April , 2004
Xxxxxx Xxxxxx Partners LLC
Xxxxxxxx Inc.
JMP Securities
Xxxx Capital Partners, LLC
c/o Thomas Xxxxxx Partners LLC
Xxx Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Introduction. ACE CASH EXPRESS, INC., a Texas corporation (the
"Company”), proposes to issue and sell to the several underwriters named in
Schedule A hereto (the “Underwriters”), and certain shareholders of the Company
named in Schedule B hereto (the “Selling Shareholders") severally propose to
sell to the several Underwriters, an aggregate of 2,900,000 shares (the “Firm
Shares”) of the Common Stock, par value $0.01 per share, of the Company, of
which 1,800,000 shares are to be sold by the Company and 1,100,000 shares are
to be sold by the Selling Shareholders, with each Selling Shareholder selling
the number of shares set forth opposite such Selling Shareholder’s name in
Schedule B hereto. The Company also proposes to issue and sell to the several
Underwriters not more than an additional 370,000 shares of its Common Stock,
par value $.01 per share, and Xxx X. Xxxxxxxxx and Xxxxxxx X. Xxxxxx (the
“Option Selling Shareholders”) severally propose to sell to the several
Underwriters not more than an aggregate of an additional 65,000 shares of the
Company’s Common Stock, par value $0.01 per share, with each Option Selling
Shareholder selling the number of Shares set forth opposite such Option Selling
Shareholder’s name in Schedule B hereto, if and to the extent that you shall
have determined to exercise, on behalf of the Underwriters, the right to
purchase such shares of common stock granted to the Underwriters in Section 3
hereof. The additional 370,000 shares to be sold by the Company and the
additional 65,000 shares to be sold by the Option Selling Shareholders are
hereinafter together referred to as the “Additional Shares”. The Firm Shares
and the Additional Shares are hereinafter collectively referred to as the
"Shares”. The shares of Common Stock, par value $0.01 per share, of the
Company to be outstanding after giving effect to the sales contemplated hereby
are hereinafter referred to as the “Common Stock”. The Company and the Selling
Shareholders are hereinafter sometimes collectively referred to as the
"Sellers”.
The Company has filed with the Securities and Exchange Commission (the
"Commission”) a registration statement on Form S-3 (Reg. No. 333-113668),
including a prospectus, relating to the Shares. The registration statement as
amended at the time it becomes effective, including the information (if any)
deemed to be part of the registration statement at the time of effectiveness
pursuant to Rule 430A under the Securities Act of 1933, as amended (the
"Securities Act”), and all documents incorporated or deemed to be incorporated
by reference therein is hereinafter referred to as the “Registration
Statement”; the prospectus in the form first used to confirm sales of Shares is
hereinafter referred to as the “Prospectus”. If the Company files a
registration statement to register additional shares of Common Stock pursuant
to Rule 462(b) under the Securities Act (the “Rule 462 Registration
Statement”), then any reference herein to the term “Registration Statement”
shall be deemed to include the Rule 462 Registration Statement. All references
in this Agreement to the Registration Statement, the Rule 462 Registration
Statement, a preliminary prospectus, the Prospectus, or any amendments or
supplements to any of the foregoing, shall include any copy thereof filed with
the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval System (“XXXXX”).
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All references in this Agreement to financial statements and schedules and
other information which is “contained,” “included” or “stated” in the
Registration Statement or the Prospectus (and all other references of like
import) shall be deemed to mean and include all such financial statements and
schedules and other information which is or is deemed to be incorporated by
reference in the Registration Statement or the Prospectus, as the case may be;
and all references in this Agreement to amendments or supplements to the
Registration Statement or the Prospectus shall be deemed to mean and include
the filing of any document under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), which is or is deemed to be incorporated by
reference in the Registration Statement or the Prospectus, as the case may be.
1. Representations and Warranties of the Company. The Company represents
and warrants to and agrees with each of the Underwriters that:
1.1. Effective Registration Statement. The Registration Statement has
become effective under the Securities Act; no stop order suspending the
effectiveness of the Registration Statement is in effect, and no proceedings
for such purpose are pending before or, to the best knowledge of the Company,
threatened by the Commission.
1.2. Contents of Registration Statement. (i) The Registration Statement,
when it became effective, did not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) the Registration Statement and the
Prospectus comply and, as amended or supplemented, if applicable, will comply
in all material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder and (iii) the Prospectus does not
contain and, as amended or supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that the representations and warranties
set forth in this paragraph do not apply to statements or omissions in the
Registration Statement or the Prospectus based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use therein.
1.3. Exchange Act Compliance. The documents incorporated or deemed to be
incorporated by reference in the Prospectus, at the time they were or hereafter
are filed with the Commission, complied and will comply in all material
respects with the requirements of the Exchange Act, and, when read together
with the other information in the Prospectus, at the time the Registration
Statement and any amendments thereto become effective and at the Closing Date
and the Option Closing Date, as the case may be, will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the 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.
1.4. Due Incorporation. The Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to own
its property and to conduct its business as described in the Prospectus and is
duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or leasing
of property requires such qualification, except to the extent that the failure
to be so qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
1.5. Subsidiaries. Each subsidiary of the Company has been duly formed or
incorporated, and is validly existing as a limited liability company or
corporation in good standing under the laws of the jurisdiction of its
formation or incorporation. Each subsidiary of the Company has the
power (corporate or other) and authority to own its property and to
conduct its business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in which the
conduct of its business
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or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be
in good standing would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole. All of the issued shares of capital stock
or membership interests, as applicable, of each subsidiary of the Company have
been duly and validly authorized and issued, are fully paid and non-assessable
and are owned directly or indirectly by the Company, free and clear of all
liens, encumbrances, equities or claims. The subsidiaries listed on Schedule C
hereto are the only subsidiaries of the Company. Except for the subsidiaries
and as otherwise listed on Schedule C hereto, the Company owns no beneficial
interest, directly or indirectly, in any corporation, partnership, joint
venture or other business entity.
1.6. Underwriting Agreement. This Agreement has been duly authorized,
executed and delivered by the Company.
1.7. Description of Capital Stock. The authorized capital stock of the
Company conforms as to legal matters to the description thereof contained in
the Prospectus.
1.8. Authorized Stock. The shares of Common Stock (including the Shares
to be sold by the Selling Shareholders) outstanding have been duly authorized
and are validly issued, fully paid and non-assessable. No preemptive rights of
shareholders exist with respect to any of the Shares that have not been
satisfied or waived. Except as disclosed in the Prospectus, there are no
outstanding (i) securities or obligations of the Company or any of its
subsidiaries convertible into or exchangeable for any capital stock of the
Company or any such subsidiary, (ii) warrants, rights or options to subscribe
for or purchase from the Company or any such subsidiary any such capital stock
or any such convertible or exchangeable securities or obligations, or (iii)
obligations of the Company or any such subsidiary to issue any shares of
capital stock, any such convertible or exchangeable securities or obligations,
or any such warrants, rights or options.
1.9. No Conflict. The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement will not
contravene any provision of applicable law or the articles of incorporation or
by-laws of the Company or any agreement or other instrument binding upon the
Company or any of its subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or any
subsidiary, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement, except such
as may be required by the Securities Act, the National Association of
Securities Dealers, Inc. (the “NASD”) or the securities or Blue Sky laws of the
various states in connection with the offer and sale of the Shares.
1.10. Financial Statements. The consolidated financial statements
including the related notes of the Company and its subsidiaries included in the
Registration Statement and Prospectus present fairly the financial position of
such entities as of the dates indicated and the results of operations and cash
flows for such entities for the periods specified, all in conformity with
generally accepted accounting principles applied on a consistent basis. The
financial statement schedules included in the Registration Statement and the
information in the Prospectus under the captions “Prospectus Summary—Summary
Consolidated Financial Data” and “Selected Consolidated Financial Data” fairly
present the information shown therein and have been compiled on a basis
consistent with the financial statements included in the Registration Statement
and the Prospectus.
1.11. No Material Adverse Change. There has not occurred any material
adverse change, or, to the best knowledge of the Company, any development
involving a prospective material adverse change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company and its
subsidiaries, taken as a whole, from that set forth in the Prospectus
(exclusive of any amendments or supplements thereto subsequent to the date of
this Agreement).
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1.12. Legal Proceedings; Contracts; Exhibits. There are no legal or
governmental proceedings pending or, to the best knowledge of the Company,
threatened to which the Company or any of its subsidiaries is a party or to
which any of the properties of the Company or any of its subsidiaries is
subject that are required to be described in the Registration Statement or the
Prospectus and are not so described, or any statutes, regulations, off-balance
sheet transactions (including without limitation, transactions related to, and
the existence of, “variable interest entities” within the meaning of Financial
Accounting Standards Board Interpretation No. 46), contracts or other documents
that are required to be described or incorporated by reference in the
Registration Statement or the Prospectus or to be filed or incorporated by
reference as exhibits to the Registration Statement that are not described or
filed or incorporated as required.
1.13. Compliance with Securities Act. The Company meets the requirements
for use of Form S-3 under the Securities Act. Each preliminary prospectus
filed as part of the registration statement as originally filed or as part of
any amendment thereto, or filed pursuant to Rule 424 under the Securities Act,
complied when so filed in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder.
1.14. Not an Investment Company. The Company is not and, after giving
effect to the offering and sale of the Shares and the application of the
proceeds thereof as described in the Prospectus, will not be an “investment
company” as such term is defined in the Investment Company Act of 1940, as
amended.
1.15. Compliance with Laws. The Company and each of its subsidiaries are
conducting business in compliance with all applicable laws, rules and
regulations of the jurisdictions in which they are conducting business, except
where the failure to comply would not have a material adverse effect on the
Company and the subsidiaries, taken as a whole.
1.16. Compliance with Environmental Laws. The Company and its
subsidiaries (i) are in compliance with any and all applicable foreign,
federal, state and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants (“Environmental Laws”), (ii) have received
all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance in all material respects with any such permit, license or approval,
except where such noncompliance with Environmental Laws, failure to receive
required permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not,
individually or in the aggregate, have a material adverse effect on the Company
and its subsidiaries, taken as a whole.
1.17. No Environmental Costs. There are no costs or liabilities
associated with Environmental Laws (including, without limitation, any capital
or operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval, any
related constraints on operating activities and any potential liabilities to
third parties) which would, individually or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
1.18. No Registration Rights. There are no contracts, agreements or
understandings between the Company and any person granting such person the
right to require
the Company to file a registration statement under the Securities Act with
respect to any securities of the Company or to require the Company to include
such securities with the Shares registered pursuant to the Registration
Statement other than as described in the Registration Statement and as have
been waived in writing in connection with the offering contemplated hereby.
1.19. Absence of Material Changes. Subsequent to the respective dates as
of which information is given in the Registration Statement and the Prospectus,
(1) the Company and its subsidiaries
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have not incurred any material liability
or obligation, direct or contingent, nor entered into any material transaction
not in the ordinary course of business; (2) the Company has not purchased any
of its outstanding capital stock, nor declared, paid or otherwise made any
dividend or distribution of any kind on its capital stock other than ordinary
and customary dividends; and (3) there has not been any material change in the
capital stock, short-term debt or long-term debt of the Company and its
subsidiaries, except in each case as described in the Prospectus.
1.20. Compliance with Xxxxxxxx-Xxxxx. The Company is in compliance in
all material respects with all applicable provisions of the Xxxxxxxx-Xxxxx Act
of 2002 (the “Xxxxxxxx-Xxxxx Act”) that are effective as of the date hereof.
1.21 Good Title to Properties. The Company and its subsidiaries have good
and marketable title in fee simple to all real property owned by them and have
good and marketable title to all personal property owned by them which are
material to the business of the Company and its subsidiaries, in each case free
and clear of all liens, encumbrances and defects except such as are described
in the Prospectus or such as do not materially affect the value of such
property and do not interfere with the use made and proposed to be made of such
property by the Company and its subsidiaries; and any real property and
buildings held under lease by the Company and its subsidiaries are held by them
under valid, subsisting and enforceable leases except where such invalidity,
individually or in the aggregate, would not have a material adverse effect on
the Company and the subsidiaries, taken as a whole..
1.22. Intellectual Property Rights. The Company and its subsidiaries own
or possess, or can acquire on reasonable terms, all material patents, patent
rights, licenses, inventions, copyrights, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks and trade names currently
employed by them in connection with the business now operated by them, and
neither the Company nor any of its subsidiaries has received any notice of
infringement of or conflict with asserted rights of others with respect to any
of the foregoing which, individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a material adverse affect
on the Company and its subsidiaries, taken as a whole.
1.23. No Labor Disputes. No material labor dispute with the employees of
the Company or any of its subsidiaries exists, or, to the knowledge of the
Company, is imminent; and the Company is not aware of any existing, threatened
or imminent labor disturbance by the employees of any of its principal
suppliers, service providers, manufacturers or contractors that could have a
material adverse effect on the Company and its subsidiaries, taken as a whole.
1.24. Insurance. The Company and its subsidiaries are insured by the
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which
they are engaged; and neither the Company nor any of its subsidiaries has any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
1.25. Governmental Permits. The Company and its subsidiaries possess all
certificates, certifications, registrations, notifications, orders, licenses,
authorizations, approvals and permits (collectively, “Permits”) issued by the
appropriate federal, state or foreign regulatory authorities necessary to
conduct their respective business and such Permits are valid and in full force
and effect, except for Permits where the failure to possess, or the invalidity
of which, individually or in the aggregate, would not have a material adverse
effect on the Company and the subsidiaries, taken as a whole. The Company and
the Subsidiaries are in compliance in all respects with the terms and
conditions of such Permits, except where the failure to comply would not have a
material adverse effect on the Company and the subsidiaries, taken as a whole.
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Neither the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such Permit
which, individually or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
1.26 Accounting Controls. Xxxxx Xxxxxxxx LLP, the accounting firm which
has certified the financial statements for the fiscal years ended June 30, 2003
and 2002, filed with or incorporated by reference in and as a part of the
Registration Statement, is an independent public accounting firm within the
meaning of the Securities Act and the Securities Act Rules and Regulations.
Xxxxxx Xxxxxxxx LLP, whose opinion with respect to the financial statements for
the fiscal year ended June 30, 2001, filed with or incorporated by reference in
and as part of the Registration Statement, was at the time such opinion was
rendered an independent public accounting firm within the meaning of the
Securities Act and the Securities Act Rules and Regulations. Each of the
Company and each of its subsidiaries maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (1) transactions are
executed in accordance with management’s general or specific authorizations;
(2) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (3) access to assets is permitted only in
accordance with management’s authorization; and (4) the recorded accountability
for assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
1.27. Listing of Common Stock. The Common Stock is registered pursuant to
Section 12(g) of the Exchange Act and is listed on the Nasdaq National Market,
and the Company has taken no action designed to, or likely to have the effect
of, terminating the registration of the Common Stock under the Exchange Act or
delisting the Common Stock from the Nasdaq National Market, nor has the Company
received any notification that the Commission or the NASD is contemplating
terminating such registration or listing.
1.28. No Price Stabilization or Manipulation. The Company and its
subsidiaries have not taken and will not take, directly or indirectly, any
action designed to or that might be reasonably expected to cause or result in
any prohibited stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Shares.
1.29. Related Party Transactions. No relationship, direct or indirect,
exists between or among the Company on the one hand and the directors,
officers, shareholders, customers or suppliers of the Company on the other
hand, which is required to be described in the Prospectus and which is not so
described.
2. Representations and Warranties of the Selling Shareholders. Each of
the Selling Shareholders represents and warrants to and agrees with each of the
Underwriters that:
2.1. Due Authorization. This Agreement has been duly authorized, executed
and delivered by or on behalf of such Selling Shareholder and is a valid and
binding agreement of such Selling Shareholder, enforceable in accordance with
its terms, except as rights to
indemnification hereunder may be limited by applicable law and except as
the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles.
2.2. Selling Shareholder Documents. The Custody Agreement signed by such
Selling Shareholder and the Custodian named therein relating to the deposit of
the Shares to be sold by such Selling Shareholder (the “Custody Agreement") and
the Power of Attorney appointing certain individuals as such Selling
Shareholder’s attorneys-in-fact to the extent set forth therein, relating to
the transactions contemplated hereby and by the Registration Statement (the
“Power of Attorney") have been duly authorized,
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executed and delivered by such
Selling Shareholder and are valid and binding agreements of such Selling
Shareholder enforceable in accordance with their respective terms, except as
rights to indemnification thereunder may be limited by applicable law and
except as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles.
2.3. No Conflict. The execution and delivery by such Selling Shareholder
of, and the performance by such Selling Shareholder of its obligations under,
this Agreement, the Custody Agreement and the Power of Attorney will not
contravene any provision of applicable law, or the articles of incorporation,
or by-laws, or other organizational documents of such Selling Shareholder (if
such Selling Shareholder is not an individual), or any agreement or other
instrument binding upon such Selling Shareholder or any judgment, order or
decree of any governmental body, agency or court having jurisdiction over such
Selling Shareholder, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by such Selling Shareholder of its obligations under this
Agreement, the Custody Agreement or the Power of Attorney of such Selling
Shareholder, except such as may be required by the Securities Act, the NASD or
the securities or Blue Sky laws of the various states in connection with the
offer and sale of the Shares.
2.4. Good Title to Shares. Such Selling Shareholder has, and on each
Closing Date will have, valid title to the Shares to be sold by such Selling
Shareholder and the legal right and power, and all authorization and approval
required by law, to enter into this Agreement, the Custody Agreement and the
Power of Attorney and to sell, transfer and deliver the Shares to be sold by
such Selling Shareholder.
2.5. Delivery of the Shares. Delivery of the Shares to be sold by such
Selling Shareholder pursuant to this Agreement will pass title to such Shares
free and clear of any security interests, claims, liens, equities and other
encumbrances.
2.6. No Registration Rights. Such Selling Shareholder does not have any
registration or other similar rights to have any equity or debt securities
registered for sale by the Company under the Registration Statement or included
in the offering contemplated by this Agreement, other than as described in the
Registration Statement and as have been waived in writing in connection with
the offering contemplated hereby.
2.7. No Price Stabilization or Manipulation. Such Selling Shareholder has
not taken and will not take, directly or indirectly, any action designed to or
that might be reasonably expected to cause or result in any prohibited
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
2.8. Disclosure by Selling Shareholder in Registration Statement. Such
portion of the Registration Statement comprised of the table and the notes
thereto under the caption “Principal and Selling Shareholders” in the form
supplied to the Selling Shareholder, insofar as such portion specifically
relates to the Selling Shareholder, does not contain any untrue statement of a
material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
3. Purchase and Sale Agreements.
3.1. Firm Shares. Each Seller, severally and not jointly, hereby agrees
to sell to the several Underwriters, and each Underwriter, upon the basis of
the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees, severally and not jointly, to purchase
from such Seller at $ a share (the “Purchase Price") the number of Firm
Shares (subject to such adjustments to eliminate fractional shares as you may
determine) that bears the same proportion to the number
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of Firm Shares to be
sold by such Seller as the number of Firm Shares set forth in Schedule A hereto
opposite the name of such Underwriter bears to the total number of Firm Shares.
3.2. Additional Shares. On the basis of the representations and
warranties contained in this Agreement, and subject to its terms and
conditions, the Company and the Option Selling Shareholders agree to grant to
the Underwriters a one-time option to purchase, severally and not jointly, up
to an aggregate of 435,000 Additional Shares at the Purchase Price, for the
sole purpose of covering over-allotments in the sale of Firm Shares. If you,
on behalf of the Underwriters, elect to exercise such option, you shall so
notify the Company and each Option Selling Shareholder in writing not later
than thirty (30) days after the date of this Agreement, which notice shall
specify the number of Additional Shares to be purchased by the Underwriters and
the date on which such shares are to be purchased. Such date may be the same
as the Closing Date (as defined below) but not earlier than the Closing Date
nor later than ten (10) business days after the date of such notice.
Additional Shares may be purchased as provided in Section 4 hereof solely for
the purpose of covering over-allotments made in connection with the offering of
the Firm Shares. If the Underwriters exercise this option in whole or in part,
(a) each Underwriter agrees, severally and not jointly, to purchase the number
of Additional Shares (subject to such adjustments to eliminate fractional
shares as you may determine) that bears the same proportion to the total number
of Additional Shares to be purchased as the number of Firm Shares set forth in
Schedule A hereto opposite the name of such Underwriter bears to the total
number of Firm Shares and (b) the Company and the Option Selling Shareholders
agree to sell the number of Additional Shares to be sold by the Company and the
Option Selling Shareholders as set forth in the paragraph “Introduction” of
this Agreement and on Schedule B hereto.
3.3. Market Standoff Provision. Each Seller hereby agrees that, without
the prior written consent of Xxxxxx Xxxxxx Partners LLC, it will not, during
the period (the “Lock-Up Period”) ending 90 days after the date of the
Prospectus, (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, lend, or otherwise transfer or dispose
of, directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or (ii) enter
into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of the Common Stock,
whether any such transaction described in clause (i) or (ii) above is to be
settled by delivery of Common Stock or such other securities, in cash or
otherwise. In addition, each Selling Shareholder, agrees that, without the
prior written consent of Xxxxxx Xxxxxx Partners LLC, it will not, during the
Lock-Up Period, make any demand for, or exercise any right with respect to, the
registration of any shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock. For the purpose of allowing the
Underwriters to comply with NASD Rule 2711(f)(4), if (1) during the period that
begins on the date that is 18 calendar days before the last day of the Lock-Up
Period and ends on the last day of the Lock-Up Period, (a) the Company issues
an earnings release, (b) the Company publicly announces material news or (c) a
material event relating to the Company occurs; or (2) prior to the expiration
of the Lock-Up Period, the Company announces that it will release earnings
results during the 16-day period beginning on the last day of the Lock-Up
Period, then the restrictions in this Section 3.3, unless otherwise waived by
Xxxxxx Xxxxxx Partners LLC in its sole discretion, shall continue to apply
until the expiration of the date that is 18 calendar days after the date on
which (a) the Company issues the earnings
release, (b) the Company publicly announces material news or (c) a
material event relating to the Company occurs, provided, however, that this
paragraph will not apply to any research report concerning the Company to be
published or distributed by a Representative pursuant to Rule 139 promulgated
under the Securities Act at a time when the Company’s shares of Common Stock
are “actively traded securities,” as defined in Regulation M, 17 C.F.R.
242.101(c)(1). This Section 3.3 shall not apply to: (A) the Shares to be sold
hereunder; (B) the issuance by the Company of shares of Common Stock upon the
exercise of options or warrants or the conversion of any security or note
outstanding on the date hereof of which the Underwriters have been advised in
writing and which is described in the Prospectus; (C) the issuance of shares
of Common Stock or grant of options or other incentive awards pursuant to the
Company’s stock incentive plans; or (D) exceptions in the Lock-Up Agreement
attached hereto as Exhibit C.
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3.4. Terms of Public Offering. The Sellers are advised by you that the
Underwriters propose to make a public offering of their respective portions of
the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Sellers are further
advised by you that the Shares are to be offered to the public initially at
$ a share (the “Public Offering Price”) and to certain dealers selected by
you at a price that represents a concession not in excess of $ a share
under the Public Offering Price, and that any Underwriter may allow, and such
dealers may reallow, a concession, not in excess of $ a share, to any
Underwriter or to certain other dealers.
4. Payment and Delivery.
4.1. Firm Shares. Payment for the Firm Shares to be sold by each Seller
shall be made to such Seller in immediately available funds against delivery of
such Firm Shares for the respective accounts of the several Underwriters at
10:00 a.m., New York City time, on , 2004, or at such other time on the
same or such other date, not later than , 2004, as shall be designated
in writing by you. The time and date of such payment are hereinafter referred
to as the “Closing Date”.
4.2. Additional Shares. Payment for any Additional Shares to be sold by
the Company and each Option Selling Shareholder shall be made to the Company
and each Option Selling Shareholder in immediately available funds in New York
City against delivery of such Additional Shares for the respective accounts of
the several Underwriters at 10:00 a.m., New York City time, on the date
specified in the notice described in Section 3(b) or at such other time on the
same or on such other date, in any event not later than , 2004, as
shall be designated in writing by you. The time and date of such payment are
hereinafter referred to as the “Option Closing Date”.
4.3. Delivery of Certificates. Certificates for the Firm Shares and
Additional Shares shall be in definitive form and registered in such names and
in such denominations as you shall request in writing not later than one (1)
full business day prior to the Closing Date or the Option Closing Date, as the
case may be. The certificates evidencing the Firm Shares and Additional Shares
shall be delivered to you on the Closing Date or the Option Closing Date, as
the case may be, for the respective accounts of the several Underwriters, with
any transfer taxes payable in connection with the transfer of the Shares to the
Underwriters duly paid, against payment of the Purchase Price therefor.
5. Covenants of the Company. In further consideration of the agreements
of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
5.1. Furnish Copies of Registration Statement and Prospectus. To furnish
to you, without charge, five signed copies of the Registration Statement
(including exhibits thereto) and for delivery to each other Underwriter a
conformed copy of the Registration Statement (without exhibits thereto) and to
furnish to you in New York City, without
charge, prior to 10:00 a.m. New York City time on the business day next
succeeding the date of this Agreement and during the period mentioned in
Section 5.3 below, as many copies of the Prospectus and any supplements and
amendments thereto (including any documents incorporated or deemed incorporated
by reference therein) or to the Registration Statement as you may reasonably
request.
5.2. Notification of Amendments or Supplements. Before amending or
supplementing the Registration Statement or the Prospectus (including any
amendment or supplement through incorporation by reference of any report filed
under the Exchange Act), to furnish to you a copy of each such proposed
amendment or supplement and not to file any such proposed amendment or
supplement to which you reasonably object, and to file with the Commission
within the applicable period specified in Rule 424(b) under the Securities Act
any prospectus required to be filed pursuant to such rule.
10
5.3. Filings of Amendments or Supplements. If during such period after
the first date of the public offering of the Shares, the Prospectus is, in your
reasonable judgment, required by law to be delivered in connection with sales
by an Underwriter or dealer (the “Prospectus Delivery Period”), any event shall
occur or condition exist as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein, in the light
of the circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if, in your reasonable judgment, it is necessary to amend or
supplement the Prospectus to comply with applicable law, forthwith to prepare,
file with the Commission and furnish, at its own expense, to the Underwriters
and to the dealers (whose names and addresses you will furnish to the Company)
to which Shares may have been sold by you on behalf of the Underwriters and to
any other dealers upon their reasonable request, either amendments or
supplements to the Prospectus so that the statements in the Prospectus as so
amended or supplemented will not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading or so that the
Prospectus, as amended or supplemented, will comply with law.
5.4. Blue Sky Laws. To endeavor to qualify the Shares for offer and sale
under the securities or Blue Sky laws of such jurisdictions as you shall
reasonably request.
5.5. Earnings Statement. To make generally available to its
securityholders as soon as practicable, but in any event not later than
eighteen (18) months after the effective date of the Registration Statement (as
defined in Rule 158(c) under the Securities Act), an earning statement of the
Company and its subsidiaries (which need not be audited) complying with Section
11(a) of the Securities Act and the rules and regulations thereunder
(including, at the option of the Company, Rule 158).
5.6 Use of Proceeds. The Company shall apply the net proceeds from the
sale of the Shares sold by it in the manner described under the caption “Use of
Proceeds” in the Prospectus.
5.7 Transfer Agent. The Company shall maintain, at its expense, a
registrar and transfer agent for the Common Stock.
5.8 Periodic Reporting Obligations. During the Prospectus Delivery
Period, if any, the Company shall file, on a timely basis, with the Commission
and the Nasdaq National Market all reports and documents required to be filed
under the Exchange Act.
5.9 Exchange Act Compliance. During the Prospectus Delivery Period, if
any, the Company will file all documents required to be filed with the
Commission pursuant to Section 13, 14 or 15 of the Exchange Age in the manner
and within the time periods required by the Exchange Act.
5.10 Xxxxxxxx-Xxxxx Controls and Procedures. The Company and its
subsidiaries will maintain such controls and other procedures, including
without limitation those required by Sections 302 and 906 of the Xxxxxxxx-Xxxxx
Act and the applicable regulations thereunder, that are reasonably designed to
ensure that material information required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the Commission’s
rules and forms, including without limitation, controls and procedures
reasonably designed to ensure that material information required to be
disclosed by the Company in the reports that it files or submits under the
Exchange Act is accumulated and communicated to the Company’s management,
including its Principal Executive Officer and its Principal Financial Officer,
or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure, to ensure that material information
relating to Company, including its subsidiaries, is made known to them by
others within those entities.
5.11 Xxxxxxxx-Xxxxx Compliance. The Company and its subsidiaries will
comply, in all material respects, with all effective applicable provisions of
the Xxxxxxxx-Xxxxx Act.
11
6. Conditions to the Underwriters’ Obligations. The several obligations
of the Underwriters to purchase and pay for the Shares on the Closing Date are
subject to the following conditions:
6.1. Effective Registration Statement. The Registration Statement shall
have become effective not later than 5:00 p.m., Eastern Time, on the date
hereof.
6.2. Rule 462 Registration Statement. If the Company elects to rely upon
Rule 462(b), the Company shall file a Rule 462 Registration Statement with the
Commission in compliance with Rule 462(b) by 9:30 a.m., Eastern Time, on the
day following the date of this Agreement, and the Company shall at the time of
filing either pay to the Commission the filing fee for the Rule 462
Registration Statement or give irrevocable instructions for the payment of such
fee pursuant to Rule 111(b) under the Securities Act.
6.3. Prospectus Filed with Commission. The Company shall have filed the
Prospectus with the Commission (including the information required by Rule 430A
under the Securities Act) in the manner and within the time period required by
Rule 424(b) under the Securities Act; or the Company shall have filed a
post-effective amendment to the Registration Statement containing the
information required by such Rule 430A, and such post-effective amendment shall
have become effective.
6.4. No Stop Order. No stop order suspending the effectiveness of the
Registration Statement, any Rule 462 Registration Statement, or any
post-effective amendment to the Registration Statement, shall be in effect and
no proceedings for such purpose shall have been instituted or threatened by the
Commission.
6.5. No NASD Objection. The NASD shall have raised no unresolved
objection to the fairness and reasonableness of the underwriting terms and
arrangements.
6.6. No Material Adverse Change. There shall not have occurred any
change, or any development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or operations of the
Company and its subsidiaries, taken as a whole, from that set forth in the
Prospectus (exclusive of any amendments or supplements thereto subsequent to
the date of this Agreement) that, in your reasonable judgment, is material and
adverse and that makes it, in your judgment, impracticable to market the Shares
on the terms and in the manner contemplated in the Prospectus.
6.7. Officer’s Certificate. The Underwriters shall have received on the
Closing Date a certificate, dated the Closing Date and signed by the Chief
Executive Officer or President of the Company, to the effect set forth in
Sections 6.4 and 6.6 above and to the effect that the representations and
warranties of the Company contained in this Agreement are true and correct as
of the Closing Date and that the Company has complied with all of the
agreements and satisfied all of the conditions on its part to be performed or
satisfied hereunder on or before the Closing Date.
6.8. Opinions of Company Counsel. The Underwriters shall have received on
the Closing Date (i) an opinion of Xxxxxx & Xxxxxxx LLP, counsel for the
Company, dated the Closing Date, the form of which is attached hereto as
Exhibit A and (ii) an opinion of Xxxxxx X. Xxxxx, Esq., Senior Vice President
and General Counsel of the Company, dated as of the Closing Date, the form of
which is attached hereto as Exhibit B. The opinions shall be rendered to the
Underwriters at the request of the Company and shall so state therein.
6.9. Opinion of Selling Shareholders’ Counsel. The Underwriters shall
have received on the Closing Date (i) opinions of Xxxxxx & Xxxxxxx LLP and
Xxxxxx X. Xxxxx, counsel for the Selling Shareholders set forth therein, dated
the Closing Date, the forms of which are included in Exhibits A and B and (ii)
an opinion or opinions, as necessary, of counsel for certain of the Selling
Shareholders set forth
12
therein, dated the Closing Date, in a form reasonably
satisfactory to the Underwriters. The opinions shall be rendered to the
Underwriters at the request of the Selling Shareholders and shall so state
therein.
6.10. Opinion of Underwriters’ Counsel. The Underwriters shall have
received on the Closing Date an opinion of Xxxxxx, Xxxxx & Xxxxxxx LLP, counsel
for the Underwriters, dated the Closing Date, in a form acceptable to the
Underwriters.
6.11. Accountant’s Comfort Letter. The Underwriters shall have received,
on each of the date hereof and the Closing Date, a letter dated the date hereof
or the Closing Date, as the case may be, in form and substance satisfactory to
the Underwriters, from Xxxxx Xxxxxxxx LLP, independent public accountants,
containing statements and information of the type ordinarily included in
accountants’ “comfort letters” to underwriters with respect to the financial
statements and certain financial information contained in the Registration
Statement and the Prospectus; provided that the letter delivered on the Closing
Date shall use a “cut-off date” not earlier than the date hereof.
6.12. Lock-Up Agreements. The “lock-up” agreements, each substantially in
the form of Exhibit C hereto, between you and certain shareholders, officers
and directors of the Company, delivered to you on or before the date hereof,
shall be in full force and effect on the Closing Date.
6.13. Selling Shareholders’ Certificates. The Underwriters shall have
received on the Closing Date a certificate, dated the Closing Date and signed
by or on behalf of each Selling Shareholder, to the effect that the
representations and warranties of such Selling Shareholder contained in this
Agreement are true and correct as of the Closing Date and that such Selling
Shareholder has complied with all of the agreements and satisfied all of the
conditions on its part to be performed or satisfied hereunder on or before the
Closing Date.
6.14. Selling Shareholder Documents. On the date hereof, the Company and
the Selling Shareholders shall have furnished for review by the Underwriters
copies of the Powers of Attorney and Custody Agreements executed by each of the
Selling Shareholders and such further information, certificates and documents
as the Underwriters may reasonably request.
6.15. Additional Documents. On the Closing Date, the Underwriters and
counsel for the Underwriters shall have received such information, documents
and opinions as they may reasonably require for the purposes of enabling them
to pass upon the issuance and sale of the Shares as contemplated herein, or in
order to evidence the accuracy of any of the representations and warranties, or
the satisfaction of any of the conditions or agreements, herein contained.
The several obligations of the Underwriters to purchase Additional Shares
hereunder are subject to the satisfaction of each of the above conditions on or
prior to the Option Closing Date and to the delivery to you on the Option
Closing Date of such documents as you may reasonably request with respect to
the good standing of the Company, the due authorization and issuance of the
Additional Shares and other matters related to the issuance of the Additional
Shares.
7. Expenses. Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Sellers agree to
pay or cause to be paid all expenses incident to the performance of the
Company’s and the Selling Shareholders’ obligations under this Agreement,
including: (i) the fees, disbursements and expenses of the Company’s counsel,
the Company’s accountants and counsel for the Selling Shareholders in
connection with the registration and delivery of the Shares under the
Securities Act and all other fees or expenses in connection with the
preparation and filing of the Registration Statement, any preliminary
prospectus, the Prospectus and amendments and supplements to any of the
foregoing, including all printing costs associated therewith, and the mailing
and delivering of copies thereof to the Underwriters and dealers, in the
quantities hereinabove specified, (ii) all costs and
13
expenses related to the
transfer and delivery of the Shares to the Underwriters, including any transfer
or other taxes payable thereon, (iii) expenses in connection with the
qualification of the Shares for offer and sale under state securities laws as
contemplated by Section 5.4 hereof, including filing fees and the reasonable
fees and disbursements of counsel for the Underwriters in connection with such
qualification (such amount to not exceed $7,500), (iv) all filing fees and
expenses, including the reasonable fees and disbursements of counsel to the
Underwriters in connection with the review of the offering of the Shares by the
NASD (such fees and disbursements not to exceed $15,000), (v) all fees and
expenses, including the reasonable fees and disbursements of the Company’s
counsel, incident to listing the Shares on the Nasdaq National Market, (vi) the
cost of printing certificates representing the Shares, (vii) the costs and
charges of any transfer agent, registrar or depositary, (viii) the costs and
expenses of the Company relating to investor presentations on any “road show”
undertaken in connection with the marketing of the offering of the Shares,
including, without limitation, expenses associated with the production of road
show slides and graphics, fees and expenses of any consultants engaged in
connection with the road show presentations with the prior approval of the
Company, travel and lodging expenses of the representatives and officers of the
Company and any such consultants, and the cost of any aircraft chartered in
connection with the road show, (ix) all expenses in connection with any offer
and sale of the Shares outside of the United States, including filing fees and
the reasonable fees and disbursements of counsel for the Underwriters in
connection with offers and sales outside of the United States, and (x) all
other costs and expenses incident to the performance of the obligations of the
Company hereunder for which provision is not otherwise made in this Section.
It is understood, however, that except as provided in this Section, Section 8
entitled “Indemnity and Contribution”, and Section 12, the Underwriters will
pay all of their costs and expenses, including fees and disbursements of their
counsel and any advertising expenses connected with any offers they may make.
8. Indemnity and Contribution.
8.1. Indemnification of the Underwriters. The Company agrees to indemnify
and hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue
statement of a material fact contained in the
Registration Statement or any amendment thereof, any preliminary
prospectus or the Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto), or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except (i) insofar as such losses, claims, damages or liabilities are caused by
any such untrue statement or omission or alleged untrue statement or omission
based upon information relating to any Underwriter furnished to the Company in
writing by such Underwriter through you expressly for use therein and (ii) that
with respect to any preliminary prospectus, the foregoing indemnity agreement
shall not inure to the benefit of any Underwriter from whom the person
asserting any loss, claim, damage or liability purchased Shares, or any person
controlling such Underwriter, if copies of the Prospectus were timely delivered
to the Underwriter pursuant to Section 5 and a copy of the Prospectus (as then
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Underwriter
to such person, if required by law so to have been delivered, at or prior to
the written confirmation of the sale of the Shares to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, claim, damage, liability or expense.
8.2. Indemnification of the Underwriters by the Selling Shareholders.
Each Selling Shareholder agrees, severally and not jointly, to indemnify and
hold harmless each Underwriter and each person, if any, who controls such
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue
statement of a
14
material fact contained in the Registration Statement or any
amendment thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only with reference to information relating to such
Selling Shareholder furnished in writing by or on behalf of such Selling
Shareholder expressly for use in the Registration Statement, any preliminary
prospectus, the Prospectus or any amendments or supplements thereto.
8.3. Indemnification by the Underwriters. Each Underwriter agrees,
severally and not jointly, to indemnify and hold harmless the Company, the
Selling Shareholders, the directors of the Company, the officers of the Company
who sign the Registration Statement and each person, if any, who controls the
Company or any Selling Shareholder within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act from and against any and
all losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any amendment thereof, any preliminary prospectus or the
Prospectus (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only with
reference to information relating to such Underwriter furnished to the Company
in writing by such Underwriter through you expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto.
8.4. Indemnification Procedures. In case any proceeding (including any
governmental investigation) shall be instituted involving any person in respect
of which indemnity may be sought pursuant to this Section 8, such person (the
"indemnified party”) shall promptly notify the person against whom such
indemnity may be sought (the “indemnifying party”) in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party
may designate in such proceeding and shall pay the reasonable fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for (i) the reasonable fees and expenses of
more than one separate firm (in addition to any local counsel) for all
Underwriters and all persons, if any, who control any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, (ii) the reasonable fees and expenses of more than one separate
firm (in addition to any local counsel) for the Company, its directors, its
officers who sign the Registration Statement and each person, if any, who
controls the Company within the meaning of either such Section and (iii) the
reasonable fees and expenses of more than one separate firm (in addition to any
local counsel) for all Selling Shareholders and all persons, if any, who
control any Selling Shareholder within the meaning of either such Section, and
that all such fees and expenses shall be reimbursed as they are incurred. In
the case of any such separate firm for the Underwriters and such control
persons of any Underwriters, such firm shall be designated in writing by Xxxxxx
Xxxxxx Partners LLC. In the case of any such separate firm for the Company,
and such directors, officers and control persons of the Company, such firm
shall be designated in writing by the Company. In the case of any such
separate firm for the Selling Shareholders and such control persons of any
Selling Shareholders, such firm shall be designated in writing by the persons
named as attorneys-in-fact for the Selling Shareholders under the Powers of
Attorney. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its
15
written consent, but if settled with such
consent or if there be a final judgment for the plaintiff (after all appeals
have been exhausted), the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse
the indemnified party for reasonable fees and expenses of counsel as
contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 60 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed
the indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
8.5. Limitation of Selling Shareholder Liability. The liability of each
Selling Shareholder under the indemnity and contribution provisions of this
Section 8 shall be limited, in the aggregate, to an amount equal to the public
offering price of the Shares sold by such Selling Shareholder, less the
underwriting discount, as set forth on the front cover page of the Prospectus.
The Company and the Selling Shareholders may agree, as among themselves and
without limiting the rights of the Underwriters under this Agreement, as to the
respective amounts of such liability for which they each shall be responsible.
8.6. Contribution Agreement. To the extent the indemnification provided
for in this Section 8 is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the
one hand and the indemnified party or parties on the other hand from the
offering of the Shares or (ii) if the allocation provided by Section 8.4 above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in Section 8.4 above but
also the relative fault of the indemnifying party or parties on the one hand
and of the indemnified party or parties 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. The
relative benefits received by the Company and the Selling Shareholders on the
one hand and the Underwriters on the other hand in connection with the offering
of the Shares shall be deemed to be in the same respective proportions as the
net proceeds from the offering of the Shares (before deducting expenses)
received by the Company, the net proceeds from the offering of the Shares
received by the Selling Shareholders and the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the
table on the cover of the Prospectus, bear to the aggregate Public Offering
Price of the Shares. The relative fault of the Company, the Selling
Shareholders and the Underwriters shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company, the Selling Shareholders or the
Underwriters and the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The
Underwriters’ respective obligations to contribute pursuant to this Section 8
are several in proportion to the respective number of Shares they have
purchased hereunder, and not joint. The Selling Shareholders’ respective
obligations to contribute pursuant to this Section 8 are several in proportion
to the respective number of Shares they have sold hereunder, and not joint. No
party shall be liable for contribution with respect to any settlement of any
losses, claims, damages or liabilities if such settlement was effected by the
party seeking contribution without the contributing party’s prior written
consent. Notwithstanding the foregoing sentence, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the indemnified
party for reasonable fees and expenses of counsel as contemplated by the second
and third sentences of Section 8.4 above, the indemnifying party
16
agrees that is
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 60 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement.
8.7. Contribution Amounts. The Company, the Selling Shareholders and the
Underwriters agree that it would not be just or equitable if contribution
pursuant to this Section 8 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method of allocation that does not take account of the equitable considerations
referred to in Section 8.6. The amount paid or payable by an indemnified party
as a result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 8, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Shares underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages that
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The remedies provided for in this
Section 8 are not exclusive and shall not limit any rights or remedies which
may otherwise be available to any indemnified party at law or in equity.
8.8. Survival of Provisions. The indemnity and contribution provisions
contained in this Section 8 and the representations, warranties and other
statements of the Company and the Selling Shareholders contained in this
Agreement shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Underwriter or any person controlling any Underwriter, any Selling
Shareholder or any person
controlling any Selling Shareholder, or the Company, its officers or
directors or any person controlling the Company and (iii) acceptance of and
payment for any of the Shares.
9. Effectiveness. This Agreement shall become effective upon the
execution and delivery hereof by the parties hereto.
10. Termination. This Agreement shall be subject to termination by notice
given by you to the Company and the Selling Shareholders if (a) after the
execution and delivery of this Agreement and prior to the Closing Date (i)
trading generally shall have been suspended or materially limited on or by, as
the case may be, any of the New York Stock Exchange, the American Stock
Exchange, the National Association of Securities Dealers, Inc., the Chicago
Board of Options Exchange, the Chicago Mercantile Exchange or the Chicago Board
of Trade, (ii) trading of any securities of the Company shall have been
suspended on any exchange or in any over-the-counter market, (iii) a general
moratorium on commercial banking activities in New York or California shall
have been declared by either federal or New York or California state
authorities, (iv) there shall have occurred after the execution of this
Agreement any outbreak or escalation of hostilities or any change in financial
markets or any calamity or crisis that, in your reasonable judgment, is
material and adverse, (v) in the reasonable judgment of the Underwriters, there
shall have occurred any material adverse change, or any development that could
reasonably be expected to result in a material adverse change, in the
condition, financial or otherwise, or in the earnings, business, operations or
prospects, whether or not arising from transactions in the ordinary course of
business, of the Company and its subsidiaries, taken as a whole, or (vi) there
shall be any failure or refusal on the part of the Company or any Selling
Shareholder to comply with the terms or to fulfill any of the conditions of
this Agreement or the Company or any Selling Shareholder shall for any reason
be unable to perform its obligations under this Agreement, and (b) in the case
of any of the events specified in Sections 10(a)(i) through 10(a)(vi),
17
such
event, individually or together with any other such event, makes it, in your
reasonable judgment, impracticable to market the Shares on the terms and in the
manner contemplated in the Prospectus.
11. Defaulting Underwriters. If, on the Closing Date or the Option
Closing Date, as the case may be, any one or more of the Underwriters shall
fail or refuse to purchase Shares that it has or they have agreed to purchase
hereunder on such date, and the aggregate number of Shares which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
is not more than one-tenth of the aggregate number of the Shares to be
purchased on such date, the other Underwriters shall be obligated severally in
the proportions that the number of Firm Shares set forth opposite their
respective names in Schedule A bears to the aggregate number of Firm Shares set
forth opposite the names of all such non-defaulting Underwriters, or in such
other proportions as you may specify, to purchase the Shares which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
on such date; provided that in no event shall the number of Shares that any
Underwriter has agreed to purchase pursuant to this Agreement be increased
pursuant to this Section 11 by an amount in excess of one-ninth of such number
of Shares without the written consent of such Underwriter. If, on the Closing
Date, any Underwriter or Underwriters shall fail or refuse to purchase Firm
Shares and the aggregate number of Firm Shares with respect to which such
default occurs is more than one-tenth of the aggregate number of Firm Shares to
be purchased, and arrangements satisfactory to you, the Company and the Selling
Shareholders for the purchase of such Firm Shares are not made within 36 hours
after such default, this Agreement shall terminate without liability on the
part of any non-defaulting Underwriter, the Company or the Selling
Shareholders. In any such case either you or the relevant Selling Shareholders
shall have the right to postpone the Closing Date, but in no event for longer
than seven (7) days, in order that the required changes, if any, in the
Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. If, on the Option Closing Date, any Underwriter
or Underwriters shall fail or refuse to purchase Additional Shares and the
aggregate number of Additional Shares with respect to which such default occurs
is more than one-tenth of the aggregate number of Additional Shares to be
purchased, the non-defaulting Underwriters shall have the option to (i)
terminate their obligation hereunder to purchase Additional Shares or (ii)
purchase not less than the number of Additional Shares that such non-defaulting
Underwriters would have
been obligated to purchase in the absence of such default. Any action
taken under this paragraph shall not relieve any defaulting Underwriter from
liability in respect of any default of such Underwriter under this Agreement.
12. Reimbursement of Underwriters’ Expenses. If this Agreement shall be
terminated by the Underwriters, or any of them, pursuant to Section 10(a)(ii),
10(a)(v) or 10(a)(vi) hereof, the Company will reimburse the Underwriters or
such Underwriters as have so terminated this Agreement with respect to
themselves for all out-of-pocket expenses (including the fees and disbursements
of their counsel) reasonably incurred by such Underwriters in connection with
this Agreement or the offering contemplated hereunder.
13. Counterparts. This Agreement may be signed in counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
14. Headings; Table of Contents. The headings of the sections of this
Agreement and the table of contents have been inserted for convenience of
reference only and shall not be deemed a part of this Agreement.
15. Notices. All communications hereunder shall be in writing and shall
be mailed, hand delivered or telecopied and confirmed to the parties hereto as
follows:
If to the Underwriters:
Xxxxxx Xxxxxx Partners LLC
Xxx Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxx Xxxxxxx
18
with a copy to:
Xxxxxx Xxxxxx Partners LLC
Xxx Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx
and
Xxxxxx, Xxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxxxx X. Xxxxxx
If to the Company:
Ace Cash Express, Inc.
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: General Counsel
with a copy to:
Xxxxxx & Xxxxxxx LLP
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxx
If to the Selling Shareholders:
Ace Cash Express, Inc.
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxx
Any party hereto may change the address for receipt of communications by giving
written notice to the others.
16. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto, including any substitute Underwriters pursuant
to Section 11 hereof, and to the benefit of the officers and directors and
controlling persons referred to in Section 8, and in each case their respective
successors, and no other person will have any right or obligation hereunder.
The term “successors” shall not include any purchaser of the Shares as such
from any of the Underwriters merely by reason of such purchase.
19
17. Partial Unenforceability. The invalidity or unenforceability of any
Section, paragraph or provision of this Agreement shall not affect the validity
or enforceability of any other Section, paragraph or provision hereof. If any
Section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.
18. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
19. Consent to Jurisdiction. Any legal suit, action or proceeding arising
out of or based upon this Agreement or the transactions contemplated hereby
(“Related Proceedings”) may be instituted in the federal courts of the United
States of America located in the City and County of San Francisco or the courts
of the State of California, in each case located in the City and County of San
Francisco (collectively, the “Specified Courts”), and each party irrevocably
submits to the exclusive jurisdiction (except for proceedings instituted in
regard to the enforcement of a judgment of any such court (a “Related
Judgment”), as to which such jurisdiction is non-exclusive) of such courts in
any such suit, action or proceeding. Service of any process, summons, notice
or document by mail to such party’s address set forth above shall be effective
service of process for any suit, action or other proceeding brought in any such
court. The parties irrevocably and unconditionally waive any objection to the
laying of venue of any suit, action or other proceeding in the Specified Courts
and irrevocably and unconditionally waive and agree not to plead or claim in
any such court that any such suit, action or other proceeding brought in any
such court has been brought in an inconvenient forum.
20. Failure of the Selling Shareholders to Sell and Deliver Shares. If
one or more of the Selling Shareholders shall fail to sell and deliver to the
Underwriters the Shares to be sold and delivered by such Selling Shareholders
at the Closing Date pursuant to this Agreement, and the remaining Selling
Shareholders do not exercise the right hereby granted to increase, pro rata or
otherwise, the number of Shares to be sold by them hereunder to the total
number of Shares to be sold by all Selling Shareholders as set forth in
Schedule B, then the Underwriters may at their option, by written notice from
the Underwriters to the Company and the Selling Shareholders, either (i)
terminate this Agreement in accordance with Section 10 hereof without any
liability on the part of any Underwriter or, except as provided in Sections 7,
8 and 12 hereof, the Company or the Selling Shareholders, or (ii) purchase the
Shares which the other Selling Shareholders have agreed to sell and deliver in
accordance with the terms hereof. If one or more of the Selling Shareholders
shall fail to sell and deliver to the Underwriters the Shares to be sold and
delivered by such Selling Shareholders pursuant to this Agreement at the
Closing Date or the Option Closing Date, then the Underwriters shall have the
right, by written notice from the Underwriters to the Company and the Selling
Shareholders to postpone the Closing Date or the Option Closing Date, as the
case may be, but in no event for longer than seven (7) days in order that the
required changes, if any, to the Registration Statement and the Prospectus or
any other documents or arrangements may be effected.
21. Entire Agreement. This Agreement constitutes the entire agreement of
the parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect
to the subject matter hereof.
22. Amendments. This Agreement may only be amended or modified in
writing, signed by all of the parties hereto, and no condition herein (express
or implied) may be waived unless waived in writing by each party whom the
condition is meant to benefit.
23. Sophisticated Parties. Each of the parties hereto acknowledges that
it is a sophisticated business person who or which was adequately represented
by counsel during negotiations regarding the provisions hereof, including,
without limitation, the indemnification and contribution provisions
20
of Section
8, and is fully informed regarding said provisions. Each of the parties hereto
further acknowledges that the provisions of Section 8 hereto fairly allocate
the risks in light of the ability of the parties to investigate the Company,
its affairs and its business in order to assure that adequate disclosure has
been made in the Registration Statement, any preliminary prospectus and the
Prospectus (and any amendments and supplements thereto), as required by the
Securities Act and the Exchange Act.
[Remainder of page intentionally left blank]
21
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
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Very truly yours,
ACE CASH EXPRESS, INC.
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By: |
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Name: |
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Title: |
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The Selling Shareholders named in Schedule B
hereto, acting severally
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By: |
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Name: |
Xxxxxx X. Xxxxx |
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Title: |
Attorney-in-Fact |
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[Signature Page to Underwriting Agreement]
Accepted as of the date hereof
Xxxxxx Xxxxxx Partners LLC
Xxxxxxxx Inc.
JMP Securities
Xxxx Capital Partners, LLC
Acting severally on behalf
of themselves and as representatives
of the several Underwriters named
in Schedule A hereto.
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By: |
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Xxxxxx Xxxxxx Partners LLC |
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By: |
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Name: |
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Title: |
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[Signature Page to Underwriting Agreement]
Schedules
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A |
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List of Underwriters |
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B |
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List of Selling Shareholders |
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C |
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List of Subsidiaries |
Exhibits
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A |
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Form of Legal Opinion of Xxxxxx & Xxxxxxx LLP |
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B |
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Form of Legal Opinion of Xxxxxx X. Xxxxx, Esq. |
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C |
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Form of Lock-Up Agreement |
SCHEDULE A
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Number of Firm Shares |
Underwriter
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To Be Purchased
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Xxxxxx Xxxxxx Partners LLC |
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Xxxxxxxx Inc. |
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JMP Securities |
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Xxxx Capital Partners, LLC |
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Total |
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2,900,000 |
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SCHEDULE B
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Selling |
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Number of Firm |
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Maximum Number of |
Shareholder
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Shares To Be Sold
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Additional Shares to be Sold
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Xxxxxxx X. Xxxxxx |
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100,000 |
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25,000 |
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Xxxxxx X. Xxxxxxxx |
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400,000 |
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KLN Foundation |
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18,378 |
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Xxxxxxxx X. Xxxxx |
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70,000 |
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Scout Ventures |
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10,000 |
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Communities Foundation of Texas |
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10,000 |
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Xxxxxx X. Xxxx III |
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403,636 |
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Xxxx Xxxxx Xxxx |
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21,705 |
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Xxxxxx Xxxxxx Rose 1990 Irrevocable Trust |
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66,281 |
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Xxx X. Xxxxxxxxx |
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— |
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40,000 |
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Total |
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1,100,000 |
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65,000 |
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SCHEDULE C
LIST OF SUBSIDIARIES
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Wholly-owned by Ace Cash Express, Inc.:
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Check Express, Inc., a Florida corporation |
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Q.C.& G. Financial, Inc., an Arizona corporation |
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Public Currency, Inc., a California corporation |
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Ace Funding LLC, a Delaware limited liability company |
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Wholly-owned by Check Express, Inc.:
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Check Express Florida, Inc., a Florida corporation |
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Check Express Finance, Inc., a Florida corporation |
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Check-X-Change Corporation, a California corporation |
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Check Express South Carolina, Inc., a Florida corporation |
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Check Express USA, Inc., a Florida corporation |
EQUITY INTERESTS IN OTHER CORPORATION:
The Company holds a warrant to purchase 1,167,264 shares of common stock of
Netspend corporation.