Exhbit 1.1
2,000,000 Shares
CREDITRUST CORPORATION
Common Stock
(Par Value $0.01 Per Share)
UNDERWRITING AGREEMENT
______________, 1998
_____ p.m.
XXXXXX, XXXXX XXXXX, INCORPORATED
BOENNING & SCATTERGOOD, INC.
As Representatives of the
Several Underwriters Identified
In Schedule I Hereto,
c/o Ferris, Xxxxx Xxxxx, Incorporated
0000 Xxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Ladies and Gentlemen:
Section 1. Introduction. Creditrust Corporation, a Maryland 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"), for which Xxxxxx, Xxxxx Xxxxx, Incorporated and Boenning &
Scattergood, Inc. are acting as Representatives (the "Representatives"), an
aggregate of 2,000,000 shares of common stock, par value $0.01 per share
("Stock"), of the Company. In addition, Xxxxxx X. Xxxxxx, the sole shareholder
of the Company (the "Selling Shareholder"), proposes, subject to the terms and
conditions stated herein, to sell to the Underwriters, at the election of the
Underwriters, up to 300,000 additional shares of Stock of the Company solely for
the purpose of covering over-allotments. The 2,000,000 shares to be sold by the
Company are herein called the "Firm Shares" and the 300,000 additional shares to
be sold by the Selling Shareholder are herein called the "Optional Shares". The
Firm Shares and any Optional
Shares that the Underwriters elect to purchase pursuant to Section 3 hereof are
herein collectively called the "Shares".
Section 2. (a) Representations and Warranties of the Company. The
Company represents and warrants to, and agrees with, each of the Underwriters
that:
(i) A registration statement on Form S-1 (File No. 333-50103)
under the Securities Act of 1933, as amended (the "Act"), with respect to the
Shares, including a form of prospectus subject to completion, has been prepared
by the Company in conformity with the requirements of the Act and the rules and
regulations of the Securities and Exchange Commission (the "Commission")
thereunder (the "Rules and Regulations"). The Company has prepared and filed
such amendments thereto, if any, and such amended preliminary prospectuses, if
any, as may have been required to the date hereof, and will file such additional
amendments thereto and such amended prospectuses as may hereafter be required.
If the Company has elected to rely upon Rule 462(b) of the Rules and Regulations
to increase the size of the offering registered under the Securities Act, the
Company will prepare and file with the Commission a registration statement with
respect to such increase pursuant to Rule 462(b).
If the Company has elected not to rely upon Rule 430A of the
Rules and Regulations, the Company has prepared and will promptly file an
amendment to the registration statement and an amended prospectus (including, if
necessary, a term sheet meeting the requirements of Rule 434 of the Rules and
Regulations) if necessary to complete the Prospectus. If the Company has elected
to rely upon Rule 430A of the Rules and Regulations, it will prepare and file a
prospectus (or, if necessary, a term sheet meeting the requirements of Rule 434)
pursuant to Rule 424(b) that discloses the information previously omitted from
the prospectus in reliance upon Rule 430A. Such registration statement, as
amended at the time it is or was declared effective by the Commission, and, in
the event of any amendment thereto after the effective date, such registration
statement as so amended (but only from and after the effectiveness of such
amendment), including a registration statement (if any) filed pursuant to Rule
462(b) of the Rules and Regulations increasing the size of the offering
registered under the Securities Act and information (if any) deemed to be part
of the registration statement at the time of effectiveness pursuant to Rules
430A(b) and 434(d) of the Rules and Regulations, is hereinafter called the
"Registration Statement". The prospectus included in the Registration Statement
at the time it is or was declared effective by the Commission and any related
prospectus supplement or supplements as filed with or promptly hereafter filed
with the Commission pursuant to Rule 424(b) under the Securities Act, is
hereinafter called the Prospectus", except that if any prospectus (including any
term sheet meeting the requirements of Rule 434 of the Rules and Regulations
provided by the Company for use with a prospectus subject to completion within
the meaning of such Rule 434 in order to meet the requirements of Section 10(a)
of the Rules and Regulations) filed by the Company with the Commission pursuant
to Rule 424(b) (and Rule 434, if applicable) of the Rules and Regulations or any
other such prospectus provided to the Underwriters by the Company for use in
connection with the offering of the Shares (whether or not required to be filed
by the Company with the Commission pursuant to Rule 424(b) of the Rules and
Regulations) differs from the prospectus on file at the time the Registration
Statement is or was
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declared effective by the Commission, the term "Prospectus" shall refer to such
differing prospectus (including any term sheet within the meaning of Rule 434 of
the Rules and Regulations) from and after the time such prospectus is filed with
the Commission or transmitted to the Commission for filing pursuant to such Rule
424(b) (and Rule 434, if applicable) or from and after the time it is first
provided to the Underwriters by the Company for such use. The term "Preliminary
Prospectus" as used herein means the preliminary prospectus included in any
Registration Statement prior to the time it becomes or became effective under
the Act and any prospectus subject to completion as described in Rule 430A or
434 of the Rules and Regulations.
Copies of the Registration Statement, any amendment thereto
and any Preliminary Prospectus filed with the Commission, including the
exhibits, financial statements and schedules thereto, have been delivered by the
Company to the Representatives on behalf of the Underwriters.
(ii) If the Registration Statement or any post-effective
amendment thereto has been declared effective, the Commission has not issued any
order suspending the effectiveness of the Registration Statement, any
post-effective amendment thereto or Rule 462(b) Registration Statement, if any,
or preventing or suspending the use of any Preliminary Prospectus, the
Prospectus, the Registration Statement or any amendment or supplement thereto or
suspending the registration of the Shares, nor has the Commission instituted or
threatened to institute any proceedings with respect to such an order. Each
Preliminary Prospectus, at the time of filing thereof, the Registration
Statement and the Prospectus and any amendments or supplements thereto contains
or will contain, as the case may be, all statements that are required to be
stated therein by, and conformed or will conform, as the case may be, in all
material respects to, the requirements of the Act and the Rules and Regulations
thereunder.
(iii) Neither the Registration Statement nor any amendment
thereto, as of its effective date, and neither the Prospectus nor any amendment
or supplement thereto, contains or will contain, as the case may be, an untrue
statement of a material fact or omit or will omit, as the case may be, to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the foregoing
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 the Representatives expressly for use therein,
and no event will have occurred which should have been set forth in an amendment
or supplement to the Registration Statement or the Prospectus pursuant to the
requirements of the Act and the Rules and Regulations thereunder which has not
then been set forth in such an amendment or supplement.
(iv) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of Maryland, its
jurisdiction of incorporation, and 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, and has all power and
authority necessary to own or hold its properties and assets and to conduct the
business in which it is engaged as described in or
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contemplated by the Registration Statement and the Prospectus. The Company does
not have any subsidiaries.
(v) The Company has the capitalization set forth in the
Prospectus and will have the adjusted capitalization set forth therein at the
Closing Date (as defined in Section 5 hereof), based on the assumptions set
forth therein. All of the shares of capital stock of the Company issued and
outstanding have been duly and validly authorized and issued, are fully paid and
non-assessable, without personal liability attaching to the ownership thereof,
and none of such shares have been issued or are owned or held in violation of
any preemptive or other rights of securityholders or other persons to acquire
securities of the Company. The securities of the Company including, without
limitation, the Shares and the Stock, conform in all material respects to all
statements relating thereto contained in the Registration Statement and the
Prospectus. Other than as disclosed in the Prospectus, there are no holders of
the securities of the Company having rights to registration thereof or
preemptive rights to purchase capital stock of the Company and neither the
filing of the Registration Statement nor the offering or sale of the Shares as
contemplated by this Agreement gives rise to any rights (other than have been
waived or satisfied) for or relating to the registration of any securities of
the Company. Except as created hereby or described in the Prospectus, there are
no commitments, plans or arrangements to issue, and no outstanding options,
warrants or other rights, calling for issuance of, any shares of capital stock
of the Company or other instrument which, by its terms, is convertible into, or
exercisable or exchangeable for, capital stock of the Company. Except as
described in the Prospectus, there is no outstanding security or other
instrument which, by its terms, is convertible into, exercisable for, or
exchangeable for capital stock of the Company.
(vi) The Shares have been duly and validly authorized. When
the Shares are issued and delivered against payment therefor as provided herein,
such Shares will be duly and validly issued, fully paid and non-assessable, will
not have been issued in violation of any preemptive or other rights of
securityholders or other persons to acquire securities of the Company and will
conform in all material respects to all statements relating thereto in the
Registration Statement and the Prospectus. Good and marketable title to the
Shares will pass to the Underwriters on the Closing Date or any Option Closing
Date, as the case may be, free and clear of any lien, encumbrance, security
interest, claim or other restriction whatsoever. The Company has received,
subject to notice of issuance, approval to have the Shares listed on The Nasdaq
National Market ("NNM") and the Company knows of no reason or set of facts which
is likely to adversely affect such approval.
(vii) The financial statements and the related notes and
schedules thereto included in the Registration Statement and the Prospectus
comply in all material respects with the requirements of the Securities Act and
the Rules and Regulations to be shown therein at the dates and for the periods
indicated, are accurate in all material respects and fairly present the
financial condition, results of operations, stockholders' equity and cash flows,
and the other information of the Company at the respective dates and for the
respective periods specified therein. Such financial statements and the related
notes and schedules thereto have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved
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(except as otherwise noted therein) and have been properly derived from the
books and records of the Company and such financial statements as are audited
have been examined by Xxxxx Xxxxxxxx LLP, who are independent public accountants
within the meaning of the Act and the Rules and Regulations, as indicated in
their reports filed therewith. The selected financial information and
statistical data set forth under the captions "Prospectus Summary--Summary
Financial Data," "Capitalization," "Selected Financial Data," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business" in the Prospectus fairly present the information set forth therein,
have been properly derived from the financial statements and other operating
records of the Company and have been compiled on a basis consistent with that of
the audited financial statements in the Registration Statement and the
Prospectus. No other financial statements or financial information, except that
which is contained in the Registration Statement, or the Prospectus (or the most
recent Preliminary Prospectus), required by Form S-1, the Rules and Regulations,
or otherwise, to be included in the Registration Statement, or the Prospectus.
(viii) Since the respective dates as of which information is
given in the Prospectus, and except as otherwise may be stated therein (A) the
Company has not entered into any transaction or incurred any liability or
obligation, contingent or otherwise, which is material to the Company and was
not entered into in the ordinary course; (B) there has not been any change in
the outstanding capital stock of the Company, or any issuance of options,
warrants or rights to purchase the capital stock of the Company, or any material
increase in the long-term debt of the Company, or the occurrence of any event or
circumstances that would, individually or in the aggregate, have a Material
Adverse Effect (as hereinafter defined); (C) the Company has not sustained any
loss or damage (whether or not insured) which has resulted in or reasonably
could be expected, individually or in the aggregate, to result in a Material
Adverse Effect ; (D) there has not been any interference with the business of
the Company from any labor dispute or court or governmental action, order or
decree; (E) the Company has not paid or declared any dividend or other
distribution with respect to its capital stock; and (F) there has not been any
change, contingent or otherwise, in the direct or indirect control of the
Company nor, to the best knowledge of the Company, do there exist any
circumstances which would reasonably be expected to result in such a change.
"Material Adverse Effect" means, when used in connection with the Company, any
development, change or effect that is materially adverse to the business,
properties, assets, net worth, condition (financial or other), or results of
operations of the Company or that reasonably could be expected to be materially
adverse to the prospects of the Company. The Company has no material contingent
liabilities which are not disclosed in the Prospectus.
(ix) The Company has filed all foreign, federal, state and
local income, franchise and other material tax returns required to be filed (or
has obtained extensions with respect thereto) and has paid all taxes shown as
due thereunder and all assessments received by it to the extent that payment has
become due, the Company has made all necessary payroll tax payments. All tax
liabilities have been adequately provided for in the financial statements of the
Company and the Company has no knowledge of any tax deficiency which might be
assessed against the Company which, if so assessed, would have a Material
Adverse Effect.
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(x) The Company maintains insurance of the types and in
amounts which it reasonably believes to be adequate for the conduct of its
business and the value of its properties and in such amounts and with such
deductibles as are customary for companies in the same or similar business, all
of which insurance is in full force and effect
(xi) Other than as set forth in the Prospectus, there are no
pending actions, suits, proceedings, or investigations or, to the best knowledge
of the Company, threatened or contemplated actions, suits, proceedings or
investigations before any court, regulatory body, administrative agency or other
governmental body that (A) challenge the validity of the capital stock of the
Company or this Agreement, or of any action taken or to be taken by the Company
pursuant to or in connection herewith; (B) are required to be disclosed in the
Registration Statement or the Prospectus that is not so disclosed; (C) if
determined adversely to the Company, reasonably could be expected, individually
or in the aggregate, to have a Material Adverse Effect; and (D) could reasonably
be expected to materially and adversely affect the consummation of the
transactions contemplated by this Agreement. Any such proceedings that are set
forth in the Prospectus are fairly and accurately summarized therein.
(xii) The Company has full right, power and authority to enter
into, execute and deliver this Agreement and to consummate the transactions
provided for, and perform its obligations as provided, herein. All necessary
corporate proceedings of the Company have been duly taken to authorize the
execution, delivery and performance by the Company of this Agreement. This
Agreement has been duly authorized, executed and delivered by the Company and
constitutes a legal, valid and binding agreement of the Company enforceable
against the Company in accordance with its terms (except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws of general application relating to or affecting the enforcement of
creditors' rights and by the application of equitable principles relating to the
availability of remedies, and except as rights to indemnity or contribution may
be limited by federal or state securities laws and the public policy underlying
such laws).
(xiii) The Company is not in default in the performance or
observance of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, franchise, license, lease,
bond, other evidence of indebtedness or other agreement or instrument to which
it is a party or by which it may be bound or to which any of its assets,
properties or businesses are or may be subject, except for such defaults that
would not, individually or in the aggregate, have a Material Adverse Effect. The
Company's execution and delivery of this Agreement and the consummation, by the
Company, of the transactions contemplated hereby, including, without limitation,
the issuance and sale of the Firm Shares, the application of the net proceeds of
the offering as described in the Prospectus under the caption "Use of Proceeds"
and the conduct of its business as described in or contemplated by the
Prospectus will not violate any provision of the Charter or Bylaws of the
Company, and will not result in the breach of, or be in contravention of,
constitute a default under, cause (or permit) the maturation or acceleration of
any liability or the termination of any rights under, or result in the creation
or imposition of any lien, charge or encumbrance upon, any property or assets of
the Company pursuant to the terms of any
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contract, indenture, mortgage, loan agreement, note, franchise, license, lease,
bond, other evidence of indebtedness or other agreement or instrument to which
the Company is a party or by which it may be bound or to which any of its
properties, assets or businesses are or may be subject, or any statute,
judgment, decree, order, rule or regulation applicable to the Company of any
government, arbitrator, court, regulatory body or administrative agency or other
governmental body, except those, if any, that are described in the Prospectus or
those which would not, individually or in the aggregate, have a Material Adverse
Effect.
(xiv) All agreements filed as exhibits to the Registration
Statement (whether executed or copies of executed documents) to which the
Company is a party or by which it is or may be bound or to which any of its
assets, properties or businesses are or may be subject have been duly and
validly authorized, executed and delivered by the Company and each constitutes
the legal, valid and binding agreement of the Company, enforceable against it in
accordance with its terms (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other laws of general
application relating to or affecting enforcement of creditors' rights, and by
the application of equitable principles relating to the availability of
remedies, and except as rights to indemnity or contribution may be limited by
federal or state securities laws and the public policy underlying such laws).
The descriptions and summaries contained in the Registration Statement and the
Prospectus of contracts and other documents are accurate and fairly present in
all material respects the information required to be disclosed with respect
thereto by the Act and the Rules and Regulations, and there are no contracts or
other documents which are required by the Act or the Rules and Regulations to be
described in the Registration Statement or filed as exhibits thereto which are
not so described or filed. The exhibits which have been filed are complete and
correct copies of the documents of which they purport to be copies.
(xv) The Company has good and marketable title in fee simple
to all real property and good and marketable title to all other property and
assets owned by it as set forth in the Prospectus, in each case free and clear
of all liens, security interests, pledges, charges, mortgages and other defects
or encumbrances of any kind or nature, except such as are described in the
Prospectus or such as do not materially affect the value of any such property,
and do not interfere with the use made and proposed to be made of such property
by the Company. Any real properties held or used by the Company under lease are
held or used under valid, subsisting and enforceable leases, such leases are in
full force and effect, the Company is not in default in respect of any material
terms of any such leases and to the best knowledge of the Company there are no
claims that have been asserted by any party adverse to the Company's right as
lessee under any such lease or affecting or challenging the Company's right to
continue possession of the premises subject to any such lease which,
individually or in the aggregate, would have a Material Adverse Affect. No real
property owned, leased, licensed or used by the Company is situated in an area
which is, or to the best knowledge of the Company, will be subject to zoning,
use, or building code restrictions which would prohibit (and no state of facts
relating to the actions or inaction of another person or entity or his or its
ownership, leasing, licensing, or use of any real or personal property exists or
will exist which would prevent) the continued effective ownership, leasing,
licensing, or use of such real property in the business of the Company as
described in or contemplated by the Prospectus.
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(xvi) All legally required proceedings in connection with the
authorization, issue and sale of the Shares in accordance with this Agreement
have been taken and no consent, authorization, approval, order, registration,
license, certificate, declaration or permit of or from, or filing with, any
court, regulatory body, administrative agency or other governmental body, is
required for the issue and sale of the Shares by the Company or the execution,
delivery or performance by the Company of this Agreement, except for the
registration under the Act of the Shares and the registration of the Stock under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), each of
which has been made or obtained, and such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities or
Blue Sky laws in connection with the purchase and distribution of the Shares by
the Underwriters, such approval as may be required from the NNM to have the
Shares listed thereon, and such approval as may be required by the National
Association of Securities Dealers, Inc. (the "NASD") in connection with the
terms and conditions set forth in this Agreement. No consent of any party to any
contract, indenture, mortgage, loan agreement, note, franchise, license, lease,
bond, other evidence of indebtedness or other agreement or instrument, or any
arrangement or understanding, to which the Company is a party, by which it may
be bound or to which any of its properties, assets or businesses are or may be
subject, is required for the execution, delivery or performance of this
Agreement by the Company.
(xvii) The Company and the conduct of its business as
described in or contemplated by the Prospectus are not in violation of any
federal, state or local statute, administrative regulation or other law
including, without limitation, the Fair Debt Collections Practices Act, the
Federal Truth-In-Lending Act (and the Federal Reserve Board's Regulation S
issued thereunder), the Fair Debt Billing Act, the Equal Credit Opportunity Act
(and the Federal Reserve Board's Regulation B issued thereunder), the Fair
Credit Reporting Act or the Electronic Fund Transfer Act and, comparable state
statutes, the consequence of which violation(s) would, individually or in the
aggregate, have a Material Adverse Effect.
(xviii) The Company is not in violation of its Charter or
Bylaws or similar constitutive documents; the Company is not (or, as a result of
the passage of time or based on its projected plans of operations, will be) in
default in the performance or observance of any obligation, agreement, covenant
or condition contained in any contract, indenture, mortgage, loan agreement,
note, franchise, license, lease, bond, other evidence of indebtedness 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, assets or businesses are or may be subject, which
would, individually or in the aggregate have a Material Adverse Effect, or which
would in any way, individually or in the aggregate, impair or delay the
consummation of the transactions contemplated by this Agreement or the offering
of the Shares in the manner contemplated hereby and by the Registration
Statement and the Prospectus, and each contract, indenture, mortgage, loan
agreement, note, franchise, license, lease, bond, other evidence of indebtedness
or other agreement or instrument is in full force and effect and is a legal,
valid and binding obligation of the Company, and to the best knowledge of the
Company, of each other party thereto.
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(xix) The statements set forth in the Prospectus under the
caption "Description of Capital Stock," insofar as they purport to constitute a
summary of the terms of the Company's securities, and under the captions "Shares
Eligible for Future Sale," "Business-Analysis of Receivables to Acquire,"
"Business-Servicing Organization," "Business-Competition," "Business-Trademarks
and Proprietary Information," "Business-Government Regulation,"
"Business-Properties," "Business-Employees," "Business-Legal Proceedings,"
"Management-Compensation of Directors," "Management-Employment Agreements,"
"Management-Compensation Pursuant to Plans," "Management-Indemnification of
Directors and Officers," and "Underwriting" (except, with respect to the
statements under the caption "Underwriting," for information furnished in
writing to the Company by the Underwriters through the Representatives expressly
for use therein), insofar as they purport to describe the provisions of the laws
and the provisions of documents referred to therein, are accurate and fairly
summarize such provisions and there are no other provisions of law or of
documents which are required by the Act or the Rules and Regulations to be
described therein.
(xx) The Company is not and, after giving effect to the
offering and sale of the Shares, 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 (the "Investment Company Act").
(xxi) The Company owns or is licensed or otherwise has
sufficient right to use, the proprietary knowledge, inventions, patents, patent
applications, trademarks, service marks, trade names, trademark registrations,
service xxxx registrations, logo marks, copyrights, licenses, inventions and
rights ("Intellectual Property") necessary for the conduct of its business as
described in or contemplated by the Prospectus and the Registration Statement.
To the best knowledge of the Company, none of the activities engaged in by the
Company infringes upon or otherwise conflicts with Intellectual Property rights
of others. No claims have been asserted against the Company by any person with
respect to the use of any such rights or challenging or questioning the validity
or effectiveness of any such rights.
(xxii) No labor disturbance(s) by, or labor dispute(s) with,
the employees of the Company exists or is threatened or imminent which would,
individually or in the aggregate, have a Material Adverse Effect.
(xxiii) The Company (A) is in compliance with all applicable
environmental, safety, health or similar laws or regulations relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws")
applicable to its business; (B) has received all permits, licenses or other
approvals required under applicable Environmental Laws to conduct its business;
and (C) is in compliance with all terms and conditions of any such permit,
license or approval; except where such noncompliance, failure to receive such
license or approval or failure to comply would not, individually or in the
aggregate, have a Material Adverse Effect.
(xxiv) The Company is in compliance with all applicable
federal or state laws, including the rules and regulations promulgated
thereunder, relating to discrimination in the hiring, promotion or pay of
employees, any applicable federal or state wages and hours law, and the
9
provisions of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), applicable to its business, except where such noncompliance would
not, individually or in the aggregate, have a Material Adverse Effect.
(xxv) The employee benefit plans, including employee welfare
benefit plans, of the Company (the "Employee Plans") have been operated in
compliance with the applicable provisions of ERISA, the Internal Revenue Code of
1986, as amended (the "Code"), all regulations, rulings and announcements
promulgated or issued thereunder and all other applicable governmental laws and
regulations (except to the extent such noncompliance would not, individually or
in the aggregate, have a Material Adverse Effect). No reportable event under
Section 4043(b) of ERISA or any prohibited transaction under Section 406 of
ERISA has occurred with respect to any employee benefit plan maintained by the
Company. There are no pending or, to the Company's best knowledge, threatened
claims by or on behalf of any Employee Plan, by any employee or beneficiary
covered under any such Plan or by any governmental authority or otherwise
involving such Plans or any of their respective fiduciaries (other than for
routine claims for benefits). All Employee Plans that are group health plans
have been operated in compliance with the group health plan continuation
coverage requirements of Section 4980B of the Code in all material respects.
(xxvi) The Company has full right, power and authority and has
obtained and holds all licenses, consents, authorizations, approvals, orders,
certificates and permits of and from, and has made all declarations and filings
with all courts, regulatory bodies, administrative agencies, or other
governmental bodies, necessary to own, lease, license and use its properties and
assets and to conduct its business in the manner described in or contemplated by
the Prospectus, except as otherwise described therein, and except where the
failure(s) to so obtain or hold or to so make or file would not, individually or
in the aggregate, have a Material Adverse Effect. The Company has not received
any notice of proceedings relating to the Registration Statement, and to its
best knowledge no governmental body is considering limiting, suspending,
modifying or revoking, any such consent, authorization, approval, order,
certificate or permit which would, individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, have a Material Adverse
Effect. The Prospectus fairly and accurately describes each license, consent,
authorization, approval order, certificate and permit the absence of which
would, individually or in the aggregate, have a Material Adverse Effect, or
which would materially and adversely affect the Company's ability to acquire and
collect on the Receivables (as such term is defined in the Prospectus) and
otherwise to expand the business operations of the Company as described in or
contemplated by the Prospectus. The Company has filed with the appropriate
governmental authorities each and every statement, report, information or form
required to be filed by it pursuant to any applicable law, regulation or order,
except where the failure(s) to so file would not, individually or in the
aggregate, have a Material Adverse Effect, and all such filings or submissions
were in compliance with applicable laws and regulations in all material respects
when filed, and no deficiencies have been asserted by any regulatory commission,
agency or authority with respect to such filings or submissions, except where
the failure(s) to so file or cure would not, individually or in the aggregate,
have a Material Adverse Effect. To the Company's best knowledge, except as
disclosed in the Registration Statement and the Prospectus, there are not
pending any changes under any law, regulation, license
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or permit that would have, individually or in the aggregate, a Material Adverse
Effect. The Company has not received any notice of, and to the best knowledge of
the Company, has not been threatened with and/or has not been sued and is not
under investigation with respect to a violation or a possible violation of any
provision of any law, regulation or order, except such violation(s) as would
not, individually or in the aggregate, have a Material Adverse Effect.
(xxvii) Neither the Company nor, to the Company's best
knowledge, any other person acting on behalf of the Company including, without
limitation, any director, officer, agent, or employee of the Company has,
directly or indirectly, while acting on behalf of the Company has (A) used any
corporate funds for unlawful contributions, gifts, entertainment, or other
unlawful expenses relating to political activity; (B) made any unlawful
contribution to any candidate for foreign or domestic office, or to any foreign
or domestic government officials or employees or other person charged with
similar public or quasi-public duties, other than payments required or permitted
by the laws of the United States or any jurisdiction thereof or to foreign or
domestic political parties or campaigns from corporate funds, or failed to
disclose fully any contribution in violation of law; (C) violated any provision
of the Foreign Corrupt Practices Act of 1977, as amended; or (D) made any other
payment of funds of the Company or received or retained any funds which
constitutes a violation by the Company of any law, rule or regulation or is
required to be disclosed in the Prospectus pursuant to the requirements of the
Act and the Rules and Regulations.
(xxviii) The books, records and accounts and systems of
internal accounting controls of the Company currently comply with the
requirements of Section 13(b)(2) of the Exchange Act in all material respects.
(xxix) The minute books of the Company are current and contain
a correct and complete record of all corporate action taken by the Board of
Directors and shareholder of the Company in all material respects and all
signatures contained therein are true signatures of the persons whose signatures
they purport to be.
(xxx) Except as described in the Prospectus, to the best
knowledge of the Company there is no loss or threatened loss of any one or more
customer, supplier, or account which loss(es) would, individually or in the
aggregate, result in a Material Adverse Effect.
(xxxi) The Company has not incurred, directly or indirectly,
any liability for a fee, commission or other compensation on account of the
employment of a broker or finder in connection with the offering and sale of the
Shares contemplated by this Agreement, except for fees and other compensation
owed to the Underwriters.
(xxxii) There are no business relationships or related party
transactions of the nature described in Item 404 of Regulation S-K of the Rules
and Regulations involving the Company and any person referred to in Items 401 or
404 of such Regulation S-K, except as required to be described, and as so
described, in the Prospectus.
11
(xxxiii) Since its inception, the Company has not incurred any
liability arising under or as a result of the application of the provisions of
the Act. Without limiting the generality of the foregoing, all offers and sales
of the Company's capital stock prior to the date hereof were at all relevant
times exempt from the registration requirements of the Act, and were the subject
of an available exemption from the registration requirements of all applicable
state securities or Blue Sky laws; and any offering materials prepared in
connection therewith did not include any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(b) Representations and Warranties of the Selling
Shareholder. The Selling Shareholder represents and warrants to, and agrees
with, each of the Underwriters that:
(i) The Selling Shareholder has received and is familiar with
the Prospectus and the Registration Statement as originally filed with the
Commission and each Prospectus and has no knowledge of any material fact,
condition or information not disclosed in any such Prospectus (preliminary or
other) and the Registration Statement which has or could have a Material Adverse
Effect on the Company; the Selling Shareholder is not prompted to sell the
Optional Shares by any information concerning the Company which is not set forth
in each such Prospectus and the Registration Statement; and to the best
knowledge of the Selling Shareholder, the representations and warranties of the
Company contained in Section 2(a) hereof are true and correct.
(ii) The Selling Shareholder has the legal capacity to enter
into this Agreement and the full right, power and authority to consummate the
transactions provided for hereby, and perform his obligations as provided. This
Agreement has been duly executed and delivered by the Selling Shareholder, and
constitutes the valid, legal and binding agreement of the Selling Shareholder,
enforceable against the Selling Shareholder in accordance with its terms (except
as such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
affecting the enforcement of creditors' rights and the application of equitable
principles relating to the availability of remedies, and except as rights to
indemnity or contribution may be limited by federal or state securities laws and
the public policy of such laws).
(iii) No consent, authorization, approval, order,
registration, license, certificate, declaration or permit of or from, or filing
with any court, regulatory body, administrative agency or other governmental
body is required for the sale of the Optional Shares by the Selling Shareholder
or the execution, delivery or performance by the Selling Shareholder of this
Agreement, except for the registration under the Act of the Shares and the
registration of the Stock under the Exchange Act, each of which has been made or
obtained, and such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the Underwriters,
such approval as may be required from the NNM to have the Shares listed thereon,
such approval as may be required by the NASD in connection with the terms and
conditions set forth in this Agreement.
12
(iv) The execution and delivery of this Agreement by the
Selling Shareholder and the consummation, by the Selling Shareholder, of the
transactions contemplated hereby will not (A) result in a breach or constitute a
default under any material agreement or instrument or any decree, judgment or
order to which the Selling Shareholder is a party or by which the Selling
Shareholder may be bound or to which any of the properties or assets of the
Selling Shareholder are or may be subject or (B) violate any law, rule or
regulation applicable to the Selling Shareholder or to which his properties or
assets are or may be subject (other than for the securities or Blue Sky laws of
the various states and the rules and regulations of the NASD and assuming
compliance with the federal securities laws by the other parties hereto).
(v) The Selling Shareholder has and will, just prior to the
closing of the transactions contemplated by the Agreement, have good and
marketable title to the Optional Shares, free and clear of any pledge, lien,
security interest, charge, claim equity or encumbrance of any kind, other than
pursuant to this Agreement. The Selling Shareholder has full right, power and
authority to sell, transfer and deliver the Optional Shares pursuant to the
Agreement and upon delivery of such Optional Shares and payment of the purchase
price therefor as contemplated by this Agreement, each of the Underwriters will
receive good and marketable title to the Optional Shares purchased by it from
the Selling Shareholder, free and clear of any pledge, lien, security interest,
charge, claim, equity or encumbrance of any kind. Except as created hereby,
there are no outstanding options, warrants, rights or other agreements or
arrangements requiring the Selling Shareholder at any time to transfer any of
the Optional Shares.
(vi) For a period of one hundred eighty (180) calendar days
after the date hereof, the Selling Shareholder will not, without the prior
written consent of the Representatives, directly or indirectly, offer to sell,
sell, grant any option for the sale of, or otherwise dispose of, any shares of
Stock or any securities convertible into or exercisable for shares of Stock
owned by the Selling Shareholder or with respect to which the Selling
Shareholder has the power of disposition, other than to the Underwriters
pursuant to this Agreement.
(vii) Certificates in negotiable form for all Optional Shares
have been placed in custody with the Company for the purpose of effecting
delivery hereunder.
(viii) The Selling Shareholder will not take, directly or
indirectly, any action designed to, or that might be reasonably expected to,
cause or result in stabilization or manipulation of the price of the Stock; and
the Selling Shareholder has not distributed and will not distribute any
prospectus or other offering material in connection with the offering and sale
of the Shares other than any Preliminary Prospectus filed with the Commission or
the Prospectuses or other material permitted by the Act or the Rules and
Regulations.
(ix) Neither the Registration Statement nor any amendment
thereto, as of the applicable effective date or dates, and neither the
Prospectus nor any amendment or supplement thereto contains or will not contain
an untrue statement of a material fact regarding the Selling
13
Shareholder or omit to state a material fact regarding the Selling Shareholder
required to be stated therein or necessary to make the statements therein not
misleading.
(c) Adequacy of Certificates. Any certificate signed by any
officer of the Company or by the Selling Shareholder and delivered to you or to
your counsel shall be deemed a representation and warranty by the Company or the
Selling Shareholder, as the case may be, to you as to the matters covered
thereby.
Section 3. Purchase of Securities by the Underwriters. On the basis of
the representations, warranties, covenants and agreements herein contained, and
subject to the terms and conditions herein set forth (i) 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 price to the public per
share of $_________, less underwriting discounts and commissions per share of
$_____ for a net purchase price per share to the Company of $_____, the number
of Firm Shares set forth opposite the name of such Underwriter in Schedule I
hereto and (ii) in the event and to the extent that the Underwriters shall
exercise the election to purchase Optional Shares as provided below, the Selling
Shareholder agrees to sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Selling
Shareholder, at the purchase price per share set forth in clause (i) of this
Section 3, its proportionate share of the number of Optional Shares as to which
such election shall have been exercised (based on the monetary obligation of the
several Underwriters hereunder on account of the purchase of Firm Shares).
The Selling Shareholder hereby grants to the Underwriters the
right to purchase at their election up to 300,000 shares of Stock constituting
the Optional Shares, at the purchase price per share set forth in the paragraph
above, for the sole purpose of covering over-allotments, if any, in the sale of
the Firm Shares. Each such election to purchase Optional Shares may be exercised
only by written notice from the Representatives to the Selling Shareholder,
given within a period of thirty (30) calendar days after the date of this
Agreement and setting forth the aggregate number of Optional Shares to be
purchased and the date on which such Optional Shares are to be delivered, as
determined by you but in no event earlier than the Closing Date or, unless you
and the Selling Shareholder otherwise agree in writing, no earlier than two (2)
nor later than ten (10) business days after the date of such notice.
Section 4. Offering of the Shares by the Underwriters. Upon the
authorization by the Representatives of the release of the Firm Shares, the
several Underwriters propose to make a public offering of the Firm Shares upon
the terms and conditions set forth in the Prospectus.
Section 5. Delivery of and Payment for the Shares.
(a) The Firm Shares to be purchased by each Underwriter
hereunder, in definitive form, and in such authorized denominations and
registered, in such names as the Representatives may request upon at least
forty-eight (48) hours prior notice to the Company, shall be delivered by
14
or on behalf of the Company to the Representatives, for the account of such
Underwriter, against payment by or on behalf of such Underwriter of the purchase
price therefor by a wire transfer of immediately available funds to an account
designated by the Company. The Company will cause the certificates representing
the Firm Shares to be made available for checking and packaging at least
twenty-four (24) hours prior to the Closing Date (as defined below) with respect
thereto at the office of Xxxxxx, Xxxxx Xxxxx, Incorporated, 0000 Xxx Xxxxxx, XX,
Xxxxxxxxxx, X.X. 00000 or such other location as the Representatives may
designate (the "Designated Office"). The time and date of such delivery and
payment shall be, with respect to the Firm Shares, at 10:00 a.m., Washington, DC
time, on ___________, 1998 or such other time and date as the Representatives
and the Company may agree. Such time and date for delivery of the Firm Shares is
herein called the "Closing Date".
(b) Delivery of and payment for any Optional Shares to be
purchased by each Underwriter pursuant hereto shall be made at the Designated
Office at 10:00 a.m., Washington, DC time, on the date specified by the
Representatives in the written notice of the Underwriters' election to purchase
such Optional Shares, or such other time and date as the Representatives and the
Company may agree. Payment of the purchase price for the Optional Shares shall
be made by the Underwriters by a wire transfer of immediately available funds to
an account designated by the Selling Shareholder. Such time and date for
delivery of Optional Shares, if not the Closing Date, is herein called the
"Option Closing Date".
(c) The documents to be delivered on the Closing Date or any
Option Closing Date, as the case may be, by or on behalf of the parties hereto
pursuant to Section 8 hereof, including the cross-receipt for the Shares and any
additional documents requested by the Underwriters, will be delivered at the
offices of Xxxxxxx, Baetjer & Xxxxxx, LLP, 1800 Mercantile Bank & Trust
Building, 0 Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000, or such other location as
the Representatives may designate (the "Closing Location"), and the Shares will
be delivered at the Designated Office, on the Closing Date or the Option Closing
Date, as the case may be.
(d) A meeting will be held at the Closing Location at 2:00
p.m., Washington, DC time, on the business day next preceding Closing Date or
any Option Closing Date, as the case may be, or at such other time as is
mutually agreed upon by the parties hereto, at which meeting the final drafts of
the documents to be delivered pursuant to the preceding paragraph will be
available for review by the parties hereto.
Section 6. Covenants of the Company. The Company covenants and agrees
with each of the Underwriters as follows:
(a) The Company will use its best efforts to cause the
Registration Statement, if not effective at the time of execution of this
Agreement, and any amendments thereto, to become effective as promptly as
practicable. If required, the Company will file the Prospectus and any
amendments or supplements thereto with the Commission in the manner and within
the time period required by Rule 424(b) under the Act. During any time when a
prospectus relating to the Shares is required to be delivered under the Act, the
Company will comply with all requirements imposed
15
upon it by the Act and the Rules and Regulations to the extent necessary to
permit the continuance of sales of or dealings in the Shares in accordance with
the provisions hereof and of the Prospectus, as then amended or supplemented.
With respect to any registration statement, prospectus, amendment (including any
post-effective amendment), or supplement to be filed with the Commission in
connection with the Shares, the Company will provide a copy of each such
document to each of the Representatives a reasonable time prior to the date such
document is proposed to be filed with the Commission and will not file any such
document without the consent of the Representatives. Any such registration
statement, prospectus, amendment or supplement, when filed, will comply with the
Act and the Rules and Regulations. In the event that the Registration Statement
is effective at the time of execution of this Agreement, but the total number of
Shares subject to this Agreement exceeds the number of Shares covered by the
Registration Statement, the Company will promptly file with the Commission on
the date hereof a registration statement pursuant to Rule 462(b) in accordance
with the requirements of such Rule and will make payment of the filing fee
therefor in accordance with the requirements of Rule 111(b) under the Act.
(b) The Company will advise the Representatives promptly (i)
when the Registration Statement, as amended, has become effective; (ii) if the
provisions of Rule 430A promulgated under the Act will be relied upon, when
the Prospectus has been filed in accordance with said Rule 430A; (iii) when
any post-effective amendment to the Registration Statement becomes effective;
(iv) of any request made by the Commission for amendments or supplements to
the Registration Statement, any Preliminary Prospectus or Prospectus or for
additional information; (v) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or any
post-effective amendment thereto or any order preventing or suspending the use
of any Preliminary Prospectus or Prospectus or any amendment or supplement
thereto or the institution or threat of any investigation or proceeding for
that purpose; and (vi) of the receipt of any comments from the Commission
regarding the Registration Statement, any post-effective amendment thereto,
the Preliminary Prospectus, the Prospectus, or any amendment or supplement
thereto. The Company will use its best efforts to prevent the issuance of any
stop order by the Commission, and if at any time the Commission shall issue
any stop order, the Company will use its best efforts to obtain the withdrawal
of such stop order at the earliest possible moment.
(c) The Company will cooperate with the Representatives,
their counsel and the Underwriters in qualifying or registering the Shares for
sale, or obtaining an exemption therefrom, under the Blue Sky laws of such
jurisdictions as the Representatives shall designate, and will continue such
qualifications or registrations or exemptions in effect so long as requested by
the Representatives to complete the distribution of the Shares. Notwithstanding
the foregoing, the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any such
jurisdiction where it is not presently qualified.
(d) The Company consents to the use of the Prospectus (and
any amendment or supplement thereto) by the Underwriters and all dealers to whom
the Shares may be sold, in connection with the offering or sale of the Shares
and for such period of time thereafter as the Prospectus is required by law to
be delivered in connection therewith. If, at any time when a
16
prospectus relating to the Shares is required to be delivered under the Act, any
event occurs as a result of which the Prospectus, as then amended or
supplemented, would include any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein not misleading,
or if it becomes necessary at any time to amend or supplement the Prospectus to
comply with the Act or the Rules and Regulations, the Company promptly will so
notify the Representatives and will prepare and file with the Commission an
amendment to the Registration Statement or an amendment or supplement to the
Prospectus which will correct such statement or omission or effect such
compliance; each such amendment or supplement to be reasonably satisfactory to
counsel to the Underwriters.
(e) As soon as practicable, but in any event not later than
forty-five (45) calendar days after the end of the twelve (12) month period
beginning on the day after the end of the fiscal quarter of the Company during
which the effective date of the Registration Statement occurs ninety (90)
calendar days in the event that such quarter is the Company's last fiscal
quarter), the Company will make generally available to its securityholders, in
the manner specified in Rule 158(b) of the Rules and Regulations, and will
deliver to each of the Representatives, an earnings statement which will be in
the detail required by, and will otherwise comply with, the provisions of
Section 11(a) of the Act and Rule 158(a) of the Rules and Regulations, which
statement need not be audited unless required by the Act or the Rules and
Regulations, covering a period of at least twelve (12) consecutive months after
the effective date of the Registration Statement.
(f) During the period of five (5) years commencing with the
date hereof, the Company will deliver to the Representatives:
(i) within ninety (90) calendar days after the end of
each fiscal year, financial statements for the Company, certified by the
Company's independent certified public accountants, including a balance sheet,
statement of operations, statement of stockholders' equity and statement of cash
flows, with supporting schedules, prepared in accordance with generally accepted
accounting principles, as at the end of such fiscal year and for the twelve (12)
months then ended, accompanied by a copy of the certificate or report thereon of
such independent certified public accountants; provided that if, during such
five-year period, the Company has active subsidiaries, the foregoing financial
statements will be on a consolidated basis to the extent that the accounts of
the Company and its subsidiaries are consolidated, and will be accompanied by
similar financial statements for any significant subsidiary which is not so
consolidated;
(ii) as soon as practicable after filing with the
Commission, all such reports, forms or other documents as may be required from
time to time, under the Act, the Rules and Regulations, the Exchange Act and the
rules and regulations thereunder;
(iii) as soon as they are available, copies of all
information (financial or other) mailed to stockholders;
17
(iv) as soon as they are available, copies of all
reports and financial statements furnished to or filed with the NASD, the NNM or
any other securities exchange or market;
(v) promptly following release by the Company, every
press release and every material news item or article of interest to the
financial community in respect of the Company or its affairs which was released
or prepared by the Company; and
(vi) as soon as possible following receipt of a
request, any additional information of a public nature concerning the Company or
its business which the Representatives may reasonably request.
(g) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a registrar
(which may be the same entity as the transfer agent) for the Stock.
(h) The Company will furnish, without charge, to the
Representatives or on the Representatives' order, at such place as the
Representatives may designate, copies of each Preliminary Prospectus, the
Registration Statement and any amendments thereto, any registration statement
filed pursuant to Rule 462(b) (of which copies three (3) will be signed and will
include all financial statements and exhibits) and the Prospectus, and all
amendments and supplements thereto, in each case as soon as available and in
such quantities as the Representatives may reasonably request.
(i) Except pursuant to this Agreement, the Company will not,
directly or indirectly, without the prior written consent of the
Representatives, issue, offer, sell, offer to sell, contract to sell, grant any
option to purchase, pledge or otherwise dispose (or announce any issuance,
offer, sale, offer of sale, contract of sale, grant of any option to purchase,
pledge or other disposition) of any shares of Stock or any securities
convertible into, or exchangeable or exercisable for, shares of Stock for a
period of one hundred eighty (180) calendar days after the date hereof, other
than issuances pursuant to the exercise of stock options or pursuant to a stock
option or other employee benefit plan in existence on the date hereof or
described in the Registration Statement. With respect to securities issued or
issuable under stock option plans and employee benefit plans, the Company will
not file any registration statement on Form S-8 (or other applicable form) for a
period of one hundred eighty (180) calendar days after the date hereof.
(j) The Company will use its reasonable efforts to cause the
Shares to be duly approved for listing on the NNM prior to the Closing Date and
shall take all reasonably necessary and appropriate action such that the Shares
remain so listed for at least thirty-six (36) months.
(k) None of the Company, any of its officers or directors,
or affiliates, or any affiliates of any of them (within the meaning of the Rules
and Regulations) will take, directly or
18
indirectly, any action designed to, or which might reasonably be expected to,
cause or result in stabilization or manipulation of the price of any securities
of the Company.
(l) The Company will apply the net proceeds of the offering
in the manner set forth under the caption "Use of Proceeds" in the Prospectus.
The Company will operate its business in such a manner and, pending application
of the net proceeds of the offering for the purposes and in the manner set forth
under the caption "Use of Proceeds" in the Prospectus, will invest such net
proceeds in such securities so as not to become an "investment company" as such
term is defined under the Investment Company Act.
(m) The Company will timely file all such reports, forms or
other documents as may be required from time to time, under the Act, the Rules
and Regulations, the Exchange Act and the rules and regulations thereunder, and
all such reports, forms and documents so filed will comply as to form and
substance with the applicable requirements under the Act, the Rules and
Regulations, the Exchange Act and the rules and regulations thereunder which may
from time to time be applicable to the Company. The Company shall comply with
the provisions of all undertakings contained in the Registration Statement.
(n) Except as described in the Prospectus, the Company will
not, until the earlier to occur of (i) thirty (30) calendar days following the
date of this Agreement or (ii) the Option Closing Date immediately after which
all Optional Shares shall have been so purchased (the "Final Option Closing
Date"), incur any liability or obligation, direct or contingent, or enter into
any material transaction, other than in the ordinary course of business.
(o) Except as described in the Prospectus, until the later
to occur of (i) thirty (30) calendar days following the date of this Agreement
or (ii) the Final Option Closing Date, the Company will not acquire any of the
Company's Stock, declare or pay any dividend or make any other distribution upon
its Stock payable to its holders of record on a date prior such occurrence.
(p) The Company will comply or cause to be complied with the
conditions to the Underwriters' obligations set forth in Section 8 hereof.
(q) During the period of thirty (30) calendar days
commencing with the date of this Agreement, the Company shall neither issue any
press release or other communication, directly or indirectly, nor hold any press
conference with respect to the offering of the Shares, the Company, or its
business, results of operations, condition (financial or other), property,
assets, liabilities or prospects, without the prior written consent of the
Representatives, which consent shall not unreasonably be denied or delayed;
provided, however, that if counsel to the Company is of the opinion that the
issuance of a press release or other communication or a press conference is
required to comply with or avoid a violation of applicable law, and having been
so informed the Representatives decline to consent thereto, the Company shall be
permitted to issue such press release or other communication or hold such press
conference in the manner advised by its counsel.
19
(r) The Company will not, and will cause each of its
officers, directors and certain shareholders designated by the Representatives
to enter into agreements with the Representatives to the effect that such
officer, director or shareholder, as the case maybe, will not, without the prior
written consent of Xxxxxx, Xxxxx Xxxxx, Incorporated, sell, contract to sell,
sell short or otherwise dispose of any Shares or other capital stock of the
Company or any other securities exchangeable for or convertible into Shares for
a period of one hundred eighty (180) calendar days after the date hereof,
provided however, that transfers or other dispositions of shares of Common Stock
for the purpose of estate planning shall be permitted to the extent that the
person(s) obtaining shares as a consequence of any such transfer or disposition
takes such shares subject to the 180 calendar day restriction described above.
Section 7. Expenses.
(a) If the Underwriters purchase the Firm Shares, in
accordance with the terms of this Agreement, the Company will pay the
Representatives, out of the first proceeds of the offering contemplated by this
Agreement, a non-accountable expense allowance of one percent (1%) of the gross
proceeds raised, in order to compensate the Representatives for their expenses
in connection with the transactions contemplated hereby The costs and expenses
of registration, filings and fees of all counsel in completing the applications
and in clearing the offering contemplated by this Agreement through the state
securities commissions or similar regulatory authorities of the various states
or other jurisdictions and of listing the Shares of the NNM shall be borne and
paid by the Company in addition to the non-accountable expense allowance
referred to in the immediately preceding sentence.
(b) If the purchase of the Firm Shares as herein
contemplated is not consummated for any reason other than the Underwriters'
default under this Agreement or other than by reason of Section 11(a) hereof,
the Company shall reimburse the several Underwriters, for their out-of-pocket
expenses (including but not limited to counsel fees and disbursements) in
connection with any investigation made by them, and any preparation made by them
in respect of marketing of the Shares or in contemplation of the performance by
them of their obligations hereunder.
Section 8. Conditions of the Underwriters' Obligations. The obligations
of each Underwriter to purchase and pay for the Shares set forth opposite the
name of such Underwriter in Schedule I are subject to the continuing accuracy of
the representations and warranties of the Company and the Selling Shareholder
herein as of the date hereof, as of the Closing Date, and as of each Option
Closing Date, if any, as if they had been made on and as of the Closing Date or
Option Closing Date, as the case may be; the accuracy on and as of the Closing
Date, and each Option Closing Date, if any, of the statements of officers of the
Company made pursuant to the provisions hereof; the performance by the Company
and the Selling Shareholder on and as of the Closing Date, and each Option
Closing Date, as the case may be, of their respective covenants and agreements
hereunder; and the following additional conditions:
20
(a) The Registration Statement shall have been declared
effective, and the Prospectus (containing the information omitted pursuant to
Rule 430(A)) shall have been filed with the Commission not later than the
Commission's close of business on the second business day following the date
hereof or such later time and date to which the Representatives shall have
consented. No stop order suspending the effectiveness of the Registration
Statement or any amendment thereto shall have been issued, and no proceedings
for that purpose shall have been instituted or threatened or, to the best
knowledge of the Company or the Representatives, shall be contemplated by the
Commission. The Company shall have complied with any request of the Commission
for additional information (to be included in the Registration Statement or the
Prospectus or otherwise).
(b) The Representatives shall not have advised the Company
that the Registration Statement, or any amendment thereto, contains an untrue
statement of fact which, in the Representatives' opinion, is material, or omits
to state a fact which, in the Representatives' opinion, is material and is
required to be stated therein or is necessary to make the statements therein not
misleading, or that the Prospectus, or any amendment or supplement thereto,
contains an untrue statement of fact which, in the Representatives' opinion, is
material, or omits to state a fact which, in the Representatives' opinion, is
material and is required to be stated therein or is necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading
(c) On or prior to the Closing Date, and any Option Closing
Date, as the case may be, the Representatives shall have received from counsel
to the Underwriters, such opinion or opinions with respect to the issuance and
sale of the Firm Shares, the Registration Statement and the Prospectus and such
other related matters as the Representatives reasonably may request and such
counsel shall have received such documents and other information as they request
to enable them to pass upon such matters.
(d) On the Closing Date, the Underwriters shall have
received the opinion, dated the Closing Date, of Piper & Marbury L.L.P., counsel
to the Company and the Selling Shareholder to the effect set forth below:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of Maryland,
its jurisdiction of incorporation, and 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.
(ii) The Company has all power and authority
necessary to own or hold its properties and assets, and to conduct its business
in the manner described in or contemplated by the Registration Statement and the
Prospectus.
(iii) The Company has the duly authorized capital
stock set forth in the Prospectus and will have the adjusted capitalization set
forth therein at the Closing Date, based on
21
the assumptions set forth therein. All of the shares of capital stock of the
Company issued and outstanding immediately prior to the Closing Date or an
Option Closing Date, as the case may be, have been duly and validly authorized
and issued, are fully paid and non-assessable, without personal liability
attaching to the ownership thereof, and, to such counsel's knowledge, none of
such shares have been issued or are owned or held in violation of any preemptive
or other rights of securityholders or other persons to acquire securities of the
Company. The securities of the Company including, without limitation, the Shares
and the Stock, conform to all statements relating thereto appearing under the
caption "Description of Capital Stock" section in the Prospectus. Other than as
disclosed in the Prospectus, to such counsel's knowledge, there are no holders
of the securities of the Company having rights to registration thereof or
pre-emptive rights to purchase capital stock of the Company and neither the
filing of the Registration Statement nor the offering and sale of the Shares as
contemplated by this Agreement give rise to any rights (other than have been
waived or satisfied) for or relating to the registration of any securities of
the Company. Except as created hereby or described in the Prospectus, to such
counsel's knowledge, there are no commitments, plans or arrangements to issue,
and no outstanding options, warrants or other rights, calling for issuance of,
any shares of capital stock of the Company or any security or other instrument
which, by its terms, is convertible into, exercisable for, or exchangeable for
capital stock of the Company.
(iv) The Shares have been duly and validly
authorized and, when issued and delivered against payment therefor as provided
herein, will be duly and validly issued and fully paid and non-assessable, to
such counsel's knowledge, will not have been issued in violation of any
preemptive or other rights of securityholders or other persons to acquire
securities of the Company and will conform to all statements relating thereto
appearing under the caption "Description of Capital Stock" in the Prospectus; no
holder thereof is or will be subject to personal liability by reason of being
such a holder. Good and marketable title to the Shares will pass to the
Underwriters on the Closing Date, or any Option Closing Date, as the case may
be, free and clear of any lien, encumbrance, security interest, claim or other
restriction whatsoever.
(v) The Shares have been duly approved for
listing on the NNM.
(vi) The Registration Statement is effective under
the Act. Any required filing of a registration statement pursuant to Rule 462(b)
has been made in the manner and within the time period required by Rule 462(b).
The Prospectus has been filed with the Commission pursuant to the appropriate
subparagraph of Rule 424(b) under the Act and no stop order suspending the
effectiveness of the Registration Statement or any amendment thereto has been
issued, and no proceedings for that purpose have been instituted or are pending
or, to the best knowledge of such counsel, are threatened or contemplated under
the Act.
(vii) The Registration Statement, as amended, and
the Prospectus (except for the financial statements, schedules and other
financial data included therein, as to which such counsel need not express any
opinion), contains all statements that are required to be stated therein
22
by, and complies as to form in all material respects with, the requirements of
the Act and the Rules and Regulations.
(viii) The descriptions and summaries contained in
the Prospectus of contracts, agreements and other documents are accurate and
fairly represent, in all material respects, the information required to be
disclosed with respect thereto by the Act and the Rules and Regulations. To the
best knowledge of such counsel, all contracts, agreements and other documents
which are required by the Act or the Rules and Regulations to be described in
the Prospectus or to be filed as exhibits to the Registration Statement have
been so described or filed.
(ix) To the best knowledge of such counsel, there
is not pending or threatened against the Company any action, suit or proceeding
by any person or any action, suit, proceeding or investigation before or by any
court, regulatory body, administrative agency or other governmental body,
required to be disclosed in the Registration Statement or the Prospectus which
is not so disclosed. Any such proceedings that are set forth in the Prospectus
are fairly and accurately summarized therein.
(x) The statements set forth under the captions
"Risk Factors," "Use of Proceeds," "Business," "Management," "Shares Eligible
for Future Sale," and "Description of Capital Stock" in the Prospectus, insofar
as such statements constitute summaries of the legal matters, documents or
proceedings referred to therein, fairly and accurately summarize such legal
matters, documents and proceedings.
(xi) The Company has full right, power, and
authority to enter into this Agreement and to consummate the transactions
provided for, and perform its obligations as provided, herein. All necessary
corporate proceedings of the Company have been taken to authorize the execution,
delivery and performance, by the Company, of this Agreement. This Agreement has
been duly authorized, executed and delivered by the Company and, assuming due
authorization, execution and delivery by each other party hereto, constitutes
the valid and binding agreement of the Company, enforceable against the Company
in accordance with its terms (except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application relating to or affecting creditors' rights and by the
application of equitable principles relating to the availability of remedies and
except as rights to indemnity or contribution may be limited by federal or state
securities laws and the public policy underlying such laws).
(xii) All required consents from any party to any
material contract, indenture, mortgage, loan agreement, note, franchise,
license, lease, bond, other evidence of indebtedness or other agreement or
instrument, or any arrangement or understanding to which the Company is a party,
or to which any of the property, assets or businesses of the Company are or may
be subject, is required for the execution, delivery and performance of this
Agreement have been obtained. None of the Company's execution and delivery of
this Agreement, performance of its obligations hereunder, consummation of the
transactions contemplated herein, including, without
23
limitation, the issuance and sale of the Firm Shares, the application of the net
proceeds of the offering in the manner set forth under the caption "Use of
Proceeds" in the Prospectus will conflict with or be in contravention of,
constitute a default under, or entitle any other party to terminate or call a
default under, cause (or permit) the maturation or acceleration of any liability
or result in the creation or imposition of any lien, charge or encumbrance upon,
any property or asset of the Company pursuant to the terms of (A) the Charter or
Bylaws of the Company; (B) the terms of any contract, indenture, mortgage, loan
agreement, note, franchise, license, lease, bond, other evidence of indebtedness
or other agreement or instrument to which the Company is a party or by which the
Company is or may be bound or to which any of its properties, assets or
businesses are or may be subject; (C) any statute, rule or regulation of any
regulatory body, administrative agency or other governmental body, having
jurisdiction over the Company or any of its properties; assets, or businesses,
(D) any order or decree of any government, arbitrator, court, regulatory body or
administrative agency or other governmental agency or body, domestic or foreign,
having such jurisdiction.
(xiii) All legally required proceedings in
connection with the authorization, issue and sale of the Shares by the Company
in accordance with this Agreement have been taken and no consent, approval,
authorization, order, license, certificate, declaration or permit from or of, or
filing with, any court, regulatory body, administrative agency or other
governmental body, has been or is required for the Company's performance of this
Agreement or the consummation of the transactions contemplated hereby, except
such as may be required under federal or state securities laws in connection
with the purchase and distribution by the Underwriters of the Shares.
(xiv) The Company is not in violation or breach of
its Charter or Bylaws. Except as disclosed in the Prospectus, neither the
Company, nor, to such counsel's best knowledge, any other party is in violation
or breach of, or in default with respect to, any material provision of any
contract, indenture, mortgage, loan agreement, note, franchise, license, lease,
bond, other evidence of indebtedness or other agreement or instrument, or
arrangement or understanding which is material to the Company, and each such
contract, indenture, mortgage, loan agreement, note, franchise, license, lease,
bond, other evidence of indebtedness or other agreement or instrument,
arrangements or understanding is in full and force and is the legal, valid and
binding obligation of the Company.
(xv) The Company does not own or have title to any
real property. Any real properties held or used by the Company under lease are
held or used under valid, subsisting and enforceable leases, such leases are in
full force and effect, the Company is not in default in respect of any material
terms of any such leases and to such counsel's best knowledge there are no
claims that have been asserted by any party adverse to the Company's right as
lessee under any such lease or affecting or challenging the Company's right to
continue possession of the premises subject to any such lease which,
individually or in the aggregate, would have a Material Adverse Affect. No real
property owned, leased, licensed or used by the Company is situated in an area
which is, or to the best knowledge of such counsel, will be subject to zoning,
use, or building code restrictions which would prohibit (and no state of facts
relating to the actions or inaction of another person or entity or
24
his or its ownership, leasing, licensing, or use of any real or personal
property exists or will exist which would prevent) the continued effective
ownership, leasing, licensing, or use of such real property in the business of
the Company as described in or contemplated by the Prospectus.
(xvi) The Company is not and, after giving effect
to the offering and sale of the Shares, will not be an "investment company," or
an entity "controlled" by an "investment company," as such terms are defined in
the Investment Company Act.
(xvii) To the best knowledge of such counsel, since
the effective date of the Registration Statement or the later effective date of
any amendment thereto, no event has occurred which should have been set forth in
an amendment or supplement to the Registration Statement or Prospectus which has
not been so set forth.
(xviii) The Company has full right, power and
authority and has obtained and holds all licenses, consents, authorizations,
approvals, orders, certificates and permits of and from, and has made all
declarations and filings with all courts, regulatory bodies, administrative
agencies, or other governmental bodies, necessary to own, lease, license and use
its properties and assets and to conduct its business in the manner described in
or contemplated by the Prospectus, except as otherwise described therein. The
Company has not received any notice of proceedings relating to the Registration
Statement, and to its best knowledge no governmental body is considering
limiting, suspending, modifying or revoking, any such consent, authorization,
approval, order, certificate or permit which would, individually or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, have a
Material Adverse Effect. The Company has filed with the appropriate governmental
authorities each and every statement, report, information or form required to be
filed by it pursuant to any applicable law, regulation or order, except where
the failure(s) to so file would not, individually or in the aggregate, have a
Material Adverse Effect, and all such filings or submissions were in compliance
with applicable laws and regulations when filed, and no deficiencies have been
asserted by any regulatory commission, agency or authority with respect to such
filings or submissions, except where the failure(s) to so file or cure would
not, individually or in the aggregate, have a Material Adverse Effect. The
Company has not received any notice of, and to the best knowledge of the
Company, has not been threatened with and/or has not been sued and is not under
investigation with respect to a violation or a possible violation of any
provision of any law, regulation or order, except such violation(s) as would
not, individually or in the aggregate, have a Material Adverse Effect.
(xix) This Agreement has been duly executed and
delivered by the Selling Shareholder, and assuming due authorization, execution
and delivery by each other party hereto, constitutes the valid and binding
agreement of the Selling Shareholder, enforceable against the Selling
Shareholder in accordance with its terms (except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application relating to or affecting creditors' rights and
by the application of equitable principles relating to the availability of
remedies and except as rights to indemnity or contribution may be limited by
federal or state securities laws and the public policy underlying such laws).
25
(xx) No consent, authorization, approval, order,
registration, license, certificate, declaration or permit of, or filing with,
any court or governmental or regulatory body, administrative agency or other
governmental body is required for the sale of the Optional Shares by the Selling
Shareholder or the execution, delivery and performance of this Agreement, except
for the registration under the Act of the Shares and the registration of the
Stock under the Exchange Act, each of which has been made or obtained, and such
consents, approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with the purchase
and distribution of the Shares by the Underwriters, such approval as may be
required from the NNM to have the Shares listed thereon, such approval as may be
required by the NASD in connection with the terms and conditions set forth in
this Agreement.
(xxi) The Selling Shareholder has the legal
capacity to enter into this Agreement and the full right, power and authority to
consummate the transactions provided for hereby, and perform his obligations as
provided. This Agreement has been duly executed and delivered by the Selling
Shareholder, and constitutes the valid, legal and binding agreement of the
Selling Shareholder, enforceable against the Selling Shareholder in accordance
with its terms (except as such enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application relating to or affecting the enforcement of creditors' rights and
the application of equitable principles relating to the availability of
remedies, and except as rights to indemnity or contribution may be limited by
federal or state securities laws and the public policy of such laws).
(xxii) The execution and delivery of this Agreement
by the Selling Shareholder and the consummation hereby, by the Selling
Shareholder, of the transactions contemplated will not (A) result in a breach
of, or constitute a default under, any material agreement or instrument or any
decree, judgment or order to which the Selling Shareholder is a party or by
which the Selling Shareholder may be bound or to which any of the properties of
the Selling Shareholder are or may be subject or (B) violate any law, rule or
regulation applicable to the Selling Shareholder or to which his properties are
or may be subject (other than for the securities or Blue Sky laws of the various
states and the rules and regulations of the NASD and assuming compliance with
the federal securities laws by the other parties hereto).
(xxiii) To the best knowledge of such counsel, the
Selling Shareholder has good and marketable title to the Optional Shares to be
sold by the Selling Shareholder hereunder and full power, right and authority to
sell such Optional Shares, and upon the delivery of and payment for the Shares
as herein contemplated, each of the Underwriters will receive good and
marketable title to the Shares purchased by it from the Selling Shareholder,
free and clear of any lien, encumbrance, security interest, claim or other
restriction whatsoever.
(xxiv) To the best knowledge of such counsel, there
is not pending or threatened any action, suit, or proceeding by any person or
any action, suit, proceeding or investigation before any court, regulatory body,
or administrative agency or any other governmental
26
body against the Company or the Selling Shareholder, or to which the business or
properties or assets of the Company or the Selling Shareholder is subject or by
which such business, properties or assets may be bound, which seeks to restrain,
enjoin, prevent consummation of or otherwise challenge this Agreement or any of
the transactions contemplated hereby.
(xxv) To such counsel's best knowledge, the written
information provided by the Selling Shareholder for use in the Prospectus did
not and does not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading and the information contained under the
caption "Principal Stockholders" in the Prospectus or any amendment or
supplement thereto with respect to the Selling Shareholder does not contain any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
In addition, such counsel shall state that in the course of the
preparation of the Registration Statement and the Prospectus, such counsel has
participated in conferences with officers and representatives of the Company and
the Selling Shareholder, with the Company's independent public accountants, and
with the Representatives, at which conferences such counsel made inquiries of
such officers, representatives and accountants and discussed the contents of the
Registration Statement and the Prospectus and on the basis of the foregoing,
nothing has come to such counsel's attention that would lead such counsel to
believe that either the Registration Statement or any amendment thereto, as of
the date the Registration Statement or such amendment is or was declared
effective, and as of the Closing Date or any Option Closing Date, as the case
may be, or the Prospectus as of the date thereof and as of the Closing Date or
any Option Closing Date, as the case may be, contained or contains any untrue
statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading (it
being understood that such counsel need not express any belief with respect to
the financial statements, and the notes and schedules related thereto and other
financial information or statistical data included in the Registration
Statement, any amendment thereto, or the Prospectus).
In rendering any such opinions, such counsel may rely, (i) as to
matters of fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company provided that copies of any such
certificates shall be delivered to counsel for the Underwriters and (ii) to the
extent such counsel deems proper, upon written statements or certificates of
public officials, provided that copies of any such statements or certificates
shall be delivered to counsel for the Underwriters.
References to the Registration Statement and the Prospectus in
this paragraph (d) shall include any amendment or supplement thereto at the date
of such opinion.
27
(e) On the Closing Date, the Underwriters shall have
received the opinion, dated the Closing Date, of J. Xxxxx Xxxxxx, Vice President
and General Counsel of the Company to the effect set forth below:
(i) The Company and the conduct of its business
as described in or contemplated by the Prospectus are or will not be, as the
case may be, in violation of any federal, state or local statute, administrative
regulation or other rule or law including, without limitation, the Fair Debt
Collections Practices Act, the Federal Truth-In-Lending Act (and the Federal
Reserve Board's Regulation S issued thereunder), Fair Debt Billing Act, Equal
Credit Opportunity Act (and the Federal Reserve Board's Regulation B issued
thereunder), the Fair Credit Reporting Act and the Electronic Fund Transfer Act,
and comparable state statutes, the consequence of which violation(s) would no,
individually or in the aggregate, have a Material Adverse Effect, or which could
in any way, individually or in the aggregate, impair or delay the consummation
of the transactions contemplated by this Agreement or the offering of the Shares
in the manner contemplated by the Prospectus.
(ii) The Prospectus fairly and accurately describes
each license, consent, authorization, approval order, certificate and permit the
absence of which would, individually or in the aggregate, have a Material
Adverse Effect, or which would materially and adversely affect the Company's
ability to acquire and collect on the Accounts (as such term is defined in the
Prospectus) and otherwise to expand the business operations of the Company as
described in or contemplated by the Prospectus.
(iii) Except as disclosed in the Registration
Statement and the Prospectus, there are not pending any changes under any law,
regulation, license or permit that would have, individually or in the aggregate,
a Material Adverse Effect.
(f) On or prior to the Closing Date or any Option Closing
Date, as the case may be, counsel to the Underwriters shall have been furnished
such documents, certificates and opinions as they may reasonably require in
order to evidence the accuracy, completeness or satisfaction of any of the
representations or warranties of the Company or the Selling Shareholder or
conditions herein contained.
(g) On the date hereof the Representatives shall have
received a letter from Xxxxx Xxxxxxxx LLP, independent certified public
accountants, dated the such date and addressed to the Underwriters, in form and
substance satisfactory to the Representative, stating that (i) they are
independent public accountants as required by the Securities Act and the
Securities Act Regulations; (ii) it is their opinion that the financial
statements included in the Registration Statement and covered by their opinion
therein comply as to form in all material respects with the applicable
accounting requirements of the Securities Act and the applicable rules and
regulations thereunder, including without limitation, Regulation S-X of the
Commission; (iii) based upon limited procedures set forth in detail in such
letter, nothing has come to their attention which causes them to believe that
during the period from December 31, 1997 to a specified date not
28
more than five (5) calendar days prior to the date of this Agreement, there has
been any decrease in the capital stock or increase in long-term debt of the
Company or any decrease in total assets of the Company as compared with the
amounts shown in the December 31, 1997 consolidated balance sheet included in
the Registration Statement, or any decrease, as compared with the corresponding
period in the preceding year, in net income of the Company, except in each case
as set forth or contemplated in the Registration Statement; (iv) they have read
the Registration Statement and certain dollar amounts, percentages and other
financial information specified by the Representatives which is included in the
Registration Statement and have performed the procedures set forth in detail in
such letter and have found such amounts, percentages or other financial
information to be in agreement with the relevant accounting and financial
records of the Company.
(h) On the Closing Date, the Underwriter shall have received
from Xxxxx Xxxxxxxx LLP a letter, dated as of the Closing Date, to the effect
that they reaffirm the statements made in the letter furnished pursuant to
paragraph (f) of this Section, except that the "specified date" referred to
shall be a date not more than five (5) days prior to the Closing Date.
(i) On the Closing Date and any Option Closing Date, the
Underwriters shall have received a certificate, dated the Closing Date or such
Option Closing Date, as the case may be, of the principal executive officer and
the principal financial or accounting officer of the Company to the effect that
each such person has carefully examined the Registration Statement and the
Prospectus and any amendments or supplements thereto and this Agreement, and
that:
(i) the representations and warranties of the
Company in this Agreement are true and correct, as if made on and as of the
Closing Date or the Option Closing Date, as the case may be, and the Company has
complied with all agreements and covenants and satisfied all conditions
contained in this Agreement on its part to be performed or satisfied at or prior
to the Closing Date or such Option Closing Date;
(ii) No stop order suspending the effectiveness of
the Registration Statement has been issued, and no proceedings for that purpose
have been instituted or are pending or, to the best knowledge of each such
person, are contemplated or threatened under the Act and any and all filings
required by Rule 424, Rule 430A and Rule 462(b) have been timely made;
(iii) The Registration Statement and Prospectus
and, if any, each amendment and each supplement thereto, contain all statements
and information required by the Act or the Rules and Regulations to be included
therein, and neither the Registration Statement or the Prospectus nor any
amendment or supplement thereto includes any untrue statement of a material fact
or omits to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading; and
(iv) Subsequent to the respective dates as of
which information is given in the Registration Statement and the Prospectus or
any amendment or supplement thereto, up to and
29
including the Closing Date or the Option Closing Date, as the case may be, the
Company has not incurred, other than in the ordinary course of its business or
as described in the Prospectus or in an amendment or a supplement thereto, any
material liabilities or obligations, direct or contingent; the Company has not
purchased any of its outstanding capital stock or paid or declared any dividends
or other distributions on its capital stock; the Company has not entered into
any transactions not in the ordinary course of business; and there has not been
any change in the capital stock or long-term debt or any increase in the
short-term borrowings (other than any increase in short-term borrowings in the
ordinary course of business) of the Company or any material adverse change to
the business, properties, assets, net worth, condition (financial or other),
results of operations or prospects of the Company; the Company has not sustained
any material loss or damage to its property or assets, whether or not insured;
there is no litigation which is pending or threatened against the Company which
is required under the Act or the Rules and Regulations to be set forth in an
amended or supplemented Prospectus which has not been set forth; and there has
not occurred any event required pursuant to the requirements of the Act and the
Rules and Regulations to be set forth in an amended or supplemented Prospectus
which has not been set forth or which would have, individually or in the
aggregate, a Material Adverse Effect.
References to the Registration Statement and the Prospectus in
this paragraph (h) are to such documents as amended and supplemented at the date
of the certificate required hereby.
(j) On the Closing Date, and the Option Closing Date, if
any, the Underwriters shall have received a certificate, dated the Closing Date
or the Option Closing Date, as applicable, from the Selling Shareholder to the
effect that the Selling Shareholder has carefully examined the Registration
Statement and the Prospectus and any amendments or supplements thereto and this
Agreement, and the representations and warranties of the Selling Shareholder set
forth in Section 2(b) of the Agreement shall be accurate as though expressly
made on and as of the Closing Date or Option Closing Date, as the case may be
and the Selling Shareholder has complied with all agreements and covenants and
satisfied all conditions contained in this Agreement on its part to be performed
or satisfied at or prior to the Closing Date or such Option Closing Date;.
(k) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus up to and
including the Closing Date or any Option Closing Date, as the case may be, there
has not been (A) any change in the letter or letters referred to in paragraphs
(g) and (h) of this Section 8 or (B) any change, or any development involving a
prospective change, in the business or properties of the Company which change in
the case of clause (i) or change or development in the case of clause (B) makes
it impractical or inadvisable in the Representatives' judgment to proceed with
the public offering or the delivery of the Shares as contemplated by the
Prospectus.
(l) No order suspending the sale of the Shares in any
jurisdiction designated by you pursuant to Section 6(c) hereof has been issued
on or prior to the Closing Date or any Option Closing Date, as the case may be,
and no proceedings for that purpose have been instituted or, to the best
knowledge of the Company or the Selling Shareholder, have been or are
contemplated.
30
(m) The Representatives shall have received from the Selling
Shareholder, each person who is a director or officer of the Company, each
shareholder, and each other person, if any, who has the right to acquire more
than five percent (5%) or more of the outstanding shares of Stock, assuming
exercise of currently exercisable stock options on a fully diluted basis, an
agreement to the effect that such person will not, directly or indirectly,
without the prior written consent of the Representatives, on behalf of the
Underwriters, offer, sell, offer to sell, contract to sell, grant any option to
purchase, pledge or otherwise dispose (or announce any offer, sale, offer of
sale, contract of sale, grant of an option to purchase, pledge or other
disposition) of any shares of Common Stock or any securities convertible into,
or exchangeable or exercisable for, shares of Common Stock for a period of one
hundred eighty (180) calendar days after the date of this Agreement; provided,
however, that transfers or other dispositions of shares of Common Stock for the
purpose of estate planning shall be permitted to the extent that the person(s)
obtaining shares as a consequence of any such transfer or disposition takes such
shares subject to the 180 calendar day restriction described above.
(n) The Shares shall have been duly authorized for listing
on the NNM.
(o) The NASD, upon review of the terms of the public
offering of the Shares contemplated hereby, shall have indicated that it has no
objection to the underwriting arrangements pertaining to the sale of the Shares
and the Underwriters' participation in the sale of the Shares as so
contemplated.
(p) The Company shall have furnished the Underwriters with
such further opinions, letters, certificates or documents as the Representatives
or counsel for the Underwriters may reasonably request.
All opinions, certificates, letters and documents to be furnished
by the Company will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Underwriters and to
counsel for the Underwriters. The Company shall furnish the Underwriters with
manually signed or conformed copies of such opinions, certificates, letters and
documents in such quantities as you reasonably request. The certificates
delivered under this Section 8 shall constitute representations, warranties and
agreements of the Company as to all matters set forth therein as fully and
effectively as if such matters had been set forth in Section 2 of this
Agreement.
If any condition to the Underwriters' obligations hereunder to
be satisfied prior to or at either the Closing Date or any Option Closing Date
is not so satisfied, this Agreement, at the Representatives' election, will
terminate upon notification to the Company without liability on the part of any
Underwriter (including the Representatives) or the Company, except for the
expenses to be paid by the Company pursuant to Section 7 hereof and except to
the extent provided in Section 9 hereof.
Section 9. Indemnification.
31
(a) The Company and the Selling Shareholder, jointly and
severally, agree to indemnify and hold harmless each Underwriter (including,
without limitation, in its capacity as a QIU (as defined in Section 10)), and
its officers, directors, partners, employees, agents and counsel, and each
person, if any, who controls such Underwriter within the meaning of Section 15
of the Act or Section 20 of the Exchange Act, against any and all losses,
claims, damages, liabilities or expenses whatsoever (which shall include, for
all purposes of this Section 9, but not be limited to, reasonable attorneys'
fees and any and all fees and expenses whatsoever reasonably incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever and any and all amounts paid in settlement),
joint or several (and actions in respect thereof), to which such Underwriter
(including, without limitation, in its capacity as a QIU (as defined in Section
10), officer, director, partner, employee, agent, counsel or controlling person
may become subject, under the Act or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages,
liabilities, expenses or actions arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement or the Prospectus or any Preliminary Prospectus, or any
amendment or supplement thereto, or any Blue Sky application or other document
executed by the Company or the Selling Shareholder specifically for the purposes
of qualifying, or based upon written information furnished by the Company or the
Selling Shareholder in any state or other jurisdiction in order to qualify, any
or all of the Shares under the securities or Blue Sky laws thereof (any such
application, document or information being hereinafter called a "Blue Sky
Application"), 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, as
incurred, expenses of such Underwriter, partner, employee, agent, counsel or
controlling person in connection with investigating, defending or appearing as a
third party witness in connection with any such loss, claim, damage, liability,
expense or action; provided, however, that neither the Company nor the Selling
Shareholder will be liable in any such case to the extent that any such loss,
claim, damage, liability, expense or action arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in any of such documents in reliance upon and in conformity with
information furnished in writing to the Company on behalf of such Underwriter
through the Representatives expressly for use therein, and provided, further,
that such indemnity with respect to any Preliminary Prospectus shall not inure
to the benefit of any Underwriter (or to the benefit of any person controlling
such Underwriter) from whom the person asserting any such loss, claim, damage,
liability or action purchased Shares which are the subject thereof to the extent
that any such loss, claim, damage, liability or action (i) results from the fact
that such Underwriter failed to send or give a copy of the Prospectus (as
amended or supplemented) to such person at or prior to the confirmation of the
sale of such Shares to such person in any case where such delivery is required
by the Act and (ii) arises out of or is based upon an untrue statement or
omission of a material fact contained in such Preliminary Prospectus that was
corrected in the Prospectus (as amended and supplemented), unless such failure
resulted from non-compliance by the Company with Section 6(h) hereof. The
indemnity agreement in this paragraph (a) shall be in addition to any liability
which the Company or the Selling Shareholder may otherwise have. The Company and
the Selling Shareholder may agree, as between themselves and without limiting
the rights of the
32
Underwriters under this Agreement, as to the respective amounts of such
liability for which they each shall be responsible. In no event, however, shall
the aggregate liability of the Selling Shareholder for indemnification or
contribution under this Section 9 or otherwise at law or in equity (other than
claims based in whole or in part on fraud) exceed the gross proceeds received by
such Selling Shareholder in respect of the Optional Shares.
(b) Each of the Underwriters agrees severally, but not
jointly, to indemnify and hold harmless the Company, each of its directors, each
of its officers who has signed the Registration Statement, each person, if any,
who controls the Company within the meaning of Section 15 of the Act or Section
20 of the Exchange Act and the Selling Shareholder against any and all losses,
claims, damages, liabilities or expenses whatsoever (which shall include, for
all purposes of this Section 9, but not be limited to, attorneys' fees and any
and all fees and expenses whatsoever incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any claim
whatsoever and any and all amounts paid in settlement), (and actions in respect
thereof) to which the Company, or any such director, officer, or controlling
person or the Selling Shareholder may become subject, under the Act or other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities, expenses or actions arise
out of or are based upon (i) any untrue statement or alleged untrue statement of
any material fact contained in the Registration Statement or the Prospectus or
any Preliminary Prospectus, or any amendment or supplement thereto or in any
Blue Sky Application, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements 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 reliance upon and in conformity with
information furnished in writing by that Underwriter through the Representatives
to the Company expressly for use therein or (ii) the failure of any Underwriter
at or prior to the written confirmation of the sale of shares to send or deliver
a copy of an amended Preliminary Prospectus or the Prospectus (or the Prospectus
as amended or supplemented) to the person asserting any such losses, claims,
damages, liabilities or expenses who purchased the Shares which is the subject
thereof and the untrue statement or omission of a material fact contained in
such Preliminary Prospectus was corrected in the amended Preliminary Prospectus
or Prospectus (or the Prospectus as amended or supplemented). The Company and
the Selling Shareholder acknowledge that the statements with respect to the
public offering of the Shares set forth in the ______ and ______ paragraphs
under the caption "Underwriting" and the stabilization legend in the Prospectus
have been furnished by the Underwriters to the Company expressly for use therein
and constitute the only information furnished in writing by or on behalf of the
Underwriters for inclusion in the Prospectus. The indemnity agreement contained
in this paragraph (b) shall be in addition to any liability which the
Underwriters may otherwise have.
(c) Promptly after receipt by an indemnified party under
this Section 9 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof it to be made against one or more
indemnifying parties under this Section 9, notify such indemnifying party or
parties of the commencement thereof; but the failure so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under
33
paragraph (a) or (b) of this Section 9 to the extent that the indemnifying party
was not actually prejudiced by such omission. In case any such action is brought
against an indemnified party and it notifies an indemnifying party or parties of
the commencement thereof, the indemnifying party or parties against which a
claim is to be made will be entitled to participate therein and, to the extent
that it or they may wish, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party has reasonably concluded that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such legal defenses and otherwise to participate in the defense of such
action on behalf of such indemnified party or parties (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel representing the indemnified party or parties who
are parties to such action). Upon receipt of notice from the indemnifying party
to such indemnified party of its election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 9 for any legal
or other expenses (other than the reasonable costs of investigation)
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party has employed such counsel in connection
with the assumption of such different or additional legal defenses in accordance
with the proviso to the immediately preceding sentence, (ii) the indemnifying
party has not employed counsel reasonably satisfactory to the indemnified party
to represent the indemnified party within a reasonable time after notice of
commencement of the action, or (iii) the indemnifying party has authorized in
writing the employment of counsel for the indemnified party at the expense of
the indemnifying party.
(d) If the indemnification provided for in this Section 9 is
unavailable or insufficient to hold harmless an indemnified party under
paragraph (a) or (b) above in respect of any losses, claims, damages,
liabilities or expenses (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, liabilities
or expenses (or actions in respect thereof) (i) in such proportion as is
appropriate to reflect the relative benefits received by each of the
contributing parties, on the one hand, and the party to be indemnified, on the
other hand, from the offering of the Shares or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of each of the contributing parties, on the
one hand, and the party to be indemnified, on the other hand in connection with
the statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. In any case
where the Company and/or the Selling Shareholder is a contributing party and the
Underwriters are the indemnified party, the relative benefits received by the
Company and/or the Selling Shareholder on the one hand, and the Underwriters, on
the other hand, shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Shares (before deducting expenses) bear to the
total underwriting discounts received by the Underwriters hereunder, in each
case as set forth in the table on the cover page of the Prospectus. Relative
fault shall be determined
34
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 and/or the Selling
Shareholder or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or expenses (or actions in
respect thereof) referred to above in this paragraph (d) shall be 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 paragraph (d), the Underwriters shall not
be required to contribute any amount in excess of the underwriting discounts
applicable to the Shares purchased by the Underwriters hereunder. The
Underwriters' obligations to contribute pursuant to this paragraph (d) are
several in proportion to their respective underwriting obligations, and not
joint. No person guilty of fraudulent misrepresentations (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. Notwithstanding the
provisions of this paragraph (d), the Selling Shareholder shall not be required
to contribute any amount in excess of the gross proceeds received by the Selling
Shareholder in respect of the Optional Shares. For purposes of this paragraph
(d), (i) each person, if any, who controls an Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act shall have the same
rights to contribution as such Underwriter and (ii) each director of the
Company, each officer of the Company who has signed the Registration Statement,
and each person, if any, who controls the Company within the meaning of Section
15 of the Act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Company. Any party entitled to contribution will, promptly
after receipt of notice of commencement of any action, suit or proceeding
against such party in respect to which claim for contribution may be made
against another party or parties under this paragraph (d), notify such party or
parties from whom contribution may be sought, but the omission so to notify such
party or parties shall not relieve the party or parties from whom contribution
may be sought from any other obligation (x) it or they may have hereunder or
otherwise than under this paragraph (d) or (y) to the extent that such party or
parties were not actually prejudiced by such omission. The contribution
agreement set forth above shall be in addition to any liabilities which any
indemnifying party may otherwise have.
Section 10. Qualified Independent Underwriter. The Company hereby
confirms that at its request Xxxxxx, Xxxxx Xxxxx, Incorporated has agreed to
render services, without compensation, as "qualified independent underwriter"
(in such capacity, the "QIU" within the meaning of Section2720 of the Conduct
Rules of the National Association of Securities Dealers, Inc.) with respect to
the offering and sale of the Shares. The Company will indemnify and hold
harmless the QIU against any losses, claims, damages or liabilities, joint or
several, to which the QIU may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon the QIU's acting (or alleged
failing to act) as such "qualified independent underwriter" and will reimburse
the QIU for any legal or other expenses reasonably incurred by the QIU in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that the
Company will have no obligation to indemnify the QIU under this Section 10 to
the extent that
35
any such loss, claim, damage or liability (or action in respect thereof) shall
have been determined by a court of competent jurisdiction (which determination
has become final and non-appealable) to have been due to the willful misconduct
or gross negligence of the QIU. The obligations of the Company under this
Section 10 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 the QIU within the meaning of the Securities Act.
Section 11. Representations, Etc. to Survive Delivery. The respective
representations, warranties, agreements, covenants, indemnities and statements
of, and on behalf of, the Company and its officers, the Selling Shareholder and
the Underwriters, respectively, set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation made by or
on behalf of the Underwriters, and will survive delivery of and payment for the
Shares. Any successors to the Underwriters shall be entitled to the benefit of
the indemnity, contribution and reimbursement agreements contained in this
Agreement.
Section 12. Effective Date and Termination.
(a) This Agreement shall become effective at 9:00 a.m.,
Washington, DC time, on the first business day following the date hereof, or at
such earlier time after the Registration Statement becomes effective as the
Representatives, in their sole discretion, shall release the Shares for the sale
to the public, unless prior to such time the Representatives shall have received
written notice from the Company that it elects that this Agreement shall not
become effective, or the Representatives shall have given written notice to the
Company that the Representatives on behalf of the Underwriters elect that this
Agreement shall not become effective; provided, however, that the provisions of
this Section 12 and of Section 7 and Section 9 hereof shall at all times be
effective. For purposes of this Section 12(a), the Shares to be purchased
hereunder shall be deemed to have been so released upon the earlier of
notification by the Representatives to securities dealers releasing such Shares
for offering or the release by the Representatives for publication of the first
newspaper advertisement which is subsequently published relating to the Shares.
(b) This Agreement (except for the provisions of Sections 7
and 9 hereof) may be terminated by the Representatives by notice to the Company
in the event that the Company has failed to comply in any respect with any of
the provisions of this Agreement required on its part to be complied with at or
prior to the Closing Date or any Option Closing Date, as the case may be, or if
any of the representations or warranties of the Company are not accurate in any
respect or if the covenants, agreements or conditions of, or applicable to, the
Company herein contained have not been complied with in any respect or satisfied
within the time specified on the Closing Date or any Option Closing Date, as the
case may be, or if prior to the Closing Date or any such Option Closing Date:
(i) the Company shall have sustained a loss by
strike, fire, flood, accident or other calamity of such a character as to
interfere materially with the conduct of the business and operations of the
Company regardless of whether or not such loss was insured;
36
(ii) trading in securities generally on the New
York Stock Exchange or the NNM shall have been suspended or a material
limitation on such trading shall have been imposed or minimum or maximum prices
shall have been established on either such exchange or market;
(iii) a banking moratorium shall have been declared
by New York or United States authorities;
(iv) there shall have been an outbreak or
escalation of hostilities between the United States and any foreign power or an
outbreak or escalation of any other insurrection or armed conflict involving the
United States;
(v) there shall have been commenced any action,
suit or proceeding at law or in equity against the Company, or by any federal,
state or other commission, board or agency, wherein any unfavorable decision
would materially adversely affect the business, properties or financial
condition of the Company;
(vi) there shall have occurred any material
adverse market conditions, of which the Representatives shall be the sole judge;
(vii) Company's independent public accountants
shall have imposed qualifications in certifying to, or its attorneys in opining
upon, material items including, without limitation, information in the footnotes
to the financial statements or matters incident to the issuance and sale of the
Shares, corporate proceedings or other subjects; or
(viii) there shall have been a material adverse
change in (i) general economic, political or financial conditions or (ii) the
present or prospective business or condition (financial or other) of the Company
that, in each case, in the Representatives' sole judgment makes it impracticable
or inadvisable to make or consummate the public offering, sale or delivery of
the Shares on the terms and in the manner contemplated in the Prospectus and the
Registration Statement.
(c) Termination of this Agreement under this Section 12 or
Section 13 after the Firm Shares have been purchased by the Underwriters
hereunder shall be applicable only to the Optional Shares. Termination of this
Agreement shall be without liability of any party to any other party other than
as provided in Sections 7 and 9 hereof.
Section 13. Substitution of Underwriters. If one or more of the
Underwriters shall fail or refuse (otherwise than for a reason sufficient to
justify the termination of this Agreement under the provisions of Section 8 or
12 hereof) to purchase and pay for (a) in the case of the Closing Date, the
number of Firm Shares agreed to be purchased by such Underwriter or Underwriters
upon tender to the Representatives such Firm Shares in accordance with the terms
hereof or (b) in the case of any Option Closing Date, the number of Optional
Shares agreed to be purchased by such
37
Underwriter or Underwriters upon tender to the Representatives of such Optional
Shares in accordance with the terms hereof, and the number of such Shares shall
not exceed ten percent (10%) of the Firm Shares or Optional Shares required to
be purchased on the Closing Date or such Option Closing Date, as the case may
be, then, each of the non-defaulting Underwriters shall purchase and pay for (in
addition to the number of such Shares which it has severally agreed to purchase
hereunder) its proportionate share (based on the monetary obligations of the
several Underwriters hereunder on account of the purchase of Firm Shares,
excluding the Firm Shares allocable to the defaulting Underwriter or
Underwriters) which the defaulting Underwriter or Underwriters shall have so
failed or refused to purchase on such Closing Date or Option Closing Date, as
the case may be. In such case, the Representatives, on behalf of the
Underwriters, shall have the right to postpone the Closing Date or the Option
Closing Date, as the case may be, to a date not exceeding seven (7) full
business days after the date originally fixed as such Closing Date or the Option
Closing Date, as the case may be, pursuant to the terms hereof in order that any
necessary changes in the Registration Statement, the Prospectus or any other
documents or arrangements may be made.
If one or more of the Underwriters shall fail or refuse (otherwise than
for a reason sufficient to justify the termination of this Agreement under the
provisions of Section 8 or 12 hereof) to purchase and pay for (a) in the case of
the Closing Date, the number of Firm Shares agreed to be purchased by such
Underwriter or Underwriters upon tender to you of such Firm Shares in accordance
with the terms hereof or (b) in the case of the Option Closing Date, the number
of Optional Shares agreed to be purchased by such Underwriter or Underwriters
upon tender to you of such Optional Shares in accordance with the terms hereof,
and the number of such Shares shall exceed ten percent (10%) of the Firm Shares
or Optional Shares required to be purchased by all the Underwriters on the
Closing Date or the Option Closing Date, as the case may be, then (unless within
forty-eight (48) hours after such default arrangements to your satisfaction
shall have been made for the purchase of the defaulted Shares by an Underwriter
or Underwriters) and subject to the provisions of Section 12(b) hereof, this
Agreement will terminate without liability on the part of any non-defaulting
Underwriter or on the part of the Company except as otherwise provided in
Sections 7 and 9 hereof. As used in this Agreement, the term "Underwriter"
includes any person substituted for an Underwriter under this paragraph. Nothing
in this Section 13, and no action taken hereunder, shall relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
Section 14. Notices. All communications hereunder shall be in writing
and if sent to the Representatives shall be mailed or delivered or sent by
facsimile transmission and confirmed by letter to Xxxxxx, Xxxxx Xxxxx,
Incorporated at 0000 Xxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, Attention: Xxxxxx
X. Xxxx (facsimile number: (000) 000-0000) or, if sent to the Company, shall be
mailed or delivered or sent by facsimile transmission and confirmed by letter to
the Company at 0000 Xxxxxxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxxxxx 00000, attention:
Xxxxxx X. Xxxxxx (facsimile number: (000) 000-0000).
Section 15. Successors. This Agreement shall inure to the benefit of
and be binding upon the Company, the Selling Shareholder and each Underwriter
and the Company's, the Selling
38
Shareholder's and each Underwriter's respective successors and legal
representatives, and nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any other person any legal or
equitable right, remedy or claim under or in respect of this Agreement, or
any provisions herein contained, this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person, except that
the representatives, warranties, indemnities and contribution agreements of
the Company and the Selling Shareholder contained in this Agreement shall
also be for the benefit of the partners, employees agents of each Underwriter
and any person or persons, if any, who control any Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, and
except that the Underwriters' indemnity and contribution agreements shall
also be for the benefit of the directors of the Company, the officers of the
Company who have signed the Registration Statement, any person or persons, if
any, who control the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act and the Selling Shareholder. No purchaser of
Shares from the Underwriters will be deemed a successor because of such
purchase.
Section 16. Applicable Law; Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of Maryland,
without giving effect to the choice of law or conflict of law principles
thereof. Each party hereto consents to the jurisdiction of each court in which
any action is commenced seeking indemnity or contribution pursuant to Section 9
above and agrees to accept, either directly or through an agent, service of
process of each such court.
Section 17. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, and all
of which together shall be deemed to be one and the same instrument.
39
If the foregoing is in accordance with your understanding,
please sign and return to us three (3) counterparts hereof, 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, the Company and the Selling Shareholder.
Very truly yours,
CREDITRUST CORPORATION
By:
---------------------------------
Name:
Title:
SELLING SHAREHOLDER:
--------------------------------------
Xxxxxx X. Xxxxxx
Accepted as of the date hereof
XXXXXX, XXXXX XXXXX, INCORPORATED
0000 Xxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
BOENNING & SCATTERGOOD, INC.
000 Xxxxx Xxxxx Xxxx, Xxxxx 000
Xxxx xx Xxxxxxx, XX 00000
By: XXXXXX, XXXXX XXXXX, INCORPORATED
On behalf of each of the Underwriters
By:
------------------------------------
Name:
Title:
40
SCHEDULE I
NUMBER OF SHARES TO BE
PURCHASED BY EACH UNDERWRITER
Number of Firm
Shares to be Purchased
Name of Underwriter Percentage from the Company
------------------- ---------- ----------------
Xxxxxx, Xxxxx Xxxxx, Incorporated....
Boenning & Scattergood, Inc..........
41
