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EXHIBIT 11
Xxxxxxxxx.xxx
_______________________
__% CONVERTIBLE SUBORDINATED NOTES DUE 2005
UNDERWRITING AGREEMENT
_______________________
August 3, 2000
Southwest Securities, Inc.,
As representative of the several
Underwriters named in Schedule I hereto,
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Dear Sirs:
Xxxxxxxxx.xxx Group, Inc., a Minnesota corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Underwriters named in Schedule I hereto (the "Underwriters") an aggregate
of $20,000,000 principal amount and, at the election of the Underwriters, up to
$3,000,000 additional principal amount of __% Convertible Subordinated Notes due
2005, convertible into shares of Common Stock, par value $0.04 per share
("Stock") of the Company. The aggregate of $20,000,000 principal amount to be
sold by the Company is herein called the "Firm Notes" and the aggregate of
$3,000,000 additional principal amount to be sold by the Company is herein
called the "Optional Notes". The Firm Notes and the Optional Notes that the
Underwriters elect to purchase pursuant to Section 2 hereof are herein
collectively called the "Notes". The Company has entered into a certain
Agreement and Plan of Merger, dated June 5, 2000 (the "Xxxxxxx Agreement"), by
and among Xxxxxxx Investments, Inc., a Minnesota corporation ("Xxxxxxx"), the
Company and SW Acquisition, Inc., a Minnesota corporation and wholly owned
subsidiary of the Company. The Company has also closed the transactions which
are the subject of that certain Agreement and Plan of Merger, dated as of June
5, 2000 (the "Xxxxxxxx Agreement"), by and among X. X. Xxxxxxxx & Company, a
Minnesota corporation ("Xxxxxxxx"), the Company and SCG Acquisition Corporation,
a Minnesota corporation and wholly owned subsidiary of the Company.
1. The Company represents and warrants to, and agrees with, each of the
Underwriters that:
(i) A registration statement on Form S-2 (File No. 333-35544) (the
"Initial Registration Statement") in respect of the Notes has been filed
with the Securities and Exchange Commission (the "Commission"); such
Initial Registration Statement and any post-effective amendment thereto,
each in the form heretofore delivered to you, and, excluding exhibits
thereto but including all documents incorporated by reference in the
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prospectus contained therein, to you for each of the other Underwriters,
have been declared effective by the Commission in such form; other than a
registration statement, if any, increasing the size of the offering (a
"Rule 462(b) Registration Statement"), filed pursuant to Rule 462(b) under
the Securities Act of 1933, as amended (the "Act"), which became effective
upon filing, no other document with respect to the Initial Registration
Statement or such documents incorporated by reference therein has
heretofore been filed with the Commission; and no stop order suspending the
effectiveness of such Initial Registration Statement, any post-effective
amendment thereto, or the Rule 462(b) Registration Statement, if any, has
been issued and no proceeding for that purpose has been initiated or
threatened by the Commission (any preliminary prospectus included in such
Initial Registration Statement or filed with the Commission pursuant to
Rule 424(a) of the rules and regulations of the Commission under the Act,
is hereinafter called a "Preliminary Prospectus"); the various parts of the
Initial Registration Statement and the Rule 462(b) Registration Statement,
if any, including all exhibits thereto but excluding Form T-1 and including
(i) the information contained in the form of final prospectus filed with
the Commission pursuant to Rule 424(b) under the Act in accordance with
Section 5(a) hereof and deemed by virtue of Rule 430A under the Act to be
part of the registration statement at the time it was declared effective
and (ii) the documents incorporated by reference in the prospectus
contained in the registration statement at the time such part of the
registration statement became effective, each as amended at the time such
part of the Initial Registration Statement became effective, or such part
of the Rule 462(b) Registration Statement, if any, became or hereafter
becomes effective, are hereinafter collectively called the "Registration
Statement"; and such final prospectus, in the form first filed pursuant to
Rule 424(b) under the Act, is hereinafter called the "Prospectus"; any
reference herein to any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include the documents incorporated by reference
therein pursuant to Item 12 of Form S-2 under the Act, as of the date of
such Preliminary Prospectus or Prospectus, as the case may be; any
reference to any amendment or supplement to any Preliminary Prospectus or
the Prospectus shall be deemed to refer to and include any documents filed
after the date of such Preliminary Prospectus or Prospectus, as the case
may be, under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and incorporated by reference in such Preliminary
Prospectus or Prospectus, as the case may be; and any reference to any
amendment to the Registration Statement shall be deemed to refer to and
include any report of the Company filed pursuant to Section 13(a) or 15(d)
of the Exchange Act after the effective date of the Registration Statement
that is incorporated by reference in the Registration Statement);
(ii) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act") and the rules and regulations
of the Commission thereunder, and did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to
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the Company by an Underwriter through Southwest Securities, Inc. expressly
for use therein;
(iii) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of
the Act and the rules and regulations of the Commission thereunder 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, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the Company
by an Underwriter through Southwest Securities, Inc. expressly for use
therein;
(iv) There are no subsidiaries of the Company that are material to the
financial condition, business or results of operations of the Company other
than the subsidiaries listed on Schedule II (each, a "Material
Subsidiary");
(v) Neither the Company nor any of its subsidiaries 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
the respective dates as of which information is given in the Registration
Statement and the Prospectus, there has not been any change in the capital
stock, short-term debt or long-term debt of the Company or any of its
subsidiaries or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general affairs,
business, management, financial position, shareholders' equity or results
of operations of the Company and its subsidiaries, taken as a whole,
otherwise than as set forth or contemplated in the Prospectus;
(vi) The Company and its subsidiaries have good and marketable title
in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the
Company and its subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in the Prospectus or
such as do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company and its subsidiaries; and any real property and buildings held
under lease by the Company and its subsidiaries are held by them under
valid, subsisting and enforceable leases 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 subsidiaries;
(vii) The Company and the Material Subsidiaries have been duly
incorporated and each is validly existing as a corporation in good standing
under the laws of the state of its incorporation, each with power and
authority (corporate and other) to own its properties
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and conduct its business as described in the Prospectus, and each has been
duly qualified as a foreign corporation for the transaction of business and
is in good standing under the laws of each other jurisdiction in which it
owns or leases properties or conducts any business so as to require such
qualification, or is subject to no material liability or disability by
reason of failure to be so qualified in any such jurisdiction; and each
other subsidiary of the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation;
(viii) 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, are not subject to any preemptive or similar rights, have
not been issued in violation of federal or state securities laws, and
conform to the description thereof contained in the Prospectus; all of the
issued shares of capital stock of each subsidiary of the Company have been
duly and validly authorized and issued, are fully paid and non-assessable
and (except for directors' qualifying shares) are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims except as described in the Prospectus and there are no
outstanding subscriptions, rights warrants, options, calls, convertible
securities, commitments of sale or liens granted or issued by the Company
or any of its subsidiaries relating to or entitling any person to purchase
or otherwise to acquire any shares or capital stock of the Company or any
of its subsidiaries, except as otherwise disclosed in the Prospectus;
(ix) The Notes have been duly authorized and, when issued and
delivered, against payment therefor, pursuant to this Agreement, will have
been duly executed, authenticated, issued and delivered and will constitute
valid and legally binding obligations of the Company entitled to the
benefits provided by the indenture to be dated as of August 7, 2000 (the
"Indenture") between the Company and Firstar Bank, N.A., as Trustee (the
"Trustee"), under which they are to be issued, which will be substantially
in the form filed as an exhibit to the Registration Statement; the
Indenture has been duly authorized and duly qualified under the Trust
Indenture Act and, when executed and delivered by the Company and the
Trustee, will constitute a valid and legally binding agreement, enforceable
in accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating
to or affecting creditors' rights and to general equity principles; and the
Notes and the Indenture will conform to the descriptions thereof in the
Prospectus;
(x) The issue and sale of the Notes and the compliance by the Company
with all of the provisions of the Notes, the Indenture and this Agreement
and the consummation of the transactions herein contemplated 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
Company or any of its subsidiaries is a party or by which the Company or
any of its subsidiaries is bound or to which any of the property or assets
of the Company or any of its subsidiaries is subject, except for any such
conflict, breach, violation or default which would not have a material
adverse effect on the Company and it subsidiaries taken as a whole, nor
will such action result in any violation of the provisions of the Articles
of Incorporation, as amended, or By-
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laws of the Company or any statute or any order, rule or regulation of any
court or government agency or body having jurisdiction over the Company or
any of its subsidiaries or any of their properties; and no consent,
approval, authorization, order, registration or qualification of or with
any such court or governmental agency or body is required for the issue and
sale of the Notes or the consummation by the Company of the transactions
contemplated by this Agreement, except the registration under the Act of
the Notes and such consents, approvals, authorizations, registrations or
qualifications as may be required under state or foreign securities or Blue
Sky laws in connection with the purchase and distribution of the Notes by
the Underwriters;
(xi) Neither the Company nor any of its subsidiaries is in violation
of its Articles of Incorporation, as amended, or By-laws or in default in
the performance or observance of any material obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of trust,
loan agreement, lease or other agreement or instrument to which it is a
party or by which it or any of its properties may be bound;
(xii) The statements set forth in the Prospectus under the caption
"Description of Convertible Notes" and "Description of Capital Stock",
insofar as they purport to constitute a summary of the terms of the Notes
and the Stock, under the caption "Certain Federal Tax Considerations" and
under the capital "Underwriting", insofar as they purport to describe the
provisions of the laws and documents referred to therein, are accurate,
complete and fair in all material respects;
(xiii) Other than as set forth in the Prospectus, there are no legal
or governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of
its subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate
have a material adverse effect on the current or future business, financial
position, shareholders' equity or results of operations of the Company and
its subsidiaries taken as a whole; and, to the best of the Company's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(xiv) Each of the Company and each subsidiary is not and, after giving
effect to the offering and sale of the Notes, will not be an "investment
company" or an entity "controlled" by an "investment company", as such
terms are defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act");
(xv) Neither the Company nor any of its affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida Statutes;
(xvi) Ernst & Young LLP, who has audited certain financial statements
of the Company and its subsidiaries, and KPMG LLP, who has audited certain
financial statements of Xxxxxxx and its subsidiaries and Xxxxxxxx, are
independent accountants as required by the Act and the rules and
regulations of the Commission thereunder;
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(xvii) The consolidated financial statements included in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto), together with related schedules and notes, present fairly the
consolidated financial position, results of operations and changes in
financial position of the Company and its subsidiaries, as well as Xxxxxxx
and its subsidiaries and Xxxxxxxx, on the basis stated therein at the
respective dates or for the respective periods to which they apply, except
as otherwise stated in the Registration Statement; such statements and
related schedules and notes have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved, except as disclosed therein; the supporting schedules, if any,
included in the Registration Statement present fairly in accordance with
generally accepted accounting principles the information required to be
stated therein; the pro forma financial statements and other pro forma
financial information included in the Registration Statement and the
Prospectus (and any amendment or supplement thereto) present fairly in all
material respects the information shown therein, have been prepared in
accordance with the Commission's rules and guidelines with respect to pro
forma financial statements, have been properly compiled on the pro forma
basis described therein, and, in the opinion of the Company, the
assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions
or circumstances referred to therein; and the other financial and
statistical information and data set forth in the Registration and the
Prospectus (and any amendment or supplement thereto) are, in all material
respects, accurately presented and prepared on a basis consistent with such
financial statements and the books and records of the Company;
(xviii) Other than as set forth in the Prospectus, the Company and
each of its subsidiaries have obtained all material environmental permits,
licenses and other authorizations required by Federal, state and local law
in order to conduct their businesses as described in the Prospectus; the
operations of the Company and each of its subsidiaries are at all times,
and all times have been, in compliance with all federal, regional, state
county or local laws, statutes, ordinances decisional law, rules,
regulations, codes, orders, decrees, directives and judgements relating to
public health or safety, pollution, damage to or protection of the
environment or hazardous or toxic materials, pollutants or contaminants
("Environmental Laws") then applicable to the business of the Company or
its subsidiaries or any real property owned or leased by the Company or its
subsidiaries, except where the failure to be in compliance would not have a
material adverse effect on the financial position, shareholders' equity or
results of operations of the Company and its subsidiaries taken as a whole;
and, except as described in the Prospectus, the Company has not received
any notice that it, or any of the real property owned or leased by it; (A)
is in violation of the requirements of any Environmental Laws; (B) is the
subject of any suit, claim, proceeding, demand, order, investigation or
request or demand for information arising under any Environmental Laws; or
(C) has actual or potential liability under any Environmental Laws;
(xix) The Company and each of its subsidiaries have all licenses,
franchises, permits, authorizations, approvals and orders and other
concessions of and from all governmental or regulatory authorities that are
necessary to own or lease their properties and conduct their businesses as
described in the Prospectus, except for such licenses, franchises, permits,
authorizations, approvals and orders the failure to obtain which will not,
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individually or in the aggregate, have a material adverse effect on the
business, financial position, shareholders' equity, results of operations
or financial prospects of the Company or its subsidiaries taken as a whole;
(xx) The Company and each of its subsidiaries is conducting business
in compliance with all applicable statutes, rules, regulations, standards,
guides and orders administered or issued by any governmental or regulatory
authority in the jurisdictions in which it is conducting business, except
where the failure to be so in compliance would not have a material adverse
effect on the business, financial position, shareholders' equity, results
of operations or financial prospects of the Company or its subsidiaries
taken as a whole;
(xxi) Except as set forth in the Prospectus or disclosed on Schedule
IV, no person has any right to require the Company to register any
securities under the Act;
(xxii) Each of the Company and each Material Subsidiary carries, or is
covered by, insurance as is customary for companies similarly situated and
engaged in similar businesses in similar industries;
(xxiii) No labor disturbances by employees of either the Company or
any Material Subsidiary exists or, to the knowledge of the Company, is
imminent which might be expected to have a material adverse effect on the
business, financial condition, results of operations or prospects of the
Company or any Material Subsidiary;
(xxiv) To its knowledge, after due investigation, all of the software
products used by the Company or any of its subsidiaries, are Year 2000
Compliant (as defined below). "Year 2000 Compliant" means, as applied to a
software product, that: (A) such software product will operate and
correctly store, represent and process (including sort) all dates
(including single and multi-century formulas and leap year calculations),
such that errors will not occur when the date being used is in the Year
2000, or in a year preceding or following the Year 2000; (B) such software
product has been written and tested to support numeric and date transitions
from the twentieth century to the twenty-first century, and back (including
without limitation all calculations, aging, reporting, printing, displays
reversals, disaster and vital records recoveries) without error, corruption
or impact to current and/or future operations; and (C) such software
product will function without error or interruption related to any date
information, specifically including errors or interruptions from functions
which may involve date information from more than one century, in each case
except where the same could not reasonably be expected to have a material
adverse effect on the financial position, shareholders' equity or results
of operations of the Company and its subsidiaries taken as a whole;
(xxv) There are no contracts or other documents which are required to
be described in the Prospectus or to be filed as exhibits to the Initial
Registration Statement by the Act which are not so described or filed;
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(xxvi) Each of the Company and each Material Subsidiary owns, or
possesses adequate rights to use, all material trademarks, service marks,
trade names, service names, brand names, logos, trade dress, trademark
registrations, service xxxx registrations, Internet domain names and
copyrights necessary for the conduct of its business and has no reason to
believe that the conduct of its business will conflict with, and has not
received any notice of any claim of conflict with any such rights or others
except as would not have a material adverse effect on the business,
financial condition, results of operations or prospects of the Company or
its subsidiaries; and, to the best of the Company's knowledge after
reasonable investigation, neither the Company nor any of its subsidiaries
have infringed or are infringing any trademarks, service marks, trade
names, trademark registrations, service xxxx registrations, domain names or
copyrights, which infringement could reasonably be expected to have a
material adverse effect on the business, financial condition, results of
operations or prospects of the Company or its subsidiaries;
(xxvii) Each of the Company and each Material Subsidiary owns, or
possesses adequate rights to use, all material patents necessary for the
conduct of its business; no valid United States patent is, or to the
knowledge of the Company would be, infringed by the activities of either
the Company or any Material Subsidiary, except as would not have a material
adverse effect on the business, financial condition, results of operations
or prospects of either the Company or any Material Subsidiary; there are no
actions, suits or judicial proceedings pending relating to patents or
proprietary information to which either the Company or any Material
Subsidiary is a party or of which any property of either the Company or any
Material Subsidiary is subject, and, to the knowledge of the Company, no
actions, suits or judicial proceedings are threatened by governmental
authorities or, except as set forth in the Prospectus, others, in each case
as would not have a material adverse effect on the business, financial
condition, results of operations or prospects of either the Company or any
Material Subsidiary, the Company is not aware of any claim by others that
either the Company or any Material Subsidiary is infringing or otherwise
violating the patents or other intellectual property of others and is not
aware of any rights of third parties to any of either the Company's or any
Material Subsidiary's patent applications, licenses which could affect
materially the use thereof by the Company or its subsidiaries;
(xxviii) The Company does not have any obligation or commitment to,
directly or indirectly, purchase or otherwise acquire from any person any
of its capital stock or other securities, whether by firm commitment or
contingent upon the occurrence of any condition;
(xxix) The Xxxxxxxx Agreement has been duly authorized by the Xxxxxxxx
shareholders and is not required to be approved by the Company's
shareholders;
(xxx) The Company has completed a thorough due diligence review of
Xxxxxxx and Xxxxxxxx and has no reason to believe that any of the
representations or warranties of Xxxxxxx or Xxxxxxxx set forth in the
Xxxxxxx Agreement or the Xxxxxxxx Agreement, as supplemented by the
Disclosure Schedule (as such term is defined in each agreement) appended to
each agreement, are not true and accurate in all material respects; and
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(xxxi) The representations and warranties of the Company set forth in
the Xxxxxxx Agreement and in the Xxxxxxxx Agreement, as supplemented by the
Company's Disclosure Schedule (as such term is defined in each agreement)
appended to each agreement, are true and accurate in all material respects
and the Company has no reason to believe that either transaction will not
be consummated in accordance with the terms set forth in the Xxxxxxx
Agreement and in the Xxxxxxxx Agreement and as described in the
Registration Statement.
2. Subject to the terms and conditions herein set forth, (a) the Company
agrees to sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company, at a purchase price of
__% of the principal amount thereof, plus accrued interest, if any, from August
8, 2000 to the Time of Delivery hereunder, the principal amount of Notes set
forth opposite the name of such Underwriter in Schedule I hereto and (b) in the
event and to the extent that the Underwriters shall exercise the election to
purchase Optional Notes as provided below, the Company agrees to issue and sell
to each of the Underwriters, and each of the Underwriters agrees, severally and
not jointly, to purchase from the Company, at the same purchase price set forth
in clause (a) of this Section 2, that portion of the aggregate principal amount
of the Optional Notes as to which such election shall have been exercised (to be
adjusted by you so as to eliminate fractions of $1,000) determined by
multiplying such aggregate principal amount of Optional Notes by a fraction the
numerator of which is the maximum aggregate principal amount of Optional Notes
which such Underwriter is entitled to purchase as set forth opposite the name of
such Underwriter in Schedule I hereto and the denominator of which is the
maximum aggregate principal amount of Optional Notes that all of the
Underwriters are entitled to purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase at
their election up to $3,000,000 aggregate principal amount of Optional Notes, at
the purchase price of ___% of the principal amount thereof, for the sole purpose
of covering overallotments in the sale of the Firm Notes. Any such election to
purchase Optional Notes may be exercised only by written notice from you to the
Company, given within a period of 45 calendar days after the date of this
Agreement and setting forth the aggregate principal amount of Optional Notes to
be purchased and the date on which such Optional Notes are to be delivered, as
determined by you but in no event earlier than the First Time of Delivery (as
defined in Section 4 hereof) or, unless you and the Company otherwise agree in
writing, earlier than two or later than ten business days after the date of such
notice.
3. Upon the authorization by you of the release of the Firm Notes, the
several Underwriters propose to offer the Firm Notes for sale upon the terms and
conditions set forth in the Prospectus.
4. (a) The Notes to be purchased by each Underwriter hereunder will be
represented by one or more definitive global Notes in book-entry form which will
be deposited by or on behalf of the Company with The Depository Trust Company
("DTC") or its designated custodian. The Company will deliver the Notes to
Southwest Securities, Inc., for the account of such Underwriter, against payment
by or on behalf of such Underwriter of the purchase price therefor by wire
transfer of immediately available funds to the Company, by causing DTC to credit
the Notes to the account of Southwest Securities, Inc. at DTC. The Company will
cause the certificate(s) representing the Notes to be made available for
checking at least 24 hours prior to the Time of Delivery (as defined
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below) with respect thereto at the office of Southwest Securities, Inc., 0000
Xxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000 (the "Designated Office"). The time
and date of such delivery and payment shall be, with respect to the Firm Notes,
9:00 a.m., Dallas time, on August 8, 2000 or such other time and date as
Southwest Securities, Inc. and the Company may agree upon in writing, and with
respect to the Optional Notes, 9:00 a.m., Dallas time, on the date specified by
Southwest Securities, Inc. in the written notice given by Southwest Securities,
Inc. of the Underwriters' election to purchase such Optional Notes, or such
other time and date as Southwest Securities, Inc. and the Company may agree upon
in writing. Such time and date for delivery of the Firm Notes is herein called
the "First Time of Delivery", such time and date for delivery of the Optional
Notes, if not the First Time of Delivery, is herein called the "Second Time of
Delivery", and each such time and date for delivery is herein called a "Time of
Delivery".
(b) The documents and Notes to be delivered at each Time of Delivery by or
on behalf of the parties hereto pursuant to Section 7 hereof, including the
cross-receipt for the Notes and any additional documents requested by the
Underwriters pursuant to Section 7(k) hereof, will be delivered at the offices
of Xxxxxx & Xxxx, L.L.P., 0000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000 (the
"Closing Location"), and the Notes will be delivered at the Designated Office,
all at each Time of Delivery. A meeting will be held at the Closing Location at
3 p.m., Dallas time, on the Business Day next preceding each Time of Delivery,
at which meeting the final drafts of the documents to be delivered pursuant to
the preceding sentence will be available for review by the parties hereto. For
the purposes of this Section 4, "Business Day" shall mean each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banking institutions
in the United States are generally authorized or obligated by law or executive
order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file
such Prospectus pursuant to Rule 424(b) under the Act not later than the
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 Act; to make no
further amendment or any supplement to the Registration Statement or
Prospectus which you object promptly after reasonable notice thereof; to
advise you, 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 Prospectus has been
filed and to furnish you copies thereof; to advise you, 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 Prospectus, of the suspension of the qualification of the
Notes 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 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 Prospectus or suspending any such
qualification, promptly to use its reasonable best efforts to obtain the
withdrawal of such order;
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(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Notes and the shares of Stock issuable
upon conversion of the Notes for offering and sale under the securities
laws of such jurisdictions as you may reasonably 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 Notes, provided that in connection therewith the
Company shall not be required to qualify as a foreign corporation, to
submit to taxation, or to file a general consent to service of process in
any jurisdiction;
(c) Prior to 10:00 a.m., Dallas time, on the Business Day next
succeeding the date of this Agreement to furnish the Underwriters with
copies of the Prospectus in such quantities as you may reasonably request,
and, if the delivery of a prospectus is required at any time prior to the
expiration of nine months after the time of the issue of the Prospectus in
connection with the offering or sale of the Notes 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 during such same period to amend or
supplement the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the Act
or the Exchange Act, to notify you and upon your request to prepare and
furnish without charge to each Underwriter and to any dealer in securities
as many copies as you may reasonably request of an amended Prospectus or a
supplement to the Prospectus which will correct such statement or omission
or effect such compliance, and in case any Underwriter is required to
deliver a prospectus in connection with sales of any of the Notes at any
time nine months or more after the time of issue of the Prospectus, upon
your request but at the expense of such Underwriter, to prepare and deliver
to such Underwriter as many copies as you may request of an amended or
supplemented Prospectus complying with Section 10(a)(3) of the Act;
(d) If the Company elects to rely upon Rule 462(b), the Company shall
file a Rule 462(b) Registration Statement with the Commission in compliance
with Rule 462(b) by 10:00 p.m., Washington, D.C. time, on the date of this
Agreement, and the Company shall at the time of filing either pay to the
Commission the filing fee for the Rule 462(b) Registration Statement or
give irrevocable instructions for the payment of such fee pursuant to Rule
111(b) under the Act;
(e) To make generally available to its securityholders as soon as
practicable, but in any event not later than 18 months after the effective
date of the Registration Statement (as defined in Rule 158(c)) under the
Act, an earnings statement of the Company and its subsidiaries (which need
not be audited) complying with Section 11(a) of the Act and the rules and
regulations thereunder of the Commission (including, at the option of the
Company, Rule 158);
(f) During the period beginning from the date hereof and continuing to
and including the date 180 days after the effective date of the Prospectus,
not to (A) offer,
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pledge, sell, contract to sell or otherwise dispose of, directly or
indirectly, except as provided hereunder, the Stock, Notes or any
securities of the Company that are substantially similar to the Notes,
including but not limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive, Stock, Notes or
any such substantially similar securities, without your prior written
consent (other than pursuant to stock option and restricted stock plans
existing on, or upon the conversion, exchange or exercise of convertible,
exchangeable or exercisable securities outstanding as of, the date of this
Agreement), or (B) enter into any swap or other arrangement that transfers
all or a portion of the economic consequences associated with the ownership
of any Stock or Notes, without your prior written consent, except to the
Underwriters pursuant to this Agreement for issuances of capital stock by
the Company in connection with potential future acquisitions provided that
the shares issuable pursuant to any such acquisitions shall not be
transferrable prior to the end of the 180-day period;
(g) To furnish to the holders of the Notes as soon as practicable
after the end of each fiscal year an annual report (including a balance
sheet and statements of income, shareholders' equity and cash flow of the
Company and its consolidated subsidiaries certified by independent public
accountants) and, as soon as practicable after the end of each of the first
three quarters of each fiscal year (beginning with the fiscal quarter
ending after the effective date of the Registration Statement),
consolidated summary financial information of the Company and its
subsidiaries for such quarter in reasonable detail;
(h) During a period of five years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to shareholders, and deliver
to you (i) as soon as they are available, copies of any reports and
financial statements furnished to or filed with the Commission or any
national securities exchange on which any class of securities of the
Company is listed; and (ii) such additional information concerning the
business and financial condition of the Company as you may from time to
time reasonably request (such financial statements to be on a consolidated
basis to the extent the accounts of the Company and its subsidiaries are
consolidated in reports furnished to its shareholders generally or to the
Commission);
(i) To use the net proceeds received by it from the sale of the Notes
pursuant to this Agreement in the manner specified in the Prospectus under
the caption "Use of Proceeds"; and
(j) To use its best efforts to list for quotation, subject to notice
of issuance, the Notes on the American Stock Exchange ("AMEX") and to
maintain the listing of the Notes for a period of three years after the
date of this Agreement.
6. The Company covenants and agrees with the several Underwriters that,
except as provided below, the Company will pay or cause to be paid the
following: (i) the fees, disbursements and expenses of the Company's counsel and
accountants in connection with the registration of the Notes under the Act and
all other expenses in connection with the preparation, printing and filing of
the Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and
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dealers; (ii) the cost of printing or producing any Agreement among
Underwriters, this Agreement, the Blue Sky Memorandum, closing documents
(including any compilations thereof) and any other documents in connection with
the offering, purchase, sale and delivery of the Notes; (iii) all expenses in
connection with the qualification of the Notes for offering and sale under state
securities laws as provided in Section 5(b) hereof, including the fees and
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky survey; (iv) all fees and
expenses in connection with listing the Notes on AMEX (v) if applicable, any
fees charged by Securities Rating Services for rating the Notes; (vi) the filing
fees incident to, and the fees and disbursements of counsel for the Underwriters
in connection with, securing any required review by the National Association of
Securities Dealers, Inc. of the terms of the sale of the Notes; (vii) the cost
of preparing the Notes; (viii) the fees and expenses of the Trustee and any
agent of the Trustee and the fees and disbursements of counsel for the Trustee
in connection with the Indenture and the Notes; and (ix) all other costs and
expenses incident to the performance of its obligations hereunder which are not
otherwise specifically provided for in this Section. It is understood that
except as provided in this Section, and Sections 8 and 11 hereof, the
Underwriters will pay all of their own costs and expenses, including the fees of
their counsel, transfer taxes on resale of any of the Notes by them and any
advertising expenses connected with any offers they may make.
7. The obligations of the Underwriters hereunder, as to the Notes to be
delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company herein are, at and as of such Time of Delivery, true and correct,
the condition that the Company shall have performed all of its and their
obligations hereunder theretofore to be performed and the following additional
conditions:
(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such filing
by the rules and regulations under the Act and in accordance with Section
5(a) hereof; if the Company has elected to rely upon Rule 462(b), the Rule
462(b) Registration Statement shall have become effective by 10:00 p.m.,
Washington, D.C. time, on the date of this Agreement; 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 all requests for
additional information on the part of the Commission shall have been
complied with to your reasonable satisfaction.
(b) Xxxxxx & Xxxx, L.L.P., counsel for the Underwriters, shall have
furnished to you their written opinion or opinions, dated such Time of
Delivery, with respect to the matters covered in paragraphs (vi), (vii),
(viii), (xii) and (xvi) (except for the last clause of paragraph (xvi)) of
subsection (c) below as well as such other related matters as you may
reasonably request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters. In giving such opinion or opinions, Xxxxxx & Xxxx, L.L.P. may rely
as to all matters of Minnesota law on the opinion of Maun & Simon, PLC
referenced below.
(c) Maun & Simon, PLC, counsel for the Company, shall have furnished
to you their written opinion, dated such Time of Delivery, in form and
substance satisfactory to you, to the effect that:
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(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Minnesota, with corporate power and authority to own its properties
and conduct its business as described in the 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 have been duly authorized and validly issued and are fully
paid and non-assessable and not subject to any preemptive or similar
rights; the shares of Stock initially issuable upon conversion of the
Notes have been duly and validly authorized and reserved for issuance
and, when issued and delivered in accordance with the provisions of
the Notes and the Indenture, will be duly and validly issued and fully
paid and non-assessable; and the Stock conforms to the description of
the Stock contained in the Prospectus; and all issuances of securities
of the Company since January 1, 1999 which were not registered under
the Act or Blue Sky or state securities laws were exempt from such
registration, provided that in rendering such opinion, counsel may, as
to factual matters, rely upon certificates of officers of the Company,
filings by the Company with the Commission and representations of
purchasers of securities of the Company contained in any subscription
documents without independent investigation;
(iii) Each of the Company and each Material Subsidiary has been
duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts any
business so as to require such qualification, or is subject to no
material liability or disability by reason of failure to be so
qualified in any such jurisdiction (such counsel being entitled to
rely in respect of the opinion in this clause upon opinions of local
counsel and/or certificates of Secretaries of State or other
appropriate public officials and in respect of matters of fact upon
certificates of officers of either the Company or the appropriate
Material Subsidiary, provided that such counsel shall state that they
believe that both you and such counsel are justified in relying upon
such opinions and certificates and that such counsel furnishes such
opinions and certificates to the representatives);
(iv) Each Material Subsidiary has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
its jurisdiction of incorporation; and all of the issued shares of
capital stock of each such subsidiary have been duly authorized and
validly issued, are fully paid and non-assessable, and (except for
directors' qualifying shares) are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or
claims, other than those described in the Prospectus (such counsel
being entitled to rely in respect of the opinion in this clause upon
opinions of local counsel and certificates of Secretaries of State or
other appropriate public officials and in respect of matters of fact
upon certificates of officers of the Company or its subsidiaries,
provided that such counsel shall state that they believe that both you
and they are justified in
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relying upon such opinions and certificates and that such counsel
furnishes such opinions and certificates to you);
(v) To the best of such counsel's knowledge and other than as set
forth in the Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of its subsidiaries is
a party or of which any property of the Company or any of its
subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the
aggregate have a material adverse effect on the current or future
consolidated financial position, shareholders' equity or results of
operations of the Company and its subsidiaries taken as a whole; and,
to the best of such counsel's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened
by others;
(vi) This Agreement has been duly authorized, executed and
delivered by the Company;
(vii) The Notes delivered by the Company at the Time of Delivery
have been duly authorized, and will be, when issued and delivered
against payment therefor in accordance with this Agreement, validly
issued, and authenticated and constitute valid and legally binding
obligations of the Company entitled to the benefits provided by the
Indenture; and the Notes and the Indenture conform in all material
respects to the descriptions thereof in the Prospectus;
(viii) The Indenture has been duly authorized, executed and
delivered by the Company and (assuming the due authorization,
execution and delivery thereof by the Trustee) constitutes a valid and
legally binding agreement, enforceable against the Company in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity
principles; and the Indenture has been duly qualified under the Trust
Indenture Act;
(ix) The issue and sale to you of the Notes being delivered at
such Time of Delivery to be sold by the Company and the compliance by
the Company with all of the provisions of the Notes, the Indenture and
this Agreement and the consummation of the transactions herein
contemplated 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
any of its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject, nor will such
action result in any violation of the provisions of the Articles of
Incorporation, as amended, or By-laws of the Company or any statute or
any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any of its subsidiaries
or any of their properties;
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(x) No consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body
is required to be obtained by or on behalf of the Company for the
issue and sale of the Notes or the consummation by the Company of the
transactions contemplated by this Agreement or the Indenture, except
such as have been obtained under the Act and the Trust Indenture Act,
such as may be required under the Act or by the National Association
of Securities Dealers, Inc. in connection with the shares of Stock
issuable upon conversion of the Notes, and such consents, approvals,
authorizations, registrations or qualifications as may be required
under state or foreign securities or Blue Sky laws in connection with
the purchase and distribution of the Notes by the Underwriters;
(xi) Neither the Company nor any of its subsidiaries is in
violation of its Articles of Incorporation, as amended or By-laws or
in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument known to such counsel to which it is a party
or by which it or any of its properties may be bound;
(xii) The statements set forth in the Prospectus under the
caption "Description of Convertible Notes" and "Description of Capital
Stock", insofar as they purport to constitute a summary of the terms
of the Notes and the Stock, under the caption "Certain Federal Tax
Considerations", and under the caption "Underwriting", insofar as they
purport to summarize the provisions of the laws and documents referred
to therein, are accurate summaries in all material respects;
(xiii) Each of the Company and each subsidiary is not an
"investment company" or an entity "controlled" by an "investment
company", as such terms are defined in the Investment Company Act;
(xiv) To the best of such counsel's knowledge, except as have
been waived at such Time of Delivery, there are no persons with
registration or similar rights to have any securities of the Company
registered pursuant to the Registration Statement;
(xv) To the best of such counsel's knowledge and without
independent investigation, the Company and each of its subsidiaries
have obtained all environmental permits, licenses and other
authorizations required by federal, state and local law in order to
conduct their businesses except as described in the Prospectus; the
Company and each of its subsidiaries are conducting their businesses
in compliance with such permits, licenses and authorizations and with
applicable environmental laws, except where the failure to be in
compliance would not have a material adverse effect on the financial
position, shareholders' equity or results of operations of the Company
and its subsidiaries, taken as a whole, and, except as described in
the Prospectus, the Company is not in violation of any Federal or
state
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law or regulation relating to the storage, handling, disposal, release
or transportation of hazardous or toxic materials;
(xvi) The Registration Statement and the Prospectus and any
further amendments and supplements thereto made by the Company prior
to such Time of Delivery (other than the financial statements and
related schedules and financial and statistical data therein, as to
which such counsel need express no opinion) comply as to form in all
material respects with the requirements of the Act and the rules and
regulations thereunder; although they do not assume any responsibility
for the accuracy, completeness or fairness of the statements contained
in the Registration Statement or Prospectus, except for those referred
to in the opinion in paragraph (xii) of this subsection (c), they have
no reason to believe that, as of its effective date, the Registration
Statement or any further amendment thereto made by the Company prior
to such Time of Delivery (other than the financial statements and
related schedules and financial and statistical data therein, as to
which such counsel need express no opinion) contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading or that, as of its date, the Prospectus or any
further amendment or supplement thereto made by the Company prior to
such Time of Delivery (other than the financial statements and related
schedules and financial and statistical data therein, as to which such
counsel need express no opinion) contained an untrue statement of a
material fact or omitted to state a material fact necessary to make
the statements therein, in light of the circumstances under which they
were made, not misleading or that, as of such Time of Delivery, the
Prospectus or any further amendment or supplement thereto made by the
Company prior to such Time of Delivery (other than the financial
statements and related schedules therein, as to which such counsel
need express no opinion) contains an untrue statement of a material
fact or omits to state a material fact necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading; and they do not know of any contracts or
other documents of a character required to be filed as an exhibit to
the Registration Statement or required to be described in the
Registration Statement or the Prospectus which are not filed or
described as required;
(xvii) Each of the Xxxxxxx Agreement and the Xxxxxxxx Agreement
has been duly authorized, executed and delivered by the Company, and,
assuming the due authorization, execution and delivery thereof by
Xxxxxxx and Xxxxxxxx, constitutes the legal, valid and binding
agreement of the Company, Xxxxxxx and Xxxxxxxx, as applicable,
enforceable against each in accordance with their respective terms;
and
(xviii) The documents incorporated by reference in the Prospectus
(other than the financial statements and related schedules and
financial and statistical data therein, as to which such counsel need
express no opinion), when they were filed with the Commission,
complied as to form in all material respects with the requirements of
the Exchange Act and the rules and regulations of the Commission
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thereunder; and such counsel has no reason to believe that any of such
documents, when such documents were so filed, contained an untrue
statement of material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such documents were so
filed, not misleading.
In rendering such opinion, such counsel may state that they express no
opinion as to the laws of any jurisdiction other than the laws of the State
of Minnesota (excluding conflict of law rules) and the federal laws of the
United States.
(d) On the date of the Prospectus at a time prior to the execution of
this Agreement, at 9:00 a.m., Dallas time, on the effective date of any
post-effective amendment to the Registration Statement filed subsequent to
the date of this Agreement and also at each Time of Delivery, Ernst & Young
LLP and KPMG LLP shall have furnished to you a letter or letters, dated the
respective dates of delivery thereof, in form and substance satisfactory to
you, to the effect set forth in Annex I hereto.
(e) (i) Neither the Company nor any of its subsidiaries 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 the respective dates as of which information is given in the
Prospectus there shall not have been any change in the capital stock,
short-term debt or long-term debt of the Company or any of its subsidiaries
or any change, or any development involving a prospective change, in or
affecting the general affairs, business, management, financial position,
shareholders' equity or results of operations of the Company and its
subsidiaries, 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(s) so material and
adverse as to make it impracticable or inadvisable to proceed with the
public offering or the delivery of the Notes being delivered at such Time
of Delivery on the terms and in the manner contemplated in the Prospectus.
(f) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange, Nasdaq or AMEX; (ii) a
suspension or material limitation in trading in the Company's securities;
(iii) a general moratorium on commercial banking activities declared by
either Federal or New York state authorities; or (iv) the outbreak or
escalation of hostilities involving the United States or the declaration by
the United States of a national emergency or war, if the effect of any such
event specified in this clause (iv) in the judgment of the
representative(s) makes it impracticable or inadvisable to proceed with the
public offering or delivery of the Notes being delivered at such Time of
Delivery on the terms and in the manner contemplated in the Prospectus.
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(g) The Company has obtained and delivered to the Underwriters
executed copies of an agreement from those persons named on Schedule III
hereto to the effect set forth in Annex II.
(h) The Company shall have furnished or caused to be furnished to you
at such Time of Delivery certificates of officers of the Company
satisfactory to you as to the accuracy of the representations and
warranties of the Company herein at and as of such Time of Delivery, as to
the performance by the Company of all of its obligations hereunder to be
performed at or prior to such Time of Delivery, and as to such other
matters as you may reasonably request, and the Company shall have furnished
or caused to be furnished certificates as to the matters set forth in
subsections (a) and (d) of this Section and as to such other matters as you
may reasonably request; and
(i) The Company shall have complied with the provisions of Section
5(c) hereof with respect to the furnishing of prospectuses on the Business
Day next succeeding the date of this Agreement.
8. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim 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 or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through Southwest Securities, Inc. expressly for use therein.
(b) Each Underwriter will indemnify and hold harmless the Company against
any losses, claims, damages or liabilities to which the Company may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through you expressly for use
therein; and will reimburse the Company for any legal or other expenses
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reasonably incurred by the Company in connection with investigating or defending
any such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against an indemnifying party
under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(d) If the indemnification provided for in this Section 8 is unavailable to
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Underwriters on the other from the
offering of the Notes. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law or if the indemnified
party failed to give the notice required under subsection (c) above, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Underwriters
on the other shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Notes (before deducting expenses) received by
the Company bear to the total underwriting discounts and commissions received by
the Underwriters with respect to the Notes, 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, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to
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information supplied by the Company on the one hand or the Underwriters on the
other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Underwriters agree that it would not be just and equitable if contributions
pursuant to this subsection (d) were determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (d), no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Notes underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this subsection
(d) to contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company (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 to each person, if any, who
controls the Company within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase the
Notes which it has agreed to purchase hereunder at the Time of Delivery, you may
in your discretion arrange for you or another party or other parties to purchase
such Notes on the terms contained herein. If within 36 hours after such default
by any Underwriter you do not arrange for the purchase of such Notes, then the
Company shall be entitled to a further period of 36 hours within which to
procure another party or other parties satisfactory to you to purchase such
Notes on such terms. In the event that, within the respective prescribed
periods, you notify the Company that you have so arranged for the purchase of
such Notes, or the Company notifies you that they have so arranged for the
purchase of such Notes, you or the Company shall have the right to postpone such
Time of Delivery for a period of not more than seven 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 Company
agrees to file promptly any amendments to the Registration Statement or the
Prospectus which in your opinion may thereby be made necessary. 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 Notes.
(b) If, after giving effect to any arrangements for the purchase of the
Notes of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a)
21
22
above, the aggregate principal amount of such Notes which remains unpurchased
does not exceed one-eleventh of the aggregate principal amount of all the Notes
to be purchased at such Time of Delivery, then the Company shall have the right
to require each non-defaulting Underwriter to purchase the principal amount of
Notes which such Underwriter agreed to purchase hereunder at such Time of
Delivery and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the principal amount of Notes which such
Underwriter agreed to purchase hereunder) of the Notes of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the purchase of the
Notes of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate principal amount of such Notes
which remains unpurchased exceeds one-eleventh of the aggregate principal amount
of all the Notes to be purchased at such Time of Delivery, or if the Company
shall not exercise the right described in subsection (b) above to require
non-defaulting Underwriters to purchase Notes of a defaulting Underwriter or
Underwriters, then this Agreement or, with respect to the Second Time of
Delivery, the obligations of the Underwriters to purchase and of the Company to
sell the Optional Notes shall thereupon terminate, without liability on the part
of any non-defaulting Underwriter or the Company, except for the expenses to be
borne by the Company and the Underwriters as provided in Section 6 hereof and
the indemnity and contribution agreements in Section 8 hereof; but nothing
herein shall relieve a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties and
other statements of the Company and the several Underwriters, as set forth in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company,
or any officer or director or controlling person of the Company, and shall
survive delivery of and payment for the Notes.
11. If this Agreement shall be terminated pursuant to Section 9 hereof, the
Company shall not then be under any liability to any Underwriter except as
provided in Section 6 and Section 8 hereof; but, if for any other reason any
Notes are not delivered by or on behalf of the Company as provided herein, the
Company will reimburse the Underwriters through you for all out-of-pocket
expenses approved in writing by you, including fees and disbursements of
counsel, reasonably incurred by the Underwriters in making preparations for the
purchase, sale and delivery of the Notes not so delivered, but the Company shall
then be under no further liability to any Underwriter in respect of the Notes
not so delivered except as provided in Section 6 and Section 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Southwest Securities, Inc. on behalf of you as the
representative.
22
23
All statements, requests, notices, and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Southwest
Securities, Inc. at 0000 Xxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, Attention:
Corporate Syndicate Department; and if to the Company shall be delivered or sent
by mail, telex or facsimile transmission to the address of the Company set forth
in the Registration Statement, Attention: President; provided, however, that any
notice to an Underwriter pursuant to Section 8(c) hereof shall be delivered or
sent by mail, telex or facsimile transmission to such Underwriter at its address
set forth in its Underwriters' Questionnaire or telex constituting such
Questionnaire, which address will be supplied to the Company by you upon
request. Any such statements, requests, notices or agreements shall take effect
upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters and the Company and, to the extent provided in Sections 8
and 10 hereof, the officers and directors of the Company and each person who
controls the Company or any Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Notes from any Underwriter shall be deemed a successor or assign by reason
merely of such purchase.
14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is not open for business.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF TEXAS.
16. This Agreement may be executed by any one or more of the parties hereto
in any number of counterparts, each of which shall be deemed to be an original,
but all such counterparts shall together constitute one and the same instrument.
17. Southwest Securities, Inc. hereby agrees to act as a "qualified
independent underwriter," as such term is defined in Section (b)(15) of Rule
2720 of the NASD Conduct Rules, in connection with the offering contemplated by
this Agreement. As a "qualified independent underwriter," Southwest Securities,
Inc. shall recommend the minimum yield at which the Notes can be offered to the
public and the maximum initial conversion price at which the Notes can be
converted into shares of Stock. The Company, Xxxxxx, Xxxxxxx & Xxxxx, Inc. and
X. X. Xxxxxxxx & Company agree that they shall not offer the Notes at a lower
yield than such minimum yield or at a conversion price higher than such maximum
initial conversion price. Southwest Securities, Inc. represents and warrants
that it meets the applicable requirements under Section (b)(15) of Rule 2720 to
act as a "qualified independent underwriter" in connection with the offering
contemplated by this Agreement.
If the foregoing is in accordance with your understanding, please sign and
return to us one counterpart hereof for the Company and for each of the
representatives plus one counterpart hereof for each counsel and the Custodian,
if any, and upon the acceptance hereof by you, on behalf of each of the
Underwriters, this letter and such acceptance hereof shall constitute a binding
agreement among each of the Underwriters and the Company. It is understood that
your acceptance of this
23
24
letter on behalf of each of the Underwriters is pursuant to the authority set
forth in a form of Agreement among Underwriters, the form of which shall be
submitted to the Company for examination, upon request, but without warranty on
your part as to the authority of the signers thereof.
Very truly yours,
XXXXXXXXX.XXX GROUP, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
Accepted as of the date hereof:
SOUTHWEST SECURITIES, INC.
On behalf of each of the Underwriters
By:_________________________________
Name:_______________________________
Title:______________________________
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25
SCHEDULE I
AGGREGATE PRINCIPAL
AMOUNT OF
OPTIONAL
AGGREGATE PRINCIPAL NOTES TO BE
AMOUNT OF PURCHASED IF
FIRM MAXIMUM
NOTES TO BE OPTION
UNDERWRITER PURCHASED EXERCISED
----------- --------- ---------
Southwest Securities, Inc..................................... 000,000 000,000
Xxxxxx, Xxxxxxx & Xxxxx, Inc..................................
X.X. Xxxxxxxx & Company.......................................
------- -------
Total....................................................
======= =======
I-1
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SCHEDULE II
Xxxxxx, Xxxxxxx & Xxxxx, Incorporated
Online Brokerage Solutions, Inc.
MJK Holdings, Inc.
Xxxxxxxxx.xxx, Inc.
MJK Capital Corporation
MJK Management Services, Inc.
[X. X. Xxxxxxxx & Company]
[Xxxxxxx Investments, Inc.]
II-1
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SCHEDULE III
1. Lock-up of Xxxxx Xxxxxx, Xxxxx Xxxxxxx, Xxxx Xxxx, Xxxxxxx Xxxx, Xxx Xxxxxx
and Xxxx Xxxxxx for 120 days.
2. Lock-up of Xxxxx Xxxxxxxx, Xxxxx Xxxx, Xxxxxx Xxxxxx and Xxxxxxx Xxxxxx for
90 days.
3. Lock-up for directors, officers and employees who purchased Series I
Convertible Preferred Holders (March 1999 private placement) and who own
(when aggregated with stock they obtained other than through the March 1999
private placement) 100,000 or more shares for 120 days.
4. Lock-up for all participants in the August 1999 private placement for 120
days.
II-1
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SCHEDULE IV
REGISTRATION RIGHTS
[None.]
II-1
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ANNEX I
FORM OF COMFORT LETTER
FOR ERNST & YOUNG LLP
Pursuant to Section 7(d) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect to
the Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules (and, if applicable, financial
forecasts and/or pro forma financial information) examined by them and
included in the Prospectus or the Registration Statement comply as to form
in all material respects with the applicable accounting requirements of the
Act and the related published rules and regulations thereunder; and, if
applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the unaudited consolidated interim financial statements, selected financial
data, pro forma financial information, financial forecasts and/or condensed
financial statements derived from audited financial statements of the
Company for the periods specified in such letter, as indicated in their
reports thereon, copies of which have been furnished to the representatives
of the Underwriters (the "Representatives");
(iii) They have made a review in accordance with standards established
by the American Institute of Certified Public Accountants of the unaudited
condensed consolidated statements of income, consolidated balance sheets
and consolidated statements of cash flows included in the Prospectus as
indicated in their reports thereon, copies of which have been separately
furnished to the Representatives, and on the basis of specified procedures
including inquiries of officials of the Company who have responsibility for
financial and accounting matters regarding whether the unaudited condensed
consolidated financial statements referred to in paragraph (vi)(A)(i) below
comply as to form in all material respects with the applicable accounting
requirements of the Act and the related published rules and regulations,
nothing came to their attention that caused them to believe that the
unaudited condensed consolidated financial statements do not comply as to
form in all material respects with the applicable accounting requirements
of the Act and the related published rules and regulations;
(iv) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company
for the five most recent fiscal years included in the Prospectus agrees
with the corresponding amounts (after restatements where applicable) in the
audited consolidated financial statements for such five fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and on
the basis of limited procedures specified in such letter nothing came to
their attention as a result of the foregoing procedures that caused them to
believe that this information does not conform in all material respects
AI-1
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with the disclosure requirements of Items 301, 302, 402 and 503(d),
respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and its subsidiaries, inspection of the
minute books of the Company and its subsidiaries since the date of the
latest audited financial statements included in the Prospectus, inquiries
of officials of the Company and its subsidiaries responsible for financial
and accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused them
to believe that:
(A) (i) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the Act and
the related published rules and regulations, or (ii) any material
modifications should be made to the unaudited condensed consolidated
statements of income, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus for them to be in
conformity with generally accepted accounting principles;
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding
items in the unaudited consolidated financial statements from which
such data and items were derived, and any such unaudited data and
items were not determined on a basis substantially consistent with the
basis for the corresponding amounts in the audited consolidated
financial statements included in the Prospectus;
(C) the unaudited financial statements which were not included in
the Prospectus but from which were derived any unaudited condensed
financial statements referred to in Clause (A) and any unaudited
income statement data and balance sheet items included in the
Prospectus and referred to in Clause (B) were not determined on a
basis substantially consistent with the basis for the audited
consolidated financial statements included in the Prospectus;
(D) any unaudited pro forma consolidated condensed financial
statements included in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements of the
Act and the published rules and regulations thereunder or the pro
forma adjustments have not been properly applied to the historical
amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated
capital stock (other than issuances of capital stock upon exercise of
options and stock appreciation rights, upon earn-outs of performance
shares and upon conversions of convertible securities, in each case
which were outstanding on the date of the latest financial
AI-2
31
statements included in the Prospectus) or any increase in the
consolidated long-term debt of the Company and its subsidiaries, or
any decreases in consolidated net current assets or net assets or
other items specified by the Representatives, or any increases in any
items specified by the Representatives, in each case as compared with
amounts shown in the latest balance sheet included in the Prospectus,
except in each case for changes, increases or decreases which the
Prospectus discloses have occurred or may occur or which are described
in such letter; and
(F) for the period from the date of the latest financial
statements included in the Prospectus to the specified date referred
to in Clause (E) there were any decreases in consolidated net revenues
or operating profit or the total or per share amounts of consolidated
net income or other items specified by the Representatives, or any
increases in any items specified by the Representatives, in each case
as compared with the comparable period of the preceding year and with
any other period of corresponding length specified by the
Representatives, except in each case for decreases or increases which
the Prospectus discloses have occurred or may occur or which are
described in such letter; and
(vii) In addition to the examination referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of minute
books, inquiries and other procedures referred to in paragraphs (iii) and
(vi) above, they have carried out certain specified procedures, not
constituting an audit in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Representatives, which are derived from the
general accounting records of the Company and its subsidiaries, which
appear in the Prospectus, including any documents incorporated by
reference, or in Part II of, or in exhibits and schedules to, the
Registration Statement specified by the Representatives, and have compared
certain of such amounts, percentages and financial information with the
accounting records of the Company and its subsidiaries and have found them
to be in agreement.
AI-3
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FORM OF COMFORT LETTER
FOR KPMG LLP
Pursuant to Section 7(d) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect to
Xxxxxxx and its subsidiaries and Xxxxxxxx within the meaning of the Act and
the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules (and, if applicable, financial
forecasts and/or pro forma financial information) examined by them and
included in the Prospectus or the Registration Statement comply as to form
in all material respects with the applicable accounting requirements of the
Act and the related published rules and regulations thereunder; and, if
applicable, they have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of
the unaudited consolidated interim financial statements, selected financial
data, pro forma financial information, financial forecasts and/or condensed
financial statements derived from audited financial statements of Xxxxxxx
and Xxxxxxxx for the periods specified in such letter, as indicated in
their reports thereon, copies of which have been furnished to the
representatives of the Underwriters (the "Representatives");
(iii) They have made a review in accordance with standards established
by the American Institute of Certified Public Accountants of the unaudited
condensed consolidated statements of income, consolidated balance sheets
and consolidated statements of cash flows included in the Prospectus as
indicated in their reports thereon, copies of which have been separately
furnished to the Representatives, and on the basis of specified procedures
including inquiries of officials of Xxxxxxx and Xxxxxxxx who have
responsibility for financial and accounting matters regarding whether the
unaudited condensed consolidated financial statements referred to in
paragraph (iv)(A)(i) below comply as to form in all material respects with
the applicable accounting requirements of the Act and the related published
rules and regulations, nothing came to their attention that caused them to
believe that the unaudited condensed consolidated financial statements do
not comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published rules and
regulations;
(iv) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of Xxxxxxx and its subsidiaries and Xxxxxxxx,
inspection of the minute books of Xxxxxxx and its subsidiaries and Xxxxxxxx
since the date of the latest audited financial statements included in the
Prospectus, inquiries of officials of Xxxxxxx and its subsidiaries and
Xxxxxxxx responsible for financial and accounting matters and such other
inquiries and procedures as may be specified in such letter, nothing came
to their attention that caused them to believe that:
AI-4
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(A) (i) the unaudited consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Prospectus do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the related published
rules and regulations, or (ii) any material modifications should be made to
the unaudited condensed consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Prospectus for them to be in conformity with generally accepted accounting
principles;
(B) as of a specified date not more than five days prior to the date
of such letter, there have been any changes in the consolidated capital
stock (other than issuances of capital stock upon exercise of options and
stock appreciation rights, upon earn-outs of performance shares and upon
conversions of convertible securities, in each case which were outstanding
on the date of the latest financial statements included in the Prospectus)
or any increase in the consolidated long-term debt of Xxxxxxx and its
subsidiaries or Xxxxxxxx, or any decreases in consolidated net current
assets or net assets or other items specified by the Representatives, or
any increases in any items specified by the Representatives, of Xxxxxxx and
its subsidiaries or Xxxxxxxx, in each case as compared with amounts shown
in the latest balance sheet included in the Prospectus, except in each case
for changes, increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter; and
(C) for the period from the date of the latest financial statements
included in the Prospectus to the specified date referred to in Clause (B)
there were any decreases in consolidated net revenues or operating profit
or the total or per share amounts of consolidated net income or other items
specified by the Representatives, or any increases in any items specified
by the Representatives, in each case as compared with the comparable period
of the preceding year and with any other period of corresponding length
specified by the Representatives, except in each case for decreases or
increases which the Prospectus discloses have occurred or may occur or
which are described in such letter; and
(v) In addition to the examination referred to in their report(s) included
in the Prospectus and the limited procedures, inspection of minute books,
inquiries and other procedures referred to in paragraphs (iii) and (iv) above,
they have carried out certain specified procedures, not constituting an audit in
accordance with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the Representatives,
which are derived from the general accounting records of Xxxxxxx and its
subsidiaries or Xxxxxxxx, which appear in the Prospectus, including any
documents incorporated by reference, or in Part II of, or in exhibits and
schedules to, the Registration Statement specified by the Representatives, and
have compared certain of such amounts, percentages and financial information
with the accounting records of Xxxxxxx and its subsidiaries or Xxxxxxxx and have
found them to be in agreement.
AI-5
34
ANNEX II
FORM OF LOCK-UP LETTER
XXXXXX, XXXXXXX & XXXXX, INC.
{address}
{address}
{address}
XXXXXXXXX.XXX GROUP, INC.
0000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Dear Sirs:
Xxxxxxxxx.xxx Group, Inc. (the "Company") intends to file a registration
statement with the Securities and Exchange Commission in connection with the
public offering (the "Offering") of convertible subordinated notes (the
"Notes"), convertible into shares of the Company's Common Stock, $0.04 par value
per share (the "Stock").
To facilitate the marketing of the Notes to be sold by the Company in the
Offering, I hereby irrevocably confirm and agree for the benefit of the Company
and the underwriters of the Offering as follows:
(i) During the period from the date of this letter until the 120th day
after the date of the final prospectus relating to the Notes to be
sold in the Offering, I will not (1) offer, pledge, sell, contract to
sell or otherwise dispose of, directly or indirectly, any Stock (or
other securities substantially similar to the Stock or securities
convertible or exchangeable into or exercisable for Stock or
substantially similar securities) that I now own or will own in the
future (beneficially or of record) or (2) enter into any swap or other
arrangement that transfers all or a portion of the economic
consequences associated with the ownership of any shares of Stock,
except that (a) I may transfer such securities to my spouse, parents,
siblings and/or lineal descendants of mine or of any such person
(each, a "Family Member"), to a trust solely for my benefit and/or the
benefit of Family Members, to a corporation wholly owned by me and/or
Family Members or to a partnership, all interests in which are owned
solely by me and/or Family Members, provided that prior to such
transfer any such person or entity shall have executed and delivered
to the Company a lock-up agreement substantially in the form of this
Agreement, and (b) I may pledge my Stock to a commercial financial
institution in the ordinary course of business.
(ii) I hereby waive all preemptive rights, rights of first refusal and
similar rights (to the extent I have any) under any agreement or
arrangement with respect to the offering and sale of the Notes in the
Offering and I agree that, during the period specified in clause (i)
above, I will not exercise any such rights or require that any Stock
or other securities be included in the Offering or registered under
the Securities Act of 1933, either in connection with the Offering or
otherwise.
Exhibit A-1
35
(iii) The undersigned has not taken and will not take, directly or
indirectly, any action which constitutes, or is intended or might
reasonably be expected to result in, stabilization or manipulation of
the price of any security of the Company to facilitate the sale or
resale of the Notes, or which constitutes a bid for or purchase of, or
an attempt to induce any person to purchase, the Notes, Stock or any
related security that is prohibited by Regulation M under the
Securities Exchange Act of 1934.
If the closing for any purchase by the underwriters of Notes sold in the
Offering has not occurred on or before August 31, 2000, the agreements set forth
in this letter will terminate on such date. I understand that there is no
assurance that the Offering will be completed.
Very truly yours,
_______________________________________
Signature
_______________________________________
Print Name
_______________________________________
Address
Exhibit A-2
