EXHIBIT 1.2
KEY CAPITAL CORPORATION
(A Maryland Corporation)
_________ shares of Common Stock
Par Value $1.00 Per Share
UNDERWRITING AGREEMENT
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_______, 1999
Xxxx, Xxxx & Co., Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Ladies and Gentlemen:
Key Capital Corporation, a Maryland corporation ("Key" or "Company"), the
holding company for Key Bank and Trust, a Maryland chartered trust company
("Bank"), proposes to issue and sell to Xxxx, Xxxx & Co., Inc. (the
"Underwriter"), ____________ authorized but unissued shares of its common stock,
$1.00 par value per share (the "Common Stock"). The Company also grants to
Xxxx, Xxxx the option described in Section 2 to purchase all or any part of
______ additional shares of Common Stock to cover over-allotments. The
aforesaid ___________ shares of Common Stock ("Initial Shares"), together with
all or any part of the _____ additional shares of Common Stock subject to the
option described in Section 2 ("Additional Shares"), are collectively herein
called the "Shares." The Shares are more fully described in the Prospectus
referred to below. The Underwriter proposes to resell the shares to the general
public in a public offering ("Public Offering").
Prior to the date hereof, up to ____ shares of Common Stock were offered to
the general public in a community offering ("Community Offering") pursuant to an
agency agreement between the Company and the Underwriter dated ___, 1999 (the
"Agency Agreement"). The Shares proposed to be sold to the Underwriter hereby
represent Shares not sold in the Community Offering. The Community Offering and
the Public Offering are collectively referred to herein as the "Offering."
The initial public offering price for the Shares, the purchase price to be
paid by the Underwriter for the Shares and the commission per Common Stock to be
paid by the Company to the Underwriter shall be agreed upon by the Company and
the Underwriter, and such agreement
shall be set forth in a separate written instrument substantially in the form of
Exhibit A hereto (the "Price Determination Agreement"). The Price Determination
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Agreement may take the form of an exchange of any standard form of written
telecommunication between the Company and the Underwriter and shall specify such
applicable information as is indicated in Exhibit A hereto. The offering of the
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Shares will be governed by this Agreement, as supplemented by the Price
Determination Agreement. From and after the date of the execution and delivery
of the Price Determination Agreement, this Agreement shall be deemed to
incorporate, and all references herein to "this Agreement" shall be deemed to
include, the Price Determination Agreement.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (No. 333-
62667) covering the registration of the Securities under the Securities Act of
1933, as amended (the "1933 Act"), including the related offering circular and
preliminary prospectus or prospectuses. Such registration statement, as amended,
has been declared effective by the Commission. The amended prospectus on file
with the Commission at the time such registration statement became effective is
hereinafter referred to as the "Offering Circular," except that, if the
prospectus used in connection with the Community Offering differs from the
prospectus on file with the Commission at the time the registration statement
became effective, the term "Offering Circular" shall refer to such revised
prospectus from and after the time it is first used in the Community Offering.
Promptly after execution and delivery of this Agreement, the Company will
either (i) prepare and file a post-effective amendment to the Registration
Statement and an amended prospectus relating to the sale of Shares in the Public
Offering in accordance with the provisions of Rule 430A ("Rule 430A") of the
rules and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of the 1933 Act
Regulations or (ii) if the Company has elected to rely upon Rule 434 ("Rule
434") of the 1933 Act Regulations, prepare and file a term sheet (a "Term
Sheet") in accordance with the provisions of Rule 434 and Rule 424(b). The
information included in such prospectus or in such Term Sheet, as the case may
be, that was omitted from such post-effective registration statement, as
amended, if applicable, but that is deemed to be part of such post-effective
registration statement (a) pursuant to paragraph (b) of Rule 430A is referred to
as "Rule 430A Information" or (b) pursuant to paragraph (d) of Rule 434 is
referred to as "Rule 434 Information." Each prospectus relating to the sale of
Shares in the Public Offering, and any prospectus relating to the sale of Shares
in the Public Offering that omitted, as applicable, the Rule 430A Information or
the Rule 434 Information, that was used prior to the execution and delivery of
this Agreement, is herein called a "preliminary prospectus." Such registration
statement, including the exhibits thereto and schedules thereto at the time it
became effective and including the Rule 430A Information and the Rule 434
Information, as applicable, is herein called the "Registration Statement." Any
registration statement filed pursuant to Rule 462(b) of the 1933 Act Regulations
is herein referred to as the "Rule 462(b) Registration Statement," and after
such filing the term "Registration Statement" shall include the Rule 462(b)
Registration Statement. The final prospectus in the form first furnished to the
Underwriter for use in connection with the Public Offering of the Shares is
herein called the "Prospectus." If Rule 434 is relied on, the term "Prospectus"
shall refer to the
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preliminary prospectus dated ______, 1999 together with the Term Sheet and all
references in this Agreement to the date of the Prospectus shall mean the date
of the Term Sheet. For purposes of this Agreement, all references to the
Registration Statement, any preliminary prospectus, the Prospectus or any Term
Sheet or any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("XXXXX").
Section 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company
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represents and warrants to the Underwriter as of the date hereof, as of the
Closing Time referred to in Section 2(b) hereof, and as of each Date of Delivery
(if any) referred to in Section 2(a) hereof, and agrees with the Underwriter, as
follows:
(i) Compliance with Registration Requirements. Each of the
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Registration Statement and any Rule 462(b) Registration Statement has become
effective under the 1933 Act and no stop order suspending the effectiveness of
the Registration Statement or any Rule 462(b) Registration Statement has been
issued under the 1933 Act and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the Company, are contemplated
by the Commission, and any request on the part of the Commission for additional
information has been complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any Option Securities are purchased,
at the Date of Delivery), the Registration Statement, the Rule 462(b)
Registration Statement and any amendments and supplements thereto complied and
will comply in all material respects with the requirements of the 1933 Act and
the 1933 Act Regulations and did not and will not contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading. Neither the
Prospectus nor any amendments or supplements thereto, at the time the Prospectus
or any such amendment or supplement was issued and at the Closing Time (and, if
any Option Securities are purchased, at the Date of Delivery), included or will
include an untrue statement of a material fact or omitted or will omit to state
a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading. If Rule 434 is
used, the Company will comply with the requirements of Rule 434 and the
Prospectus shall not be "materially different", as such term is used in Rule
434, from the prospectus included in the Registration Statement at the time it
became effective. The representations and warranties in this subsection shall
not apply to statements in or omissions from the Registration Statement or
Prospectus made in reliance upon and in conformity with information furnished to
the Company in writing by the Underwriter expressly for use in the Registration
Statement or Prospectus.
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Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment thereto,
or filed pursuant to Rule 424 under the 1933 Act, complied when so filed in all
material respects with the 1933 Act Regulations and each preliminary prospectus
and the Prospectus delivered to the Underwriter for use in connection with this
offering was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to XXXXX, except to the extent permitted by
Regulation S-T.
(ii) Independent Accountants. KPMG Peat Marwick LLP, the
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accountants who certified the financial statements and supporting schedules
included in the Registration Statement, are independent public accountants as
required by the 1933 Act and the 1933 Act Regulations.
(iii) Financial Statements. The consolidated financial
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statements, audited and unaudited, included in the Registration Statement and
the Prospectus, together with the related schedules and notes, present fairly
the financial position of the Company and its consolidated subsidiaries at the
dates indicated and the results of operations, shareholders' equity and cash
flows of the Company and its consolidated subsidiaries for the periods
specified; and said financial statements have been prepared in conformity with
generally accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved. The supporting schedules included in the
Registration Statement present fairly in accordance with GAAP the information
required to be stated therein. The selected consolidated financial data, pro
forma and the summary consolidated financial data included in the Prospectus
present fairly the information shown therein and have been compiled on a basis
consistent with that of the audited consolidated financial statements included
in the Registration Statement.
(iv) No Material Adverse Effect on Business. Since the
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respective dates as of which information is given in the Registration Statement
and the Prospectus, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business (a "Material Adverse Effect"), (B) there have been
no transactions entered into by the Company or any of its subsidiaries, other
than those in the ordinary course of business, which are material with respect
to the Company and its subsidiaries considered as one enterprise, and (C) there
has been no dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock. Neither the Company, the Bank nor
any other subsidiary has any material liability of any nature, contingent or
otherwise, except as set forth in the Prospectus.
(v) Good Standing of the Company. The Company is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
Maryland with corporate power and authority under such laws to own, lease and
operate its properties and conduct its business as described in the Prospectus.
Each subsidiary of the Company is an entity duly organized, validly existing and
in good standing under the laws of its respective jurisdiction of organization
with corporate power and authority under such laws to own, lease and operate its
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properties and conduct its business. The Company and each of its subsidiaries is
duly qualified to transact business as a foreign corporation and is in good
standing in each other jurisdiction in which it owns or leases property of a
nature, or transacts business of a type, that would make such qualification
necessary, except to the extent that the failure to so qualify or be in good
standing would not have a material adverse effect on the condition (financial or
otherwise), earnings, business affairs, assets or business prospects of the
Company and its subsidiaries, considered as one enterprise.
(vi) Corporate Power and Authority. The Company is duly
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registered with the Board of Governors of the Federal Reserve System as a bank
holding company under the Bank Holding Company Act of 1956, as amended (the "BHC
Act"); each subsidiary of the Company that conducts business as a bank is duly
authorized to conduct such business in each jurisdiction in which such business
is currently conducted; and the deposit accounts of the Bank are insured by the
Bank Insurance Fund of the Federal Deposit Insurance Corporation (the "FDIC"),
up to the maximum allowable limits thereof. The Company has all such power,
authority, authorization, approvals and orders as may be required to enter into
this Agreement, to carry out the provisions and conditions hereof and to issue
and sell the Common Stock.
(vii) Good Standing of the Bank. The Bank is a trust company
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duly organized, validly existing and in good standing under the laws of the
State of Maryland with corporate power and authority under such laws to own,
lease and operate its properties and conduct its business; the Bank is duly
qualified to transact business as a foreign corporation and is in good standing
in each other jurisdiction in which it owns or leases property of a nature, or
transacts business of a type, that would make such qualification necessary,
except to the extent that the failure to so qualify or be in good standing would
not have a material adverse effect on the condition (financial or otherwise),
earnings, business affairs, assets or business prospects of the Bank and its
subsidiaries, considered as one enterprise. All of the outstanding shares of
capital stock of the Bank and each of the Company's other subsidiaries have been
duly authorized and validly issued and are fully paid and non-assessable and are
owned by the Company directly or indirectly, free and clear of any pledge, lien,
security interest, charge, claim, equity or encumbrance of any kind.
(viii) Absence of Significant Subsidiaries. Except for the Bank,
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the Company does not have any "significant subsidiaries" as defined in Rule 1-02
of Regulation S-X of the Commission.
(ix) Capitalization. The authorized, issued and outstanding
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capital stock of the Company is as set forth in the Prospectus in the column
entitled "Actual" under the caption "Capitalization" (except for subsequent
issuances, if any, pursuant to this Agreement, pursuant to reservations,
agreements or employee benefit plans referred to in the Prospectus). The shares
of issued and outstanding capital stock have been duly authorized and validly
issued and are fully paid and non-assessable; none of the outstanding shares of
capital stock was issued in violation of the preemptive or other similar rights
of any securityholder of the Company.
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(x) Authorization of Agreement. This Agreement has been duly
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authorized, executed and delivered by the Company and, when duly executed by the
Underwriter, will constitute the valid and binding agreement of the Company
enforceable against the Company in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally or by general equitable principles.
(xi) Authorization and Description of Securities. The Shares to
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be purchased by the Underwriter from the Company have been duly authorized for
issuance and sale to the Underwriter pursuant to this Agreement and, when issued
and delivered by the Company pursuant to this Agreement against payment of the
consideration set forth herein, will be validly issued and fully paid and non-
assessable; the Common Stock conforms to all statements relating thereto
contained in the Prospectus and such description conforms to the right set forth
in the instruments defining the same; no holder of the Shares will be subject to
personal liability by reason of being such a holder; and the issuance of the
Shares is not subject to the preemptive or other similar rights of any
securityholder of the Company.
(xii) Absence of Defaults and Conflicts. Neither the Company, the
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Bank nor any other subsidiary is in violation of any provision of its articles
of incorporation, charter or by-laws or in default in the performance or
observance of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other agreement or
instrument to which it is a party or by which it may be bound or to which any of
its properties may be subject, except for such defaults that in the aggregate
would not have a material adverse effect on the condition (financial or
otherwise), earnings, business affairs, assets or business prospects of the
Company and its subsidiaries, considered as one enterprise and the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated herein and in the Registration Statement (including
the issuance and sale of the Shares and the use of the proceeds from the sale of
the Shares as described in the Prospectus under the caption "Use of Proceeds")
and compliance by the Company with its obligations hereunder have been duly
authorized by all necessary corporate action and do not and will not, whether
with or without the giving of notice or passage of time or both, conflict with
or constitute a breach of, or a default or Repayment Event (as defined below)
under, give rise to any right of termination under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any Subsidiary pursuant to, any of the Agreements and Instruments
(except for such conflicts, breaches or defaults or linens, charges or
encumbrances that would not individually or in the aggregate, result in a
Material Adverse Effect), nor will such action result in any violation of the
provisions of the charter or by-laws of the Company or any Subsidiary or any
applicable law, statute, rule, regulation, judgment, order, right or decree of
any government, government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any Subsidiary or any of their assets,
properties or operations. As used herein, a "Repayment Event" means any event
or condition which gives the holder of any note, debenture or other evidence of
indebtedness (or any person acting on such holder's behalf) the right to
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require the repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any Subsidiary.
(xiii) Absence of Legal Proceedings. Except as disclosed in the
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Prospectus, there is no action, suit or proceeding before or by any government,
governmental instrumentality or court, domestic or foreign, now pending or, to
the knowledge of the Company, threatened against the Company, the Bank or any
other subsidiary that is required to be disclosed in the Prospectus or that
could reasonably be expected to result in any material adverse change in the
condition (financial or otherwise), earnings, business affairs, assets or
business prospects of the Company and its subsidiaries, considered as one
enterprise, or that could reasonably be expected materially and adversely to
affect the properties or assets of the Company and its subsidiaries, considered
as one enterprise, or that could reasonably be expected materially and adversely
to affect the consummation of the transactions contemplated in this Agreement;
all pending legal or governmental proceedings to which the Company, the Bank or
any other subsidiary is a party that are not described in the Prospectus,
including ordinary routine litigation incidental to its business, if decided in
a manner adverse to the Company, would not have a Material Adverse Effect on the
condition (financial or otherwise), earnings, business affairs or business
prospects of the Company and its subsidiaries, considered as one enterprise.
(xiv) Accuracy of Exhibits. There are no material contracts or
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documents of a character required to be described in the Registration Statement
or the Prospectus or to be filed as exhibits to the Registration Statement that
are not described and filed as required.
(xv) Title to Property. The Company and its subsidiaries,
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including the Bank, each has good and marketable title to all properties and
assets described in the Prospectus as owned by it, free and clear of all liens,
charges, encumbrances or restrictions, except such as (A) are described in the
Prospectus or (B) are neither material in amount nor materially significant in
relation to the business of the Company and its subsidiaries, considered as one
enterprise; all of the leases and subleases material to the business of the
Company and its subsidiaries, considered as one enterprise are in full force and
effect, and neither the Company, the Bank nor any other subsidiary has any
notice of any material claim that has been asserted by anyone adverse to the
rights of the Company, the Bank or any other subsidiary under any such lease or
sublease or affecting or questioning the rights of such corporation to the
continued possession of the leased or subleased premises under any such lease or
sublease.
(xvi) Possession of Licenses and Permits. Each of the Company
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and its subsidiaries, including the Bank, owns, possesses or has obtained all
material governmental licenses, permits, certificates, consents, orders,
approvals and other authorizations necessary to own or lease, as the case may
be, and to operate its properties and to carry on its business as presently
conducted, and neither the Company, the Bank nor any other subsidiary has
received any notice of any restriction upon, or any notice of proceedings
relating to revocation or modification of, any such licenses, permits,
certificates, consents, orders, approvals or authorizations.
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(xvii) Absence of Labor Dispute. No labor problem with the
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employees of the Company, the Bank or any other subsidiary exists or, to the
best knowledge of the Company, is imminent that could materially adversely
affect the condition (financial or otherwise), earnings, business affairs or
business prospects of the Company and its subsidiaries, considered as one
enterprise, and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its, the Bank's or any other subsidiary's
principal suppliers, contractors or customers that could reasonably be expected
to materially adversely affect the condition (financial or otherwise), earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise.
(xviii) Registration Rights. Except as disclosed in the Prospectus,
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there are no persons with registration or other similar rights to have any
securities of the Company registered pursuant to the Registration Statement or
otherwise registered by the Company under the 1933 Act.
(xix) Possession of Intellectual Property. Except as disclosed in
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the Prospectus, the Company and its subsidiaries, including the Bank, own or
possess all patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets or other unpatented and/or unpatentable proprietary or
confidential information systems or procedures), trademarks, service marks and
trade names (collectively, "patent and proprietary rights") currently employed
by them in connection with the business now operated by them except where the
failure to own, possess or acquire such patent and proprietary rights would not
have a material adverse effect on the condition (financial or otherwise),
earnings, business affairs, assets or business prospects of the Company and its
subsidiaries, considered as one enterprise. Neither the Company, the Bank nor
any other subsidiary has received any notice or is otherwise aware of any
infringement of or conflict with asserted rights of others with respect to any
patent or proprietary rights, and which infringement or conflict (if the subject
of any unfavorable decision, rule and refinement, singly or in the aggregate)
could reasonably be expected to result in any material adverse change in the
condition (financial or otherwise), earnings, business affairs, assets or
business prospects of the Company and its subsidiaries, considered as one
enterprise.
(xx) Tax Matters. The Company and each subsidiary of the Company
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has filed all federal, state and local income, franchise or other tax returns
required to be filed and have made timely payments of all taxes due and payable
in respect of such returns, and no material deficiency has been asserted with
respect thereto by any taxing authority.
(xxi) Nasdaq Listing. The Common Stock have been approved for
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listing on The Nasdaq Stock Market, Inc.'s (the "Nasdaq Stock Market") National
Market.
(xxii) Compliance with Certain Provisions of the Exchange Act.
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Neither the Company, the Bank nor any other subsidiary has taken or will take,
directly or indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be
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expected to constitute, the stabilization or manipulation, under the Exchange
Act or otherwise, of the price of the Common Stock.
(xxiii) Compliance with Applicable Laws. Neither the Company, the
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Bank nor any other subsidiary is or has been (by virtue of any action, omission
to act, contract to which it is a party or by which it is bound, or any
occurrence or state of facts whatsoever) in violation of any applicable foreign,
federal, state, municipal or local statutes, laws, ordinances, rules,
regulations and/or orders issued pursuant to foreign, federal, state, municipal
or local statutes, laws, ordinances, rules, or regulations (including those
relating to any aspect of banking, bank holding companies, consumer credit,
truth-in-lending, usury, currency transaction reporting, environmental
protection, occupational safety and health and equal employment practices)
heretofore or currently in effect, except such violations that have been fully
cured or satisfied without recourse or that in the aggregate will not have a
Material Adverse Effect on the condition (financial or otherwise), earnings,
business affairs, assets or business prospects of the Company and its
subsidiaries, considered as one enterprise.
(xxiv) Absence of Certain Agreements. Neither the Company, the
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Bank nor any other subsidiary has any agreement or understanding with any person
(A) concerning the future acquisition by the Company or the Bank of a
controlling interest in any entity or (B) concerning the future acquisition by
any person of a controlling interest in the Company, the Bank or any other
subsidiary, in either case that is required by the 1933 Act or the 1933 Act
Regulations to be disclosed by the Company that is not disclosed in the
Prospectus.
(xxv) Absence of Further Requirements. No filing with, or
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authorization, approval, consent, license, order, registration, qualification or
decree of, any court or governmental authority or agency is necessary or
required for the performance by the Company of its obligations hereunder, in
connection with the offering, issuance or sale of the Securities hereunder or
the consummation of the transactions contemplated by this Agreement, except such
as have been already obtained or as may be required under the 1933 Act or the
1933 Act Regulations or state securities laws.
(xxvi) Warrants, Options and Other Rights. Except as disclosed in
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the Prospectus, there are no outstanding options, warrants or other rights
calling for the issuance of, and no commitments, plans or arrangements to issue,
any shares of capital stock of the Company or any of its Subsidiaries or any
security convertible into or exchangeable for capital stock of the Company or
any of its Subsidiaries.
(xxvii) Investment Company Act. The Company is not, and upon the
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issuance and sale of the Securities as herein contemplated and the application
of the net proceeds therefrom as described in the Prospectus 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
"1940 Act").
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(xxviii) Environmental Laws. Except as described in the Registration
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Statement and except as would not, individually or in the aggregate, result in a
Material Adverse Effect, (A) neither the Company nor any of its Subsidiaries is
in violation of any federal, state, local or foreign statute, law, rule,
regulation, ordinance, code, policy or rule of common law or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent, decree or judgment, relating to pollution or protection of human
health, the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or threatened
release of chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum or petroleum products (collectively, "Hazardous
Materials") or to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials (collectively,
"Environmental Laws"), (B) the Company and its Subsidiaries have all permits,
authorizations and approvals required under any applicable Environmental Laws
and are each in compliance with their requirements, (C) there are no pending or,
to the best knowledge of the Company, threatened, administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to any
Environmental Law against the Company or any of its Subsidiaries and (D) there
are no events or circumstances that might reasonably be expected to form the
basis of an order for clean-up or remediation, or an action, suit or proceeding
by any private party or governmental body or agency, against or affecting the
Company or any of its Subsidiaries relating to Hazardous Materials or any
Environmental Laws.
(xxix) Insurance. The Company and its Subsidiaries carry or are
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entitled to the benefits of insurance in such amounts and covering such risks as
is generally maintained by companies of established repute engaged in the same
or similar business, and all such insurance is in full force and effect.
(xxx) Accounting Controls. The Company and its Subsidiaries
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maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general and specific authorizations; (ii) transactions are recorded
as necessary to permit the preparation of financial statements in conformity
with GAAP and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorizations; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(xxxi) Fees. Other than as contemplated by this Agreement or the
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Agency Agreement, there is no broker, finder or other party that is entitled to
receive from the Company or any of its Subsidiaries any brokerage or finder's
fee or any other fee, commission or payment as a result of the transactions
contemplated by this Agreement or the Agency Agreement.
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(xxxii) Lock-up Agreements. The Company has obtained and delivered
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to the Underwriter the agreements of the persons and entities named in Schedule
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B hereto to the effect that each such person and entity will not, for a period
-
of 180 days from the date hereof and except as otherwise provided therein,
without the prior written consent of the Underwriter directly or indirectly, (i)
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant for
the sale of, or otherwise dispose of or transfer any shares of the Common Stock
or any securities convertible into or exchangeable or exercisable for Common
Stock or file or cause to be filed any registration statement under the 1933 Act
with respect to any of the foregoing or (ii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Common Stock, whether
any such swap or transaction is to be settled by delivery of Common Stock or
other securities, in cash or otherwise; provided, however, that such
restrictions shall not apply to a bona fide gift of shares of Common Stock by
such person to a person or entity who, prior to such transfer, shall have
executed and delivered to the Underwriter an agreement, substantially in the
form of the agreement contemplated by this Section 1(a)(xxviii), not to take any
action prohibited by such agreement with respect to such shares of Common Stock.
(xxxiii) Use of Prospectus. The Company has not distributed and,
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prior to the later to occur of (i) the Closing Time and (ii) completion of the
distribution of the Shares, will not distribute any prospectus (as such term is
defined in the 1933 Act and the 1933 Act Regulations) in connection with the
offering and sale of the Shares other than the Registration Statement, any
preliminary prospectus, the Prospectus or other materials, if any, permitted by
the 1933 Act or by the 1933 Act Regulations and approved by the Representative.
(b) Any certificate signed by any authorized officer of the Company or
the Bank and delivered to the Underwriter or to counsel for the Underwriter
pursuant to this Agreement shall be deemed a representation and warranty by the
Company to the Underwriter as to the matters covered thereby.
Section 2. Sale and Delivery to the Underwriter; Closing.
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(a) Initial Securities and Option Securities. On the basis of the
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representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Company agrees to sell to the Underwriter, and
the Underwriter agrees to purchase from the Company, _________ shares of Common
Stock at the purchase price and terms set forth herein and in the Price
Determination Agreement.
In addition, on the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
hereby grants an option to the Underwriter to purchase up to an additional
_________ shares of Common Stock in accordance with the terms set forth herein
and in the Price Determination Agreement. The option hereby granted will expire
at 5:00 p.m. New York City time on the 30th day after the commencement of
11
the Public Offering (or at 5:00 p.m. New York City time on the next business day
following the 30th day if such 30th day is not a business day) and may be
exercised, on one occasion only, solely for the purpose of covering over-
allotments which may be made in connection with the offering and distribution of
the Initial Securities upon notice by the Underwriter to the Company setting
forth the number of Option Securities as to which the Underwriter is exercising
the option and the time, date and place of payment and delivery for the Option
Securities. Such time and date of delivery (the "Date of Delivery") shall be
determined by the Underwriter but shall not be later than five full business
days after the exercise of said option, nor in any event prior to Closing Time,
as hereinafter defined, nor earlier than the second business day after the date
on which the notice of the exercise of the option shall have been given.
(b) Payment. Payment of the purchase price for, and delivery of
-------
certificates for, the Initial Securities shall be made at the offices of Xxxxxxx
Xxxxxxxx & Xxxx, 0000 Xxxxxxxxxxxx Xxxxxx, X.X., Xxxxx 000, Xxxxxxxxxx, XX
00000, or at such other place as shall be agreed upon by the Company and the
Underwriter, at 10:00 a.m. Washington time on the third full business day after
commencement of the Public Offering, or at such other time not earlier than
three nor more than ten full business days thereafter as the Underwriter and the
Company shall determine (such date and time of payment and delivery being herein
called the "Closing Time"). In addition, in the event that any or all of the
Option Securities are purchased by the Underwriter, payment of the purchase
price for, and delivery of certificates for, such Option Securities shall be
made at the above-mentioned office of Xxxxxxx Xxxxxxxx & Wood, or at such other
place as shall be agreed upon by the Company and the Underwriter, on the Option
Closing Date as specified in the notice from the Underwriter to the Company.
Payment for the Initial Securities and the Option Securities, if any, shall be
made to the Company by wire transfer of immediately available funds, against
delivery to the Underwriter for the account of the Underwriter of Common Stock
to be purchased by it.
(c) Denominations; Registration. Certificates for the Initial
---------------------------
Securities and the Option Securities, if any, shall be in such denominations and
registered in such names as the Underwriter may request in writing at least one
full business day before the Closing Time or the relevant Date of Delivery, as
the case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
Underwriter in The City of New York not later than 10:00 A.M. (Eastern time) on
the business day prior to the Closing Time or the relevant Date of Delivery, as
the case may be.
Section 3. Certain Covenants of the Company. The Company covenants
--------------------------------
with the Underwriter as follows:
(a) Compliance with Securities Regulations. The Company will use its
--------------------------------------
best efforts to cause the Registration Statement to become effective and will
notify the Underwriter immediately, and confirm the notice in writing, (i) when
the Registration Statement, or any post-effective amendment to the Registration
Statement, shall have become effective, or any supplement to the Prospectus or
any amended Prospectus shall have been filed, (ii) of the receipt
12
of any comments from the Commission, (iii) of any request of the Commission to
amend the Registration Statement or amend or supplement the Prospectus or for
additional information and (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Common Stock for offering or sale in any
jurisdiction, or of the institution or threatening of any proceedings for any of
such purposes. The Company will promptly effect the filings necessary pursuant
to Rule 424(b) and will take such steps as shall be necessary to ascertain
promptly whether the form of prospectus transmitted for filing under Rule 424(b)
was received for filing by the Commission and, in the event that it was not, it
will promptly file such prospectus. The Company will use every reasonable effort
to prevent the issuance of any such stop order or of any order preventing or
suspending such use and, if any such order is issued, to obtain the lifting
thereof at the earliest possible moment.
(b) Filing of Amendments. The Company will not at any time file or
--------------------
make any amendment to the Registration Statement or, if the Company has elected
to rely upon Rule 430A of the 1933 Act Regulations ("Rule 430A"), any amendment
or supplement to the Prospectus (including documents incorporated by reference
into the Registration Statement or the Prospectus) of which the Underwriter
shall not previously have been advised and furnished a copy, or to which the
Underwriter or counsel for the Underwriter shall reasonably object.
(c) Delivery of Registration Statements. The Company has delivered or
-----------------------------------
will deliver to the Underwriter and counsel for the Underwriter, without charge,
as many signed and conformed copies of the Registration Statement as originally
filed and of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein) and signed copies of all consents and
certificates of experts as the Underwriter may reasonably request. The copies of
the Registration Statement and each amendment thereto furnished to the
Underwriter will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to XXXXX, except to the extent permitted by
Regulation S-T.
(d) Delivery of Prospectuses. The Company will deliver or cause to be
------------------------
delivered to the Underwriter or counsel to the Underwriter, without charge, from
time to time until the effective date of the Registration Statement, as many
copies of each preliminary prospectus as the Underwriter may reasonably request,
and the Company hereby consents to the use of such copies for purposes permitted
by the 1933 Act. The Company will deliver or cause to be delivered to the
Underwriter, without charge, as soon as the Registration Statement shall have
become effective (or, if the Company has elected to rely upon Rule 430A, as soon
as practicable after the Price Determination Agreement has been executed and
delivered) and thereafter from time to time as requested by the Underwriter
during the period when the Prospectus is required to be delivered under the 1933
Act, such number of copies of the Prospectus (as supplemented or amended) as the
Underwriter may reasonably request. The Prospectus and any amendments or
supplements thereto furnished to the Underwriter will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
XXXXX, except to the extent permitted by Regulation S-T.
13
(e) Continued Compliance with Securities Laws. The Company will
-----------------------------------------
comply to the best of its ability with the 1933 Act and the 1933 Act
Regulations, and the 1934 Act and the 1934 Act Regulations, so as to permit the
completion of the distribution of the Common Stock as contemplated in this
Agreement and in the Prospectus. If, at any time when a prospectus is required
by the 1933 Act to be delivered in connection with sales of the Common Stock,
any event shall occur or condition exist as a result of which it is necessary,
in the reasonable opinion of counsel for the Underwriter or counsel for the
Company, to amend the Registration Statement or amend or supplement the
Prospectus in order that the Prospectus will not include an untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein not misleading, in the light of the circumstances existing at
the time it is delivered to a purchaser, or if it shall be necessary, in the
reasonable opinion of either such counsel, at any such time to amend the
Registration Statement or amend or supplement the Prospectus in order to comply
with the requirements of the 1933 Act or the 1933 Act Regulations, the Company
will promptly prepare and file with the Commission, subject to Section 3(b)
hereof, such amendment or supplement as may be necessary to correct such untrue
statement or omission or to make the Registration Statement or the Prospectus
comply with such requirements, and the Company will furnish to the Underwriter
such number of copies of such amendment or supplement as the Underwriter may
reasonably request.
(f) Blue Sky Qualifications. The Company will use its best efforts,
-----------------------
in cooperation with the Underwriter, to qualify the Common Stock, for offering
and sale under the applicable securities laws of such states and other
jurisdictions as the Underwriter may designate and to maintain such
qualifications in effect for a period of not less than one year from the
effective date of the Registration Statement; provided, however, that the
-------- -------
Company shall not be obligated to file any general consent to service of process
or to qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not otherwise so
subject. The Company will file such statements and reports as may be required by
the laws of each jurisdiction in which the Common Stock have been qualified as
above provided.
(g) Rule 158. The Company will make generally available (within the
--------
meaning of Rule 158 of the 1933 Act Regulations ("Rule 158") to its
securityholders and the Underwriter as soon as practicable, but not later than
90 days after the close of the period covered thereby, an earnings statement of
the Company and its subsidiaries (in form complying with the provisions of Rule
158) covering a period of at least 12 months beginning after the effective date
of the Registration Statement but not later than the first day of the Company's
fiscal quarter next following such effective date.
(h) Use of Proceeds. The Company will use the net proceeds received
---------------
by it from the sale of the Shares in the manner specified in the Prospectus
under "Use of Proceeds."
14
(i) Compliance with Exchange Act. The Company, during the period when
----------------------------
a prospectus is required by the 1933 Act to be delivered in connection with
sales of Common Stock, will file promptly all documents required to be filed
with the Commission pursuant to Section 13 or 14 of the 1934 Act subsequent to
the time the Registration Statement becomes effective.
(j) Delivery of Reports to Underwriter. For a period of three years
----------------------------------
after the Closing Time, the Company will furnish to the Underwriter copies of
all annual reports, quarterly reports and current reports filed by the Company
with the Commission and such other documents, reports, proxy statements and
information as shall be furnished by the Company to its stockholders generally.
(k) Delivery of Reports to Shareholders. The Company will provide to
-----------------------------------
the holders of the Common Stock annual reports containing financial statements
audited by the Company's independent auditors and, upon written request, the
Company's annual reports on Form 10-K.
(l) Delivery of Reports to Nasdaq. The Company will file with the
-----------------------------
Nasdaq Stock Market all documents and notices required by the Nasdaq Stock
Market of companies that have issued securities that are traded on the Nasdaq
Stock Market's National Market, in the over-the-counter market and quotations
for which are reported by the Nasdaq Stock Market.
(m) Payment of Blue Sky Fees. The Company shall pay the legal fees
------------------------
and related filing fees of Xxxxxxx Xxxxxxxx & Xxxx to prepare one or more "blue
sky" surveys (each, a "Blue Sky Survey") for use in connection with the offering
of the Common Stock as contemplated by the Prospectus and a copy of such Blue
Sky Survey or surveys shall be delivered to each of the Company and the
Underwriter.
(n) Updating the Prospectus. If, at the time the Registration
-----------------------
Statement becomes effective, any information shall have been omitted therefrom
in reliance upon Rule 430A, then the Company will prepare, and file or transmit
for filing with the Commission in accordance with Rule 430A and Rule 424(b),
copies of an amended Prospectus or, if required by Rule 430A, a post-effective
amendment to the Registration Statement (including an amended Prospectus)
containing all information so omitted.
(o) Delivery of Bound Volumes. The Company will, at its expense,
-------------------------
subsequent to the issuance of the Common Stock, prepare and distribute to the
Underwriter and counsel to the Underwriter, a bound volume containing copies of
the documents used in connection with the issuance of the Common Stock.
(p) Restriction on Material Transactions. The Company will not, prior
------------------------------------
to the Option Closing Date or thirty (30) days after the date of this Agreement,
whichever occurs first, incur any material liability or obligation, direct or
contingent, or enter into any material transaction, other than in the ordinary
course of business, or any transaction with a related party
15
which is required to be disclosed in the Prospectus pursuant to Item 404 of
Regulation S-K of the Commission, except as contemplated by the Prospectus.
(q) Restriction on Sale of Securities. During a period of 180 days
---------------------------------
from the date of the Prospectus, the Company will not, without the prior written
consent of the Underwriter, (i) directly or indirectly, offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock or file or cause to be
filed any registration statement under the 1933 Act with respect to any of the
foregoing or (ii) enter into any swap or any other agreement or any transaction
that transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock, whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the Securities to be sold hereunder, (B) any
shares of Common Stock issued by the Company upon the exercise of an option or
warrant or the conversion of a security outstanding on the date hereof and
referred to in the Prospectus, (C) any shares of Common Stock issued or options
to purchase Common Stock granted pursuant to existing employee benefit plans of
the Company referred to in the Prospectus or (D) any shares of Common Stock
issued pursuant to any non-employee director stock plan.
Section 4. Payment of Expenses.
-------------------
(a) Payment. The Company will pay and bear all costs and expenses
-------
incident to the performance of its obligations under this Agreement, including
(i) the preparation, printing and filing of the Registration Statement
(including financial statements and exhibits), as originally filed and as
amended, all amendments thereto, all preliminary prospectuses, the Prospectus
and any amendments or supplements thereto, and the cost of furnishing copies
thereof to the Underwriter; (ii) the preparation, printing and distribution of
this Agreement, the Agency Agreement, the Blue Sky Survey and all other
documents applicable to the Offering; (iii) the preparation, issuance and
delivery of certificates for the Common Stock to the purchasers thereof; (iv)
the fees and disbursements of the Company's counsel and accountants; (v) Nasdaq
Stock Market filing fees; (vi) the fees and disbursements of Xxxxxxx Xxxxxxxx &
Xxxx in connection with the Blue Sky Survey; (vii) the qualification of the
Common Stock under the applicable securities laws in accordance with Section
3(f) hereof; (viii) any filing fee for review of the Offering by the Commission
and the NASD; (ix) the fees and expenses related to the marketing by the
Underwriter of the Common Stock; (x) the fees and charges of any transfer agent,
registrar and other agents; (xi) the legal fees not to exceed $60,000, plus
associated expenses of the Underwriter's counsel, and (xii) general out-of-
pocket expenses of the Underwriter which shall not exceed $10,000 without the
prior written consent of the Company, which consent shall not be unreasonably
withheld, and (xiii) all other costs incident to the performance of the
Company's obligations hereunder.
16
If (i) the Closing Time does not occur on or before , 1999, (ii) the
Company abandons or terminates the Offering, or (iii) this Agreement is
terminated by the Underwriter in accordance with the provisions of Section 5 or
8(a), the Company shall reimburse the Underwriter for its reasonable out-of-
pocket expenses, as set forth in this Section 4, including the reasonable fees
and disbursements of counsel for the Underwriter.
(b) Allocation of Expenses. The provisions of this Section shall not
----------------------
affect and, as between the Underwriter, on the one hand, and the Company on the
other hand, shall not be affected by, any agreement that the Company may make
for the sharing of such costs and expenses.
Section 5. Conditions of Underwriter's Obligations. The obligations
---------------------------------------
of the Underwriter to purchase and pay for the Common Stock that it has agreed
to purchase pursuant to this Agreement are subject, in the Underwriter's
discretion, to the following further conditions:
(a) Effectiveness of Registration Statement. The Registration
---------------------------------------
Statement shall have become effective not later than 4:00 p.m., New York City
time, on the first business day following the date hereof, or at such later time
or on such later date as the Underwriter may agree to in writing; at the Closing
Time, no stop order suspending the effectiveness of the Registration Statement
shall have been issued under the 1933 Act and no proceedings for that purpose
shall be pending or, to the Underwriter's knowledge or the knowledge of the
Company, shall be contemplated by the Commission, and any request on the part of
the Commission for additional information shall have been complied with to the
satisfaction of counsel for the Underwriter. If the Company has elected to rely
upon Rule 430A, a prospectus containing the information required by Rule 430A
shall have been filed with the Commission in accordance with Rule 424(b) (or a
post-effective amendment providing such information shall have been filed and
declared effective in accordance with the requirements of Rule 430A).
(b) Opinions of Counsel. At the Closing Time, the Underwriter shall
-------------------
have received:
(i) The favorable opinion, dated as of the Closing Time, of Xxxxxxx,
Kantarian & Xxxxxxxxx, P.C., counsel for the Company, in form and substance
reasonably satisfactory to counsel for the Underwriter, substantially in the
form set forth in Exhibit B.
---------
(ii) The favorable opinion, dated as of the Closing Time, of
Xxxxxxx Xxxxxxxx & Wood, counsel for the Underwriter, in form and substance
satisfactory to the Underwriter.
In giving such opinions, such counsel may rely, as to all matters
governed by the laws of jurisdictions other than the federal law of the United
States and the laws of Maryland upon opinions of other counsel, who shall be
counsel satisfactory to counsel for the Underwriter, in which case the opinion
shall state that such counsel believes that it, the Underwriter and the
Underwriter's counsel are entitled to so rely upon the opinions of such other
counsel. Such
17
counsel may also state that, insofar as such opinion involves factual matters,
they have relied, to the extent they deem proper, upon certificates of officers
or directors of the Company and the Bank and certificates of public officials.
(c) Officer's Certificate. At the Closing Time and again at the
---------------------
Option Closing Date, (i) the Registration Statement and the Prospectus, as they
may then be amended or supplemented, shall contain all statements that are
required to be stated therein under the 1933 Act and the 1933 Act Regulations
and shall conform in all material respects to the requirements of the 1933 Act
and the 1933 Act Regulations, the Company shall have complied in all material
respects with Rule 430A (if they shall have elected to rely thereon), and
neither the Registration Statement nor the Prospectus, as they may then be
amended or supplemented, shall 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; (ii) there shall not have been, since the
respective dates as of which information is given in the Registration Statement,
any material adverse change in the condition (financial or otherwise), earnings,
business affairs, assets or business prospects of the Company and its
subsidiaries, considered as one enterprise, whether or not arising in the
ordinary course of business; (iii) no action, suit or proceeding at law or in
equity shall be pending or, to the knowledge of the Company, threatened against
the Company or any subsidiary that would be required to be set forth in the
Prospectus that is not set forth therein, and no proceedings shall be pending
or, to the knowledge of the Company, threatened against the Company or any
subsidiary of the Company before or by any federal, state or other commission,
board or administrative agency wherein an unfavorable decision, ruling or
finding would materially adversely affect the condition (financial or
otherwise), earnings, business affairs, assets or business prospects of the
Company and its subsidiaries, considered as one enterprise, other than as set
forth in the Prospectus; (iv) the Company shall have complied, in all material
respects, with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the Closing Time or Option Closing Date,
as applicable; (v) the other representations and warranties of the Company set
forth in Section l(a) hereof shall be accurate in all material respects as
though expressly made at and as of the Closing Time or Option Closing Date, as
applicable; and (vi) no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceeding for that purpose
been initiated or, to the knowledge of the Company, threatened by the
Commission. At the Closing Time, the Underwriter shall have received a
certificate of the President and Chief Executive Officer and the Chief Financial
Officer of the Company, dated as of the Closing Time, to such effect.
18
(d) Accountant's Comfort Letter. At the time that this Agreement is
---------------------------
executed by the Company, the Underwriter shall have received from KPMG Peat
Marwick, LLP, a letter or letters, dated such date, in form and substance
satisfactory to the Underwriter, confirming that they are independent certified
public accountants with respect to the Company within the meaning of the 1933
Act and the 1933 Act Regulations, and stating in effect that with respect to the
Company:
(i) in their opinion, the consolidated financial statements as of
December 31, 1998 and 1997, and for each of the years in the three year period
ended December 31, 1998 and the related financial statement schedules, if any,
included or incorporated by reference in the Registration Statement and the
Prospectus and covered by their opinions included therein comply as to form in
all material respects with the applicable accounting requirements of the 1933
Act and the 1933 Act Regulations;
(ii) on the basis of procedures (but not an audit in accordance
with generally accepted accounting standards) specified by the American
Institute of Certified Public Accountants for a review of interim financial
information as described in SAS No. 71, Interim Financial Information, including
a reading of the latest available interim consolidated financial statements of
the Company, a reading of the minutes of all meetings of the Board of Directors
of the Company and the Bank and of the Audit and Executive Committees of the
Board of Directors of the Bank since January 1, 1999, inquiries of certain
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) the unaudited interim consolidated financial information included
or incorporated by reference in the Prospectus, if any, do not comply
as to form in all material respects with applicable accounting
requirements of the 1933 Act, or are not presented in conformity with
generally accepted accounting principles applied on a basis consistent
with that of the audited financial statements included in the
Prospectus,
(B) at a specified date not more than three days prior to the date of
this Agreement, there was any increase in long-term debt or Federal
Home Loan Bank advances of the Company and its consolidated
subsidiaries or any decrease in total assets, total deposits or
stockholders' equity of the Company and its consolidated subsidiaries,
any increase in the number of outstanding shares of capital stock of
the Company and its consolidated subsidiaries, any increase in non-
performing loans or non-performing assets of the Company and its
consolidated subsidiaries or any increase or decrease in loan loss
allowance of the Company and its consolidated subsidiaries, in each
case as compared with amounts shown in the financial statements at
December 31, 1998 included in the Registration Statement,
19
except in all cases for changes, increases or decreases that the
Registration Statement discloses have occurred or may occur; or
(C) for the period from January 1, 1998 to a specified date not more
than three days prior to the date of this Agreement, there was any
decrease in consolidated net interest income, net income or net income
per share, in each case as compared with a period of comparable length
in the preceding year, except in all cases for increases or decreases
that the Registration Statement discloses have occurred or may occur;
and
(iii) in addition to the procedures referred to in clause (ii)
above, they have performed other specified procedures, not constituting an
audit, with respect to certain amounts, percentages, numerical data and
financial information appearing in the Registration Statement (including the
Selected Consolidated Financial Data) (having compared such items with, and have
found such items to be in agreement with, the financial statements of the
Company or general accounting records of the Company, as applicable, which are
subject to the Company's internal accounting controls or other data and
schedules prepared by the Company from such records).
(e) At the Closing Time, the Underwriter shall have received from KPMG
Peat Marwick, LLP a letter, in form and substance satisfactory to the
Underwriter and dated as of the Closing Time, reaffirming the statements made in
the letter(s) finished pursuant to Section 5(d) hereof, except that the
inquiries specified in Section 5(d) hereof shall be made based upon the latest
available unaudited interim consolidated financial statements and the specified
date referred to shall be a date not more than three days prior to the Closing
Time.
(f) At the Closing Time, counsel for the Underwriter shall have been
furnished with all such documents, certificates and opinions as they may request
for the purpose of enabling them to pass upon the issuance and sale of the
Common Stock as contemplated in this Agreement and the matters referred to in
Section 5(c) hereof and in order to evidence the accuracy and completeness of
any of the representations, warranties or statements of the Company, the
performance of any of the covenants of the Company or the fulfillment of any of
the conditions herein contained; and all proceedings taken by the Company at or
prior to the Closing Time in connection with the authorization, issuance and
sale of the Common Stock as contemplated in this Agreement shall be satisfactory
in form and substance to the Underwriter and its counsel.
(g) Payment of Expenses. The Company shall have paid, or made
-------------------
arrangements satisfactory to the Underwriter for the payment of, all such
expenses as may be required by Section 4 hereof.
20
(h) Conditions for Purchase of Option Securities. In the event the
--------------------------------------------
Underwriter exercises its option provided in Section 2 hereof to purchase all or
any portion of the Option Securities, the obligations of the Underwriter to
purchase the Option Securities that it has agreed to purchase shall be subject
to the receipt by the Underwriter on the Option Closing Date of:
(1) A certificate, dated the Option Closing Date, of the
President and the Chief Financial Officer of the Company confirming
that the certificate delivered at the Closing Time pursuant to Section
5(c) hereof remains true as of the Option Closing Date;
(2) The favorable opinion of Xxxxxxx, Kantarian & Xxxxxxxxx,
P.C., counsel for the Company, addressed to the Underwriter and dated
the Option Closing Date, in form satisfactory to counsel to the
Underwriter, relating to the Option Securities and otherwise to the
same effect as the opinion required by Section 5(b)(i) hereof;
(3) The favorable opinion of Xxxxxxx Xxxxxxxx & Xxxx, counsel to
the Underwriter, dated the Option Closing Date, relating to the Option
Securities and otherwise to the same effect as the opinion required by
Section 5(b)(iv) hereof; and
(4) A letter from KPMG Peat Marwick, L.L.P. addressed to the
Underwriter and dated the Option Closing Date, in form and substance
satisfactory to the Underwriter and substantially the same in form and
substance as the letter finished to the Underwriter pursuant to
Section 5(e) hereof.
(i) Approval of Listing. At Closing Time, the Shares shall have been
-------------------
approved for inclusion in the Nasdaq National Market, subject only to official
notice of issuance.
(j) No Objection. The NASD shall have confirmed that it has not
------------
raised any objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.
(k) Lock-up Agreements. At the date of this Agreement, the
------------------
Underwriter shall have received an agreement substantially in the form of
Exhibit C hereto signed by the persons listed on Schedule B hereto.
--------- ----------
If any of the conditions specified in this Section 5 shall not have been
fulfilled when and as required by this Agreement, this Agreement may be
terminated by the Underwriter on notice to the Company at any time at or prior
to the Closing Time, and such termination shall be without liability of any
party to any other party, except as provided in Section 4 of this Agreement.
Notwithstanding any such termination, the provisions of Sections 4, 6, 10 and 12
of this Agreement shall remain in effect.
21
Section 6. Indemnification.
---------------
(a) The Company agrees to indemnify and hold harmless the Underwriter,
each officer, director, employees, agent and legal counsel of the Underwriter,
and each person, if any, who controls the Underwriter within the meaning of
Section 15 of the 1933 Act or Section 20(a) of the 1934 Act, against any loss,
liability, claim, damage and expense whatsoever (which shall include, but not be
limited to, amounts incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim or investigation
whatsoever and any and all amounts paid in settlement of any claim or
litigation, provided such settlement is entered into with the consent of the
Company as provided herein), as and when incurred, arising out of, based upon or
in connection with (i) any untrue statement or alleged untrue statement of a
material fact or any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, contained in (A) any preliminary prospectus, the Registration
Statement or the Prospectus (as from time to time amended and supplemented), or
any amendment or supplement thereto or in any document incorporated by reference
therein or required to be delivered with any preliminary prospectus or the
Prospectus or (B) in any application or other document or communication
(collectively called an "application") executed by or on behalf of the Company
or based upon written information furnished by or on behalf of the Company filed
in any jurisdiction in order to qualify the Common Stock under the "blue sky" or
securities laws thereof or filed with the Commission, the NASD or any securities
exchange, unless such statement or omission or alleged statement or omission was
made in reliance upon and in conformity with written information concerning the
Underwriter, the Underwriting Agreement or the compensation of the Underwriter
furnished to the Company by or on behalf of the Underwriter expressly for
inclusion in any preliminary prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or in any application, as
the case may be, or (ii) any breach of any representation, warranty, covenant or
agreement of the Company contained in the Underwriting Agreement. For purposes
of this section, the term "expense" shall include, but not be limited to,
counsel fees and costs, court costs, out-of-pocket costs and compensation for
the time spent by any of the Underwriter's directors, officers, employees and
counsel according to his or her normal hourly billing rates. The indemnification
provisions shall also extend to all directors, officers, employees, agents,
legal counsel and controlling persons of each affiliate of the Underwriter.
(b) The Underwriter agrees to indemnify and hold harmless each of the
Company, each of their directors or trustees, each officer who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act,
against any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) above, as incurred, but only with respect
to untrue statements or omissions, or alleged untrue statements or omissions,
made in any preliminary prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or any application in
reliance upon and in conformity with written information about the Underwriter,
the Underwriting Agreement or the compensation of the Underwriter, furnished to
the Company by the Underwriter expressly for inclusion in such
22
preliminary prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or in any application.
(c) An indemnified party shall give prompt notice to each indemnifying
party if any action, suit, proceeding or investigation is commenced in respect
of which indemnity may be sought hereunder, but failure to notify an
indemnifying party shall not relieve the indemnifying party from its obligations
to indemnify hereunder, except to the extent that the indemnifying party has
been prejudiced in any material respect by such failure. If it so elects within
a reasonable time after receipt of such notice, an indemnifying party may assume
the defense of such action, including the employment of counsel satisfactory to
the indemnified parties and the payment of all expenses of the indemnified party
in connection with such action. Such indemnified party or parties shall have the
right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless the employment of such counsel shall have been authorized in
writing by the indemnifying party in connection with the defense of such action
or the indemnifying party shall not have promptly employed counsel satisfactory
to such indemnified party or parties or such indemnified party or parties shall
have reasonably concluded that there may be one or more legal defenses available
to it or them or to other indemnified parties that are different from or
additional to those available to one or more of the indemnifying parties, in any
of which events such fees and expenses shall be borne by the indemnifying party
and the indemnifying party shall not have the right to direct the defense of
such action on behalf of the indemnified party or parties. The Company shall be
liable for any settlement of any claim against the Underwriter (or any of its
directors, officers, employees, agents, legal counsel or controlling persons)
made with the Company's written consent, which consent shall not be unreasonably
withheld. The Company shall not, without the written consent of the Underwriter,
settle or compromise any claim against the Underwriter (or any of its directors,
officers, employees, agents, legal counsel or controlling persons) based upon
circumstances giving rise to an indemnification claim against the Company
hereunder unless such settlement or compromise provides that the Underwriter and
the other indemnified parties shall be unconditionally and irrevocably released
from all liability in respect to such claim.
(d) In order to provide for just and equitable contribution, if a
claim for indemnification pursuant to these indemnification provisions is made
but it is found in a final judgment by a court that such indemnification may not
be enforced in such case, even though the express provisions hereof provide for
indemnification in such case, then the Company, on the one hand, and the
Underwriter, on the other hand, shall contribute to the amount paid or payable
by such indemnified persons as a result of such loss, liability, claim, damage
and expense in such proportion as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and the Underwriter, on the
other hand, from the underwriting, and also the relative fault of the Company,
on the one hand, and the Underwriter, on the other hand, in connection with the
statements, acts or omissions which resulted in such loss, liability, claim,
damage and expense, and any other relevant equitable considerations. No person
found liable for a fraudulent misrepresentation or omission shall be entitled to
contribution from any person who is not also found liable for such fraudulent
misrepresentation or omission. Notwithstanding the foregoing,
23
the Underwriter shall not be obligated to contribute any amount hereunder that
exceeds the amount of the underwriting commission paid to the Underwriter with
respect to the Shares purchased by the Underwriter.
(e) The indemnity and contribution agreements contained herein are in
addition to any liability which the Company may otherwise have to the
Underwriter.
(f) Neither termination nor completion of the engagement of the
Underwriter nor any investigation made by or on behalf of the Underwriter shall
affect the indemnification obligations of the Company or the Underwriter
hereunder, which shall remain and continue to be operative and in full force and
effect.
Section 7. Representations, Warranties and Agreements to Survive
-----------------------------------------------------
Delivery. The representations, warranties, indemnities, agreements and other
---------
statements of the Company or their officers or directors set forth in or made
pursuant to this Agreement will remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Company or the
Underwriter or any controlling person and will survive delivery of and payment
for the Common Stock.
Section 8. Termination of Agreement.
------------------------
(a) The Underwriter may terminate this Agreement, by notice to the
Company, at any time at or prior to the Closing Time (i) if there has been,
since the respective dates as of which information is given in the Registration
Statement, any material adverse change in the condition (financial or
otherwise), earnings, business affairs or business prospects of the Company and
its subsidiaries, considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any outbreak or
escalation of existing hostilities or other national or international calamity
or crisis, the effect of which on the financial markets of the United States is
such as to make it, in the Underwriter's judgment, impracticable to market the
Common Stock or enforce contracts for the sale of the Common Stock, or (iii) if
trading in any securities of the Company has been suspended or materially
limited by the Commission or the NASD, or if trading generally on the New York
Stock Exchange or in the over-the-counter market has been suspended, or minimum
or maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by such exchange or by order of the Commission,
the NASD or any other governmental authority with appropriate jurisdiction over
such matters, or (iv) if a banking moratorium has been declared by either
federal or Maryland authorities, or (v) if there shall have been such material
and substantial change in the market for securities in general or in political,
financial or economic conditions as in the Underwriter's judgment makes it
inadvisable to proceed with the offering, sale and delivery of the Common Stock
on the terms contemplated by the Prospectus, or (vi) if the Underwriter
reasonably determines (which determination shall be in good faith) that there
has not been satisfactory disclosure of all relevant financial information
relating to the Company in the Company's
24
disclosure documents and that the sale of the Common Stock is inadvisable given
such disclosures.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party, except
to the extent provided in Section 4 hereof. Notwithstanding any such
termination, the provisions of Sections 4, 6, 9 and 11 hereof shall remain in
effect.
Section 9. Notices. All notices and other communications under
-------
this Agreement shall be in writing and shall be deemed to have been duly given
if delivered, mailed or transmitted by any standard form of telecommunication.
Notices shall be addressed as follows:
If to the Underwriter:
Xxxx, Xxxx & Co., Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx X. Xxxxx, Senior Vice-President
with a copy to:
Xxxxxxx Xxxxxxxx & Xxxx
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
If to the Company or the Bank:
Key Capital Corporation
7F Xxxxxx Xxxx Xxxxx
Xxxxxx Xxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Xx., President
with a copy to:
Housley Kantarian & Xxxxxxxxx, P.C.
0000 00/xx/ Xxxxxx, X.X.,
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
25
Section 10. Parties. This Agreement is made solely for the benefit
-------
of the Underwriter, and the officers, directors, employees, agents and legal
counsel of the Underwriter specified in Section 6 hereof, the Company and, to
the extent expressed, any person controlling the Company or the Underwriter, and
the directors of the Company, its respective officers who have signed the
Registration Statement, and their respective executors, administrators,
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. The term "successors and assigns" shall
not include any purchaser, as such purchaser, from the Underwriter of the Common
Stock.
Section 11. Arbitration. Any claims, controversies, demands,
------------
disputes or differences between or among the parties hereto or any persons bound
hereby arising out of, or by virtue of, or in connection with, or otherwise
relating to this Agreement shall be submitted to and settled by arbitration
conducted in Baltimore, Maryland, before one or three arbitrators, each of whom
shall be knowledgeable in the field of securities law and investment banking.
Such arbitration shall be conducted in accordance with the rules then obtaining
of the American Arbitration Association. The parties hereto agree to share
equally the responsibility for all fees of the arbitrators, abide by any
decision rendered as final and binding and waive the right to appeal the
decision or otherwise submit the dispute to a court of law for a jury or non-
jury trial. The parties hereto specifically agree that neither party may appeal
or subject the award or decision of any such arbitrator to appeal or review in
any court of law or in equity or in any other tribunal, arbitration system or
otherwise. Judgment upon any award granted by such arbitrator may be enforced in
any court having jurisdiction thereof.
Section 12. Governing Law. This Agreement shall be governed by the
-------------
laws of the State of New Jersey.
Section 13. Counterparts. This Agreement may be executed in one or
------------
more counterparts, and when a counterpart has been executed by each party, all
such counterparts taken together shall constitute one and the same agreement.
Section 14. Miscellaneous. This Agreement sets forth the entire
-------------
understanding and agreement of the parties hereto representing the subject
matter hereof and supersedes and cancels all prior agreements. Any provision in
this Agreement which shall be found to be unenforceable shall not affect the
validity of the remaining terms of this Agreement. Time shall be of the essence
for this Agreement.
26
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between the Company and the
Underwriter in accordance with its terms.
Very truly yours,
KEY CAPITAL CORPORATION
By: _______________________________
Name: Xxxxx X. Xxxxx, Xx.
Title: President
KEY BANK & TRUST
By: _______________________________
Name: Xxxxx X. Xxxxx, Xx.
Title: President
Confirmed and accepted as of
the date first above written:
XXXX XXXX & CO., INC.
By: ____________________________________
Name: Xxxxx X. Xxxxx
Title: Senior Vice-President
27
EXHIBIT A
---------
KEY CAPITAL CORPORATION
(a Maryland corporation)
Shares of Common Stock
PRICE DETERMINATION AGREEMENT
-----------------------------
___________________________, 1999
Xxxx, Xxxx & Co., Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement, dated the date hereof (the
"Underwriting Agreement"), among Key Capital Corporation, a Maryland corporation
(the "Company") and Xxxx, Xxxx & Co., Inc. (the "Underwriter"). The
Underwriting Agreement provides for the purchase by the Underwriter from the
Company subject to the terms and conditions set forth therein, of _____ shares
of Common Stock of the Company (the "Common Stock"), subject to the
Underwriter's option to purchase up to an additional ______ shares of Common
Stock (to cover over-allotments, if any). This Agreement is the Price
Determination Agreement referred to in the Underwriting Agreement.
Pursuant to Section 2 of the Underwriting Agreement, the Company agrees
with the Underwriter as follows:
1. The public offering price per share of Common Stock shall be
$__________.
2. The purchase price per share of Common Stock to be paid by the
Underwriter shall be $____.
3. The commission per share of Common Stock to be paid by the Company to
the Underwriter for its commitment hereunder shall be $_____.
1
The Company represents and warrants to the Underwriter that the
representations and warranties of the Company set forth in Section l(a) of the
Underwriting Agreement are accurate as though expressly made at and as of the
date hereof.
This Agreement shall be governed by the laws of the State of New Jersey.
If the foregoing is in accordance with the understanding of the Underwriter
of the agreement between the Underwriter and the Company, please sign and return
to the Company a counterpart hereof, whereupon this instrument, along with all
counterparts and together with the Underwriting Agreement, shall be a binding
agreement between the Underwriter and the Company in accordance with its terms
and the terms of the Underwriting Agreement.
Very truly yours,
KEY CAPITAL CORPORATION
By: ___________________________
Name: Xxxxx X. Xxxxx, Xx.
Title: President
KEY BANK & TRUST
By: ____________________________
Name: Xxxxx X. Xxxxx, Xx.
Title: President
Confirmed and accepted as of
the date first above written:
XXXX, XXXX & CO., INC.
By: _________________________________
Name: Xxxxx X. Xxxxx
Title: Senior Vice-President
2
