EXHIBIT 1.1
1,025,000 SHARES
PROVIDENCE AND WORCESTER RAILROAD COMPANY
COMMON STOCK
UNDERWRITING AGREEMENT
----------------------
March __, 1998
ADVEST, INC.
As Representative (the "Representative")
of the several Underwriters
named in Schedule I hereto
c/o Advest, Inc.
Xxx Xxxxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Providence and Worcester Railroad Company, a Rhode Island corporation
(the "Company"), and a certain shareholder of the Company named in Schedule II
hereto (the "Selling Shareholder"), propose to sell to the several Underwriters
named in Schedule I hereto (the "Underwriters") an aggregate of 1,025,000 shares
(the "Firm Stock") of the Company's Common Stock, par value $.50 per share (the
"Common Stock"). Of the 1,025,000 shares of the Firm Stock, 1,000,000 are being
sold by the Company and 25,000 by the Selling Shareholder.
In addition, in order to cover over-allotments in the sale of the Firm
Stock, Xxxxxx X. Xxxx, the principal shareholder of the Company (the "Principal
Shareholder"), proposes to grant to the Underwriters an option to purchase up to
an additional 153,750 shares of the Common Stock on the terms and for the
purposes set forth in Section 3 (the "Option Stock"). The Firm Stock and the
Option Stock, if purchased, are hereinafter referred to collectively as the
"Stock." This is to confirm the agreement concerning the purchase of the Stock
from the Company, the Selling Shareholder and the Principal Shareholder by the
Underwriters.
1. Representations, Warranties and Agreements of the Company. The
Company represents, warrants and agrees to and with the Underwriters and the
Selling Shareholder that:
(a) A registration statement on Form S-1 and Amendment No. 1
with respect to the Stock has (i) been prepared by the Company in
conformity with the requirements of the United States Securities Act
of 1933 (the "Securities Act")
and the rules and regulations (the "Rule and Regulations") of the
United States Securities and Exchange Commission (the "Commission")
thereunder, (ii) been filed with the Commission under the Securities
Act and (iii) become effective under the Securities Act. Copies of
such registration statement and the amendment thereto have been
delivered by the Company to you as the Representative of the
Underwriters. As used in this Agreement, "Effective Time" means the
date and the time as of which such registration statement, or the most
recent post-effective amendment thereto, if any, was declared
effective by the Commission; "Effective Date" means the date of the
Effective Time; "Preliminary Prospectus" means each prospectus
included in such registration statement, or amendments thereof, before
it became effective under the Securities Act and any prospectus filed
with the Commission by the Company with the consent of the
Representative pursuant to Rule 424(a) of the Rules and Regulations;
"Registration Statement" means such registration statement, as amended
at the Effective Time and thereafter amended by post-effective
amendment, including all information contained in the final prospectus
filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations in accordance with Section 6 hereof and deemed to be a
part of the registration statement as of the Effective Time pursuant
to paragraph (b) of Rule 430A of the Rules and Regulations; and
"Prospectus" means such final prospectus, as first filed with the
Commission pursuant to paragraph (1) or (4) of Rule 424(b) of the
Rules and Regulations. To the Company's knowledge, the Commission has
not issued any order suspending the effectiveness of the Registration
Statement or preventing or suspending the use of any Preliminary
Prospectus.
(b) When any Preliminary Prospectus was filed with the
Commission, it contained all statements required to be stated therein
in accordance with, and complied in all material respects with the
requirements of, the Securities Act and the Rules and Regulations.
The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the
Commission, as the case may be, conform in all respects to the
requirements of the Securities Act and the Rules and Regulations and
do not and will not, as of the applicable effective date (as to the
Registration Statement and any amendment thereto) and as of the
applicable filing date (as to the Prospectus and any amendment or
supplement thereto) contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided that
no representation or warranty is made as to information contained in
or omitted from the Registration Statement or the Prospectus in
reliance upon and in conformity with written information furnished to
the Company through the Representative by or on behalf of any
Underwriter specifically for inclusion therein or furnished by or on
behalf of and
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relating to the Selling Shareholder or the Principal Shareholder
specifically for use therein.
(c) The Company and its subsidiary (as defined in Section 17)
have been duly incorporated and are validly existing as corporations
in good standing under the laws of their respective jurisdictions of
incorporation, are duly qualified to do business and are in good
standing as foreign corporations in each jurisdiction in which their
respective ownership or lease of property or the conduct of their
respective businesses requires such qualification except where the
failure to so qualify would not have a material adverse effect on the
consolidated financial position, shareholders' equity, results of
operations, business or prospects of the Company and its subsidiary,
taken as a whole, and have all power and authority, and all material
licenses, permits, clearances, easements, certifications,
registrations, approvals, consents and franchises, necessary to own or
lease and operate their respective properties and assets and to
conduct their businesses as described in the Registration Statement
and Prospectus subject in each case to such qualifications as may be
set forth in the Prospectus; and the sole subsidiary of the Company is
not a "significant subsidiary," as such term is defined in Rule 405 of
the Rules and Regulations.
(d) The Company and its subsidiary have sufficient interest in
their real and personal property to permit the operation of a freight
railroad as described in the Prospectus.
(e) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, are fully
paid and non-assessable and conform to the description thereof
contained in the Prospectus, and none of such shares have been issued
in violation of any preemptive rights; all of the issued shares of
capital stock of the subsidiary of the Company have been duly and
validly authorized and issued and 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; and no options, warrants
or other rights to purchase, agreements or other obligations to issue
or other rights to convert any obligations into shares of capital
stock or ownership interests in the subsidiary of the Company are
outstanding.
(f) The offers and sales of the outstanding shares of the
Company's capital stock, whether described in the Registration
Statement or otherwise, were made in conformity in all material
respects with applicable federal and state securities laws.
(g) The shares of the Stock have been duly and validly
authorized and, when issued and delivered against payment therefor as
provided herein, will be duly and validly issued, fully paid and non-
assessable and the issuance thereof will
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not be subject to any preemptive rights, rights of first refusal or
similar rights; and the Stock will conform to the description thereof
contained in the Prospectus.
(h) The Company has reserved and kept available for the exercise
of the Warrants (as defined in Section 3(c) hereof) such number of
authorized but unissued shares of Common Stock as are sufficient to
permit the exercise in full of the Warrants. The Warrant Shares (as
defined in Section 3(c) hereof), when issued and sold pursuant to the
Warrants, will be duly and validly issued, fully paid and
nonassessable and none of them will be issued in violation of any
preemptive or other similar right binding on the Company.
(i) The Company has full power and authority to enter into,
deliver and perform this Agreement and the Warrants (as defined in
Section 3(c) hereof) and to issue and sell the Stock, the Warrants and
the Warrant Shares (as defined in Section 3(c) hereof); and this
Agreement and the Warrants have been duly authorized, executed and
delivered by the Company.
(j) The execution, delivery and performance of this Agreement by
the Company and the consummation of the transactions contemplated
hereby will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, any
material indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or its subsidiary is a
party or by which the Company or its subsidiary is bound or to which
any of the property or assets of the Company or its subsidiary is
subject, nor will such actions result in any violation of the
provisions of the charter or by-laws or similar governing instruments
of the Company or its subsidiary or any statute or any order, rule or
regulation of any court or governmental agency or body, domestic or
foreign, having jurisdiction over the Company or its subsidiary or any
of their properties or assets; and except for the registration of the
Stock under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be required
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and applicable state securities laws and the rules of the
American Stock Exchange, Inc. (the "AMEX") and the National
Association of Securities Dealers, Inc. (the "NASD") in connection
with the purchase and distribution of the Stock by the Underwriters,
no consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body is
required for the execution, delivery and performance of this Agreement
by the Company and the consummation of the transactions contemplated
hereby.
(k) The execution, delivery and performance of the Warrants (as
defined in Section 3(c) hereof) by the Company and the consummation of
the transactions contemplated thereby will not conflict with or result
in a breach or violation of any
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of the terms or provisions of, or constitute a default under, any
material indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or its subsidiary is a
party or by which the Company or its subsidiary is bound or to which
any of the property or assets of the Company or its subsidiary is
subject, nor will such actions result in any violation of the
provisions of the charter or by-laws or similar governing instruments
of the Company or its subsidiary or any statute or any order, rule or
regulation of any court or governmental agency or body, domestic or
foreign, having jurisdiction over the Company or its subsidiary or any
of their properties or assets; and except for the registration of the
Warrants and the Warrant Shares (as defined in Section 3(c) hereof)
under the Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the Exchange
Act, and applicable state securities laws and the rules of the AMEX
and the NASD, no consent, approval, authorization or order of, or
filing or registration with, any such court or governmental agency or
body is required for the execution, delivery and performance of the
Warrants by the Company and the consummation of the transactions
contemplated thereby.
(l) There are no contracts, agreements or understandings between
the Company and any person granting such person the right (other than
rights which have been waived or satisfied) to require the Company to
include such securities in the securities registered pursuant to the
Registration Statement; and there are no options or warrants for the
purchase of, other outstanding rights to purchase, agreements or
obligations to issue or agreements or other rights to convert or
exchange any obligation or security into, capital stock of the Company
or securities convertible into or exchangeable for capital stock of
the Company, except as described in the Prospectus.
(m) Except as described in the Registration Statement, the
Company has not sold or issued any shares of Common Stock during the
six-month period preceding the date of the Prospectus, including any
sales pursuant to Rule 144A under, or Regulation D or S of, the
Securities Act, other than shares issued pursuant to employee benefit
plans, qualified stock options plans or other employee compensation
plans or pursuant to outstanding options, rights or warrants.
(n) Neither the Company nor its subsidiary has sustained, since
the date of the latest audited financial statements included in the
Prospectus, any material loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the
Prospectus; and, since such date, there has not been any change in the
capital stock or long-term debt of the Company or its subsidiary
(other than scheduled
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principal payments) or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, management, business, prospects, obligations,
financial position, shareholders' equity or results of operations of
the Company and its subsidiary, otherwise than as set forth or
contemplated in the Prospectus.
(o) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement or
included in the Prospectus present fairly the financial condition and
results of operations of the entities purported to be shown thereby,
at the dates and for the periods indicated, and have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved; the financial
information included in the Prospectus under the caption "Prospectus
Summary" and "Selected Financial Data" (including any as adjusted
financial information) and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" accurately presents the
information shown therein and has been prepared on a basis consistent
with that of the audited financial statements of the Company included
in the Registration Statement; and the other historical and pro forma,
financial and statistical information and data set forth in the
Registration Statement and the Prospectus (and any amendment or
supplement thereto) are accurately presented and prepared on a basis
consistent with the books and records of the Company.
(p) Deloitte & Touche LLP, which have certified certain
financial statements of the Company, whose report appears in the
Prospectus and which have delivered the initial letter referred to in
Section 9(g) hereof, are independent public accountants as required by
the Securities Act and the Rules and Regulations.
(q) All real property owned by the Company and its subsidiary is
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 for railroad operations and do not
materially interfere with the use made and proposed to be made of such
property by the Company and its subsidiary; all real property and
buildings held under lease or trackage rights agreement by the Company
and its subsidiary are held by them under valid, subsisting and
enforceable leases or trackage rights agreements, as the case may be,
with such exceptions as are not material and do not interfere with the
use made and proposed to be made of such property and buildings by the
Company and its subsidiary.
(r) Except as described in the Prospectus, the Company and its
subsidiary carry, or are covered by, insurance in such amounts and
covering such risks as is adequate for the conduct of their respective
businesses and the value of their
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respective properties and as is customary for companies engaged in
similar businesses in similar industries.
(s) Except as described in the Prospectus, the Company and its
subsidiary own or possess adequate rights to use all material patents,
patent applications, trademarks, service marks, trade names, trademark
registrations, service xxxx registrations, copyrights and licenses
necessary for the conduct of their respective businesses and have no
reason to believe that the conduct of their respective businesses will
conflict with, and have not received any notice of any claim of
conflict with, any such rights of others.
(t) There are no legal or governmental claims, actions or
proceedings pending or, to the knowledge of the Company, threatened
against the Company or its subsidiary to which the Company or its
subsidiary is a party or of which any property or assets of the
Company or its subsidiary is the subject that are required to be
described in the Registration Statement or the Prospectus but are not
described as required.
(u) The statements in the Registration Statement and Prospectus,
insofar as they are descriptions of or references to statutes,
regulations, contracts, agreements or other documents, are accurate in
all material respects and present or summarize fairly, in all material
respects, the information required to be disclosed under the
Securities Act or the Rules and Regulations, and there are no
statutes, regulations, contracts or other documents which are required
to be described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or the Rules and
Regulations which have not been described in the Prospectus or filed
as exhibits to the Registration Statement or incorporated therein by
reference as permitted by the Rules and Regulations.
(v) 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 which is not so
described.
(w) No labor dispute or disturbance by the employees of the
Company or its subsidiary exists or, to the knowledge of the Company,
is imminent which might be expected to have a material adverse effect
on the consolidated financial position, shareholders' equity, results
of operations, business or prospects of the Company and its
subsidiary, taken as a whole; and the Company has no knowledge of any
existing or threatened labor disturbance by the employees of any of
the principal suppliers, contractors or customers of the Company or
its subsidiary that would materially adversely affect the consolidated
financial position, shareholders'
7
equity, results of operations, business or prospects of the Company
and its subsidiary, taken as a whole.
(x) The Company is in compliance in all material respects with
all presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and
published interpretations thereunder ("ERISA"); no "reportable event"
(as defined in ERISA) has occurred with respect to any "pension plan"
(as defined in ERISA) for which the Company would have any liability;
the Company has not incurred and does not expect to incur liability
under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of
the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder (the "Code"); and
each "pension plan" for which the Company would have any liability
that is intended to be qualified under Section 401(a) of the Code is
so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which would cause the loss of
such qualification.
(y) The Company and its subsidiary have filed all federal,
state, local and foreign income and franchise tax returns required to
be filed through the date hereof and have paid all taxes due thereon,
and no tax deficiency has been determined adversely to the Company or
its subsidiary which has had (nor does the Company have any knowledge
of any tax deficiency which, if determined adversely to the Company or
its subsidiary, might have) a material adverse effect on the
consolidated financial position, shareholders' equity, results of
operations, business or prospects of the Company and its subsidiary,
taken as a whole.
(z) Since the date as of which information is given in the
Prospectus through the date hereof, and except as may otherwise be
disclosed in the Prospectus, the Company has not (i) issued or granted
any securities (except pursuant to the exercise of warrants and
options outstanding on the date of the Prospectus or pursuant to
employee benefit plans described in the Prospectus), (ii) incurred any
liability or obligation, direct or contingent, other than liabilities
and obligations which were incurred in the ordinary course of
business, (iii) entered into any transaction not in the ordinary
course of business or (iv) declared or paid any dividend on its
capital stock (other than regular dividends declared on January 28,
1998).
(aa) The Company and its subsidiary each (i) makes and keeps
accurate books and records and (ii) maintains internal accounting
controls which provide reasonable assurance that (A) transactions are
executed in accordance with management's authorization, (B)
transactions are recorded as necessary to permit preparation of its
financial statements and to maintain accountability for its assets,
(C) access to its assets is permitted only in accordance with
management's
8
authorization and (D) the reported accountability for its assets is
compared with existing assets at reasonable intervals.
(bb) Neither the Company nor its subsidiary (i) is in violation
of its charter or by-laws or similar governing instruments, (ii) is in
default in any material respect, and no event has occurred which, with
notice or lapse of time or both, would constitute such a default, in
the due performance or observance of any term, covenant or condition
contained in any material indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which it is a party or
by which it is bound or to which any of its properties or assets is
subject or (iii) is in violation in any material respect of any law,
ordinance, governmental rule, regulation, order, permit or court
decree to which it or its property or assets may be subject, including
with respect to any known release of hazardous wastes or other
hazardous materials.
(cc) Neither the Company nor its subsidiary, nor, to the
Company's knowledge, any director, officer, agent, employee or other
person associated with or acting on behalf of the Company or its
subsidiary, has used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating
to political activity; made any direct or indirect unlawful payment to
any foreign or domestic government official or employee from corporate
funds; violated or is in violation of any provision of the Foreign
Corrupt Practices Act of 1977; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
(dd) Neither the Company nor its subsidiary is an "investment
company" within the meaning of such term under the Investment Company
Act of 1940 and the rules and regulations of the Commission
thereunder.
(ee) There are no engagements or arrangements between the Company
and an investment bank or third party pursuant to which such investment
bank or third party has been granted any rights to underwrite securities of
the Company or would be entitled to receive a fee in the event of a private
placement of securities, public offering of securities or merger or
acquisition involving the Company, except for any rights to underwrite
contemplated by this Agreement, any arrangements for which fees are
reflected in Item 13 of Part II of the Registration Statement and any
arrangement described in the Prospectus under the caption "Underwriting."
2.A Representations, Warranties and Agreements of the Selling
Shareholder. The Selling Shareholder represents, warrants and agrees to and with
the Company, the Underwriters and the Principal Shareholder that:
9
(a) The Selling Shareholder has, and immediately prior to the
First Delivery Date (as defined in Section 5 hereof) the Selling
Shareholder will have, good and valid title to the shares of Stock to
be sold by the Selling Shareholder hereunder on such date, free and
clear of all liens, encumbrances, equities or claims; and upon
delivery of such shares and payment therefor pursuant hereto, good and
valid title to such shares, free and clear of all liens, encumbrances,
equities or claims, will pass to the several Underwriters.
(b) The Selling Shareholder has full right, power and authority
to enter into this Agreement and to sell, transfer and deliver the
Stock to be sold by the Selling Shareholder hereunder, and this
Agreement has been duly authorized, executed and delivered by the
Selling Shareholder and constitutes the legal, valid and binding
obligation of the Selling Shareholder enforceable in accordance with
its terms; the execution, delivery and performance of this Agreement
by the Selling Shareholder and the consummation by the Selling
Shareholder of the transactions contemplated hereby will not conflict
with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to
which the Selling Shareholder is a party or by which the Selling
Shareholder is bound or to which any of the property or assets of the
Selling Shareholder is subject, nor will such actions result in any
violation of the provisions of the charter or by-laws of the Selling
Shareholder or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the
Selling Shareholder or the property or assets of the Selling
Shareholder; and, except for the registration of the Stock under the
Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the Exchange
Act, applicable state securities laws and the rules of the AMEX or the
NASD in connection with the purchase and distribution of the Stock by
the Underwriters, no consent, approval, authorization or order of, or
filing or registration with, any such court or governmental agency or
body is required for the execution, delivery and performance of this
Agreement by the Selling Shareholder and the consummation by the
Selling Shareholder of the transactions contemplated hereby.
(c) The Registration Statement and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus, when they become effective or are filed with the
Commission, as the case may be, do not and will not, as of the
applicable effective date (as to the Registration Statement and any
amendment thereto) and as of the applicable filing date (as to the
Prospectus and any amendment or supplement thereto) contain an untrue
statement of a material fact regarding the Selling Shareholder;
provided that no
10
representation or warranty is made as to information contained in or
omitted from the Registration Statement or the Prospectus in reliance
upon and in conformity with written information furnished to the
Company or the Selling Shareholder through the Representative by or on
behalf of any Underwriter specifically for inclusion therein.
(d) The Selling Shareholder 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 the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the shares of the
Stock.
2.B Representations, Warranties and Agreements of the Principal
Shareholder. The Principal Shareholder represents, warrants and agrees:
(a) The Principal Shareholder has, and immediately prior to the
Second Delivery Date (as defined in Section 5 hereof), the Principal
Shareholder will have, good and valid title to the shares of the
Option Stock to be sold by the Principal Shareholder hereunder on such
date (if the Underwriters exercise the option granted under Section
3(b) hereof), free and clear of all liens, encumbrances, equities or
claims; and upon delivery of such shares and payment therefor pursuant
hereto, good and valid title to such shares, free and clear of all
liens, encumbrances, equities or claims, will pass to the several
Underwriters.
(b) The Principal Shareholder has full right, power and authority
to enter into this Agreement and to sell, transfer and deliver the
Option Stock to be sold by the Principal Shareholder hereunder, and
this Agreement has been duly executed and delivered by the Principal
Shareholder.
(c) The execution, delivery and performance of this Agreement by
the Principal Shareholder and the consummation by the Principal
Shareholder of the transactions contemplated hereby will not conflict
with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any material indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Principal Shareholder is a party or by which
the Principal Shareholder is bound or to which any of the property or
assets of the Principal
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Shareholder is subject, nor will such actions result in any violation
of the provisions of any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over the
Principal Shareholder or the property or assets of the Principal
Shareholder; and, except for the registration of the Option Stock
under the Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the Exchange
Act, applicable state securities laws and the rules of the AMEX or the
NASD in connection with the purchase and distribution of the Option
Stock by the Underwriters, no consent, approval, authorization or
order of, or filing or registration with, any such court or
governmental agency or body is required for the execution, delivery
and performance of this Agreement, by the Principal Shareholder and
the consummation by the Principal Shareholder of the transactions
contemplated hereby.
(d) The Registration Statement and the Prospectus and any further
amendments or supplements to the Registration Statement or the
Prospectus, when they become effective or are filed with the
Commission, as the case may be, do not and will not, as of the
applicable effective date (as to the Registration Statement and any
amendment thereto) and as of the applicable filing date (as to the
Prospectus and any amendment or supplement thereto) contain an untrue
statement of a material fact regarding the Principal Shareholder or
omit to state a material fact required to be stated therein or
necessary to make the statements therein regarding the Principal
Shareholder not misleading; provided that no representation or
warranty is made as to information contained in or omitted from the
Registration Statement or the Prospectus in reliance upon and in
conformity with written information furnished to the Company or the
Principal Shareholder through the Representative by or on behalf of
any Underwriter specifically for inclusion therein or by or on behalf
of and relating to the Selling Shareholder specifically for use
therein.
(e) The Principal Shareholder has examined the Registration
Statement and the Prospectus (as amended or supplemented) and has no
knowledge that the Registration Statement, as of the effective date,
or the Prospectus (or any amendment or supplement thereto), as of the
applicable filing date, contains any untrue statement of a material
fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
(f) The Principal Shareholder 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 the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the shares of the
Stock.
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3. Purchase of the Stock and the Warrants by the Underwriters. On
the basis of the representations and warranties contained in, and subject to the
terms and conditions of, this Agreement:
(a) The Company agrees to sell 1,000,000 shares of the Firm Stock and
the Selling Shareholder hereby agrees to sell the number of shares of the Firm
Stock set opposite its name in Schedule II hereto to the several Underwriters
and each of the Underwriters, severally and not jointly, agrees to purchase the
number of shares of the Firm Stock set opposite that Underwriter's name in
Schedule I hereto. Each Underwriter shall be obligated to purchase from the
Company and from the Selling Shareholder that number of shares of the Firm Stock
which represents the same proportion of the number of shares of the Firm Stock
to be sold by the Company and by the Selling Shareholder as the number of shares
of the Firm Stock set forth opposite the name of such Underwriter in Schedule I
represents of the total number of shares of the Firm Stock to be purchased by
all of the Underwriters pursuant to this Agreement. The respective purchase
obligations of the Underwriters with respect to the Firm Stock shall be rounded
among the Underwriters to avoid fractional shares, as the Representative may
determine.
(b) The Principal Shareholder grants to the Underwriters an option to
purchase up to 153,750 shares of Option Stock. Such option is granted solely
for the purpose of covering over-allotments in the sale of Firm Stock and is
exercisable as provided in Section 5 hereof. Shares of Option Stock shall be
purchased severally for the account of the Underwriters in proportion to the
number of shares of Firm Stock set opposite the name of such Underwriters in
Schedule I hereto. The respective purchase obligations of each Underwriter with
respect to the Option Stock shall be adjusted by the Representative so that no
Underwriter shall be obligated to purchase Option Stock other than in 100 share
amounts. The price of both the Firm Stock and any Option Stock shall be $_____
per share.
(c) On the First Delivery Date (as hereinafter defined), the Company
agrees to sell to Advest, Inc. (for its own account and not as Representative of
the several Underwriters) and Xxxxxxxxx Securities, Inc., for an aggregate price
of $100.00, warrants (the "Warrants") to purchase up to 100,000 shares of the
Common Stock (i.e., 10% of the number of shares of Firm Stock sold by the
----
Company) (the "Warrant Shares") at an exercise price per Warrant Share equal to
155% of the public offering price listed on the cover page of the Prospectus.
The Warrants will be exercisable at any time during a period of four (4) years
commencing on the first anniversary of the effective date of the Registration
Statement up to the fifth anniversary thereof. The Warrants will be restricted
from sale, transfer, assignment or hypothecation for a period of one year from
the effective date of the Registration Statement, except to members of the
selling group and their respective officers and partners. Each Warrant shall be
substantially identical to the form of Warrant filed as an exhibit to the
Registration Statement.
13
4. Offering of Stock by the Underwriters. Upon authorization by the
Representative of the release of the Firm Stock, the several Underwriters
propose to offer the Firm Stock for sale upon the terms and conditions set forth
in the Prospectus.
5. Delivery of and Payment for the Stock. Delivery of and payment
for the Firm Stock shall be made at the office of Xxxxxx, Xxxxx & Bockius LLP,
000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000, at 10:00 A.M., New York City time, on the
[third] [fourth] full business day following the date of this Agreement or at
such other date or place as shall be determined by agreement between the
Representative and the Company, except that physical delivery of such
certificates shall be made at the office of the Depository Trust Company, 00
Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000. This date and time are sometimes
referred to as the "First Delivery Date." On the First Delivery Date, the
Company and the Selling Shareholder shall deliver or cause to be delivered
certificates representing the Firm Stock to the Representative for the account
of each Underwriter against payment to the Company and the Selling Shareholder
of the purchase price by wire transfer of immediately available funds to such
accounts as the Company and the Selling Shareholder, as the case may be, shall
designate in writing, at least 48 hours in advance of such Delivery Date. Time
shall be of the essence, and delivery at the time and place specified pursuant
to this Agreement is a further condition of the obligation of each Underwriter
hereunder. Upon delivery, the Firm Stock shall be registered in such names and
in such denominations as the Representative shall request in writing not less
than two full business days prior to the First Delivery Date. For the purpose of
expediting the checking and packaging of the certificates for the Firm Stock,
the Company and the Selling Shareholder shall make the certificates representing
the Firm Stock available for inspection by the Representative at the office of
the Depository Trust Company, 00 Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
(or at such other location specified by you in writing at least 48 hours prior
to such Delivery Date), not later than 2:00 P.M., New York City time, on the
business day prior to the First Delivery Date.
At any time on or before the thirtieth day after the date of this
Agreement (or, if such 30th day shall be a Saturday or Sunday or a holiday, on
the next business day thereafter when the AMEX is open for trading) the option
granted in Section 3 may be exercised by written notice being given to the
Principal Shareholder by the Representative. Such notice shall set forth the
aggregate number of shares of Option Stock as to which the option is being
exercised, the names in which the shares of Option Stock are to be registered,
the denominations in which the shares of Option Stock are to be issued and the
date and time, as determined by the Representative, when the shares of Option
Stock are to be delivered; provided, however, that this date and time shall not
be earlier than the First Delivery Date nor earlier than the second business day
after the date on which the option shall have been exercised nor later than the
fifth business day after the date on which the option shall have been exercised.
In the event the Underwriters elect to purchase all or a portion of the Option
Stock, the Company and the Principal Shareholder agree to furnish or cause to
be furnished to the Underwriters all of the certificates, letters and opinions,
and to satisfy all of the other conditions set forth in Section 9 hereof
(excluding paragraphs (e) and (k) thereof) at each Delivery Date (as hereinafter
defined). (The date and time the shares of Option Stock are delivered are
sometimes referred to as the "Second Delivery Date" and the First Delivery Date
and the Second Delivery Date are sometimes each referred to as a "Delivery
Date.")
Delivery of and payment for the Option Stock shall be made at the
place specified in the first sentence of the first paragraph of this Section 5
(or at such other place as shall be
14
determined by agreement between the Representative and the Principal
Shareholder) at 10:00 A.M., New York City time, on the Second Delivery
Date. On the Second Delivery Date, the Principal Shareholder shall deliver or
cause to be delivered the certificates representing the Option Stock to the
Representative for the account of each Underwriter against payment to the
Principal Shareholder of the purchase price by wire transfer of immediately
available funds to such account as the Principal Shareholder shall designate in
writing at least 48 hours in advance of such Delivery Date. Time shall be of the
essence, and delivery at the time and place specified pursuant to this Agreement
is a further condition of the obligation of each Underwriter hereunder. Upon
delivery, the Option Stock shall be registered in such names and in such
denominations as the Representative shall request in the aforesaid written
notice. For the purpose of expediting the checking and packaging of the
certificates for the Option Stock, the Principal Shareholder shall make the
certificates representing the Option Stock available for inspection by the
Representative at the office of the Depository Trust Company, 00 Xxxxx Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (or at such other location specified by you in
writing at least 48 hours prior to such Delivery Date), not later than 2:00
P.M., New York City time, on the business day prior to the Second Delivery Date.
6. Further Agreements of the Company. The Company agrees:
(a) To prepare the Prospectus in a form approved by the
Representative and to file such Prospectus pursuant to Rule 424(b)
under the Securities Act not later than Commission's close of business
on the second business day following the execution and delivery of
this Agreement or, if applicable, such earlier time as may be required
by Rule 430A(a)(3) under the Securities Act; to make no further
amendment or any supplement to the Registration Statement or to the
Prospectus except as permitted herein; to advise the Representative,
promptly after it receives notice thereof, of the time when any
amendment to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended or
supplemented Prospectus has been filed and to furnish the
Representative with copies thereof; to advise the Representative,
promptly after it receives notice thereof, of the issuance by the
Commission of any stop order or of any order preventing or suspending
the use of any Preliminary Prospectus or the Prospectus, of the
suspension of the qualification of the Stock for offering or sale in
any jurisdiction, of the initiation or threatening of any proceeding
for any such purpose, or of any request by the Commission for the
amending or supplementing of the Registration Statement or the
Prospectus or for additional information; and, in the event of the
issuance of any stop order or of any order preventing or suspending
the use of any Preliminary Prospectus or the Prospectus or suspending
any such qualification, to use promptly its best efforts to obtain its
withdrawal;
(b) To furnish promptly to the Representative and to counsel for
the Underwriters a signed copy of the Registration Statement as
originally filed with the Commission, and each amendment thereto filed
with the Commission, including all consents and exhibits filed
therewith;
15
(c) To deliver promptly to the Representative such number of the
following documents as the Representative shall reasonably request:
(i) conformed copies of the Registration Statement as originally filed
with the Commission and each amendment thereto (in each case excluding
exhibits other than this Agreement) and (ii) each Preliminary
Prospectus, the Prospectus and any amended or supplemented Prospectus
and, if the delivery of a Prospectus is required at any time after the
Effective Time in connection with the offering or sale of the Stock or
any other securities relating thereto and if at such time any events
shall have occurred as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not
misleading, or, if for any other reason it shall be necessary to amend
or supplement the Prospectus in order to comply with the Securities
Act or the Exchange Act, to notify the Representative and, upon its
request, to file such document and to prepare and furnish without
charge to each Underwriter and to any dealer in securities as many
copies as the Representative may from time to time reasonably request
of an amended or supplemented Prospectus that will correct such
statement or omission or effect such compliance;
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company or the
Representative, be required by the Securities Act or requested by the
Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any
Prospectus pursuant to Rule 424 of the Rules and Regulations, to
furnish a copy thereof to the Representative and counsel for the
Underwriters and obtain the consent of the Representative to the
filing;
(f) As soon as practicable after the Effective Date, to make
generally available to the Company's security holders and to deliver
to the Representative an earnings statement of the Company and its
subsidiary (which need not be audited) complying with Section 11(a) of
the Securities Act and the Rules and Regulations (including, at the
option of the Company, Rule 158);
(g) For a period of five years following the Effective Date, to
furnish to the Representative copies of all materials furnished by the
Company to its shareholders and all public reports and all reports and
financial statements furnished by the Company to the principal
national securities exchange upon which the Common Stock may be listed
pursuant to requirements of or agreements with
16
such exchange or to the Commission pursuant to the Exchange Act or any
rule or regulation of the Commission thereunder;
(h) Promptly from time to time to take such action as the
Representative may reasonably request to qualify the Stock for
offering and sale under the securities laws of such jurisdictions as
the Representative may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the
distribution of the Stock; provided that in connection therewith the
Company shall not be required to qualify as a foreign corporation or
to file a general consent to service of process in any jurisdiction;
(i) For a period of 180 days from the date of the Prospectus,
not to, directly or indirectly, (1) offer for sale, sell, pledge or
otherwise transfer or dispose of (or enter into any transaction or
device which is designed to, or could be expected to, result in the
disposition by any person at any time in the future of) any shares of
Common Stock or securities convertible into or exchangeable for Common
Stock (other than the Stock and shares issued pursuant to employee
benefit plans, qualified stock option plans or other employee
compensation plans existing on the date hereof or pursuant to
currently outstanding options, warrants, rights or agreements), or
sell or grant options, rights or warrants with respect to any shares
of Common Stock or securities convertible into or exchangeable for
Common Stock (other than the grant of options or issuance of Common
Stock pursuant to option, stock purchase and employee benefit plans
existing on the date hereof), or (2) enter into any swap or other
derivatives transaction or agreement that transfers to another, in
whole or in part, any of the economic benefits or risks of ownership
of such shares of Common Stock, whether any such transaction described
in clause (1) or (2) above is to be settled by delivery of Common
Stock or other securities, in cash or otherwise, in each case without
the prior written consent of Advest, Inc.; and to cause each officer
and director, the Selling Shareholder and any other shareholder of the
Company who beneficially owns (as such term is defined in Rule 13d-1
under the Exchange Act) 5% or more of the Common Stock to furnish to
the Representative prior to the First Delivery Date, a letter or
letters, in form and substance satisfactory to counsel for the
Underwriters, pursuant to which each such person shall agree to the
following: For a period of 180 days (90 days, in the case of the
Selling Shareholder) from the date of the Prospectus (the "Lock-Up
Period") (A) (i) not to sell, offer to sell, solicit an offer to buy,
contract to sell, encumber, distribute, pledge, grant any option for
the sale of, or otherwise transfer or dispose of, directly or
indirectly, in one or a series of transactions, any shares of Common
Stock or any options or warrants to purchase any shares of Common
Stock without the prior written consent of Advest, Inc.; (ii) not to
announce or disclose any intention to do anything after the expiration
of the Lock-Up Period which the person is prohibited, as provided in
(i), from doing
17
during the Lock-Up Period; and (iii) to waive during the Lock-up
Period any right it may have to cause the Company to register pursuant
to the Securities Act shares of Common Stock and agree not to exercise
any registration rights during such Lock-up Period; and (B) not to
engage in any hedging or other transaction which is designed to or
reasonably expected to lead to or result in a disposition of any
shares of Common Stock or any options or warrants to purchase any
shares of Common Stock during the Lock-Up Period even if such shares
would be disposed of by someone other than the person;
(j) To apply the net proceeds from the sale of the Stock being
sold by the Company as set forth in the Prospectus;
(k) Prior to the Effective Date, to apply for the listing of the
Stock on the AMEX and to use its best efforts to complete that
listing, subject only to official notice of issuance, prior to the
First Delivery Date;
(l) To take such steps as shall be necessary to ensure that
neither the Company nor its subsidiary shall become an "investment
company" within the meaning of such term under the Investment Company
Act of 1940 and the rules and regulations of the Commission
thereunder;
(m) Prior to the termination of the underwriting syndicate
contemplated by this Agreement, neither the Company nor any of its
officers, directors or affiliates will (i) take, directly or
indirectly, any action designed to cause or to result in, or that
might reasonably be expected to cause or result in, the stabilization
or manipulation of the price of any security of the Company or (ii)
sell, bid for, purchase or pay anyone any compensation for soliciting
purchases of, the Stock;
(n) To pay Advest, Inc. and Xxxxxxxxx Securities, Inc. a non-
accountable expense allowance equal to 2.0% of the aggregate public
offering price of the shares of the Stock sold by the Company to the
Underwriters hereunder, less $25,000 previously paid to Xxxxxxxxx
Securities, Inc. and $25,000 previously paid to Advest, Inc. upon the
initial filing of the Registration Statement; and
(o) For a period of three (3) years from the date of the
Prospectus, Advest, Inc. shall have the right of first refusal to
provide investment banking services ("Investment Banking Services"),
including with respect to financings, mergers and acquisitions,
financial advisory and fairness opinions, to the Company. Specifically
excluded from Advest, Inc.'s right of first refusal are public or
private offerings of the Company's shares in exchange for properties,
assets or stock of other individuals or corporations. The Company
agrees to consult with Advest, Inc. with regard to any such Investment
Banking Services prior to consulting any other prospective investment
banker(s) and will offer Advest, Inc. the opportunity to provide any
such Investment Banking Services on terms not less favorable to the
Company than it can secure elsewhere. Advest, Inc. shall have thirty
(30) days in which to accept such offer. However, the Company shall
not be required to consult with Advest, Inc. concerning any borrowings
from banks and institutional lenders or concerning financing under any
equipment leasing or similar arrangements.
7. A. Further Agreement of the Selling Shareholder. The Selling
Shareholder agrees:
(a) For a period of 90 days from the date of the Prospectus, not
to, directly or indirectly, (1) offer for sale, sell, pledge or
otherwise transfer or dispose of (or enter into any transaction or
device which is designed to, or could be expected to, result in the
disposition by any person at any time in the future of) any shares of
Common Stock or securities convertible into or exchangeable for Common
Stock (other than the Stock) or (2) enter into any swap or other
18
derivatives transaction or agreement that transfers to another, in
whole or in part, any of the economic benefits or risks of ownership
of such shares of Common Stock, whether any such transaction described
in clause (1) or (2) above is to be settled by delivery of Common
Stock or other securities, in cash or otherwise, in each case without
the prior written consent of Advest, Inc.
(b) That the Stock to be sold by the Selling Shareholder
hereunder is subject to the interest of the Underwriters and that the
obligations of the Selling Shareholder hereunder shall not be
terminated by any act of the Selling Shareholder, by operation of law,
or, in the case of a trust, by the death or incapacity of any executor
or trustee or the termination of such trust, or the occurrence of any
other event.
(c) To deliver to the Representative prior to the First Delivery
Date a properly completed and executed United States Treasury
Department Form W-8 (if the Selling Shareholder is a non-United States
person) or Form W-9 (if the Selling Shareholder is a United States
person.)
7.B. Further Agreements of the Principal Shareholder. The Principal
Shareholder agrees to deliver to the Representative prior to the Second Delivery
Date a properly completed and executed United States Treasury Department Form W-
9.
8. Expenses. The Company will pay all costs and expenses incident to
the performance of the obligations of the Company under this Agreement,
including, without limitation, all costs and expenses incident to (i) the
preparation, printing and delivery expenses (including postage, air freight
charges and charges for counting and packaging) associated with the Registration
Statement, the Preliminary Prospectus and the Prospectus and any amendments or
supplements thereto, this Agreement, the Agreement among Underwriters, the
Underwriters' Questionnaire submitted to each of the underwriters by the
Representatives in connection herewith, the power of attorney executed by each
of the Underwriters in favor of Advest, Inc. in connection herewith, the Dealer
Agreement and related documents (collectively, the "Underwriting Documents") and
the preliminary Blue Sky memorandum relating to the offering prepared by Xxxxxx,
Xxxxx & Xxxxxxx LLP, counsel to the Underwriters (collectively with any
supplement thereto, the "Preliminary Blue Sky Memorandum"); (ii) the fees,
disbursements and expenses of the Company's counsel (including local and special
counsel) and accountants in connection with the registration of the Stock under
the Securities Act and all other expenses in connection with the preparation and
filing of the Registration Statement (including all amendments thereto), any
Preliminary Prospectus, the Prospectus and any amendments and supplements
thereto, the Underwriting Documents and the Preliminary Blue Sky Memorandum;
(iii) the delivery of copies of the foregoing documents to the Underwriters;
(iv) the filing fees of the Commission and the NASD relating to the Stock; (v)
the preparation, issuance and delivery to the Underwriters of any certificates
evidencing the Stock, including transfer agent's and registrar's fees; (vi) the
qualification of the Stock for offering and sale under state securities and
19
blue sky laws, including filing fees and fees and disbursements of counsel for
the Underwriters relating thereto, and in connection with the review of the
transactions contemplated hereby by the NASD (such counsel's fees; including
fees in connection with the preparation of the Preliminary Blue Sky Memorandum
not to exceed $5,000); (vii) any listing of the Stock on the AMEX; (viii) any
expenses for travel, lodging and meals incurred by the Company and any of its
officers, directors and employees in connection with any meetings with
prospective investors in the Stock; and (ix) all other costs and expenses
incident to the performance of the obligations of the Company under this
Agreement; provided that, except as provided in this Section 8 and in Section 13
the Underwriters shall pay their own costs and expenses, including the costs and
expenses of their counsel, and the expenses of advertising any offering of the
Stock made by the Underwriters, and the Selling Shareholder shall pay the fees
and expenses of its counsel and any registration fees payable in connection with
its sale of Stock to the Underwriters.
9. Conditions of Underwriters' Obligations. The respective
obligations of the Underwriters hereunder are subject to the accuracy, when made
and on each Delivery Date, of the representations and warranties of the Company,
the Selling Shareholder and the Principal Shareholder contained herein, to the
performance by the Company, the Selling Shareholder and the Principal
Shareholder of their respective obligations hereunder, and to each of the
following additional terms and conditions:
(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 6(a); no stop order suspending
the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose shall have
been initiated or threatened by the Commission; and any request of the
Commission for inclusion of additional information in the Registration
Statement or the Prospectus or otherwise shall have been complied
with.
(b) No Underwriter shall have discovered and disclosed to the
Company on or prior to such Delivery Date that the Registration
Statement or the Prospectus or any amendment or supplement thereto
contains an untrue statement of a fact which, in the opinion of
Xxxxxx, Xxxxx & Bockius LLP, counsel for the Underwriters, is material
or omits to state a fact which, in the opinion of such counsel, is
material and is required to be stated therein or is necessary to make
the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident
to the authorization, form and validity of this Agreement, the Stock,
the Registration Statement and the Prospectus, and all other legal
matters relating to this Agreement and the transactions contemplated
hereby shall be reasonably satisfactory in all material respects to
counsel for the Underwriters, and the Company, the Principal
Shareholder and the Selling Shareholder shall have furnished to such
counsel all
20
documents and information that they may reasonably request to enable
them to pass upon such matters.
(d) Xxxxxxxx, Xxxxx & Xxxxxx shall have furnished to the
Representative and the Selling Shareholder its written opinion, as
counsel to the Company and the Principal Shareholder, addressed to the
Underwriters and dated such Delivery Date, in form and substance
reasonably satisfactory to the Representative, to the effect that:
(i) The Company and its subsidiary have been duly
incorporated and are validly existing as corporations in good
standing under the laws of their respective jurisdictions of
incorporation, are duly licensed or qualified to do business and
are in good standing as foreign corporations in each jurisdiction
set forth on a schedule to such counsel's opinion and have all
power and authority necessary to own or hold their respective
properties and assets and to conduct their businesses as
described in the Registration Statement and Prospectus;
(ii) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital
stock of the Company (including the shares of Stock being
delivered on such Delivery Date) have been duly and validly
authorized and issued, are fully paid and non-assessable and
conform to the description thereof contained in the Prospectus,
and none of the shares of Stock being delivered on such Delivery
Date have been issued in violation of any preemptive rights; all
of the issued shares of capital stock of the subsidiary of the
Company have been duly and validly authorized and issued and are
fully paid, non-assessable and are owned directly by the Company,
free and clear of any perfected security interest or, to the
knowledge of such counsel, any other lien, encumbrance, equity or
claim;
(iii) The Warrant Shares have been duly authorized and
reserved by the Company; the Warrant Shares, when issued and sold
pursuant to the Warrants, will be duly and validly issued,
outstanding, fully-paid and nonassessable and none of them will
have been issued in violation of any preemptive or, to such
counsel's knowledge, other similar right binding on the Company;
(iv) There are no preemptive or other rights to subscribe
for or to purchase, or any restriction upon the voting or
transfer of, any shares of the Stock pursuant to the Company's
charter or by-laws or any agreement or other instrument known to
such counsel;
21
(v) To the knowledge of such counsel, the Principal
Shareholder has, and immediately prior to the Delivery Date, the
Principal Shareholder will have full legal right, power and
authority to sell assign, transfer and deliver valid title to the
shares of Option Stock to be sold by the Principal Shareholder
hereunder on such date, and upon delivery of such shares and
payment therefor pursuant hereto, the Underwriters will acquire
good and valid title to such shares, free and clear of all liens,
encumbrances, equities or claims, assuming they purchase such
shares without knowledge of any "Adverse Claim" (as such term is
defined in Article 8-302 of the Uniform Commercial Code of the
State of New York); and there are no transfer or similar taxes
payable under the laws of the State of Rhode Island or the
Commonwealth of Massachusetts in connection with the sale and
delivery of shares of Stock by the Principal Shareholder to the
Underwriters;
(vi) To the best of such counsel's knowledge and other than
as set forth or contemplated in the Prospectus, there are no
legal or governmental proceedings pending to which the Company or
its subsidiary is a party or of which any property or assets of
the Company or its subsidiary is the subject which, if determined
adversely to the Company or its subsidiary, would have a material
adverse effect on the consolidated financial position,
shareholders' equity, results of operations, business or
prospects of the Company and its subsidiary; and, to the best of
such counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(vii) The Registration Statement was declared effective under
the Securities Act as of the date and time specified in such
opinion, the Prospectus was filed with the Commission pursuant to
the subparagraph of Rule 424(b) of the Rules and Regulations
specified in such opinion on the date specified therein and, to
the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued and
no proceeding for that purpose is pending or threatened by the
Commission;
(viii) The Registration Statement and the Prospectus and any
further amendments or supplements thereto made by the Company
prior to such Delivery Date (other than the financial statements
and related schedules therein, as to which such counsel need
express no opinion) comply as to form in all material respects
with the requirements of the Securities Act and the Rules and
Regulations; and, to the best of such counsel's knowledge, the
Company has filed all forms, reports and documents required to be
filed with the Commission under the Exchange Act;
22
(ix) The statements in the Registration Statement and
Prospectus, insofar as they are descriptions of or references to
statutes, regulations, contracts, agreements or other legal
documents, are accurate in all material respects and present or
summarize fairly, in all material respects, the information
required to be disclosed under the Securities Act or the Rules
and Regulations, and there are no statutes, regulations,
contracts or other documents which are required to be described
in the Prospectus or filed as exhibits to the Registration
Statement by the Securities Act or the Rules and Regulations
which have not been described in the Prospectus or filed as
exhibits to the Registration Statement or incorporated therein by
reference as permitted by the Rules and Regulations;
(x) The statements (a) in the Prospectus under the captions
"Description of Capital Stock," "Business-Legal Proceedings," and
"Business - Governmental Regulation" and (b) in the Registration
Statement in Item 14, in each case insofar as such statements
constitute summaries of the legal matters, documents or
proceedings referred to therein, fairly present the information
called for with respect to such legal matters, documents and
proceedings and fairly summarize the matters referred to therein;
(xi) The Company has full power and authority to enter into,
deliver and perform this Agreement and the Warrants and to issue
and sell the Stock, the Warrants and the Warrant Shares; this
Agreement and the Warrants have been duly authorized, executed
and delivered by the Company; the Principal Shareholder has full
right, power and authority to enter into this Agreement; and this
Agreement has been duly executed and delivered by the Principal
Shareholder;
(xii) The issue and sale of the shares of Stock and the
Warrants being delivered on such Delivery Date by the Company and
the compliance by the Company with all of the provisions of this
Agreement and the consummation of the transactions contemplated
hereby or thereby will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument known to such counsel
to which the Company or its subsidiary is a party or by which the
Company or its subsidiary is bound or to which any of the
property or assets of the Company or its subsidiary is subject,
nor will such actions result in any violation of the provisions
of the charter or by-laws of the Company or its subsidiary or any
statute or any order, rule or regulation known to such counsel of
any court or governmental agency or body
23
having jurisdiction over the Company or its subsidiary or any of
their properties or assets; and, except for the registration of
the Stock, the Warrants and the Warrant Shares under the
Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the
Exchange Act, applicable state securities laws, and the rules of
the AMEX and the NASD, no consent, approval, authorization or
order of, or filing or registration with, any such court or
governmental agency or body is required for the execution,
delivery and performance of this Agreement and the Warrants by
the Company and the consummation of the transactions contemplated
hereby or thereby;
(xiii) The execution, delivery and performance of this
Agreement by the Principal Shareholder and the consummation by
the Principal Shareholder of the transactions contemplated hereby
will not conflict with or result in a breach or violation of any
of the terms or provisions of, or constitute a default under, any
statute, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument known to such counsel to which
the Principal Shareholder is a party or by which the Principal
Shareholder is bound or to which any of the property or assets of
the Principal Shareholder is subject, nor will such actions
result in any violation of any statute or any order, rule or
regulation known to such counsel of any court or governmental
agency or body having jurisdiction over the Principal Shareholder
or the property or assets of the Principal Shareholder; and,
except for the registration of the Stock under the Securities Act
and such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act,
applicable state securities laws and the rules of the AMEX and
the NASD in connection with the purchase and distribution of the
Stock by the Underwriters, no consent, approval, authorization or
order of, or filing or registration with, any such court or
governmental agency or body is required for the execution,
delivery and performance of this Agreement by the Principal
Shareholder and the consummation by the Principal Shareholder of
the transactions contemplated hereby;
(xiv) To the best of such counsel's knowledge, there are no
contracts, agreements or understandings between the Company and
any person granting such person the right (other than rights
which have been waived or satisfied) to require the Company to
include such securities owned by such person in the securities
registered pursuant to the Registration Statement;
24
(xv) The Company is not an investment company within the
meaning of the Investment Company Act of 1940, as amended, and
the rules and regulations of the Commission thereunder; and
(xvi) To the best of such counsel's knowledge, the Company
and its subsidiary have sufficient interest in their real and
personal property to permit the operation of a freight railroad
as described in the Prospectus.
In rendering such opinion, such counsel may (i) state that its opinion
is limited to matters governed by the Federal laws of the United
States of America, the laws of the State of Rhode Island, the laws of
the Commonwealth of Massachusetts, the laws of the State of
Connecticut and the General Corporation Law of the State of Delaware;
and (ii) rely (to the extent such counsel deems proper and specifies
in its opinion), as to matters involving the application of railroad
regulatory matters and the laws of the State of Connecticut upon the
opinion of other counsel of good standing (which may include general
counsel for the Company), provided that such other counsel is
satisfactory to counsel for the Underwriters and furnishes a copy of
its opinion to the Representative and counsel shall state that it
believes that both the Underwriters and it are justified in relying
upon such opinions. Such counsel shall also have furnished to the
Representative a written statement, addressed to the Underwriters and
dated such Delivery Date, in form and substance satisfactory to the
Representative, to the effect that (x) such counsel has acted as
counsel to the Company in connection with the preparation of the
Registration Statement, and (y) based on the foregoing, no facts have
come to the attention of such counsel which lead it to believe that
the Registration Statement, as of the Effective Date, contained any
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the
statements therein not misleading, or that the Prospectus contains any
untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading (provided that such counsel need express no
belief regarding the financial statements, the notes and schedules
thereto and other financial, statistical or market data contained in
the Registration Statement, any amendment thereto, or the Prospectus,
or any amendment or supplement thereto). The opinion of counsel for
the Company shall include a statement to the effect that it may be
relied upon by counsel for the Underwriters in their opinion delivered
to the Underwriters. For purposes of rendering such opinion with
respect to the Principal Shareholder, Xxxxxxxx, Xxxxx & Xxxxxx (and
such other counsel as may be required to render an opinion pursuant
hereto) may rely as to factual matters on the representations and
warranties of the Principal Shareholder set forth herein as if said
representations and warranties set forth herein had been set forth in
a separate certificate directed to said counsel at and as of each
closing hereunder.
25
(e) The counsel for the Selling Shareholder shall have furnished
to the Representative its written opinion, as counsel to the Selling
Shareholder addressed to the Underwriters and dated the such Delivery
Date, in form and substance reasonably satisfactory to the
Representative, to the effect that:
(i) The Selling Shareholder has full right, power and
authority to enter into this Agreement; the execution, delivery
and performance of this Agreement by the Selling Shareholder and
the consummation by the Selling Shareholder of the transactions
contemplated hereby will not conflict with or result in a breach
or violation of any of the terms or provisions of, or constitute
a default under, any statute, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument known to
such counsel to which the Selling Shareholder is a party or by
which the Selling Shareholder is bound or to which any of the
property or assets of the Selling Shareholder is subject, nor
will such actions result in any violation of the provisions of
the charter or by-laws of the Selling Shareholder or any statute
or any order, rule or regulation known to such counsel of any
court or governmental agency or body having jurisdiction over the
Selling Shareholder or the property or assets of the Selling
Shareholder; and, except for the registration of the Stock under
the Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the
Exchange Act, applicable state securities laws and the rules of
the AMEX and the NASD in connection with the purchase and
distribution of the Stock by the Underwriters, no consent,
approval, authorization or order of, or filing or registration
with, any such court or governmental agency or body is required
for the execution, delivery and performance of this Agreement by
the Selling Shareholder and the consummation by the Selling
Shareholder of the transactions contemplated hereby;
(ii) This Agreement has been duly authorized, executed and
delivered by or on behalf of the Selling Shareholder;
(iii) To the knowledge of such counsel, the Selling
Stockholder has, and immediately prior to the First Delivery
Date, the Selling Shareholder will have full legal right, power
and authority to sell, assign, transfer and deliver valid title
to the shares of the Stock to be sold by the Selling Shareholder
hereunder on such date; and
(iv) Upon delivery of the shares of Stock to be sold
by the Selling Shareholder under this Agreement and payment
therefor pursuant hereto,
26
the Underwriters will acquire good and valid title to such
shares, free and clear of all liens, encumbrances, equities or
claims, assuming they purchase such shares without knowledge of
any "Adverse Claim" (as such term is defined in Article 8-302 of
the Uniform Commercial Code of the State of New York) and there
are no transfer or similar taxes payable in connection with the
sale and delivery of the shares of Stock by the Selling
Stockholder to the Underwriters, except as specified in such
opinion.
In rendering such opinion, such counsel may (i) state that its opinion
is limited to matters governed by the Federal laws of the United
States of America, the laws of the State of Rhode Island and the
General Corporation Law of the State of Delaware, (ii) rely (to the
extent such counsel deems proper and specifies in its opinion) upon
the opinion of the general counsel for the Selling Shareholder,
provided, that such other counsel is satisfactory to counsel for the
Underwriters and furnishes a copy of its opinion to the Representative
and counsel shall state that it believes that both the Underwriters
and it are justified in relying upon such opinion and (iii) in
rendering the opinion in Section 9(e)(iii) above, rely upon a
certificate of the Selling Shareholder (or the representations and
warranties of the Selling Shareholder set forth herein as if said
representations and warranties set forth herein had been set forth
in a separate certificate directed to said counsel at and as of the
closing hereunder) in respect of matters of fact as to ownership of
and liens, encumbrances, equities or claims on the shares of Stock
sold by the Selling Shareholder, provided that such counsel shall
furnish copies thereof to the Representative and state that it
believes that both the Underwriters and it are justified in relying
upon such certificate. The opinion of counsel for the Selling
Shareholder shall include a statement to the effect that it may be
relied upon by counsel for the Underwriters in their opinion delivered
to the Underwriters.
(f) The Representative shall have received from Xxxxxx, Xxxxx &
Bockius LLP, counsel for the Underwriters, an opinion, dated such
Delivery Date, with respect to the issuance and sale of the Stock, the
Registration Statement, the Prospectus and other related matters as
the Representative may reasonably require, and the Company shall have
furnished to such counsel such documents as it may reasonably request
for the purpose of enabling it to pass upon such matters.
27
(g) At the time of execution of this Agreement, the
Representative shall have received from Deloitte & Touche LLP, a
letter, in form and substance satisfactory to the Representative,
addressed to the Underwriters and dated the date hereof (i) confirming
that they are independent public accountants within the meaning of the
Securities Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission, (ii) stating, as of the date hereof
(or, with respect to matters involving changes or developments since
the respective dates as of which specified financial information is
given in the Prospectus, as of a date not more than five days prior to
the date hereof), the conclusions and findings of such firm with
respect to the financial information and other matters ordinarily
covered by accountants' "comfort letters" to underwriters in
connection with registered public offerings.
(h) With respect to the letter of Deloitte & Touche LLP referred
to in the preceding paragraph and delivered to the Representative
concurrently with the execution of this Agreement (the "initial
letter"), the Company shall have furnished to the Representative a
letter (the "bring-down letter") of such accountants, addressed to the
Underwriters and dated such Delivery Date (i) confirming that they are
independent public accountants within the meaning of the Securities
Act and are in compliance with the applicable requirements relating to
the qualification of accountants under Rule 2-01 of Regulation S-X of
the Commission, (ii) stating, as of the date of the bring-down letter
(or, with respect to matters involving changes or developments since
the respective dates as of which specified financial information is
given in the Prospectus, as of a date not more than five days prior to
the date of the bring-down letter), the conclusions and findings of
such firm with respect to the financial information and other matters
covered by the initial letter and (iii) confirming in all material
respects the conclusions and findings set forth in the initial letter.
(i) The Company shall have furnished to the Representative a
certificate of the Company, dated such Delivery Date, signed by its
Chairman of the Board and its President stating that:
(i) The representations, warranties and agreements of the
Company in Section 1 are true and correct as of such Delivery
Date; the Company has complied with all its agreements contained
herein; and the conditions set forth in Section 9 have been
fulfilled; and
(ii) As of the Effective Date, the Registration Statement
and Prospectus did not include any untrue statement of a material
fact and did not omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and since the Effective
28
Date, no event has occurred which should have been set forth in a
supplement or amendment to the Registration Statement or the
Prospectus.
(j) The Principal Shareholder shall have furnished to the
Representative a certificate dated such Delivery Date stating that the
representations, warranties and agreements of the Principal
Shareholder contained herein are true and correct as of such Delivery
Date and that the Principal Shareholder has complied with all
agreements contained herein to be performed by the Principal
Shareholder at or prior to such Delivery Date.
(k) The Selling Shareholder shall have furnished to the
Representative on the First Delivery Date a certificate, dated the
First Delivery Date, signed by, or on behalf of, the Selling
Shareholder stating that the representations, warranties and
agreements of the Selling Shareholder contained herein are true and
correct as of the First Delivery Date and that the Selling Shareholder
has complied with all agreements contained herein to be performed by
the Selling Shareholder at or prior to the First Delivery Date.
(l) (i) Neither the Company nor its subsidiary shall
have sustained since the date of the latest audited financial
statements included in the Prospectus any loss or interference with
its business from fire, explosion, flood or other calamity, whether or
not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus and (ii) since such date, there shall
not have been any change in the capital stock or long-term debt of the
Company or its subsidiary or any change, or any development involving
a prospective change, in or affecting the consolidated financial
position, shareholders' equity, results of operations, business or
prospects of the Company and its subsidiary, otherwise than as set
forth or contemplated in the Prospectus, the effect of which, in any
such case described in clause (i) or (ii), is, in the judgment of the
Representative, so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Stock being delivered on such Delivery Date on the terms and in the
manner contemplated in the Prospectus.
(m) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in
securities generally on the New York Stock Exchange or the AMEX or in
the over-the-counter market, or trading in any securities of the
Company on any exchange or in the over-the-counter market, shall have
been suspended or minimum prices shall have been established on any
such exchange or such market by the Commission, by such exchange or by
any other regulatory body or governmental authority having
jurisdiction, (ii) a banking moratorium shall have been declared by
Federal or state authorities, (iii) the United States shall have
become engaged in hostilities, there
29
shall have been an escalation in hostilities involving the United
States or there shall have been a declaration of a national emergency
or war by the United States or (iv) there shall have occurred such a
material adverse change in general economic, political or financial
condition (or the effect of international conditions on the/ financial
markets in the United States shall be such) as to make it, in the
judgment of a majority in interest of the several Underwriters,
impracticable or inadvisable to proceed with the public offering or
delivery of the Stock being delivered on such Delivery Date on the
terms and in the manner contemplated in the Prospectus.
(n) The AMEX has approved the Stock for listing, subject only to
official notice of issuance.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
10. Indemnification and Contribution.
(a) The Company, shall indemnify and hold harmless each Underwriter,
its officers, directors and employees and each person, if any, who controls any
Underwriter within the meaning of the Securities Act or the Exchange Act, from
and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof (including, but not limited to, any loss, claim,
damage, liability or action relating to purchases and sales of Stock), to which
that Underwriter, officer, employee or controlling person may become subject,
under the Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained (A) in any Preliminary
Prospectus, the Registration Statement or the Prospectus or in any amendment or
supplement thereto or (B) in any blue sky application or other document prepared
or executed by the Company (or based upon any written information furnished by
the Company) specifically for the purpose of qualifying any or all of the Stock
under the securities laws of any state or other jurisdiction (any such
application, document or information being hereinafter called a "Blue Sky
Application"), or (ii) the omission or alleged omission to state in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or in any
amendment or supplement thereto, or in any Blue Sky Application any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and shall reimburse each Underwriter and each such officer,
employee or controlling person promptly upon demand for any legal or other
expenses reasonably incurred by that Underwriter, officer, employee or
controlling person in connection with investigating, defending or preparing to
defend against, or appearing as a third-party witness in connection with, any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or action arises out of, or
is based upon, any untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus, or in any such amendment or supplement, or in any
30
Blue Sky Application, in reliance upon and in conformity with written
information concerning such Underwriter furnished to the Company through the
Representative by or on behalf of any Underwriter specifically for inclusion
therein or concerning the Selling Shareholder furnished to the Company by or on
behalf of the Selling Shareholder specifically for inclusion therein. The
Company will not, without the prior written consent of the Representative of the
Underwriters, settle or compromise or consent to the entry of any judgment in
any pending or threatened claim, action, suit or proceeding (or related cause of
action or portion thereof) in respect of which indemnification may be sought
hereunder (whether or not any Underwriter is a party to such claim, action, suit
or proceeding), unless such settlement, compromise or consent includes an
unconditional release of each Underwriter from all liability arising out of such
claim, action, suit or proceeding (or related cause of action or portion
thereof). The foregoing indemnity agreement is in addition to any liability
which the Company may otherwise have to any Underwriter or to any officer,
director, employee or controlling person of that Underwriter.
(b) The Selling Shareholder shall indemnify and hold harmless each
Underwriter, its officers, directors and employees, and each person, if any, who
controls any Underwriter within the meaning of the Securities Act or the
Exchange Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof (including, but not limited to, any
loss, claim, damage, liability or action relating to purchases and sales of
Stock), to which that Underwriter, officer, employee or controlling person may
become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact relating to the
Selling Shareholder contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus or in any amendment or supplement thereto or (ii)
the omission or alleged omission to state in any Preliminary Prospectus,
Registration Statement or the Prospectus, or in any amendment or supplement
thereto, any material fact relating to the Selling Shareholder required to be
stated therein or necessary to make the statements therein not misleading, but
in each case only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information concerning the Selling Shareholder furnished
to the Company by or on behalf of the Selling Shareholder specifically for
inclusion therein, and shall reimburse each Underwriter, its officers and
employees and each such controlling person for any legal or other expenses
reasonably incurred by that Underwriter, its officers and employees or
controlling person in connection with investigating, defending or preparing to
defend against, or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that the Selling Shareholder shall not be liable in any such
case to the extent that any such loss, claim, damage, liability or action arises
out of, or is based upon, any untrue statement or alleged untrue statement or
omission or alleged omission made in any Preliminary Prospectus, the
Registration Statement or the Prospectus or in any such amendment or supplement
in reliance upon and in conformity with written information concerning such
Underwriter furnished to the Company through the Representative by or on behalf
of any Underwriter specifically for inclusion therein; and provided, further,
however, that the indemnity of the Selling Shareholder under this Section 10(b)
shall only be effective to the extent of the value (based on the initial public
offering price per share) of any such Stock sold by it pursuant to this
Agreement. The foregoing indemnity agreement is in addition to any liability
which the Selling Shareholder may otherwise have to any Underwriter or any
officer, director, employee or controlling person of that Underwriter.
(c) The Principal Shareholder shall indemnify and hold harmless each
Underwriter, its officers, directors and employees, and each person, if any, who
controls any
31
Underwriter within the meaning of the Securities Act or the Exchange Act, from
and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof (including, but not limited to, any loss, claim,
damage, liability or action relating to purchases and sales of Stock), to which
that Underwriter, officer, employee or controlling person may become subject,
under the Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact of which the Principal Shareholder
has knowledge contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus or in any amendment or supplement thereto or (ii)
the omission or alleged omission to state in any Preliminary Prospectus,
Registration Statement or the Prospectus, or in any amendment or supplement
thereto, any material fact of which the Principal Shareholder has knowledge
required to be stated therein or necessary to make the statements therein not
misleading, and shall reimburse each Underwriter, its officers and employees and
each such controlling person for any legal or other expenses reasonably incurred
by that Underwriter, its officers and employees or controlling person in
connection with investigating, defending or preparing to defend against, or
appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Principal Shareholder shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or action arises out of, or
is based upon, any untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus or in any such amendment or supplement in reliance upon and in
conformity with written information concerning such Underwriter furnished to the
Company through the Representative by or on behalf of any Underwriter
specifically for inclusion therein; and provided, further, however, that the
direct indemnity of the Principal Shareholder under this Section 10(c) shall
only be effective if he sells Stock pursuant to this Agreement and then only to
the extent of the value (based on the initial public offering price per share)
of any such Stock sold by him pursuant to this Agreement. The foregoing
indemnity agreement is in addition to any liability which the Principal
Shareholder may otherwise have to any Underwriter or any officer, director,
employee or controlling person of that Underwriter.
(d) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless the Company, its officers and employees, each of its directors
(including any person who, with his or her consent, is named in the Registration
Statement as about to become a director of the Company), and each person, if
any, who controls the Company within the meaning of the Securities Act or the
Exchange Act, the Selling Shareholder and the Principal Shareholder from and
against any loss, claim, damage or liability, joint or several, or any action in
respect thereof, to which the Company or any such director, officer or
controlling person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained (A) in any Preliminary Prospectus, the Registration Statement or
the Prospectus or in any amendment or supplement thereto, or (B) in any Blue Sky
Application or (ii) the omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or in any amendment or
supplement thereto, or in any Blue Sky Application any material fact required to
be stated therein or necessary to make the statements
32
therein not misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information concerning such
Underwriter furnished to the Company through the Representative by or on behalf
of that Underwriter specifically for inclusion therein, and shall reimburse the
Company, any such director, officer or controlling person, the Selling
Shareholder and the Principal Shareholder for any legal or other expenses
reasonably incurred by the Company or any such director, officer, controlling
person, the Selling Shareholder or the Principal Shareholder in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability which any Underwriter may
otherwise have to the Company or any such director, officer, employee or
controlling person.
(e) Promptly after receipt by an indemnified party under this Section
10 of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 10, notify the indemnifying party in
writing of the claim or the commencement thereof; provided, however, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have under this Section 10 except to the extent it has been
materially prejudiced by such failure and, provided further, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have to an indemnified party otherwise than under this Section 10. If any
such claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 10 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the Representative shall have the right to employ counsel to represent jointly
the Representative and those other Underwriters and their respective officers,
employees and controlling persons who may be subject to liability arising out of
any claim in respect of which indemnity may be sought by the Underwriters
against the Company, the Principal Shareholder or the Selling Shareholder under
this Section 10 if, in the reasonable judgment of the Representative, it is
advisable for the Representative and those Underwriters, officers, employees and
controlling persons to be jointly represented by separate counsel, provided,
further, however that the fees and expenses of such separate counsel shall be
paid by the Company, the Principal Shareholder or the Selling Shareholder only
if the representative shall have been advised by its counsel that representation
of the underwriters and such indemnifying party by the same counsel would be
inappropriate under applicable standards of professional conduct due to actual
or potential differing interests between them (in which case the indemnifying
party shall not have the right to assume to defense of such action, suit or
proceeding on behalf of such underwriters, officers, employees and controlling
persons). Furthermore, it is understood that the indemnifying parties shall, in
connection with any one such action, suit or
33
proceeding or separate but substantially similar or related actions, suits or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of only one
separate firm of attorneys (in addition to any local counsel) at any time for
all such underwriters, officers, employees and controlling persons not having
actual or potential differing interests with the indemnifying party or among
themselves, which firm shall be designated in writing by Advest, Inc. No
indemnifying party shall (i) without the prior written consent of the
indemnified parties (which consent shall not be unreasonably withheld), settle
or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding, or (ii) be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with the consent of the indemnifying party or if there
be a final judgment of the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment.
(f) If the indemnification provided for in this Section 10 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 10(a), 10(b), 10(c) or 10(d) in respect of any loss, claim,
damage or liability, or any action in respect thereof, referred to therein, then
each indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company, the Principal Shareholder and the Selling Shareholder
on the one hand and the Underwriters on the other hand from the offering of the
Stock or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company, the Principal Shareholder and the Selling Shareholder, on the one
hand, and the Underwriters, on the other hand, with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable considerations. The
relative benefits received by the Company, the Principal Shareholder and the
Selling Shareholder on the one hand, and the Underwriters, on the other hand,
with respect to such offering shall be deemed to be in the same proportion as
the total net proceeds from the offering of the Stock purchased under this
Agreement (before deducting expenses) received by the Company, the Principal
Shareholder and the Selling Shareholder, on the one hand, and the total
underwriting discounts and commissions received by the Underwriters with respect
to the shares of the Stock purchased under this Agreement, on the other hand,
bear to the total gross proceeds from the offering of the shares of the Stock
under this Agreement, in each case as set forth in the table on the cover page
of the Prospectus. The relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Company, the Principal Shareholder, the Selling Shareholder or the
34
Underwriters, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Principal Shareholder, the Selling Shareholder and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this Section were to be determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section 10(f) shall be deemed to include, for
purposes of this Section 10(f), 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 10(f), (i) no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Stock underwritten by it and distributed
to the public was offered to the public exceeds the amount of any damages which
such Underwriter has otherwise paid or become liable to pay by reason of any
untrue or alleged untrue statement or omission or alleged omission and (ii) the
Selling Shareholder shall not be required to contribute any amount in excess of
the value (based on the initial public offering price) of any Stock sold by it
pursuant to this Agreement. 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 Underwriters' obligations to contribute as provided in
this Section 10(f) are several in proportion to their respective underwriting
obligations and not joint.
(g) Any losses, claims, damages, liabilities or expenses (including
legal) for which an indemnified party is entitled to indemnification or
contribution under this Section 10 shall be paid by the indemnifying party to
the indemnified party as such losses, claims, damages, liabilities or expenses
are incurred.
(h) The Underwriters severally confirm and the Company acknowledges
that the statements with respect to the public offering of the Stock by the
Underwriters set forth in the last paragraph of the cover page of, the legend
concerning stabilization on the inside front cover page of and the third,
fourth, fifth, sixth, ninth and tenth paragraphs appearing under the caption
"Underwriting" in, the Prospectus are correct and constitute the only
information concerning such Underwriters furnished in writing to the Company by
or on behalf of the Underwriters specifically for inclusion in the Registration
Statement and the Prospectus.
11. Defaulting Underwriters.
(a) If any Underwriter defaults in its obligation to purchase Stock on
either Delivery Date, the Company may in its discretion arrange for the Company
or another party or other parties to purchase such Stock on the terms contained
herein within thirty-six (36) hours after such default by any Underwriter. In
the event that, within the respective prescribed period, the Company notifies
the Representative that it has so arranged for the purchase of such Stock, the
Company shall have the right to postpone a Delivery Date for a period of not
more than seven (7) days in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Representative
35
agrees to file promptly any amendments to the Registration Statement or the
Prospectus that in its opinion may thereby be made necessary. The cost of
preparing, printing and filing any such amendments shall be paid for by the
Underwriters. The term "Underwriter" as used in this Agreement shall include any
person substituted under this Section with like effect as if such person had
originally been a party to this Agreement with respect to such Stock. Any action
taken under this Section 11 shall not relieve any defaulting Underwriter from
liability in respect of any such default of any such Underwriter under this
Agreement.
(b) If, after giving effect to any arrangements for the purchase of
the Stock of a defaulting Underwriter or Underwriters by you as provided in
Section 11(a), if any, the aggregate number of such Stock which remains
unpurchased does not exceed one-eleventh (1/11) of the aggregate number of Stock
to be purchased at such Delivery Date, then the Representative shall have the
right to require each non-defaulting Underwriter to purchase the number of
shares of Stock which such Underwriter agreed to purchase hereunder at such
Delivery Date and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of shares of Stock which such
Underwriter agreed to purchase hereunder) of the shares of Stock of such
defaulting Underwriter or Underwriters for which such arrangements have not been
made.
12. Termination. The obligations of the Underwriters hereunder may
be terminated by the Representative by notice given to and received by the
Company and the Selling Shareholder prior to delivery of and payment for the
Firm Stock if, prior to that time, any of the events described in Section 9(l)
or 9(m), shall have occurred or if the Underwriters shall decline to purchase
the Stock for any reason permitted under this Agreement.
13. Reimbursement of Underwriters' Expenses. If the Company, the
Selling Shareholder or the Principal Shareholder shall fail to tender the Firm
Stock or the Option Stock, as the case may be, for delivery to the Underwriters
by reason of any failure, refusal or inability on the part of the Company, the
Selling Shareholder, or the Principal Shareholder to perform any agreement on
its part to be performed, or because any other condition of the Underwriters'
obligations hereunder required to be fulfilled by the Company, the Selling
Shareholder, or the Principal Shareholder is not fulfilled (other than Section
9(m) hereof), the Company, or the Selling Shareholder, if the failure, refusal
or inability to perform is on the part of the Selling Shareholder, or the
Principal Shareholder if the failure, refusal or inability to perform is on the
part of the Principal Shareholder, will reimburse the Underwriters for all out-
of-pocket expenses (including fees and expenses of counsel) incurred by the
Underwriters in connection with this Agreement and the proposed purchase of the
Firm Stock or the Option Stock, as the case may be, and upon demand the Company,
the Selling Shareholder or the Principal Shareholder, as the case may be, shall
pay the full amount thereof to the Representative; provided, however, that if
the Underwriters elect to purchase the Stock from the Company despite the
failure, refusal or inability on the part of the Selling Shareholder or the
Principal Shareholder, as the case may be, to perform any agreement on its part
to be performed, the Selling Shareholder or the Principal Shareholder, as the
case may be, shall only reimburse the Underwriters and the Company for the
incremental costs incurred by reason of such failure, refusal or inability. If
this Agreement is terminated pursuant to Section 11 by reason of the default of
one or more Underwriters, the Company, the Selling Shareholder, and the
Principal Shareholder shall not be obligated to reimburse any Underwriter on
account of those expenses.
14. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
36
(a) if to the Underwriters, shall be delivered or sent by mail,
telex or facsimile transmission to Advest, Inc., Xxx Xxxxxxxxxxx
Xxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx X.
Xxxxxxxxxxx (Fax: 000-000-0000) (with a copy to Xxxxxx, Xxxxx &
Bockius LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention:
Xxxxxxxxxxx X. Xxxxxx, Esq., Fax: 000-000-0000);
(b) if to the Company or the Principal Shareholder, shall be
delivered or sent by mail, telex or facsimile transmission to the
address of the Company set forth in the Registration Statement,
Attention: Xxxxx X. Xxxxxx (Fax: 000-000-0000) (with a copy to
Xxxxxxxx, Xxxxx & Xxxxxx, 0000 Xxxxx Xxxxxx, Xxxxxxxxxx, XX 00000-
2393, Attention: Xxxxxxxx X. Xxxxxxx, Esq., Fax: 000-000-0000);
(c) if to the Selling Shareholder, shall be delivered or sent by
mail, telex or facsimile transmission to the Selling Shareholder at
the address set forth on Schedule II hereto;
provided, however, that any notice to an Underwriter pursuant to Section 10(e)
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representative, which address will be supplied to any other party hereto by the
Representative upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company, the
Selling Shareholder and the Principal Shareholder shall be entitled to act and
rely upon any request, consent, notice or agreement given or made on behalf of
the Underwriters by Advest, Inc., as Representative.
15. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Underwriters, the Company, the
Principal Shareholder, the Selling Shareholder and their respective personal
representatives and successors. This Agreement and the terms and provisions
hereof are for the sole benefit of only those persons, except that (A) the
representations, warranties, indemnities and agreements of the Company, the
Principal Shareholder and the Selling Shareholder contained in this Agreement
shall also be deemed to be for the benefit of the person or persons, if any, who
control any Underwriter within the meaning of Section 15 of the Securities Act
or Section 20(a) of the Exchange Act and any successor to any Underwriter and
(B) the indemnity agreement of the Underwriters contained in Section 10(d) of
this Agreement shall be deemed to be for the benefit of directors of the
Company, officers of the Company who have signed the Registration Statement and
any person controlling the Company within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act. Nothing in this Agreement
is intended or shall be construed to give any person, other than the persons
referred to in this Section 15, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.
37
16. Survival; Effective Date. (a) The respective indemnities,
representations, warranties and agreements of the Company, the Principal
Shareholder, the Selling Shareholder and the Underwriters contained in this
Agreement or made by or on behalf on them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Stock and shall
remain in full force and effect, regardless of any investigation made by or on
behalf of any of them or any person controlling any of them. In addition, the
respective agreements, covenants, indemnities and other statements set forth in
Sections 8, 10 and 13 hereof shall remain in full force and effect, regardless
of any termination or cancellation of this Agreement.
(b) This Agreement shall become effective: (i) upon the execution and
delivery hereof by the parties hereto; or (ii) if, at the time this Agreement is
executed and delivered, it is necessary for the Registration Statement or a
post-effective amendment thereto to be declared effective before the offering of
the Stock may commence, when notification of the effectiveness of the
Registration Statement or such post-effective amendment has been received by the
Company and the Underwriters. Until such time as this Agreement shall become
effective, it may be terminated by the Company, by notifying the Representative
or by the Representative, by notifying the Company.
17. Definition of the Terms "Business Day" and "Subsidiary." For
purposes of this Agreement, (a) "business day" means any day on which the New
York Stock Exchange, Inc. is open for trading and (b) "subsidiary" has the
meaning set forth in Rule 405 of the Rules and Regulations.
18. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of New York without giving effect to any provisions
regarding conflicts of laws.
19. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
20. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
38
If the foregoing correctly sets forth the agreement among the Company,
the Principal Shareholder, the Selling Shareholder and the Underwriters, please
indicate your acceptance in the space provided for that purpose below.
Very truly yours,
PROVIDENCE AND WORCESTER
RAILROAD COMPANY
By
____________________________________________
Name:
Title:
____________________________________________
Xxxxxx X. Xxxx, the Principal Shareholder
The Selling Shareholder named in Schedule II to
this Agreement
By
____________________________________________
Name:
Title:
Accepted as of the date first written above:
Advest, Inc.
For itself and as Representative
of the several Underwriters named
in Schedule I hereto
By ADVEST, Inc.
By _______________________________
Name:
Title:
39
SCHEDULE I
Number of Number of
Underwriters Shares
------------ ---------
Advest, Inc. . . . . . . . . . . . . . . .
Total
40
SCHEDULE II
Number of Shares
Name and address of the Selling Shareholder of Firm Stock
------------------------------------------- -------------------
Total............................................. =========
41
