1
EXHIBIT 1.1
XXXXXXXXX.XXX
% CONVERTIBLE SUBORDINATED NOTES DUE 2005
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UNDERWRITING AGREEMENT
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, 2000
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Southwest Securities, Inc.,
Xxxxxx, Xxxxxxx & Xxxxx, Inc.,
As representatives of the several
Underwriters named in Schedule I hereto,
c/o Southwest Securities, Inc.
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Dear Sirs:
Xxxxxxxxx.xxx Group, Inc., a Minnesota corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Underwriters named in Schedule I hereto (the "Underwriters") an aggregate
of $30,000,000 principal amount and, at the election of the Underwriters, up to
$4,500,000 additional principal amount of __% Convertible Subordinated Notes due
2005, convertible into shares of Common Stock, par value $0.04 per share
("Stock") of the Company. The aggregate of $30,000,000 principal amount to be
sold by the Company is herein called the "Firm Notes" and the aggregate of
$4,500,000 additional principal amount to be sold by the Company is herein
called the "Optional Notes". The Firm Notes and the Optional Notes that the
Underwriters elect to purchase pursuant to Section 2 hereof are herein
collectively called the "Notes". The Company has entered into a certain
Agreement and Plan of Merger, dated June 5, 2000 (the "Xxxxxxx Agreement"), by
and among Xxxxxxx Investments, Inc., a Minnesota corporation ("Xxxxxxx"), the
Company and SW Acquisition, Inc., a Minnesota corporation and wholly owned
subsidiary of the Company. The Company also has entered into a certain Agreement
and Plan of Merger, dated as of June 5, 2000 (the "Xxxxxxxx Agreement"), by and
among X. X. Xxxxxxxx & Company, a Minnesota corporation ("Xxxxxxxx"), the
Company and SCG Acquisition Corporation, a Minnesota corporation and wholly
owned subsidiary of the Company.
1. The Company represents and warrants to, and agrees with, each of the
Underwriters that:
(i) A registration statement on Form S-2 (File No. 333-35544)
(the "Initial Registration Statement") in respect of the Notes has been
filed with the Securities and Exchange Commission (the "Commission");
such Initial Registration Statement and any post-effective amendment
thereto, each in the form heretofore delivered to you, and,
Exhibit 1.1-1
2
excluding exhibits thereto but including all documents incorporated by
reference in the prospectus contained therein, to you for each of the
other Underwriters, have been declared effective by the Commission in
such form; other than a registration statement, if any, increasing the
size of the offering (a "Rule 462(b) Registration Statement"), filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended
(the "Act"), which became effective upon filing, no other document with
respect to the Initial Registration Statement or such documents
incorporated by reference therein has heretofore been filed with the
Commission; and no stop order suspending the effectiveness of such
Initial Registration Statement, any post-effective amendment thereto,
or the Rule 462(b) Registration Statement, if any, has been issued and
no proceeding for that purpose has been initiated or threatened by the
Commission (any preliminary prospectus included in such Initial
Registration Statement or filed with the Commission pursuant to Rule
424(a) of the rules and regulations of the Commission under the Act, is
hereinafter called a "Preliminary Prospectus"); the various parts of
the Initial Registration Statement and the Rule 462(b) Registration
Statement, if any, including all exhibits thereto but excluding Form
T-1 and including (i) the information contained in the form of final
prospectus filed with the Commission pursuant to Rule 424(b) under the
Act in accordance with Section 5(a) hereof and deemed by virtue of Rule
430A under the Act to be part of the registration statement at the time
it was declared effective and (ii) the documents incorporated by
reference in the prospectus contained in the registration statement at
the time such part of the registration statement became effective, each
as amended at the time such part of the Initial Registration Statement
became effective, or such part of the Rule 462(b) Registration
Statement, if any, became or hereafter becomes effective, are
hereinafter collectively called the "Registration Statement"; and such
final prospectus, in the form first filed pursuant to Rule 424(b) under
the Act, is hereinafter called the "Prospectus"; any reference herein
to any Preliminary Prospectus or the Prospectus shall be deemed to
refer to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-2 under the Act, as of the date of such
Preliminary Prospectus or Prospectus, as the case may be; any reference
to any amendment or supplement to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include any documents filed
after the date of such Preliminary Prospectus or Prospectus, as the
case may be, under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and incorporated by reference in such Preliminary
Prospectus or Prospectus, as the case may be; and any reference to any
amendment to the Registration Statement shall be deemed to refer to and
include any report of the Company filed pursuant to Section 13(a) or
15(d) of the Exchange Act after the effective date of the Registration
Statement that is incorporated by reference in the Registration
Statement);
(ii) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, conformed in all
material respects to the requirements of the Act and the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act") and the
rules and regulations of the Commission thereunder, and did not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in writing
to
Exhibit 1.1-2
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the Company by an Underwriter through Southwest Securities, Inc.
expressly for use therein;
(iii) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration Statement
or the Prospectus will conform, in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder and do not and will not, as of the applicable effective date
as to the Registration Statement and any amendment thereto and as of
the applicable filing date as to the Prospectus and any amendment or
supplement thereto, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter
through Southwest Securities, Inc. expressly for use therein;
(iv) There are no subsidiaries of the Company that are
material to the financial condition, business or results of operations
of the Company other than the subsidiaries listed on Schedule II (each,
a "Material Subsidiary");
(v) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements
included in the Prospectus any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, there has not been any change in the capital stock,
short-term debt or long-term debt of the Company or any of its
subsidiaries or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, business, management, financial position,
shareholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole, otherwise than as set forth or
contemplated in the Prospectus;
(vi) The Company and its subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title
to all personal property owned by them which is material to the
business of the Company and its subsidiaries, in each case free and
clear of all liens, encumbrances and defects except such as are
described in the Prospectus or such as do not materially affect the
value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and its
subsidiaries; and any real property and buildings held under lease by
the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made
of such property and buildings by the Company and its subsidiaries;
(vii) The Company and the Material Subsidiaries have been duly
incorporated and each is validly existing as a corporation in good
standing under the laws of the state of its incorporation, each with
power and authority (corporate and other) to own its properties
Exhibit 1.1-3
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and conduct its business as described in the Prospectus, and each has
been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any
business so as to require such qualification, or is subject to no
material liability or disability by reason of failure to be so
qualified in any such jurisdiction; and each other subsidiary of the
Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation;
(viii) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital stock
of the Company have been duly and validly authorized and issued are
fully paid and non-assessable, are not subject to any preemptive or
similar rights, have not been issued in violation of federal or state
securities laws, and conform to the description thereof contained in
the Prospectus; all of the issued shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and (except for directors'
qualifying shares) are owned directly or indirectly by the Company,
free and clear of all liens, encumbrances, equities or claims except as
described in the Prospectus and there are no outstanding subscriptions,
rights warrants, options, calls, convertible securities, commitments of
sale or liens granted or issued by the Company or any of its
subsidiaries relating to or entitling any person to purchase or
otherwise to acquire any shares or capital stock of the Company or any
of its subsidiaries, except as otherwise disclosed in the Prospectus;
(ix) The Notes have been duly authorized and, when issued and
delivered, against payment therefor, pursuant to this Agreement, will
have been duly executed, authenticated, issued and delivered and will
constitute valid and legally binding obligations of the Company
entitled to the benefits provided by the indenture to be dated as of
_________, 2000 (the "Indenture") between the Company and Firstar Bank,
N.A., as Trustee (the "Trustee"), under which they are to be issued,
which will be substantially in the form filed as an exhibit to the
Registration Statement; the Indenture has been duly authorized and duly
qualified under the Trust Indenture Act and, when executed and
delivered by the Company and the Trustee, will constitute a valid and
legally binding agreement, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles; and the Notes and
the Indenture will conform to the descriptions thereof in the
Prospectus;
(x) The issue and sale of the Notes and the compliance by the
Company with all of the provisions of the Notes, the Indenture and this
Agreement and the consummation of the transactions herein contemplated
will not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries is bound or to which
any of the property or assets of the Company or any of its subsidiaries
is subject, except for any such conflict, breach, violation or default
which would not have a material adverse effect on the Company and it
subsidiaries taken as a whole, nor will such action result in any
violation of the provisions of the Articles of Incorporation, as
amended, or By-
Exhibit 1.1-4
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laws of the Company or any statute or any order, rule or regulation of
any court or government agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties; and no
consent, approval, authorization, order, registration or qualification
of or with any such court or governmental agency or body is required
for the issue and sale of the Notes or the consummation by the Company
of the transactions contemplated by this Agreement, except the
registration under the Act of the Notes and such consents, approvals,
authorizations, registrations or qualifications as may be required
under state or foreign securities or Blue Sky laws in connection with
the purchase and distribution of the Notes by the Underwriters;
(xi) Neither the Company nor any of its subsidiaries is in
violation of its Articles of Incorporation, as amended, or By-laws or
in default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any indenture, mortgage,
deed of trust, loan agreement, lease or other agreement or instrument
to which it is a party or by which it or any of its properties may be
bound;
(xii) The statements set forth in the Prospectus under the
caption "Description of Convertible Notes" and "Description of Capital
Stock", insofar as they purport to constitute a summary of the terms of
the Notes and the Stock, under the caption "Certain Federal Tax
Considerations" and under the capital "Underwriting", insofar as they
purport to describe the provisions of the laws and documents referred
to therein, are accurate, complete and fair in all material respects;
(xiii) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company or any
of its subsidiaries is a party or of which any property of the Company
or any of its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries, would individually
or in the aggregate have a material adverse effect on the current or
future business, financial position, shareholders' equity or results of
operations of the Company and its subsidiaries taken as a whole; and,
to the best of the Company's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by
others;
(xiv) Each of the Company and each subsidiary is not and,
after giving effect to the offering and sale of the Notes, will not be
an "investment company" or an entity "controlled" by an "investment
company", as such terms are defined in the Investment Company Act of
1940, as amended (the "Investment Company Act");
(xv) Neither the Company nor any of its affiliates does
business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Section 517.075, Florida
Statutes;
(xvi) Ernst & Young LLP, who has audited certain financial
statements of the Company and its subsidiaries, and KPMG LLP, who has
audited certain financial statements of Xxxxxxx and its subsidiaries
and Xxxxxxxx, are independent accountants as required by the Act and
the rules and regulations of the Commission thereunder;
Exhibit 1.1-5
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(xvii) The consolidated financial statements included in the
Registration Statement and the Prospectus (and any amendment or
supplement thereto), together with related schedules and notes, present
fairly the consolidated financial position, results of operations and
changes in financial position of the Company and its subsidiaries, as
well as Xxxxxxx and its subsidiaries and Xxxxxxxx, on the basis stated
therein at the respective dates or for the respective periods to which
they apply, except as otherwise stated in the Registration Statement;
such statements and related schedules and notes have been prepared in
accordance with generally accepted accounting principles consistently
applied throughout the periods involved, except as disclosed therein;
the supporting schedules, if any, included in the Registration
Statement present fairly in accordance with generally accepted
accounting principles the information required to be stated therein;
the pro forma financial statements and other pro forma financial
information included in the Registration Statement and the Prospectus
(and any amendment or supplement thereto) present fairly in all
material respects the information shown therein, have been prepared in
accordance with the Commission's rules and guidelines with respect to
pro forma financial statements, have been properly compiled on the pro
forma basis described therein, and, in the opinion of the Company, the
assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the
transactions or circumstances referred to therein; and the other
financial and statistical information and data set forth in the
Registration and the Prospectus (and any amendment or supplement
thereto) are, in all material respects, accurately presented and
prepared on a basis consistent with such financial statements and the
books and records of the Company;
(xviii) Other than as set forth in the Prospectus, the Company
and each of its subsidiaries have obtained all material environmental
permits, licenses and other authorizations required by Federal, state
and local law in order to conduct their businesses as described in the
Prospectus; the operations of the Company and each of its subsidiaries
are at all times, and all times have been, in compliance with all
federal, regional, state county or local laws, statutes, ordinances
decisional law, rules, regulations, codes, orders, decrees, directives
and judgements relating to public health or safety, pollution, damage
to or protection of the environment or hazardous or toxic materials,
pollutants or contaminants ("Environmental Laws") then applicable to
the business of the Company or its subsidiaries or any real property
owned or leased by the Company or its subsidiaries, except where the
failure to be in compliance would not have a material adverse effect on
the financial position, shareholders' equity or results of operations
of the Company and its subsidiaries taken as a whole; and, except as
described in the Prospectus, the Company has not received any notice
that it, or any of the real property owned or leased by it; (A) is in
violation of the requirements of any Environmental Laws; (B) is the
subject of any suit, claim, proceeding, demand, order, investigation or
request or demand for information arising under any Environmental Laws;
or (C) has actual or potential liability under any Environmental Laws;
(xix) The Company and each of its subsidiaries have all
licenses, franchises, permits, authorizations, approvals and orders and
other concessions of and from all governmental or regulatory
authorities that are necessary to own or lease their properties and
conduct their businesses as described in the Prospectus, except for
such licenses, franchises, permits, authorizations, approvals and
orders the failure to obtain which will not,
Exhibit 1.1-6
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individually or in the aggregate, have a material adverse effect on the
business, financial position, shareholders' equity, results of
operations or financial prospects of the Company or its subsidiaries
taken as a whole;
(xx) The Company and each of its subsidiaries is conducting
business in compliance with all applicable statutes, rules,
regulations, standards, guides and orders administered or issued by any
governmental or regulatory authority in the jurisdictions in which it
is conducting business, except where the failure to be so in compliance
would not have a material adverse effect on the business, financial
position, shareholders' equity, results of operations or financial
prospects of the Company or its subsidiaries taken as a whole;
(xxi) Except as set forth in the Prospectus or disclosed on
Schedule IV, no person has any right to require the Company to register
any securities under the Act;
(xxii) Each of the Company and each Material Subsidiary
carries, or is covered by, insurance as is customary for companies
similarly situated and engaged in similar businesses in similar
industries;
(xxiii) No labor disturbances by employees of either the
Company or any Material Subsidiary exists or, to the knowledge of the
Company, is imminent which might be expected to have a material adverse
effect on the business, financial condition, results of operations or
prospects of the Company or any Material Subsidiary;
(xxiv) To its knowledge, after due investigation, all of the
software products used by the Company or any of its subsidiaries, are
Year 2000 Compliant (as defined below). "Year 2000 Compliant" means, as
applied to a software product, that: (A) such software product will
operate and correctly store, represent and process (including sort) all
dates (including single and multi-century formulas and leap year
calculations), such that errors will not occur when the date being used
is in the Year 2000, or in a year preceding or following the Year 2000;
(B) such software product has been written and tested to support
numeric and date transitions from the twentieth century to the
twenty-first century, and back (including without limitation all
calculations, aging, reporting, printing, displays reversals, disaster
and vital records recoveries) without error, corruption or impact to
current and/or future operations; and (C) such software product will
function without error or interruption related to any date information,
specifically including errors or interruptions from functions which may
involve date information from more than one century, in each case
except where the same could not reasonably be expected to have a
material adverse effect on the financial position, shareholders' equity
or results of operations of the Company and its subsidiaries taken as a
whole;
(xxv) There are no contracts or other documents which are
required to be described in the Prospectus or to be filed as exhibits
to the Initial Registration Statement by the Act which are not so
described or filed;
Exhibit 1.1-7
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(xxvi) Each of the Company and each Material Subsidiary owns,
or possesses adequate rights to use, all material trademarks, service
marks, trade names, service names, brand names, logos, trade dress,
trademark registrations, service xxxx registrations, Internet domain
names and copyrights necessary for the conduct of its business and has
no reason to believe that the conduct of its business will conflict
with, and has not received any notice of any claim of conflict with any
such rights or others except as would not have a material adverse
effect on the business, financial condition, results of operations or
prospects of the Company or its subsidiaries; and, to the best of the
Company's knowledge after reasonable investigation, neither the Company
nor any of its subsidiaries have infringed or are infringing any
trademarks, service marks, trade names, trademark registrations,
service xxxx registrations, domain names or copyrights, which
infringement could reasonably be expected to have a material adverse
effect on the business, financial condition, results of operations or
prospects of the Company or its subsidiaries;
(xxvii) Each of the Company and each Material Subsidiary owns,
or possesses adequate rights to use, all material patents necessary for
the conduct of its business; no valid United States patent is, or to
the knowledge of the Company would be, infringed by the activities of
either the Company or any Material Subsidiary, except as would not have
a material adverse effect on the business, financial condition, results
of operations or prospects of either the Company or any Material
Subsidiary; there are no actions, suits or judicial proceedings pending
relating to patents or proprietary information to which either the
Company or any Material Subsidiary is a party or of which any property
of either the Company or any Material Subsidiary is subject, and, to
the knowledge of the Company, no actions, suits or judicial proceedings
are threatened by governmental authorities or, except as set forth in
the Prospectus, others, in each case as would not have a material
adverse effect on the business, financial condition, results of
operations or prospects of either the Company or any Material
Subsidiary, the Company is not aware of any claim by others that either
the Company or any Material Subsidiary is infringing or otherwise
violating the patents or other intellectual property of others and is
not aware of any rights of third parties to any of either the Company's
or any Material Subsidiary's patent applications, licenses which could
affect materially the use thereof by the Company or its subsidiaries;
(xxviii) The Company does not have any obligation or
commitment to, directly or indirectly, purchase or otherwise acquire
from any person any of its capital stock or other securities, whether
by firm commitment or contingent upon the occurrence of any condition;
(xxix) The Xxxxxxxx Agreement has been duly authorized by the
Xxxxxxxx shareholders and is not required to be approved by the
Company's shareholders;
(xxx) The Company has completed a thorough due diligence
review of Xxxxxxx and Xxxxxxxx and has no reason to believe that any of
the representations or warranties of Xxxxxxx or Xxxxxxxx set forth in
the Xxxxxxx Agreement or the Xxxxxxxx Agreement, as supplemented by the
Disclosure Schedule (as such term is defined in each agreement)
appended to each agreement, are not true and accurate in all material
respects; and
(xxxi) The representations and warranties of the Company set
forth in the Xxxxxxx Agreement and in the Xxxxxxxx Agreement, as
supplemented by the Company's Disclosure
Exhibit 1.1-8
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Schedule (as such term is defined in each agreement) appended to each
agreement, are true and accurate in all material respects and the
Company has no reason to believe that either transaction will not be
consummated in accordance with the terms set forth in the Xxxxxxx
Agreement and in the Xxxxxxxx Agreement and as described in the
Registration Statement.
2. Subject to the terms and conditions herein set forth, (a) the
Company agrees to sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Company, at a purchase
price of __% of the principal amount thereof, plus accrued interest, if any,
from _____, 2000 to the Time of Delivery hereunder, the principal amount of
Notes set forth opposite the name of such Underwriter in Schedule I hereto and
(b) in the event and to the extent that the Underwriters shall exercise the
election to purchase Optional Notes as provided below, the Company agrees to
issue and sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company, at the same purchase
price set forth in clause (a) of this Section 2, that portion of the aggregate
principal amount of the Optional Notes as to which such election shall have been
exercised (to be adjusted by you so as to eliminate fractions of $1,000)
determined by multiplying such aggregate principal amount of Optional Notes by a
fraction the numerator of which is the maximum aggregate principal amount of
Optional Notes which such Underwriter is entitled to purchase as set forth
opposite the name of such Underwriter in Schedule I hereto and the denominator
of which is the maximum aggregate principal amount of Optional Notes that all of
the Underwriters are entitled to purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase at
their election up to $4,500,000 aggregate principal amount of Optional Notes, at
the purchase price of ___% of the principal amount thereof, for the sole purpose
of covering overallotments in the sale of the Firm Notes. Any such election to
purchase Optional Notes may be exercised only by written notice from you to the
Company, given within a period of 45 calendar days after the date of this
Agreement and setting forth the aggregate principal amount of Optional Notes to
be purchased and the date on which such Optional Notes are to be delivered, as
determined by you but in no event earlier than the First Time of Delivery (as
defined in Section 4 hereof) or, unless you and the Company otherwise agree in
writing, earlier than two or later than ten business days after the date of such
notice.
3. Upon the authorization by you of the release of the Firm Notes, the
several Underwriters propose to offer the Firm Notes for sale upon the terms and
conditions set forth in the Prospectus.
4. (a) The Notes to be purchased by each Underwriter hereunder will be
represented by one or more definitive global Notes in book-entry form which will
be deposited by or on behalf of the Company with The Depository Trust Company
("DTC") or its designated custodian. The Company will deliver the Notes to
Southwest Securities, Inc., for the account of such Underwriter, against payment
by or on behalf of such Underwriter of the purchase price therefor by wire
transfer of immediately available funds to the Company, by causing DTC to credit
the Notes to the account of Southwest Securities, Inc. at DTC. The Company will
cause the certificate(s) representing the Notes to be made available for
checking at least 24 hours prior to the Time of Delivery (as defined below) with
respect thereto at the office of Southwest Securities, Inc., 0000 Xxx Xxxxxx,
Xxxxx 0000, Xxxxxx, Xxxxx 00000 (the "Designated Office"). The time and date of
such delivery and payment
Exhibit 1.1-9
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shall be, with respect to the Firm Notes, 9:00 a.m., Dallas time, on __________,
2000 or such other time and date as Southwest Securities, Inc. and the
Company may agree upon in writing, and with respect to the Optional Notes, 9:00
a.m., Dallas time, on the date specified by Southwest Securities, Inc. in the
written notice given by Southwest Securities, Inc. of the Underwriters' election
to purchase such Optional Notes, or such other time and date as Southwest
Securities, Inc. and the Company may agree upon in writing. Such time and date
for delivery of the Firm Notes is herein called the "First Time of Delivery",
such time and date for delivery of the Optional Notes, if not the First Time of
Delivery, is herein called the "Second Time of Delivery", and each such time and
date for delivery is herein called a "Time of Delivery".
(b) The documents and Notes to be delivered at each Time of Delivery by
or on behalf of the parties hereto pursuant to Section 7 hereof, including the
cross-receipt for the Notes and any additional documents requested by the
Underwriters pursuant to Section 7(k) hereof, will be delivered at the offices
of Xxxxxx & Xxxx, L.L.P., 0000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000 (the
"Closing Location"), and the Notes will be delivered at the Designated Office,
all at each Time of Delivery. A meeting will be held at the Closing Location at
3 p.m., Dallas time, on the Business Day next preceding each Time of Delivery,
at which meeting the final drafts of the documents to be delivered pursuant to
the preceding sentence will be available for review by the parties hereto. For
the purposes of this Section 4, "Business Day" shall mean each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banking institutions
in the United States are generally authorized or obligated by law or executive
order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to
file such Prospectus pursuant to Rule 424(b) under the Act not later
than the Commission's close of business on the second business day
following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by Rule 430A(a)(3)
under the Act; to make no further amendment or any supplement to the
Registration Statement or Prospectus which you object promptly after
reasonable notice thereof; to advise you, promptly after it receives
notice thereof, of the time when any amendment to the Registration
Statement has been filed or becomes effective or any supplement to the
Prospectus or any amended Prospectus has been filed and to furnish you
copies thereof; to advise you, promptly after it receives notice
thereof, of the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or
Prospectus, of the suspension of the qualification of the Notes for
offering or sale in any jurisdiction, of the initiation or threatening
of any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the Registration
Statement or Prospectus or for additional information; and, in the
event of the issuance of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or Prospectus or
suspending any such qualification, promptly to use its reasonable best
efforts to obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Notes and the shares of Stock
issuable upon conversion of the Notes for offering and sale under the
securities laws of such jurisdictions as you may reasonably
Exhibit 1.1-10
11
request and to comply with such laws so as to permit the continuance of
sales and dealings therein in such jurisdictions for as long as may be
necessary to complete the distribution of the Notes, provided that in
connection therewith the Company shall not be required to qualify as a
foreign corporation, to submit to taxation, or to file a general
consent to service of process in any jurisdiction;
(c) Prior to 10:00 a.m., Dallas time, on the Business Day next
succeeding the date of this Agreement to furnish the Underwriters with
copies of the Prospectus in such quantities as you may reasonably
request, and, if the delivery of a prospectus is required at any time
prior to the expiration of nine months after the time of the issue of
the Prospectus in connection with the offering or sale of the Notes and
if at such time any events shall have occurred as a result of which the
Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be
necessary during such same period to amend or supplement the Prospectus
or to file under the Exchange Act any document incorporated by
reference in the Prospectus in order to comply with the Act or the
Exchange Act, to notify you and upon your request to prepare and
furnish without charge to each Underwriter and to any dealer in
securities as many copies as you may reasonably request of an amended
Prospectus or a supplement to the Prospectus which will correct such
statement or omission or effect such compliance, and in case any
Underwriter is required to deliver a prospectus in connection with
sales of any of the Notes at any time nine months or more after the
time of issue of the Prospectus, upon your request but at the expense
of such Underwriter, to prepare and deliver to such Underwriter as many
copies as you may request of an amended or supplemented Prospectus
complying with Section 10(a)(3) of the Act;
(d) If the Company elects to rely upon Rule 462(b), the
Company shall file a Rule 462(b) Registration Statement with the
Commission in compliance with Rule 462(b) by 10:00 p.m., Washington,
D.C. time, on the date of this Agreement, and the Company shall at the
time of filing either pay to the Commission the filing fee for the Rule
462(b) Registration Statement or give irrevocable instructions for the
payment of such fee pursuant to Rule 111(b) under the Act;
(e) To make generally available to its securityholders as soon
as practicable, but in any event not later than 18 months after the
effective date of the Registration Statement (as defined in Rule
158(c)) under the Act, an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a)
of the Act and the rules and regulations thereunder of the Commission
(including, at the option of the Company, Rule 158);
(f) During the period beginning from the date hereof and
continuing to and including the date 180 days after the effective date
of the Prospectus, not to (A) offer, pledge, sell, contract to sell or
otherwise dispose of, directly or indirectly, except as provided
hereunder, the Stock, Notes or any securities of the Company that are
substantially similar to the Notes, including but not limited to any
securities that are convertible into or
Exhibit 1.1-11
12
exchangeable for, or that represent the right to receive, Stock, Notes
or any such substantially similar securities, without your prior
written consent (other than pursuant to stock option and restricted
stock plans existing on, or upon the conversion, exchange or exercise
of convertible, exchangeable or exercisable securities outstanding as
of, the date of this Agreement), or (B) enter into any swap or other
arrangement that transfers all or a portion of the economic
consequences associated with the ownership of any Stock or Notes,
without your prior written consent, except to the Underwriters pursuant
to this Agreement for issuances of capital stock by the Company in
connection with potential future acquisitions provided that the shares
issuable pursuant to any such acquisitions shall not be transferrable
prior to the end of the 180-day period;
(g) To furnish to the holders of the Notes as soon as
practicable after the end of each fiscal year an annual report
(including a balance sheet and statements of income, shareholders'
equity and cash flow of the Company and its consolidated subsidiaries
certified by independent public accountants) and, as soon as
practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the
effective date of the Registration Statement), consolidated summary
financial information of the Company and its subsidiaries for such
quarter in reasonable detail;
(h) During a period of five years from the effective date of
the Registration Statement, to furnish to you copies of all reports or
other communications (financial or other) furnished to shareholders,
and deliver to you (i) as soon as they are available, copies of any
reports and financial statements furnished to or filed with the
Commission or any national securities exchange on which any class of
securities of the Company is listed; and (ii) such additional
information concerning the business and financial condition of the
Company as you may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of
the Company and its subsidiaries are consolidated in reports furnished
to its shareholders generally or to the Commission);
(i) To use the net proceeds received by it from the sale of
the Notes pursuant to this Agreement in the manner specified in the
Prospectus under the caption "Use of Proceeds"; and
(j) To use its best efforts to list for quotation, subject to
notice of issuance, the Notes on the American Stock Exchange ("AMEX")
and to maintain the listing of the Notes for a period of three years
after the date of this Agreement.
6. The Company covenants and agrees with the several Underwriters that,
except as provided below, the Company will pay or cause to be paid the
following: (i) the fees, disbursements and expenses of the Company's counsel and
accountants in connection with the registration of the Notes under the Act and
all other expenses in connection with the preparation, printing and filing of
the Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, the Blue Sky Memorandum,
closing documents (including any compilations thereof) and any other documents
in connection with the offering, purchase, sale and delivery of the Notes; (iii)
all
Exhibit 1.1-12
13
expenses in connection with the qualification of the Notes for offering and
sale under state securities laws as provided in Section 5(b) hereof, including
the fees and disbursements of counsel for the Underwriters in connection with
such qualification and in connection with the Blue Sky survey; (iv) all fees and
expenses in connection with listing the Notes on AMEX (v) if applicable, any
fees charged by Securities Rating Services for rating the Notes; (vi) the filing
fees incident to, and the fees and disbursements of counsel for the Underwriters
in connection with, securing any required review by the National Association of
Securities Dealers, Inc. of the terms of the sale of the Notes; (vii) the cost
of preparing the Notes; (viii) the fees and expenses of the Trustee and any
agent of the Trustee and the fees and disbursements of counsel for the Trustee
in connection with the Indenture and the Notes; and (ix) all other costs and
expenses incident to the performance of its obligations hereunder which are not
otherwise specifically provided for in this Section. It is understood that
except as provided in this Section, and Sections 8 and 11 hereof, the
Underwriters will pay all of their own costs and expenses, including the fees of
their counsel, transfer taxes on resale of any of the Notes by them and any
advertising expenses connected with any offers they may make.
7. The obligations of the Underwriters hereunder, as to the Notes to be
delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company herein are, at and as of such Time of Delivery, true and correct,
the condition that the Company shall have performed all of its and their
obligations hereunder theretofore to be performed and the following additional
conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed
for such filing by the rules and regulations under the Act and in
accordance with Section 5(a) hereof; if the Company has elected to rely
upon Rule 462(b), the Rule 462(b) Registration Statement shall have
become effective by 10:00 p.m., Washington, D.C. time, on the date of
this Agreement; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and
no proceeding for that purpose shall have been initiated or threatened
by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction.
(b) Xxxxxx & Xxxx, L.L.P., counsel for the Underwriters, shall
have furnished to you their written opinion or opinions, dated such
Time of Delivery, with respect to the matters covered in paragraphs
(vi), (vii), (viii), (xii) and (xvi) of subsection (c) below as well as
such other related matters as you may reasonably request, and such
counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters. In giving
such opinion or opinions, Xxxxxx & Xxxx, L.L.P. may rely as to all
matters of Minnesota law on the opinion of Maun & Simon, PLC referenced
below.
(c) Maun & Simon, PLC, counsel for the Company, shall have
furnished to you their written opinion, dated such Time of Delivery, in
form and substance satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Minnesota, with
Exhibit 1.1-13
14
corporate power and authority to own its properties and
conduct its business as described in the Prospectus;
(ii) The Company has an authorized capitalization as
set forth in the Prospectus, and all of the issued shares of
capital stock of the Company have been duly authorized and
validly issued and are fully paid and non-assessable and not
subject to any preemptive or similar rights; the shares of
Stock initially issuable upon conversion of the Notes have
been duly and validly authorized and reserved for issuance
and, when issued and delivered in accordance with the
provisions of the Notes and the Indenture, will be duly and
validly issued and fully paid and non-assessable; and the
Stock conforms to the description of the Stock contained in
the Prospectus; and all issuances of securities of the Company
since January 1, 1999 which were not registered under the Act
or Blue Sky or state securities laws were exempt from such
registration, provided that in rendering such opinion, counsel
may, as to factual matters, rely upon certificates of officers
of the Company, filings by the Company with the Commission and
representations of purchasers of securities of the Company
contained in any subscription documents without independent
investigation;
(iii) Each of the Company and each Material
Subsidiary has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under
the laws of each other jurisdiction in which it owns or leases
properties, or conducts any business so as to require such
qualification, or is subject to no material liability or
disability by reason of failure to be so qualified in any such
jurisdiction (such counsel being entitled to rely in respect
of the opinion in this clause upon opinions of local counsel
and/or certificates of Secretaries of State or other
appropriate public officials and in respect of matters of fact
upon certificates of officers of either the Company or the
appropriate Material Subsidiary, provided that such counsel
shall state that they believe that both you and such counsel
are justified in relying upon such opinions and certificates
and that such counsel furnishes such opinions and certificates
to the representatives);
(iv) Each Material Subsidiary has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation;
and all of the issued shares of capital stock of each such
subsidiary have been duly authorized and validly issued, are
fully paid and non-assessable, and (except for directors'
qualifying shares) are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities
or claims, other than those described in the Prospectus (such
counsel being entitled to rely in respect of the opinion in
this clause upon opinions of local counsel and certificates of
Secretaries of State or other appropriate public officials and
in respect of matters of fact upon certificates of officers of
the Company or its subsidiaries, provided that such counsel
shall state that they believe that both you and they are
justified in relying upon such opinions and certificates and
that such counsel furnishes such opinions and certificates to
you);
Exhibit 1.1-14
15
(v) To the best of such counsel's knowledge and other
than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any
of its subsidiaries is a party or of which any property of the
Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a
material adverse effect on the current or future consolidated
financial position, shareholders' equity or results of
operations of the Company and its subsidiaries taken as a
whole; and, to the best of such counsel's knowledge, no such
proceedings are threatened or contemplated by governmental
authorities or threatened by others;
(vi) This Agreement has been duly authorized,
executed and delivered by the Company;
(vii) The Notes delivered by the Company at the Time
of Delivery have been duly authorized, and will be, when
issued and delivered against payment therefor in accordance
with this Agreement, validly issued, and authenticated and
constitute valid and legally binding obligations of the
Company entitled to the benefits provided by the Indenture;
and the Notes and the Indenture conform in all material
respects to the descriptions thereof in the Prospectus;
(viii) The Indenture has been duly authorized,
executed and delivered by the Company and (assuming the due
authorization, execution and delivery thereof by the Trustee)
constitutes a valid and legally binding agreement, enforceable
against the Company in accordance with its terms, subject, as
to enforcement, to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting
creditors' rights and to general equity principles; and the
Indenture has been duly qualified under the Trust Indenture
Act;
(ix) The issue and sale to you of the Notes being
delivered at such Time of Delivery to be sold by the Company
and the compliance by the Company with all of the provisions
of the Notes, the Indenture and this Agreement and the
consummation of the transactions herein contemplated will not
conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to which the
Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of
the property or assets of the Company or any of its
subsidiaries is subject, nor will such action result in any
violation of the provisions of the Articles of Incorporation,
as amended, or By-laws of the Company or any statute or any
order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties;
(x) No consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required to be obtained by or
on behalf of the Company for the issue and sale of the Notes
or the consummation by the Company of the transactions
contemplated by this
Exhibit 1.1-15
16
Agreement or the Indenture, except such as have been obtained
under the Act and the Trust Indenture Act, such as may be
required under the Act or by the National Association of
Securities Dealers, Inc. in connection with the shares of
Stock issuable upon conversion of the Notes, and such
consents, approvals, authorizations, registrations or
qualifications as may be required under state or foreign
securities or Blue Sky laws in connection with the purchase
and distribution of the Notes by the Underwriters;
(xi) Neither the Company nor any of its subsidiaries
is in violation of its Articles of Incorporation, as amended
or By-laws or in default in the performance or observance of
any material obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument known to
such counsel to which it is a party or by which it or any of
its properties may be bound;
(xii) The statements set forth in the Prospectus
under the caption "Description of Convertible Notes" and
"Description of Capital Stock", insofar as they purport to
constitute a summary of the terms of the Notes and the Stock,
under the caption "Certain Federal Tax Considerations", and
under the caption "Underwriting", insofar as they purport to
summarize the provisions of the laws and documents referred to
therein, are accurate summaries in all material respects;
(xiii) Each of the Company and each subsidiary is not
an "investment company" or an entity "controlled" by an
"investment company", as such terms are defined in the
Investment Company Act;
(xiv) To the best of such counsel's knowledge, except
as have been waived at such Time of Delivery, there are no
persons with registration or similar rights to have any
securities of the Company registered pursuant to the
Registration Statement;
(xv) To the best of such counsel's knowledge and
without independent investigation, the Company and each of its
subsidiaries have obtained all environmental permits, licenses
and other authorizations required by federal, state and local
law in order to conduct their businesses except as described
in the Prospectus; the Company and each of its subsidiaries
are conducting their businesses in compliance with such
permits, licenses and authorizations and with applicable
environmental laws, except where the failure to be in
compliance would not have a material adverse effect on the
financial position, shareholders' equity or results of
operations of the Company and its subsidiaries, taken as a
whole, and, except as described in the Prospectus, the Company
is not in violation of any Federal or state law or regulation
relating to the storage, handling, disposal, release or
transportation of hazardous or toxic materials;
(xvi) The Registration Statement and the Prospectus
and any further amendments and supplements thereto made by the
Company prior to such Time of
Exhibit 1.1-16
17
Delivery (other than the financial statements and related
schedules and financial and statistical data therein, as to
which such counsel need express no opinion) comply as to form
in all material respects with the requirements of the Act and
the rules and regulations thereunder; although they do not
assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration
Statement or Prospectus, except for those referred to in the
opinion in paragraph (xii) of this subsection (c), they have
no reason to believe that, as of its effective date, the
Registration Statement or any further amendment thereto made
by the Company prior to such Time of Delivery (other than the
financial statements and related schedules and financial and
statistical data therein, as to which such counsel need
express no opinion) 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, as of its date, the Prospectus or any
further amendment or supplement thereto made by the Company
prior to such Time of Delivery (other than the financial
statements and related schedules and financial and statistical
data therein, as to which such counsel need express no
opinion) contained an untrue statement of a material fact or
omitted to state a material fact necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading or that, as of such Time of
Delivery, the Prospectus or any further amendment or
supplement thereto made by the Company prior to such Time of
Delivery (other than the financial statements and related
schedules therein, as to which such counsel need express no
opinion) contains an untrue statement of a material fact or
omits to state a material fact necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading; and they do not know of any
contracts or other documents of a character required to be
filed as an exhibit to the Registration Statement or required
to be described in the Registration Statement or the
Prospectus which are not filed or described as required;
(xvii) Each of the Xxxxxxx Agreement and the Xxxxxxxx
Agreement has been duly authorized, executed and delivered by
the Company, and, assuming the due authorization, execution
and delivery thereof by Xxxxxxx and Xxxxxxxx, constitutes the
legal, valid and binding agreement of the Company, Xxxxxxx and
Xxxxxxxx, as applicable, enforceable against each in
accordance with their respective terms; and
(xviii) The documents incorporated by reference in
the Prospectus (other than the financial statements and
related schedules and financial and statistical data therein,
as to which such counsel need express no opinion), when they
were filed with the Commission, complied as to form in all
material respects with the requirements of the Exchange Act
and the rules and regulations of the Commission thereunder;
and such counsel has no reason to believe that any of such
documents, when such documents were so filed, contained an
untrue statement of material fact or omitted to state a
material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made when such documents were so filed, not misleading.
Exhibit 1.1-17
18
In rendering such opinion, such counsel may state that they
express no opinion as to the laws of any jurisdiction other than the
laws of the State of Minnesota (excluding conflict of law rules) and
the federal laws of the United States.
(d) On the date of the Prospectus at a time prior to the
execution of this Agreement, at 9:00 a.m., Dallas time, on the
effective date of any post-effective amendment to the Registration
Statement filed subsequent to the date of this Agreement and also at
each Time of Delivery, Ernst & Young LLP and KPMG LLP shall have
furnished to you a letter or letters, dated the respective dates of
delivery thereof, in form and substance satisfactory to you, to the
effect set forth in Annex I hereto.
(e) (i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial
statements included in the Prospectus any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus, and (ii) since the respective dates as
of which information is given in the Prospectus there shall not have
been any change in the capital stock, short-term debt or long-term debt
of the Company or any of its subsidiaries or any change, or any
development involving a prospective change, in or affecting the general
affairs, business, management, financial position, shareholders' equity
or results of operations of the Company and its subsidiaries, otherwise
than as set forth or contemplated in the Prospectus, the effect of
which, in any such case described in clause (i) or (ii), is in the
judgment of the representative(s) so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Notes being delivered at such Time of Delivery on the
terms and in the manner contemplated in the Prospectus.
(f) On or after the date hereof there shall not have occurred
any of the following: (i) a suspension or material limitation in
trading in securities generally on the New York Stock Exchange, Nasdaq
or AMEX; (ii) a suspension or material limitation in trading in the
Company's securities; (iii) a general moratorium on commercial banking
activities declared by either Federal or New York state authorities; or
(iv) the outbreak or escalation of hostilities involving the United
States or the declaration by the United States of a national emergency
or war, if the effect of any such event specified in this clause (iv)
in the judgment of the representative(s) makes it impracticable or
inadvisable to proceed with the public offering or delivery of the
Notes being delivered at such Time of Delivery on the terms and in the
manner contemplated in the Prospectus.
(g) The Company has obtained and delivered to the Underwriters
executed copies of an agreement from those persons named on Schedule
III hereto to the effect set forth in Annex II.
(h) The Company shall have furnished or caused to be furnished
to you at such Time of Delivery certificates of officers of the Company
satisfactory to you as to the accuracy of the representations and
warranties of the Company herein at and as of such
Exhibit 1.1-18
19
Time of Delivery, as to the performance by the Company of all of its
obligations hereunder to be performed at or prior to such Time of
Delivery, and as to such other matters as you may reasonably request,
and the Company shall have furnished or caused to be furnished
certificates as to the matters set forth in subsections (a) and (d) of
this Section and as to such other matters as you may reasonably
request; and
(i) The Company shall have complied with the provisions of
Section 5(c) hereof with respect to the furnishing of prospectuses on
the Business Day next succeeding the date of this Agreement.
8. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through Southwest Securities, Inc. expressly for use therein.
(b) Each Underwriter will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein 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 any
Preliminary Prospectus, the Registration Statement or the Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through you expressly
for use therein; and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or defending
any such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against an indemnifying party
under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than
Exhibit 1.1-19
20
under such subsection. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate therein and, to
the extent that it shall wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel satisfactory to
such indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and, after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party under such subsection for any legal expenses of other counsel
or any other expenses, in each case subsequently incurred by such indemnified
party, in connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the written consent of the
indemnified party, effect the settlement or compromise of, or consent to the
entry of any judgment with respect to, any pending or threatened action or claim
in respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to such
action or claim) unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability arising out of
such action or claim and (ii) does not include a statement as to or an admission
of fault, culpability or a failure to act, by or on behalf of any indemnified
party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other from the offering of the Notes. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required under
subsection (c) above, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering of the Notes
(before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters with respect
to the Notes, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or the Underwriters on the other and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Underwriters
agree that it would not be just and equitable if contributions pursuant to this
subsection (d) 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 above in this subsection (d). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subsection (d) shall be
Exhibit 1.1-20
21
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (d), no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Notes underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this subsection
(d) to contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company (including any
person who, with his or her consent, is named in the Registration Statement as
about to become a director of the Company) and to each person, if any, who
controls the Company within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase
the Notes which it has agreed to purchase hereunder at the Time of Delivery, you
may in your discretion arrange for you or another party or other parties to
purchase such Notes on the terms contained herein. If within 36 hours after such
default by any Underwriter you do not arrange for the purchase of such Notes,
then the Company shall be entitled to a further period of 36 hours within which
to procure another party or other parties satisfactory to you to purchase such
Notes on such terms. In the event that, within the respective prescribed
periods, you notify the Company that you have so arranged for the purchase of
such Notes, or the Company notifies you that they have so arranged for the
purchase of such Notes, you or the Company shall have the right to postpone such
Time of Delivery for a period of not more than seven days, in order to effect
whatever changes may thereby be made necessary in the Registration Statement or
the Prospectus, or in any other documents or arrangements, and the Company
agrees to file promptly any amendments to the Registration Statement or the
Prospectus which in your opinion may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person substituted
under this Section with like effect as if such person had originally been a
party to this Agreement with respect to such Notes.
(b) If, after giving effect to any arrangements for the purchase of the
Notes of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate principal amount of such Notes
which remains unpurchased does not exceed one-eleventh of the aggregate
principal amount of all the Notes to be purchased at such Time of Delivery, then
the Company shall have the right to require each non-defaulting Underwriter to
purchase the principal amount of Notes which such Underwriter agreed to purchase
hereunder at such Time of Delivery and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based on the
principal amount of Notes which such Underwriter agreed to purchase hereunder)
of the Notes of such defaulting Underwriter or Underwriters for which such
Exhibit 1.1-21
22
arrangements have not been made; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Notes of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate principal amount of such Notes
which remains unpurchased exceeds one-eleventh of the aggregate principal amount
of all the Notes to be purchased at such Time of Delivery, or if the Company
shall not exercise the right described in subsection (b) above to require
non-defaulting Underwriters to purchase Notes of a defaulting Underwriter or
Underwriters, then this Agreement or, with respect to the Second Time of
Delivery, the obligations of the Underwriters to purchase and of the Company to
sell the Optional Notes shall thereupon terminate, without liability on the part
of any non-defaulting Underwriter or the Company, except for the expenses to be
borne by the Company and the Underwriters as provided in Section 6 hereof and
the indemnity and contribution agreements in Section 8 hereof; but nothing
herein shall relieve a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Underwriters, as set forth
in this Agreement or made by or on behalf of them, respectively, pursuant to
this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company,
or any officer or director or controlling person of the Company, and shall
survive delivery of and payment for the Notes.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
the Company shall not then be under any liability to any Underwriter except as
provided in Section 6 and Section 8 hereof; but, if for any other reason any
Notes are not delivered by or on behalf of the Company as provided herein, the
Company will reimburse the Underwriters through you for all out-of-pocket
expenses approved in writing by you, including fees and disbursements of
counsel, reasonably incurred by the Underwriters in making preparations for the
purchase, sale and delivery of the Notes not so delivered, but the Company shall
then be under no further liability to any Underwriter in respect of the Notes
not so delivered except as provided in Section 6 and Section 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Southwest Securities, Inc. on behalf of you as the
representative.
All statements, requests, notices, and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Southwest
Securities, Inc. at 0000 Xxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, Attention:
Corporate Syndicate Department; and if to the Company shall be delivered or sent
by mail, telex or facsimile transmission to the address of the Company set forth
in the Registration Statement, Attention: President; provided, however, that any
notice to an Underwriter pursuant to Section 8(c) hereof shall be delivered or
sent by mail, telex or facsimile transmission to such Underwriter at its address
set forth in its Underwriters' Questionnaire or telex constituting such
Exhibit 1.1-22
23
Questionnaire, which address will be supplied to the Company by you upon
request. Any such statements, requests, notices or agreements shall take effect
upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters and the Company and, to the extent provided in
Sections 8 and 10 hereof, the officers and directors of the Company and each
person who controls the Company or any Underwriter, and their respective heirs,
executors, administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement. No purchaser of
any of the Notes from any Underwriter shall be deemed a successor or assign by
reason merely of such purchase.
14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is not open for business.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
17. Southwest Securities, Inc. hereby agrees to act as a "qualified
independent underwriter," as such term is defined in Section (b)(15) of Rule
2720 of the NASD Conduct Rules, in connection with the offering contemplated by
this Agreement. As a "qualified independent underwriter," Southwest Securities,
Inc. shall recommend the minimum yield at which the Notes can be offered to the
public and the maximum initial conversion price at which the Notes can be
converted into shares of Stock. The Company and Xxxxxx, Xxxxxxx & Xxxxx, Inc.
agree that they shall not offer the Notes at a lower yield than such minimum
yield or at a conversion price higher than such maximum initial conversion
price. Southwest Securities, Inc. represents and warrants that it meets the
applicable requirements under Section (b)(15) of Rule 2720 to act as a
"qualified independent underwriter" in connection with the offering contemplated
by this Agreement.
If the foregoing is in accordance with your understanding, please sign
and return to us one counterpart hereof for the Company and for each of the
representatives plus one counterpart hereof for each counsel and the Custodian,
if any, and upon the acceptance hereof by you, on behalf of each of the
Underwriters, this letter and such acceptance hereof shall constitute a binding
agreement among each of the Underwriters and the Company. It is understood that
your acceptance of this letter on behalf of each of the Underwriters is pursuant
to the authority set forth in a form of Agreement among Underwriters, the form
of which shall be submitted to the Company for examination, upon request, but
without warranty on your part as to the authority of the signers thereof.
Exhibit 1.1-23
24
Very truly yours,
XXXXXXXXX.XXX GROUP, INC.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Accepted as of the date hereof:
SOUTHWEST SECURITIES, INC.
XXXXXX, XXXXXXX & XXXXX, INC.
By: Southwest Securities, Inc.
On behalf of each of the Underwriters
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Exhibit 1.1-24
25
SCHEDULE I
AGGREGATE PRINCIPAL
AMOUNT OF
OPTIONAL
AGGREGATE PRINCIPAL NOTES TO BE
AMOUNT OF PURCHASED IF
FIRM MAXIMUM
NOTES TO BE OPTION
UNDERWRITER PURCHASED EXERCISED
----------- --------- ---------
Southwest Securities, Inc..................................... 000,000 000,000
Xxxxxx, Xxxxxxx & Xxxxx, Inc..................................
X.X. Xxxxxxxx & Company.......................................
.............................................................. -----------------
Total.................................................... =================
I-1
26
SCHEDULE II
Xxxxxx, Xxxxxxx & Xxxxx, Incorporated
Online Brokerage Solutions, Inc.
MJK Holdings, Inc.
Xxxxxxxxx.xxx, Inc.
MJK Capital Corporation
MJK Management Services, Inc.
[X. X. Xxxxxxxx & Company]
[Xxxxxxx Investments, Inc.]
II-1
27
SCHEDULE III
[List of parties to Lock-up Agreement]
II-1
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SCHEDULE IV
REGISTRATION RIGHTS
II-1
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ANNEX I
FORM OF COMFORT LETTER
FOR ERNST & YOUNG LLP
Pursuant to Section 7(d) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the
Act and the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
financial forecasts and/or pro forma financial information) examined by
them and included in the Prospectus or the Registration Statement
comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published rules and
regulations thereunder; and, if applicable, they have made a review in
accordance with standards established by the American Institute of
Certified Public Accountants of the unaudited consolidated interim
financial statements, selected financial data, pro forma financial
information, financial forecasts and/or condensed financial statements
derived from audited financial statements of the Company for the
periods specified in such letter, as indicated in their reports
thereon, copies of which have been furnished to the representatives of
the Underwriters (the "Representatives");
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus as indicated in their reports thereon,
copies of which have been separately furnished to the Representatives,
and on the basis of specified procedures including inquiries of
officials of the Company who have responsibility for financial and
accounting matters regarding whether the unaudited condensed
consolidated financial statements referred to in paragraph (vi)(A)(i)
below comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published rules and
regulations, nothing came to their attention that caused them to
believe that the unaudited condensed consolidated financial statements
do not comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published rules and
regulations;
(iv) The unaudited selected financial information with respect
to the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the
Prospectus agrees with the corresponding amounts (after restatements
where applicable) in the audited consolidated financial statements for
such five fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K
and on the basis of limited procedures specified in such letter nothing
came to their attention as a result of the foregoing procedures
AI-1
30
that caused them to believe that this information does not conform in
all material respects with the disclosure requirements of Items 301,
302, 402 and 503(d), respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available
interim financial statements of the Company and its subsidiaries,
inspection of the minute books of the Company and its subsidiaries
since the date of the latest audited financial statements included in
the Prospectus, inquiries of officials of the Company and its
subsidiaries responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A) (i) the unaudited consolidated
statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the
Prospectus do not comply as to form in all material respects
with the applicable accounting requirements of the Act and the
related published rules and regulations, or (ii) any material
modifications should be made to the unaudited condensed
consolidated statements of income, consolidated balance sheets
and consolidated statements of cash flows included in the
Prospectus for them to be in conformity with generally
accepted accounting principles;
(B) any other unaudited income statement
data and balance sheet items included in the Prospectus do not
agree with the corresponding items in the unaudited
consolidated financial statements from which such data and
items were derived, and any such unaudited data and items were
not determined on a basis substantially consistent with the
basis for the corresponding amounts in the audited
consolidated financial statements included in the Prospectus;
(C) the unaudited financial statements which
were not included in the Prospectus but from which were
derived any unaudited condensed financial statements referred
to in Clause (A) and any unaudited income statement data and
balance sheet items included in the Prospectus and referred to
in Clause (B) were not determined on a basis substantially
consistent with the basis for the audited consolidated
financial statements included in the Prospectus;
(D) any unaudited pro forma consolidated
condensed financial statements included in the Prospectus do
not comply as to form in all material respects with the
applicable accounting requirements of the Act and the
published rules and regulations thereunder or the pro forma
adjustments have not been properly applied to the historical
amounts in the compilation of those statements;
(E) as of a specified date not more than
five days prior to the date of such letter, there have been
any changes in the consolidated capital stock (other than
issuances of capital stock upon exercise of options and stock
appreciation rights,
AI-2
31
upon earn-outs of performance shares and upon conversions of
convertible securities, in each case which were outstanding on
the date of the latest financial statements included in the
Prospectus) or any increase in the consolidated long-term debt
of the Company and its subsidiaries, or any decreases in
consolidated net current assets or net assets or other items
specified by the Representatives, or any increases in any
items specified by the Representatives, in each case as
compared with amounts shown in the latest balance sheet
included in the Prospectus, except in each case for changes,
increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter;
and
(F) for the period from the date of the
latest financial statements included in the Prospectus to the
specified date referred to in Clause (E) there were any
decreases in consolidated net revenues or operating profit or
the total or per share amounts of consolidated net income or
other items specified by the Representatives, or any increases
in any items specified by the Representatives, in each case as
compared with the comparable period of the preceding year and
with any other period of corresponding length specified by the
Representatives, except in each case for decreases or
increases which the Prospectus discloses have occurred or may
occur or which are described in such letter; and
(vii) In addition to the examination referred to in their
report(s) included in the Prospectus and the limited procedures,
inspection of minute books, inquiries and other procedures referred to
in paragraphs (iii) and (vi) above, they have carried out certain
specified procedures, not constituting an audit in accordance with
generally accepted auditing standards, with respect to certain amounts,
percentages and financial information specified by the Representatives,
which are derived from the general accounting records of the Company
and its subsidiaries, which appear in the Prospectus, including any
documents incorporated by reference, or in Part II of, or in exhibits
and schedules to, the Registration Statement specified by the
Representatives, and have compared certain of such amounts, percentages
and financial information with the accounting records of the Company
and its subsidiaries and have found them to be in agreement.
AI-3
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FORM OF COMFORT LETTER
FOR KPMG LLP
Pursuant to Section 7(d) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to Xxxxxxx and its subsidiaries and Xxxxxxxx within the meaning
of the Act and the applicable published rules and regulations
thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
financial forecasts and/or pro forma financial information) examined by
them and included in the Prospectus or the Registration Statement
comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published rules and
regulations thereunder; and, if applicable, they have made a review in
accordance with standards established by the American Institute of
Certified Public Accountants of the unaudited consolidated interim
financial statements, selected financial data, pro forma financial
information, financial forecasts and/or condensed financial statements
derived from audited financial statements of Xxxxxxx and Xxxxxxxx for
the periods specified in such letter, as indicated in their reports
thereon, copies of which have been furnished to the representatives of
the Underwriters (the "Representatives");
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus as indicated in their reports thereon,
copies of which have been separately furnished to the Representatives,
and on the basis of specified procedures including inquiries of
officials of Xxxxxxx and Xxxxxxxx who have responsibility for financial
and accounting matters regarding whether the unaudited condensed
consolidated financial statements referred to in paragraph (iv)(A)(i)
below comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published rules and
regulations, nothing came to their attention that caused them to
believe that the unaudited condensed consolidated financial statements
do not comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published rules and
regulations;
(iv) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available
interim financial statements of Xxxxxxx and its subsidiaries and
Xxxxxxxx, inspection of the minute books of Xxxxxxx and its
subsidiaries and Xxxxxxxx since the date of the latest audited
financial statements included in the Prospectus, inquiries of officials
of Xxxxxxx and its subsidiaries and Xxxxxxxx responsible for financial
and accounting matters and such other inquiries and procedures as may
be specified in such letter, nothing came to their attention that
caused them to believe that:
AI-4
33
(A) (i) the unaudited consolidated
statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the
Prospectus do not comply as to form in all material respects
with the applicable accounting requirements of the Act and the
related published rules and regulations, or (ii) any material
modifications should be made to the unaudited condensed
consolidated statements of income, consolidated balance sheets
and consolidated statements of cash flows included in the
Prospectus for them to be in conformity with generally
accepted accounting principles;
(B) as of a specified date not more than
five days prior to the date of such letter, there have been
any changes in the consolidated capital stock (other than
issuances of capital stock upon exercise of options and stock
appreciation rights, upon earn-outs of performance shares and
upon conversions of convertible securities, in each case which
were outstanding on the date of the latest financial
statements included in the Prospectus) or any increase in the
consolidated long-term debt of Xxxxxxx and its subsidiaries or
Xxxxxxxx, or any decreases in consolidated net current assets
or net assets or other items specified by the Representatives,
or any increases in any items specified by the
Representatives, of Xxxxxxx and its subsidiaries or Xxxxxxxx,
in each case as compared with amounts shown in the latest
balance sheet included in the Prospectus, except in each case
for changes, increases or decreases which the Prospectus
discloses have occurred or may occur or which are described in
such letter; and
(C) for the period from the date of the
latest financial statements included in the Prospectus to the
specified date referred to in Clause (B) there were any
decreases in consolidated net revenues or operating profit or
the total or per share amounts of consolidated net income or
other items specified by the Representatives, or any increases
in any items specified by the Representatives, in each case as
compared with the comparable period of the preceding year and
with any other period of corresponding length specified by the
Representatives, except in each case for decreases or
increases which the Prospectus discloses have occurred or may
occur or which are described in such letter; and
(v) In addition to the examination referred to in their
report(s) included in the Prospectus and the limited procedures,
inspection of minute books, inquiries and other procedures referred to
in paragraphs (iii) and (iv) above, they have carried out certain
specified procedures, not constituting an audit in accordance with
generally accepted auditing standards, with respect to certain amounts,
percentages and financial information specified by the Representatives,
which are derived from the general accounting records of Xxxxxxx and
its subsidiaries or Xxxxxxxx, which appear in the Prospectus, including
any documents incorporated by reference, or in Part II of, or in
exhibits and schedules to, the Registration Statement specified by the
Representatives, and have compared certain of such amounts, percentages
and financial information with the accounting records of Xxxxxxx and
its subsidiaries or Xxxxxxxx and have found them to be in agreement.
AI-5
34
ANNEX II
FORM OF LOCK-UP LETTER
XXXXXX, XXXXXXX & XXXXX, INC.
{address}
{address}
{address}
XXXXXXXXX.XXX GROUP, INC.
0000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Dear Sirs:
Xxxxxxxxx.xxx Group, Inc. (the "Company") intends to file a
registration statement with the Securities and Exchange Commission in connection
with the public offering (the "Offering") of convertible subordinated notes (the
"Notes"), convertible into shares of the Company's Common Stock, $0.04 par value
per share (the "Stock").
To facilitate the marketing of the Notes to be sold by the Company in
the Offering, I hereby irrevocably confirm and agree for the benefit of the
Company and the underwriters of the Offering as follows:
(i) During the period from the date of this letter until the
120th day after the date of the final prospectus relating to
the Notes to be sold in the Offering, I will not (1) offer,
pledge, sell, contract to sell or otherwise dispose of,
directly or indirectly, any Stock (or other securities
substantially similar to the Stock or securities convertible
or exchangeable into or exercisable for Stock or substantially
similar securities) that I now own or will own in the future
(beneficially or of record) or (2) enter into any swap or
other arrangement that transfers all or a portion of the
economic consequences associated with the ownership of any
shares of Stock, except that (a) I may transfer such
securities to my spouse, parents, siblings and/or lineal
descendants of mine or of any such person (each, a "Family
Member"), to a trust solely for my benefit and/or the benefit
of Family Members, to a corporation wholly owned by me and/or
Family Members or to a partnership, all interests in which are
owned solely by me and/or Family Members, provided that prior
to such transfer any such person or entity shall have executed
and delivered to the Company a lock-up agreement substantially
in the form of this Agreement, and (b) I may pledge my Stock
to a commercial financial institution in the ordinary course
of business.
(ii) I hereby waive all preemptive rights, rights of first
refusal and similar rights (to the extent I have any) under
any agreement or arrangement with respect to the offering and
sale of the Notes in the Offering and I agree that, during the
period specified in clause (i) above, I will not exercise any
such rights or require that any
Exhibit A-1
35
Stock or other securities be included in the Offering or
registered under the Securities Act of 1933, either in
connection with the Offering or otherwise.
(iii) The undersigned has not taken and will not take,
directly or indirectly, any action which constitutes, or is
intended or might reasonably be expected to result in,
stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Notes, or
which constitutes a bid for or purchase of, or an attempt to
induce any person to purchase, the Notes, Stock or any related
security that is prohibited by Regulation M under the
Securities Exchange Act of 1934.
If the closing for any purchase by the underwriters of Notes sold in
the Offering has not occurred on or before August 31, 2000, the agreements set
forth in this letter will terminate on such date. I understand that there is no
assurance that the Offering will be completed.
Very truly yours,
------------------------
Signature
------------------------
Print Name
------------------------
Address
Exhibit A-2
