Exhibit 1.1
1,250,000 Shares Maximum
850,000 Shares Minimum
Common Stock
XXXXXXX CAPITAL MANAGEMENT HOLDINGS, INC.
World Trade Center - Baltimore
000 Xxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
PLACEMENT AGENCY AGREEMENT
____________, 1998
The Xxxxxxx Co.
World Trade Center - Baltimore
000 Xxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Xxxxxxx Capital Management Holdings, Inc., a Maryland corporation (the
"Company"), and parent of its wholly-owned subsidiary, Xxxxxxx Capital
Management, Inc. ("CCM"), proposes to cause to be issued, and sold (the
"Offering") through The Xxxxxxx Co. (the "Placement Agent") on a "best
efforts" basis, a minimum of 850,000 (the "Minimum") and a maximum of
1,250,000 (the "Maximum") shares (the "Shares") of common stock, $0.001 par
value per share (the "Common Stock"), at a public offering price of $____ per
share (the "Offering Price").
SECTION 1. APPOINTMENT
The Company hereby appoints the Placement Agent, and the Placement Agent
xxxxxx agrees, to act as an agent of the Corporation and to use its best
efforts to solicit subscriptions for the Shares for the period and on the
terms set forth in this Agreement. In connection therewith, the Company has
delivered to the Placement Agent copies of its Articles of Incorporation and
Bylaws, the Corporation's Registration Statement on Form SB-2 (File No.
333-51883) and all amendments thereto (the "Registration Statement") filed
with the Securities and Exchange Commission (the "Commission") pursuant to
the Securities Act of 1933, as amended (the "Securities Act"), and the
Company's current prospectus (as currently in effect and as amended or
supplemented, the "Prospectus") and shall promptly furnish the Placement
Agent with all amendments of or supplements to the foregoing.
SECTION 2. REPRESENTATIONS OF THE COMPANY
The Company represents and warrants to the Placement Agent that:
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(a) The Company has an authorized capitalization as set forth in
the Prospectus under the caption "Capitalization"; the outstanding shares of
capital stock of the Company and CCM, have been duly and validly authorized
and issued and are fully paid and non-assessable; except as disclosed in the
Prospectus, there are no outstanding (i) securities or obligations of the
Company or CCM convertible into or exchangeable for any capital stock of the
Company or CCM, (ii) warrants, rights or options to subscribe for or purchase
from the Company or CCM any such capital stock or any such convertible or
exchangeable securities or obligations, or (iii) obligations of the Company
or CCM to issue any shares of capital stock, any such convertible or
exchangeable securities or obligations, or any such warrants, rights or
options;
(b) the Company's only subsidiary is CCM and the Company and CCM
each has been duly incorporated and is validly existing as a corporation in
good standing under the laws of its respective jurisdiction of incorporation
with full corporate power and authority to own its respective properties and
to conduct its respective business as described in the Registration Statement
and the Prospectus;
(c) the Company and CCM are duly qualified or licensed by each
jurisdiction in which they conduct their respective businesses and in which
the failure, individually or in the aggregate, to be so qualified or licensed
could reasonably be expected to have a material adverse effect on the assets,
operations, business, prospects or condition (financial or otherwise) of the
Company and CCM taken as a whole, and the Company and CCM are duly qualified,
and are in good standing, in each jurisdiction in which they own or lease
real property or maintain an office and in which such qualification is
necessary, except where, individually or in the aggregate, the failure to be
so qualified and in good standing would not have a material adverse effect on
the assets, operations, business, prospects or condition (financial or
otherwise) of the Company and CCM taken as a whole; except as disclosed in
the Prospectus, CCM is not prohibited or restricted, directly or indirectly,
from paying dividends to the Company, or from making any other distribution
with respect to CCM's capital stock or from paying the Company any loans or
advances to CCM from the Company or from transferring CCM's property or
assets to the Company;
(d) the Company and CCM are in compliance with all applicable
federal, state, local and foreign laws, rules and regulations, including,
without limitation, the Securities Act, the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), the Investment Company Act of 1940, as
amended (the "Investment Company Act"), the Investment Advisers Act of 1940,
as amended, and the regulations promulgated thereunder (collectively, the
"Securities Laws"), orders, decrees and judgments, including those relating
to transactions with affiliates, except where, individually or in the
aggregate, the failure to be in compliance in a material respect therewith
would not have a material adverse
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effect on the assets, operations, business, prospects or condition (financial
or otherwise) of the Company and CCM taken as a whole;
(e) neither the Company nor CCM is in breach of, or in default
under, nor has any event occurred which with giving of notice, lapse of time,
or both would constitute a breach of, or default under, its respective
articles of incorporation or charter or by-laws or in the performance or
observance of any obligation, agreement, covenant or condition contained in
any license, indenture, mortgage, deed of trust, loan or credit agreement or
other agreement or instrument to which the Company or CCM is a party or by
which any of them or their respective properties is bound, except for such
breaches or defaults which, individually or in the aggregate, would not have
a material adverse effect on the assets, operations, business, prospects or
condition (financial or otherwise) of the Company and CCM taken as a whole,
and the execution, delivery and performance of this Agreement and the
Qualified Independent Underwriter Agreement, by and between the Company and
Xxxxxx Xxxxx Xxxxx Incorporated (the "QIU Agreement") and consummation of the
transactions contemplated hereby and thereby will not result in the creation
or imposition of any lien, charge, claim or encumbrance upon any property or
asset of the Company or CCM, or conflict with, or result in any breach of, or
constitute a default under, or constitute an event which with giving of
notice, lapse of time, or both would constitute a breach of, or default
under, (i) any provision of the articles of incorporation or charter or
by-laws of the Company or CCM, or (ii) any provision of any license,
indenture, mortgage, deed of trust, loan or credit agreement or other
agreement or instrument to which the Company or CCM is a party or by which
either of them or their respective properties may be bound or affected, or
(iii) any federal, state, local or foreign law, regulation or rule,
including, without limitation, the Securities Laws, or any decree, judgment
or order applicable to the Company or CCM, except in the case of this clause
(iii) for such breaches or defaults which, individually or in the aggregate,
would not have a material adverse effect on the assets, operations, business,
prospects or condition (financial or otherwise) of the Company and CCM taken
as a whole;
(f) this Agreement has been duly authorized, executed and
delivered by the Company and is a legal, valid and binding agreement of the
Company enforceable against the Company in accordance with its terms, except
as may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally, and by general principles
of equity, and except to the extent that the indemnification and contribution
provisions of Section 11 hereof may be limited by federal or state securities
laws and public policy considerations in respect thereof;
(g) no approval, authorization, consent or order of or filing with
any federal, state or local governmental or regulatory commission, board,
body, authority or agency is required in connection with the execution,
delivery and performance of this Agreement and the QIU Agreement, the
consummation of
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the transactions contemplated hereby and thereby, or the sale and delivery of
the Shares by the Company as contemplated hereby other than (i) such as have
been obtained, or will have been obtained at each Closing Date under the
Securities Act, (ii) such approvals as have been obtained or will have been
obtained by the Initial Closing Date in connection with the approval of the
quotation of the Shares on the Nasdaq SmallCap Market (the "SmallCap Market")
and (iii) any necessary qualification under the securities or blue sky laws
of the various jurisdictions in which the Shares are being offered through
the Placement Agent;
(h) each of the Company and CCM has all necessary licenses,
authorizations, consents and approvals and has made all necessary filings
required under any federal, state, local and foreign law, regulation and
rule, including, without limitation, the Securities Laws, and has obtained
all necessary authorizations, consents and approvals from other persons,
required in order to conduct their respective businesses as described in the
Prospectus, except to the extent that any failure to have any such licenses,
authorizations, consents or approvals, to make any such filings or to obtain
any such authorizations, consents or approvals would not, individually or in
the aggregate, have a material adverse effect on the assets, operations,
business, prospects or condition (financial or otherwise) of the Company and
CCM taken as a whole; neither the Company nor CCM is in violation of, in
default under, or has received any notice regarding a possible violation,
default or revocation of any such license, authorization, consent or approval
applicable to the Company or CCM, the effect of which, individually or in the
aggregate, could be material and adverse to the assets, operations, business,
prospects or condition (financial or otherwise) of the Company and CCM taken
as a whole; and no such license, authorization, consent or approval contains
a materially burdensome restriction that is not adequately disclosed in the
Registration Statement and the Prospectus;
(i) each of the Registration Statement and any Rule 462(b)
Registration Statement has become effective under the Securities Act and no
stop order suspending the effectiveness of the Registration Statement or any
Rule 462(b) Registration Statement has been issued under the Securities Act
and no proceedings for that purpose have been instituted or are pending or,
to the knowledge of the Company, are threatened by the Commission, and any
request on the part of the Commission for additional information has been
complied with;
(j) the Preliminary Prospectus and the Registration Statement
comply and the Prospectus and any further amendments or supplements thereto
will, when they have become effective or are filed with the Commission, as
the case may be, comply in all material respects with the requirements of the
Securities Act and the regulations promulgated thereunder (the "Securities
Act Regulations"); the Registration Statement did not, and any amendment
thereto
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will not, in each case as of the applicable effective date, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; and the
Preliminary Prospectus does not, and the Prospectus or any amendment or
supplement thereto will not, as of the applicable filing date and at each
Closing Date contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the Company makes no warranty
or representation with respect to any statement contained in the Registration
Statement or the Prospectus in reliance upon and in conformity with the
information concerning The Placement Agent and furnished in writing by or on
behalf of the Placement Agent to the Company expressly for use in the
Registration Statement or the Prospectus (that information being limited to
that described in Section 11(e) hereof);
(k) the Preliminary Prospectus was and the Prospectus delivered to
the Placement Agent for use in connection with the Offering will be identical
in all material respects to the versions of the Preliminary Prospectus and
the Prospectus created to be transmitted to the Commission for filing via the
Electronic Data Gathering Analysis and Retrieval System ("XXXXX"), except to
the extent permitted by Regulation S-T;
(l) all legal or governmental proceedings, contracts or documents
of a character required to be filed as exhibits to the Registration Statement
or to be summarized or described in the Prospectus have been so filed,
summarized or described as required and any such summaries or descriptions
present fairly the information required to be shown;
(m) there are no actions, suits, proceedings, inquiries or
investigations pending or, to the Company's knowledge, threatened against the
Company or CCM or any of their respective officers or directors or to which
the properties, assets or rights of either entity are subject, at law or in
equity, before or by any federal, state, local or foreign court, governmental
or regulatory commission, board, body, authority, arbitration panel or agency
which, individually or in the aggregate, could result in a judgment, decree,
award or order having a material adverse effect on the assets, operations,
business, prospects or condition (financial or otherwise) of the Company and
CCM taken as a whole;
(n) the financial statements, including the notes thereto,
included in the Registration Statement and the Prospectus present fairly the
consolidated financial position of the Company and CCM as of the dates
indicated and the consolidated results of operations and changes in
stockholders' equity and cash flows of the Company and CCM for the periods
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specified; such financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except as indicated in the notes thereto); the
financial statement schedules included in the Registration Statement and the
amounts in the Prospectus under the captions "Prospectus Summary --Summary
Financial Data," "Capitalization," "Dilution" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" 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;
(o) Xxxxxx Xxxxxxxx LLP, whose report on the consolidated
financial statements of the Company and CCM are filed with the Commission as
part of the Registration Statement and Prospectus, are and were during the
periods covered by their reports independent public accountants as required
by the Securities Act and the Securities Act Regulations;
(p) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as may be
otherwise stated in the Registration Statement or the Prospectus, there has
not been (i) any material adverse change, in the assets, liabilities,
capital, operations, business or condition (financial or otherwise), present
or prospective, of the Company and CCM taken as a whole, whether or not
arising in the ordinary course of business, (ii) any transaction, which is
material to the Company and CCM taken as a whole, contemplated or entered
into by the Company or CCM, (iii) any obligation, contingent or otherwise,
directly or indirectly incurred by the Company or CCM, which is material to
the Company and CCM taken as a whole or (iv) any dividend or distribution of
any kind declared, paid or made by the Company or CCM on any class of capital
stock;
(q) the Company is not, and upon the sale of the Shares as herein
contemplated will not be, an investment company which is required to register
under the Investment Company Act;
(r) the Shares will conform in all material respects to the
description thereof contained in the Registration Statement and the
Prospectus;
(s) except as disclosed in the Prospectus, there are no persons
with registration or other similar rights to have any equity securities
registered pursuant to the Registration Statement or otherwise registered by
the Company under the Securities Act;
(t) the Shares have been duly authorized and, when the Shares have
been issued and duly delivered against payment therefor as contemplated by
this Agreement and the Prospectus, the Shares will be validly issued, fully
paid and nonassessable, free and clear of any pledge, lien, encumbrance,
security interest, mortgage or other claim whatsoever, and the
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issuance and sale of the Shares by the Company is not subject to preemptive
or other similar rights arising by operation of law, under the articles of
incorporation or by-laws of the Company, under any agreement to which the
Company or CCM is a party, or otherwise;
(u) the Company has not taken, and will not take, directly or
indirectly, any action which is designed to or which has constituted or which
might reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Shares;
(v) any certificate signed by any officer of the Company or CCM
delivered to the Placement Agent or to counsel for the Placement Agent
pursuant to or in connection with this Agreement shall be deemed a
representation and warranty by the Company to each of the Placement Agent and
its counsel as to the matters covered thereby;
(w) the form of certificate used to evidence the Common Stock
complies in all material respects with all applicable statutory requirements,
with any applicable requirements of the articles of incorporation and by-laws
of the Company, and with the requirements of the SmallCap Market;
(x) in connection with the Offering, the Company has not offered
and will not offer its Common Stock or any other securities convertible into
or exchangeable or exercisable for Common Stock in a manner in violation of
the Securities Act;
(y) except as disclosed in the Prospectus, the Company has not
incurred any liability for any finder's fees or similar payments in
connection with the transactions herein contemplated; and
(z) The Company, CCM and their predecessors have filed all
necessary federal, state and foreign income and franchise tax returns that
they were required to file and have paid all taxes shown as due thereon
(including, but not limited to, all penalties, interest and other additions
thereto), except for failures to file or pay which would not, individually or
in the aggregate, have a material adverse effect on the assets, operations,
business, prospects or condition (financial or otherwise) of the Company and
CCM taken as a whole. All such tax returns were correct and complete in all
material respects. All tax liabilities are adequately provided for on the
books of the Company and CCM, except to such extent as would not,
individually or in the aggregate, have a material adverse affect on the
assets, operations, business, prospects or condition (financial or otherwise)
of the Company and CCM taken as a whole. The Company, CCM and their
predecessors have made all necessary payroll and employment tax payments and
are current and up-to-date with respect to such tax payments as of the date
of this Agreement, except where failure to
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make any such payment would not, individually or in the aggregate, have a
material adverse affect on the assets, operations, business, prospects or
condition (financial or otherwise) of the Company and CCM taken as a whole.
The Company and CCM have no knowledge of any tax proceedings or other action
pending or threatened against the Company or CCM which, individually or in
the aggregate, could have a material adverse affect on the assets,
operations, business, prospects or condition (financial or otherwise) of the
Company and CCM taken as a whole.
SECTION 3. DISTRIBUTION SERVICES
Subject to the direction and control of the Company's Board of Directors
(the "Board"), the Placement Agent shall solicit subscriptions for the Shares
to be sold in the Offering.
(a) As agent of the Company, the Placement Agent shall offer, and
solicit offers to subscribe to, the Shares as shall then be effectively
registered under the Securities Act and applicable state securities laws. All
subscriptions for the Shares obtained by the Placement Agent shall be
directed to the Company for acceptance and shall not be binding on the
Company until accepted by it. The Placement Agent shall have no authority to
make binding subscriptions on behalf of the Company. The Placement Agent's
rights hereunder shall not apply to shares of Common Stock issued in
connection with the reinvestment by the Company's stockholders of dividends
or other distributions or any other offering by the Company of securities to
its stockholders.
(b) The Placement Agent shall use its best efforts to obtain
subscriptions to the Shares upon the terms and conditions contained herein
and in the Prospectus, including the Offering Price. The Company shall
furnish to the Placement Agent from time to time, for use in connection with
the Offering, such information with respect to the Company and the Shares as
the Placement Agent may reasonably request. The Company shall supply the
Placement Agent with such copies of the Prospectus as the Placement Agent may
request. The Placement Agent may use its employees, agents and other persons
who need not be its employees, at its cost and expense, to assist it in
carrying out its obligations hereunder, but no such employee, agent or other
person shall be deemed to be an agent of the Company or have any rights under
this Agreement.
(c) The Company reserves the right to suspend the Offering at any time,
in the absolute discretion of the Board of Directors, and upon notice of such
suspension the Placement Agent shall cease to offer the Shares.
(d) The Company and the Placement Agent will cooperate with each other
in taking such action as may be necessary to qualify the Shares for sale
under the securities laws of such states as the Company may designate. The
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Company shall pay all fees and expenses of registering the Shares under the
Securities Act and of registering or qualifying the Shares and the Company's
qualification under applicable state securities laws. The Placement Agent
shall pay all expenses relating to its broker-dealer qualification.
(e) The Company shall advise the Placement Agent immediately: (i) of
any request by the Commission for amendments to the Company's Registration
Statement or Prospectus or for additional information; (ii) in the event of
the issuance by the Commission of any stop order suspending the effectiveness
of the Company's Registration Statement or Prospectus or the initiation of
any proceedings for that purpose; (iii) of the happening of any material
event which makes untrue any statement made in the Company's Registration
Statement or Prospectus or which requires the making of a change in either
thereof in order to make the statements therein not misleading; and (iv) of
all action of the Commission with respect to any amendments to the Company's
Registration Statement or Prospectus which may from time to time be filed
with the Commission under the Securities Act.
(f) The Company will advise the Placement Agent promptly of the
happening of any event known to the Company within the time during which a
Prospectus relating to the Shares is required to be delivered under the
Securities Act Regulations which, in the judgment of the Company, would
require the making of any change in the Prospectus then being used so that
the Prospectus would not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, and, during such time, the Company will
prepare and furnish, at the Company's expense, to the Placement Agent
promptly such amendments or supplements to such Prospectus as may be
necessary to reflect any such change and to furnish to the Placement Agent a
copy of such proposed amendment or supplement before filing any such
amendment or supplement with the Commission.
(g) The Company will furnish promptly to the Placement Agent a signed
copy of the Registration Statement, as initially filed with the Commission,
and of all amendments or supplements thereto (including all exhibits filed
therewith or incorporated by reference therein) and such number of conformed
copies of the foregoing as the Placement Agent may reasonably request.
(h) The Company will furnish to the Placement Agent, not less than one
business day before filing with the Commission subsequent to the effective
date of the Registration Statement and during the period referred to in
paragraph (f) above, a copy of any document proposed to be filed with the
Commission pursuant to Section 13, 14, or 15(d) of the Exchange Act.
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SECTION 4. EXPENSES
The Company will pay all fees, costs and expenses incident to the
performance by the Company of its obligations hereunder, including: (a) the
preparation, printing, filing and distribution of the Registration Statement
(including the exhibits thereto), all amendments and supplements thereto and
the Prospectus; (b) the preparation, printing, and issuance of the Shares
including any stamp taxes and transfer agent and registrar fees payable in
connection with the original issuance of the Shares; (c) the registrations or
qualifications referred to in Section 2 hereof including fees and
disbursements of counsel relating to such registrations or qualifications;
(d) the fees and expenses of the Company's accountants and the fees and
expenses of counsel for the Company; (e) the expenses of delivery to the
Placement Agent of copies of the Prospectus, as may be requested for use in
connection with the Offering; (f) any filings required to be made by the
Placement Agent with the National Association of Securities Dealers, Inc.;
and (g) the fees and expenses incurred with respect to the quotation of the
Shares on the Nasdaq SmallCap Market. In the event the Offering is
terminated pursuant to Section 6 hereof, the Placement Agent will be entitled
to reimbursement only for its actual accountable out-of-pocket expenses and
fees and expenses of legal counsel.
SECTION 5. TERMS OF THE OFFERING
(a) The Offering shall commence upon the effectiveness of the
Registration Statement (the "Effective Date"). All subscription proceeds
shall be transmitted directly to an escrow account established at UMB Bank,
N.A. (the "Escrow Agent") by 12:00 noon, Central Time, of the next business
day after receipt thereof by the Placement Agent. The termination date of
the Offering is on the earlier to occur of: the date selected by the
Company; the date of the sale of the Maximum; or the date that is 180 days
after the Effective Date, unless extended by the Company for one or more
additional periods not to exceed an additional 30 days in the aggregate, in
which case, on that date which the last such additional period expires (the
"Termination Date"). If the Minimum is not sold by 5:00 p.m. Baltimore Time
on the Termination Date, the Offering shall terminate and all subscription
proceeds shall be returned to prospective investors, without discount and
without interest.
(b) On such date after the sale of the Minimum and on or before the
Termination Date as shall be determined by the Company and subject to the
terms and conditions of this Agreement, a closing shall occur pursuant to
which the Shares shall be issued to subscribers against release of the
Offering proceeds held in escrow with respect to such subscribers'
subscriptions ("Initial Closing"). After the Initial Closing, subscription
proceeds will be held by the Escrow Agent pending a subsequent closing.
Subject to the terms and conditions of this Agreement, subsequent closings
("Subsequent Closings") shall be held thereafter with respect to additional
sales of the Shares on a monthly basis or on
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such a more frequent basis as the Company and Placement Agent shall agree
until the earlier of the Termination Date or termination of the Offering as
provided herein. The Initial Closing or a Subsequent Closing is hereinafter
referred to sometimes as a Closing. The Offering Price will be $___ per
Share. The minimum subscription will be for 100 Shares. The Placement Agent
shall be paid a selling concession of up to seven percent (7.0%) of the
subscription proceeds ($0.___ per share) from all sales of the Shares all, or
any portion, of which the Placement Agent may reallow to other selling agents
or any qualified independent underwriter. The Company shall have the right
to accept or reject in whole or in part subscriptions for the Shares.
SECTION 6. TERMINATION
This Agreement may be terminated at any time, without the payment of any
penalty, (i) by the Board of Directors of the Company, on 10 days' written
notice to the Placement Agent or (ii) by the Placement Agent on 10 days'
written notice to the Company. This Agreement shall automatically terminate
in the event of its assignment.
SECTION 7. SURVIVAL OF AGREEMENTS, REPRESENTATIONS AND
WARRANTIES
The respective indemnities of the Company and the Placement Agent and
the representations and warranties of the Company set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless
of any termination or cancellation of this Agreement or any investigation by
or on behalf of the Company or the Placement Agent or any controlling person
referred to in Section 11 hereof, and shall survive the issuance of the
Shares, and any successor or assign of the Placement Agent or the Company or
any such controlling person or any legal representative of such controlling
person shall be entitled to the benefit of the respective indemnities,
agreements, warranties and representations.
SECTION 8. ACTIVITIES OF PLACEMENT AGENT
Except to the extent necessary to perform its obligations under this
Agreement, nothing herein shall be deemed to limit or restrict the Placement
Agent's right, or the right of any of its officers, directors or employees
(whether or not they are a director, officer, employee or other affiliated
person of the Company) to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether
of a similar or dissimilar nature, or to render services of any kind to any
other company, corporation, firm, individual or association.
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SECTION 9. CERTAIN COVENANTS OF THE COMPANY.
The Company hereby covenants and agrees with the Placement Agent that:
(a) The Company will apply the net proceeds of the sale of the
Shares in accordance with its statements under the caption "Use of Proceeds"
in the Prospectus.
(b) The Company will make generally available to its security
holders as soon as practicable, but in any event not later than the end of
the fiscal quarter first occurring after the first anniversary of the
effective date of the Registration Statement, an earnings statement complying
with the provisions of Section 11(a) of the Securities Act (in form, at the
option of the Company, complying with the provisions of Rule 158 of the
Securities Act Regulations) covering a period of 12 months beginning after
the effective date of the Registration Statement.
(c) The Company will use its best efforts to effect and maintain
the quotation of the Shares on the SmallCap Market and to file with the
SmallCap Market all documents and notices required of companies that have
securities included for quotation on the SmallCap Market.
(d) At no time prior to the completion of the Offering will the
Company issue any press releases or other communications directly or
indirectly and will hold no press conferences with respect to the Company or
CCM, on the financial condition, results of operations, business, properties,
assets or liabilities of the Company or CCM, or the Offering of the Shares,
without the prior written consent of the Placement Agent.
SECTION 10. CONDITIONS OF THE PLACEMENT AGENT'S OBLIGATIONS:
The obligations of the Placement Agent hereunder are subject to the
accuracy of the representations and warranties on the part of the Company in
all material respects on the date hereof and on each Closing Date, the
performance by the Company of its obligations hereunder in all material
respects and to the following further conditions:
(a) The Company shall furnish to the Placement Agent on the date
hereof and on each Closing Date an opinion of Xxxxxxx, Xxxxxxx and Xxxxxx,
LLP, counsel for the Company, addressed to the Placement Agent and dated as
of each such Closing Date, and in a form reasonably satisfactory to
Xxxxxxxxx, Xxxxxx & Xxxxxxx L.L.P., counsel for the Placement Agent, stating
that:
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The Xxxxxxx Co.
_______________, 1998
Page 13
(i) the Company has an authorized capitalization as set
forth in the Prospectus under the caption "Capitalization;" the
outstanding shares of capital stock of the Company and CCM have been
duly and validly authorized and issued and are fully paid and
non-assessable; except as disclosed in the Prospectus, to such
counsel's knowledge, there are no outstanding (A) securities or
obligations of the Company or CCM convertible into or exchangeable for
any capital stock of the Company or CCM, (B) warrants, rights or
options to subscribe for or purchase from the Company or CCM any such
capital stock or any such convertible or exchangeable securities or
obligations, or (C) obligations of the Company or CCM to issue any
shares of capital stock, any such convertible or exchangeable
securities or obligations, or any such warrants, rights or options;
(ii) the Company and CCM each has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of its respective jurisdiction of
incorporation with full corporate power and authority to own its
respective properties and to conduct its respective business as
described in the Registration Statement and the Prospectus and to
execute and deliver this Agreement and the QIU Agreement;
(iii) the execution, delivery and performance of this
Agreement and the QIU Agreement by the Company and the
consummation by the Company of the transactions contemplated
under this Agreement or the QIU Agreement, as the case may be, do
not and will not (A) conflict with, or result in any breach of,
or constitute a default under, or constitute an event which with
giving of notice, lapse of time, or both would constitute a
breach of or default under, (I) any provisions of the articles of
incorporation, charter or by-laws of the Company or CCM, (II) to
the best of such counsel's knowledge, any provision of any
material license, indenture, mortgage, deed of trust, loan or
credit agreement or other agreement or instrument to which the
Company or CCM is a party or by which either of them or their
respective properties may be bound or affected, or (III) to the
best of such counsel's knowledge, any law or regulation,
including, without limitation, the Securities Laws, or any
decree, judgment or order applicable to the Company or CCM,
except in the case of clause (II) for such conflicts, breaches or
defaults which, individually or in the aggregate, would not have
a material adverse effect on the assets, operations, business,
prospects or condition (financial or otherwise) of the Company
and CCM taken as a whole; or (B) to such counsel's knowledge,
result in the creation or imposition of
Xxxxxxx Capital Management Holdings, Inc.
The Xxxxxxx Co.
_______________, 1998
Page 14
any lien, charge, claim or encumbrance upon any property or assets of
the Company or CCM;
(iv) to such counsel's knowledge, no approval,
authorization, consent or order of or filing with any federal or
state governmental or regulatory commission, board, body,
authority or agency is required in connection with the execution,
delivery and performance of this Agreement and the QIU Agreement,
the consummation of the transactions contemplated hereby and
thereby, the sale and delivery of the Shares by the Company as
contemplated hereby other than such as have been obtained or made
under the Securities Act, and except that such counsel need
express no opinion as to any necessary qualification under the
rules of the NASD or the state securities or blue sky laws of the
various jurisdictions in which the Shares are being offered by
the Placement Agent;
(v) the Company is not, and upon the sale of the
Shares as herein contemplated will not be, an investment company
required to be registered under the Investment Company Act;
(vi) the Shares have been duly authorized and, when
the Shares have been issued and duly delivered against payment
therefor as contemplated by this Agreement, the Shares will be
validly issued, fully paid and nonassessable, free and clear of
any pledge, lien, encumbrance, security interest, mortgage or
other claim whatsoever;
(vii) the issuance and sale of the Shares by the
Company is not subject to preemptive or other similar rights
arising by operation of law, under the articles of incorporation
or by-laws of the Company, under any agreement known to such
counsel to which the Company or CCM is a party or, to the best of
such counsel's knowledge, otherwise;
(viii) the form of certificate used to evidence the
Common Stock complies in all material respects with all
applicable statutory requirements, with any applicable
requirements of the articles of incorporation and by-laws of the
Company and the requirements of the SmallCap Market;
(ix) the Registration Statement has become effective
under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement has been issued and,
to
Xxxxxxx Capital Management Holdings, Inc.
The Xxxxxxx Co.
_______________, 1998
Page 15
the best of such counsel's knowledge, no proceedings with respect
thereto have been commenced or threatened;
(x) as of the Effective Date, the Registration
Statement and the Prospectus (except as to the financial
statements and other financial and statistical data contained in
such Registration Statement or Prospectus, as to which such
counsel need express no opinion) complied as to form in all
material respects with the requirements of the Securities Act and
the Securities Act Regulations;
(xi) the statements under the captions
"Capitalization," "Risk Factors -- Regulatory Risks," "Business
-- Government Regulation," "Certain Transactions," "Description
of Capital Stock," and "Shares Eligible for Future Sale," in the
Registration Statement and the Prospectus, insofar as such
statements constitute a summary of the legal matters referred to
therein, constitute accurate summaries thereof in all material
respects; and
(xii) except as set forth in the Prospectus, to the
best of such counsel's knowledge, there are no material legal or
governmental proceedings pending or threatened against, or
involving the properties of the Company or CCM required to be
disclosed in the Prospectus; provided that for this purpose such
counsel need not regard any litigation or governmental
proceedings to be "threatened" unless the potential litigant or
governmental authority has manifested to the Company or CCM, or
to their management, a present intention to initiate such
proceedings.
(xiii) to such counsel's knowledge, there are no
contracts or documents of a character which are required to be
filed as exhibits to the Registration Statement or to be
described or summarized in the Prospectus which have not been so
filed, summarized or described.
In addition, such counsel shall state that they have participated in the
preparation of the Prospectus and the Registration Statement and in
conferences with officers and other representatives of the Company and
representatives of the independent public accountants for the Company and
with the Placement Agent at which the contents of the Prospectus and the
Registration Statement and related matters were discussed and, although such
counsel is not passing upon and does not assume responsibility for the
accuracy, completeness or fairness of the statements contained in the
Prospectus and the Registration Statement and have not made any independent
investigation or
Xxxxxxx Capital Management Holdings, Inc.
The Xxxxxxx Co.
_______________, 1998
Page 16
verification thereof, nothing has come to their attention during the course
of such participation that leads them to believe that at the time the
Registration Statement became effective, the Prospectus and the Registration
Statement (other than the financial statements and schedules and other
financial and statistical data and information included therein or omitted
therefrom, as to which they need express no opinion) contained or contains an
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(b) the Placement Agent shall have received, on each of the date
hereof and each Closing Date, a letter dated the date hereof or such Closing
Date, as the case may be, in form and substance satisfactory to the Placement
Agent, from Xxxxxx Xxxxxxxx LLP, independent public accountants, confirming
that they are independent public accountants within the meaning of the
Securities Act and the Securities Act Regulations and stating that in their
opinion the financial statements examined by them and included in the
Registration Statement comply in form in all material respects with the
applicable accounting requirements of the Securities Act and the Securities
Act Regulations; and containing the information and statements 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.
(c) No amendment or supplement to the Registration Statement or
the Prospectus shall have been filed to which the Placement Agent has
objected in writing.
(d) Prior to the completion of the Offering (i) no stop order
suspending the effectiveness of the Registration Statement or any order
preventing or suspending the use of any Preliminary Prospectus or the
Prospectus shall have been issued by the Commission, (ii) no suspension of
the qualification of the Shares for offering or sale in any jurisdiction
shall have occurred, and no proceeding for such suspension shall have been
initiated or threatened; and (iii) the Registration Statement and the
Prospectus shall not contain an untrue statement of material fact or omit to
state a material fact, individually or in the aggregate, 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.
(e) Between the time of execution of this Agreement and each
Closing Date (i) no material and unfavorable change in the assets,
operations, business, prospects or condition (financial or otherwise) of the
Company and CCM taken as a whole shall have occurred or become known (whether
or not arising in the ordinary course of business), and (ii) no transaction
which is material
Xxxxxxx Capital Management Holdings, Inc.
The Xxxxxxx Co.
_______________, 1998
Page 17
and unfavorable to the Company shall have been entered into by the Company
or CCM
.
(f) On the Effective Date, the QIU Agreement shall have been
entered into and delivered by all required parties.
(g) On each Closing Date, all filings required to have been made
pursuant to Rules 424 or 430A under the Securities Act have been made.
(h) On the Initial Closing Date, the Shares shall have been
approved for listing upon notice of issuance on the SmallCap Market.
(i) The NASD shall not have raised any objection with respect to
the fairness and reasonableness of the underwriting terms and arrangements.
(j) the Placement Agent shall have received a letter from Xxxxxx X.
Xxxxxxx, Xx., in form and substance satisfactory to the Placement Agent,
confirming his agreement that until February 25, 1999 he will not sell any
shares of Common Stock, or any securities convertible into or exchangeable
for any shares of Common Stock, or any option, warrant or other right to
acquire any shares of Common Stock, or publicly announce any intention to do
any of the foregoing, without the prior written consent of the Placement
Agent, which consent may be withheld in their sole discretion.
(k) The Company shall, on the date hereof and at each Closing
Date, deliver to the Placement Agent a certificate of its president and its
chief financial officer to the effect that, to each of such officer's
knowledge, the representations and warranties of the Company set forth in
this Agreement and the conditions set forth in paragraphs (c) through (h)
inclusive of this Section 10 have been met and are true and correct as of
such date.
(l) The Company shall have furnished to the Placement Agent such
other documents and certificates as to the accuracy and completeness of any
statement in the Registration Statement and the Prospectus, the
representations, warranties and statements of the Company contained herein,
and the performance by the Company of the covenants contained herein, and the
fulfillment of any conditions contained herein or therein, as of each Closing
Date as the Placement Agent may reasonably request.
(m) The Company shall have performed such of its obligations under
this Agreement as are to be performed by the terms hereof at or before each
Closing Date.
Xxxxxxx Capital Management Holdings, Inc.
The Xxxxxxx Co.
_______________, 1998
Page 18
SECTION 11. INDEMNIFICATION AND CONTRIBUTION
(a) The Company agrees to indemnify and hold harmless the
Placement Agent and its directors, officers and each person, if any, who
controls the Placement Agent within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against any and all
losses, claims, damages, liabilities and judgments (including, without
limitation, any legal or other expenses incurred in connection with
investigating or defending any matter, including any action, that could give
rise to any such losses, claims, damages, liabilities or judgments and any
amount paid in settlement of, any action, suit or proceeding commenced or any
claim asserted), to which the Placement Agent may become subject under the
Securities Act, the Exchange Act or other Federal or state statutory law or
regulation, at common law or otherwise, related to, based upon or arising out
of (i) an untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, the Prospectus, or any amendment or
supplement thereto, or any preliminary prospectus (unless, with respect to
any preliminary prospectus, corrected in the Prospectus), or 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 (unless,
with respect to any preliminary prospectus, corrected in the Prospectus) , or
(ii) any breach or alleged breach by the Company of its representations,
warranties and agreements contained in this Agreement.
The Placement Agent agrees to indemnify and hold harmless the Company,
its directors and officers, and each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20
of the Exchange Act to the same extent as the foregoing indemnity from the
Company to the Placement Agent, but only with respect to (i) any breach or
alleged breach by the Placement Agent of its representations, warranties and
agreements contained in this Agreement or (ii) information relating to the
Placement Agent furnished in writing by the Placement Agent expressly for use
in the Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any preliminary prospectus; provided, however, that the foregoing
indemnity by the Placement Agent shall not apply to any untrue statement or
omission contained in any preliminary prospectus which is not contained in
the Prospectus.
(b) In case any action shall be commenced involving any person in
respect of which indemnity may be sought under this Section 11, such person
shall promptly notify each indemnifying party in writing and such
indemnifying party shall assume the defense thereof, including the employment
of counsel reasonably satisfactory to such indemnified party, and the payment
of all fees and expenses of such counsel, as incurred. Any indemnified party
shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
Xxxxxxx Capital Management Holdings, Inc.
The Xxxxxxx Co.
_______________, 1998
Page 19
shall be at the expense of such indemnified party unless (i) the employment
of such counsel by such indemnified party shall have been specifically
authorized in writing by the indemnifying parties, (ii) the indemnifying
party shall have failed to assume the defense of such action or employ
counsel reasonably satisfactory to the indemnified party, or (iii) the named
parties to any such action (including any impleaded parties) include both the
indemnified party and the indemnifying party, and the indemnified party shall
have been advised by such counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the indemnifying party (in which case the indemnifying party
shall not have the right to assume the defense of such action on behalf of
the indemnified party). In any such case, the indemnifying party shall not,
in connection with any one action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more
than one separate firm of attorneys (in addition to any local counsel) for
all indemnified parties and all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by the Placement
Agent, in the case of parties indemnified pursuant to the first paragraph of
Section 11(a), and by the Company, in the case of the parties indemnified
pursuant to the second paragraph of Section 11(a). The indemnifying party
shall indemnify and hold harmless the indemnified party from and against any
and all losses, claims, damages, liabilities and judgments by reason of any
settlement of any action (i) effected with its written consent or (ii)
effected without its written consent if the settlement is entered into more
than twenty business days after the indemnifying party shall have received a
request from the indemnified party for reimbursement for the fees and expense
of counsel (in any case where such fees and expenses are at the expense of
the indemnifying party) and, prior to the date of such settlement, the
indemnifying party shall have failed to comply with such reimbursement
request. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement or compromise of, or consent to
the entry of judgment with respect to, any pending or threatened action in
respect of which the indemnified party is or could have been a party and
indemnity or contribution may be or could have been sought hereunder by the
indemnified party, unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
on claims that are or could have been the subject matter of such action and
(ii) does not include a statement as to or an admission of fault, culpability
or a failure to act, by or on behalf of the indemnified party.
(c) To the extent the indemnification provided for in Section 11a)
is unavailable to, or insufficient to hold harmless any indemnified party
under Section 11(a), in respect of any loss, claim, damage, liability or
judgment referred to therein, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages, liabilities and judgments (i) in such proportion as is appropriate
to reflect the relative benefits
Xxxxxxx Capital Management Holdings, Inc.
The Xxxxxxx Co.
_______________, 1998
Page 20
received by the Company, on the one hand, and the Placement Agent, on the
other, from the Offering or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, or if the indemnified party failed
to give the notice required under Section 11(b), in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company, on the one hand, and
the Placement Agent, on the other, in connection with the Placement Agent 's
activities under this Agreement or the statements or omissions that resulted
in such losses, claims, damages, liabilities or judgments, as well as any
other relevant equitable considerations. The relative benefits received by
the Company, on the one hand, and the Placement Agent, on the other, shall be
deemed to be in the same proportion as the total net proceeds from the
Offering (after deducting expenses) bear to the total fee paid to the
Placement Agent pursuant to Section 5. The relative fault of the Company, on
the one hand, and of the Placement Agent, on the other, 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 or by the
Placement Agent, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Placement Agent agree that it would not be just and
equitable if contribution pursuant to this Section 11(c) were determined by
pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or judgments 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 matter, including any action that could have given rise to such
losses, claims, damages, liabilities or judgments. Notwithstanding the
provisions of this Section 11, the Placement Agent shall not be required to
contribute any amount in excess of the amount by which the fee paid to the
Placement Agent pursuant to Section 5 exceeds the amount of any damages the
Placement Agent has otherwise been required to pay by reason of such
activities under this Agreement or 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.
(d) The remedies provided for in this Section 10 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.
(e) The statements under the caption "Plan of Distribution" in the
Prospectus constitute the only information furnished to the Company in
writing
Xxxxxxx Capital Management Holdings, Inc.
The Xxxxxxx Co.
_______________, 1998
Page 21
on behalf of the Placement Agent expressly for use in the Registration
Statement, the Prospectus or any amendment or supplement thereto, or any
preliminary prospectus.
(f) The indemnity and contribution agreements contained in this
Section 11, and the covenants, representations and warranties of the Company
in this Agreement, shall remain operative and in full force and effect
regardless of (i) any investigation made by the Placement Agent or on its
behalf or by or on behalf of any person who controls the Placement Agent or
(ii) any termination of this Agreement or the Offering.
SECTION 12. MISCELLANEOUS
(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto.
(b) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion
or portions shall be considered severable and not be affected, and the rights
and obligations of the parties shall be construed and enforced as if the
Agreement did not contain the particular part, term or provision held to be
illegal or invalid.
(c) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(d) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have
been properly given.
(e) This Agreement shall be governed by and shall be construed in
accordance with the laws of the State of Maryland without reference to
principles of conflict of law.
(f) This Agreement has been and is made solely for the benefit of the
Placement Agent, the Corporation and their respective successors, executors,
administrators, heirs and assigns, and the officers, directors and
controlling persons referred to herein, and no other person will have any
right or obligation hereunder. The term "successors" shall not include any
purchaser of the Shares merely because of such purchase.
(g) This Agreement embodies the entire agreement between the
Corporation and the Placement Agent relating to the subject matter hereof and
supersedes all prior agreements, representations and understandings, if any,
relating to the subject matter hereof.
Xxxxxxx Capital Management Holdings, Inc.
The Xxxxxxx Co.
_______________, 1998
Page 22
(h) Please confirm that the foregoing correctly sets forth the
agreement between the Corporation and the Placement Agent.
Very truly yours,
XXXXXXX CAPITAL MANAGEMENT HOLDINGS, INC.
By:
--------------------------------
Xxxxxx X. Xxxxxxx, Xx.
President
Accepted,
THE XXXXXXX CO.
By:
---------------------------
Xxxxxx X. Xxxxxxx, Xx.
President
