officials
B-2-3
<PAGE> 57
EXHIBIT C
[Date]
Montgomery Securities
BT Alex. Brown Incorporated
As Representatives of the Several Underwriters
c/o Montgomery Securities
600 Montgomery Street
San Francisco, California 94111
RE: Il Fornaio (America) Corporation (the "Company")
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of
Common Stock of the Company ("Common Stock") or securities convertible into or
exchangeable or exercisable for Common Stock. The Company proposes to carry out
a public offering of Common Stock (the "Offering") for which you will act as the
representatives of the underwriters. The undersigned recognizes that the
Offering will be of benefit to the undersigned and will benefit the Company by,
among other things, raising additional capital for its operations. The
undersigned acknowledges that you and the other underwriters are relying on the
representations and agreements of the undersigned contained in this letter in
carrying out the Offering and in entering into underwriting arrangements with
the Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that the
undersigned will not, without the prior written consent of Montgomery Securities
(which consent may be withheld at the sole discretion of Montgomery Securities),
directly or indirectly, sell, offer, contract or grant any option to sell
(including without limitation any short sale), pledge, transfer, establish an
open "put equivalent position" within the meaning of Rule 16a-1(h) under the
Securities Exchange Act of 1934, or otherwise dispose of (other than by devise
or descent) any shares of Common Stock, options or warrants to acquire shares of
Common Stock, or securities exchangeable or exercisable for or convertible into
shares of Common Stock currently or hereafter owned either of record or
beneficially (as defined in Rule 13d-3 under Securities Exchange Act of 1934, as
amended) by the undersigned, or publicly announce the undersigned's intention to
do any of the foregoing, for a period commencing on the date hereof and
continuing through the close of trading on the date 180 days after the date of
the Prospectus. The foregoing paragraph shall not prohibit (i) bona fide gifts
made to any person or entity or (ii) distributions by the undersigned to its
partners (if the undersigned is a partnership) or shareholders (if the
undersigned is a corporation); provided that such donee or distributee agrees in
writing to be bound by the provisions of this letter as if it were the
undersigned referred to herein, which written agreement shall have been executed
and delivered to Montgomery Securities prior to
C-1
<PAGE> 58
such gift or distribution. The undersigned also agrees and consents to the entry
of stop transfer instructions with the Company's transfer agent and registrar
against the transfer of shares of Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock held by the undersigned except in
compliance with the foregoing restrictions.
With respect to the Offering only, the undersigned waives any registration
rights relating to registration under the Securities Act of 1933, as amended, of
any Common Stock owned either of record or beneficially by the undersigned,
including any rights to receive notice of the Offering.
This agreement is irrevocable and will be binding on the undersigned and the
respective successors, heirs, personal representatives, and assigns of the
undersigned.
_______________________________
Printed Name of Holder
By: ___________________________
Signature
_______________________________
Printed Name of Person Signing (and indicate capacity of person signing if
signing as custodian, trustee, or on behalf of an entity)
C-2
<PAGE> 1
Exhibit 11.1
IL FORNAIO
COMPUTATION OF EARNINGS PER COMMON SHARE
AND COMMON SHARE EQUIVALENT
(in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Nine months Three Months Nine months
ended ended ended ended
September 29, 1996 September 29, 1996 September 28, 1997 September 28, 1997
Fully Fully Fully Fully
Primary Diluted Primary Diluted Primary Diluted Primary Diluted
------ ------ ------ ------ ------ ------ ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net income $ 312 $ 312 $1,005 $1,005 $ 583 $ 583 $ 1,888 $1,888
Adjustments to net income:
Interest expense reduction
net of 38% tax rate 5 5 23 23 -- -- -- --
Interest income
net of 38% tax rate 9 9 54 54 35 35 72 72
------ ------ ------ ------ ------ ------ ------- ------
Net income - as adjusted: 326 326 1,082 1,082 618 618 1,960 1,960
Weighted average common stock outstanding 4,489 4,489 4,489 4,489 4,704 4,704 4,606 4,606
Common stock equivalents 531 531 526 526 571 577 413 536
Weighted average common stock and common
stock equivalents 5,020 5,020 5,015 5,015 5,275 5,281 5,019 5,142
Net income per common stock and common
stock equivalent: $ 0.07 $ 0.07 $ 0.22 $ 0.22 $ 0.12 $ 0.12 $ 0.39 $ 0.38
Calculation of common stock equivalents:
Options and warrants to purchase common stock 839 839 839 839 980 980 911 911
Common stock assumed purchased with potential
proceeds (308) (308) (313) (313) (409) (403) (498) (375)
------ ------ ------ ------ ------ ------ ------- ------
Common stock equivalents 531 531 526 526 571 577 413 536
====== ====== ====== ====== ====== ====== ======= ======
Calculation of common stock assumed purchased
with potential proceeds:
Potential proceeds from exercise of options
and warrants to purchase common stock $1,388 $1,466 $1,409 $1,487 $6,043 $6,090 $ 4,994 $5,675
Common stock price used under the treasury
stock method 4.50 4.75 4.50 4.75 14.77 15.13 10.05 15.13
Common stock assumed purchased with
potential proceeds $ 308 $ 308 $ 313 $ 313 $ 409 $ 403 $ 498 $ 375
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-START> DEC-30-1996
<PERIOD-END> SEP-28-1997
<CASH> 487,000
<SECURITIES> 12,320,000
<RECEIVABLES> 1,244,000
<ALLOWANCES> 98,000
<INVENTORY> 1,589,000
<CURRENT-ASSETS> 17,311,000
<PP&E> 42,305,000
<DEPRECIATION> 15,273,000
<TOTAL-ASSETS> 46,742,000
<CURRENT-LIABILITIES> 7,257,000
<BONDS> 0
0
0
<COMMON> 6,000
<OTHER-SE> 34,181,000
<TOTAL-LIABILITY-AND-EQUITY> 46,742,000
<SALES> 53,572,000
<TOTAL-REVENUES> 53,572,000
<CGS> 12,546,000
<TOTAL-COSTS> 50,524,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 79,000
<INTEREST-EXPENSE> 2,000
<INCOME-PRETAX> 3,214,000
<INCOME-TAX> 1,326,000
<INCOME-CONTINUING> 1,888,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,888,000
<EPS-PRIMARY> .39
<EPS-DILUTED> .38
</TABLE>
