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Exhibit 1.1
RAINBOW RENTALS, INC.
COMMON STOCK
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UNDERWRITING AGREEMENT
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, 1998
THE XXXXXXXX-XXXXXXXX COMPANY, LLC
XXXX XXXXXXXX XXXXXXX
SUNTRUST EQUITABLE SECURITIES CORPORATION
As representatives of the several
Underwriters named in SCHEDULE I hereto,
c/o The Xxxxxxxx-Xxxxxxxx Company, LLC
0000 Xxxxxxxxx Xxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Ladies and Gentlemen:
Rainbow Rentals, Inc., a Ohio corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
several Underwriters named in SCHEDULE I hereto (the "Underwriters") 2,250,000
shares of common stock, without par value (the "Common Stock"), of the Company
(the "Firm Shares"), and, subject to the terms and conditions stated herein,
certain shareholders of the Company identified on SCHEDULE II hereto (the
"Selling Shareholders") propose to sell to the Underwriters up to 337,500
additional shares of Common Stock (the "Optional Shares") (the Firm Shares and
the Optional Shares that the Underwriters elect to purchase pursuant to Section
2 hereof are collectively called the "Shares").
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, each of the Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-48769)
with respect to the Shares, including a prospectus subject to
completion, has been filed by the Company with the Securities and
Exchange Commission (the "Commission") under the Securities Act of
1933, as amended (the "Act"), and one or more amendments to such
registration statement may have been so filed. After the execution of
this Agreement, the Company will file with the Commission either (i) if
such registration statement, as it may have been amended, has become
effective under the Act and information has been omitted therefrom in
accordance with Rule 430A under the Act, either (A) if the Company
relies on Rule 434 under the Act, a term sheet relating to the shares
that shall identify the preliminary prospectus that it supplements
containing such information as is required or permitted by
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Rules 434, 430A and 424(b) under the Act or (B) if the Company does not
rely on Rule 434 under the Act, a prospectus in the form most recently
included in an amendment to such registration statement (or, if no such
amendment shall have been filed, in such registration statement) with
such changes or insertions as are required by Rule 430A or permitted by
Rule 424(b) under the Act and as have been provided to and approved by
the Representatives, or (ii) if such registration statement, as it may
have been amended, has not become effective under the Act, an amendment
to such registration statement, including a form of prospectus, a copy
of which amendment has been provided to and approved by the
Representatives prior to the execution of this Agreement. The Company
may also file a related registration statement with the Commission
pursuant to Rule 462(b) under the Act for the purpose of registering
certain additional shares of Common Stock, which registration statement
will be effective upon filing with the Commission. As used in this
Agreement, the term "Original Registration Statement" means the
registration statement initially filed relating to the Shares, as
amended at the time when it was or is declared effective, including all
financial statement schedules and exhibits thereto and including any
information omitted therefrom pursuant to Rule 430A under the Act and
included in the Prospectus (as hereinafter defined); the term "Rule
462(b) Registration Statement" means any registration statement filed
with the Commission pursuant to Rule 462(b) under the Act (including
the Original Registration Statement and any Preliminary Prospectus or
Prospectus incorporated herein at the time such Original Registration
Statement becomes effective); the term "Registration Statement"
includes both the Original Registration Statement and any Rule 462(b)
Registration Statement; the term "Preliminary Prospectus" means each
prospectus subject to completion included in such registration
statement or any amendment or post-effective amendment thereto
(including the prospectus subject to completion, if any, included in
the Registration Statement at the time it was or is declared
effective); and the term "Prospectus" means (A) if the Company relies
on Rule 434 of the Act, the Term Sheet (as hereinafter defined)
relating to the Shares that is first filed pursuant to Rule 424(b)(7)
of the Act, together with the Preliminary Prospectus identified therein
that such Term Sheet supplements; (B) if the Company does not rely on
Rule 434 of the Act, the prospectus first filed with the Commission
pursuant to Rule 424(b) under the Act; or (C) if no prospectus is
required to be so filed, such term means the prospectus included in the
Registration Statement at the effective time of such Registration
Statement; and the term "Term Sheet" means any term sheet that
satisfies the requirements of Rule 434 of the Act. Any reference to the
"date" of a Prospectus that includes a Term Sheet shall mean the date
of the Term Sheet. For purposes of the following representations and
warranties, to the extent reference is made to the Prospectus and at
the relevant time the Prospectus is not yet in existence, such
reference shall be deemed to be to the most recent Preliminary
Prospectus.
(b) No order preventing or suspending the use of any
Preliminary Prospectus has been issued and no proceeding for that
purpose has been instituted or threatened by the Commission or the
securities authority of any state or other jurisdiction. If the
Registration Statement has become effective under the Act, no stop
order suspending the effectiveness of the Registration Statement or any
part thereof has been issued and no proceeding for that purpose has
been instituted or threatened or, to the best knowledge of the Company,
contemplated by the Commission or the securities authority of any state
or other jurisdiction.
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(c) When any Preliminary Prospectus was filed with the
Commission it (i) contained all statements required to be stated
therein in accordance with, and complied in all material respects with
the requirements of, the Act and the rules and regulations of the
Commission thereunder and (ii) did not include any untrue statement of
a material fact or omit to state any material fact necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading. When the Registration Statement
or any amendment thereto was or is declared effective, and at each Time
of Delivery (as hereinafter defined), it (i) contained or will contain
all statements required to be stated therein in accordance with, and
complied or will comply in all material respects with the requirements
of, the Act and the rules and regulations of the Commission thereunder
and (ii) did not or will not include any untrue statement of a material
fact or omit to state any material fact necessary to make the
statements therein not misleading. When (A) the Prospectus or any
amendment or supplement thereto is filed with the Commission pursuant
to Rule 424(b) (or, if the Prospectus or such amendment or supplement
is not required to be so filed, when the Registration Statement or the
amendment thereto containing such amendment or supplement to the
Prospectus was or is declared effective) or (B) any Term Sheet which is
a part of the Prospectus is filed with the Commission pursuant to Rule
434, and at each Time of Delivery, the Prospectus, as amended or
supplemented at any such time, (i) contained or will contain all
statements required to be stated therein in accordance with, and
complied or will comply in all material respects with the requirements
of, the Act and the rules and regulations of the Commission thereunder
and (ii) did not or will not include any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. The foregoing provisions of this paragraph
(c) do not apply to statements or omissions made in any Preliminary
Prospectus, the Registration Statement or any amendment thereto, the
Prospectus or any amendment or supplement thereto or any Term Sheet in
reliance upon and in conformity with written information furnished to
the Company by any Underwriter through you specifically for use
therein.
(d) If the Company has elected to rely on rule 462(b) and the
Rule 462(b) Registration Statement has not been declared effective (i)
the Company has filed a Rule 462(b) Registration Statement in
compliance with and that is effective upon filing pursuant to rule
462(b) and has received confirmation of its receipt; and (ii) the
Company has given irrevocable instructions for transmission of the
application filing fee in connection with the filing of the Rule 462(b)
Registration Statement, in compliance with Rule 111 promulgated under
the Act, or the Commission has received payment of such filing fee.
(e) The descriptions in the Registration Statement and the
Prospectus of statutes, legal and governmental proceedings or contracts
and other documents are accurate and fairly present the information
required to be shown; and there are no statutes or legal or
governmental proceedings required to be described in the Registration
Statement or the Prospectus that are not described as required and no
contracts or documents of a character that are required to be described
in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described and filed
as required.
(f) Each of the Company and its wholly-owned subsidiary,
Rainbow Advertising, Inc., an Ohio corporation (the "Subsidiary") has
been duly incorporated, is
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validly existing as a corporation in good standing under the laws of
its jurisdiction of incorporation and has full power and authority
(corporate and other) to own or lease its properties and conduct its
business as described in the Prospectus. The Company has full power and
authority (corporate and other) to enter into this Agreement and to
perform its obligations hereunder. Each of the Company and the
Subsidiary is duly qualified to transact business as a foreign
corporation 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, except where the failure
to so qualify would not have a material adverse effect on the financial
condition, results of operations or business of the Company and the
Subsidiary, taken as a whole.
(g) The Company's authorized, issued and outstanding capital
stock is as disclosed in the Prospectus. All of the issued and
outstanding shares of Common Stock of the Company have been duly
authorized and validly issued, are fully paid and nonassessable and
conform to the description of the Common Stock contained in the
Prospectus. None of the issued shares of capital stock of the Company
or the Subsidiary has been issued or is owned or held in violation of
any preemptive rights of shareholders, and no person or entity
(including any holder of outstanding shares of capital stock of the
Company or the Subsidiary) has any preemptive or other rights to
subscribe for any of the Shares.
(h) All of the issued shares of capital stock of the
Subsidiary have been duly authorized and validly issued, are fully paid
and nonassessable and are owned beneficially by the Company free and
clear of all liens, security interests, pledges, charges, encumbrances,
defects, shareholders' agreements, voting trusts, equities or claims of
any nature whatsoever. Other than the subsidiaries listed on Exhibit 21
to the Registration Statement, the Company does not own, directly or
indirectly, any capital stock or other equity securities of any other
corporation or any ownership interest in any partnership, joint venture
or other association.
(i) The Underwriters will receive good and marketable title to
the Shares to be issued and delivered by the Company hereunder, free
and clear of all liens, encumbrances, claims, security interests,
restrictions, shareholders' agreements and voting trusts whatsoever.
Except as disclosed in the Prospectus, there are no outstanding (i)
securities or obligations of the Company or the Subsidiary convertible
into or exchangeable for any capital stock of the Company or the
Subsidiary, (ii) warrants, rights or options to subscribe for or
purchase from the Company or the Subsidiary any such capital stock or
any such convertible or exchangeable securities or obligations, or
(iii) obligations of the Company or the Subsidiary to issue any shares
of capital stock, any such convertible or exchangeable securities or
obligations, or any such warrants, rights or options.
(j) Since the date of the most recent audited financial
statements included in the Prospectus, neither the Company nor the
Subsidiary has sustained 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 disclosed in or
contemplated by the Prospectus.
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(k) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) neither the
Company nor the Subsidiary has incurred any liabilities or obligations,
direct or contingent, or entered into any transactions, not in the
ordinary course of business, that are material to the Company and the
Subsidiary, (ii) the Company has not purchased any of its outstanding
capital stock or declared, paid or otherwise made any dividend or
distribution of any kind on its capital stock, (iii) there has not been
any change in the capital stock, long-term debt or short-term debt of
the Company or the Subsidiary, other than in the ordinary course of
business, and (iv) there has not been any material adverse change, or
any development involving a prospective material adverse change, in or
affecting the financial condition, results of operations or business of
the Company and the Subsidiary, in each case other than as disclosed in
or contemplated by the Prospectus.
(l) The Shares have been duly authorized and, when issued and
delivered against payment therefor as provided herein, will be validly
issued and fully paid and nonassessable and will conform to the
description of the Common Stock contained in the Prospectus; and the
certificates evidencing the Shares will comply with all applicable
requirements of Ohio law and none of the Shares will be issued or sold
in violation of any preemptive rights of shareholders.
(m) There are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company to file a registration statement under the Act with
respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or any
securities being registered pursuant to any other registration
statement filed by the Company under the Act.
(n) All offers and sales of the Company's capital stock prior
to the date hereof were at all relevant times duly registered under the
Act or exempt from the registration requirements of the Act by reason
of Sections 3(b), 4(2) or 4(6) thereof and were duly registered or the
subject of an available exemption from the registration requirements of
the applicable state securities or blue sky laws.
(o) Neither the Company nor the Subsidiary is, or with the
giving of notice or passage of time or both would be, in violation of
its Amended and Restated Articles of Incorporation or Amended and
Restated Code of Regulations or in default under any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or
instrument to which the Company or the Subsidiary is a party or to
which any of their respective properties or assets are subject that
would have a material adverse effect on the Company's and the
Subsidiary's business, financial condition or results of operations,
taken as a whole (a "Material Adverse Effect").
(p) The issue and sale of the Shares and the performance of
this Agreement and the consummation of the transactions herein
contemplated will not conflict with, or (with or without the giving of
notice or the passage of time or both) result in a breach or violation
of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage,
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deed of trust, loan agreement, lease or other agreement or instrument
to which the Company or the Subsidiary is a party or to which any of
their respective properties or assets is subject and which would have a
Material Adverse Effect, nor will such action conflict with or violate
any provision of the Amended and Restated Articles of Incorporation or
Amended and Restated Code of Regulations of the Company or the
Subsidiary or any statute, rule or regulation or any order, judgment or
decree of any court or governmental agency or body having jurisdiction
over the Company or the Subsidiary or any of their respective
properties or assets.
(q) The Company and the Subsidiary have good and marketable
title in fee simple to all real property, if any, and good title to all
personal property owned by them, in each case free and clear of all
liens, security interests, pledges, charges, encumbrances, mortgages
and defects, except such as are disclosed in the Prospectus or such as
do not materially and adversely affect the value of such property and
do not interfere with the use made or proposed to be made of such
property by the Company and the Subsidiary; and any real property and
buildings held under lease by the Company or the Subsidiary are held
under valid, subsisting and enforceable leases, with such exceptions as
are disclosed in the Prospectus or are not material and do not
interfere with the use made or proposed to be made of such property and
buildings by the Company or the Subsidiary.
(r) No consent, approval, authorization, order or declaration
of or from, or registration, qualification or filing with, any court or
governmental agency or body is required for the issue and sale of the
Shares or the consummation of the transactions contemplated by this
Agreement, except the registration of the Shares under the Act (which,
if the Registration Statement is not effective as of the time of
execution hereof, shall be obtained as provided in this Agreement) and
such as may be required under state securities or blue sky laws in
connection with the offer, sale and distribution of the Shares by the
Underwriters.
(s) Other than as disclosed in the Prospectus, there is no
litigation, arbitration, claim, proceeding (formal or informal) or
investigation pending or threatened (or any basis therefor) in which
the Company or the Subsidiary is a party or of which any of their
respective properties or assets are the subject which, if determined
adversely to the Company or the Subsidiary, would individually or in
the aggregate have a material adverse effect on the financial
condition, results of operations or business of the Company and the
Subsidiary. Neither the Company nor the Subsidiary is in violation of,
or in default with respect to, any statute, rule, regulation, order,
judgment or decree, except as described in the Prospectus or such as do
not and will not individually or in the aggregate have a material
adverse effect on the financial condition, results of operations or
business of the Company and the Subsidiary, and neither the Company nor
the Subsidiary is required to take any action in order to avoid any
such violation or default. The Company and the Subsidiary hold all
licenses, consents and approvals, and have satisfied all eligibility
and other similar requirements imposed by federal and state regulatory
bodies, administrative agencies or other governmental bodies, agencies
or officials, in each case as material to the conduct of the respective
businesses in which they are engaged.
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(t) KPMG Peat Marwick, LLP, who have certified certain
financial statements of the Company and the Subsidiary, are and were
during the periods covered by their reports included in the
Registration Statement and the Prospectus, independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder.
(u) The consolidated financial statements and schedules
(including the related notes) of the Company and the Subsidiary
included in the Registration Statement, the Prospectus or any
Preliminary Prospectus were prepared in accordance with generally
accepted accounting principles consistently applied throughout the
periods involved and fairly present the financial condition and results
of operations of the Company and the Subsidiary, on a consolidated
basis, at the dates and for the periods presented. The financial and
operating data set forth under the captions "Prospectus Summary,"
"Summary Financial and Operating Data," "Use of Proceeds,"
"Capitalization," "Selected Financial Data," "Management's Discussion
and Analysis of Financial Condition and Results of Operations,"
"Business," "Management," and "Principal and Selling Shareholders" and
the financial statements contained in the Prospectus fairly present, on
the basis stated in the Prospectus, the information included therein.
(v) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the valid and binding
agreement of the Company enforceable against the Company in accordance
with its terms, subject, as to enforcement, to applicable bankruptcy,
insolvency, reorganization and moratorium laws and other laws relating
to or affecting the enforcement of creditors' rights generally and to
general equitable principles.
(w) Neither the Company nor any of its officers, directors or
affiliates has (i) taken, directly or indirectly, any action designed
to cause or result in, or that has constituted or might reasonably be
expected to constitute, the stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of the
Shares or (ii) since the filing of the Registration Statement (A) sold,
bid for, purchased or paid anyone any compensation for soliciting
purchases of, the Shares or (B) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other securities of
the Company.
(x) The Company has obtained for the benefit of the Company
and the Underwriters from each of its directors, officers and
shareholders a written agreement (a "Lock Up Agreement") that for a
period of 180 days from the date of the Prospectus such director,
officer or shareholder will not, without your prior written consent,
offer, pledge, sell, contract to sell, grant any option for the sale
of, or otherwise dispose of, directly or indirectly, any shares of
Common Stock or securities convertible into, or exercisable or
exchangeable for, shares of Common Stock except pursuant to the terms
of the Lock-Up Agreement entered into by such director, officer or
shareholder and the Underwriters.
(y) Neither the Company, the Subsidiary, nor any director,
officer, agent, employee or other person associated with or acting on
behalf of the Company or the Subsidiary has, directly or indirectly:
used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political
activity; made any
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unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns from
corporate funds; violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
(z) The operations of the Company and the Subsidiary with
respect to any real property currently leased or owned or by any means
controlled by the Company or the Subsidiary (the "Real Property") are
in compliance in all material respects with all federal, state, and
local laws, ordinances, rules, and regulations relating to occupational
health and safety and the environment (collectively, "Laws"), and the
Company and the Subsidiary have all licenses, permits and
authorizations necessary to operate under all Laws and are in
compliance with all terms and conditions of such licenses, permits and
authorizations; neither the Company nor the Subsidiary has authorized,
conducted or has knowledge of the generation, transportation, storage,
use, treatment, disposal or release of any hazardous substance,
hazardous waste, hazardous material, hazardous constituent, toxic
substance, pollutant, contaminant, petroleum product, natural gas,
liquefied gas or synthetic gas defined or regulated under any
environmental law on, in or under any Real Property; and there is no
pending or threatened claim, litigation or any administrative agency
proceeding, nor has the Company or the Subsidiary received any written
or oral notice from any governmental entity or third party, that: (i)
alleges a violation of any Laws by the Company or the Subsidiary; (ii)
alleges the Company or the Subsidiary is a liable party under the
Comprehensive Environmental Response, Compensation, and Liability Act,
42 U.S.C.ss.9601 ET SEQ. or any state superfund law; (iii) alleges
possible contamination of the environment by the Company or the
Subsidiary; or (iv) alleges possible contamination of the Real
Property.
(aa) The Company and the Subsidiary own or have the right to
use all patents, patent applications, trademarks, trademark
applications, tradenames, service marks, copyrights, franchises, trade
secrets, proprietary or other confidential information and intangible
properties and assets (collectively, "Intangibles") necessary to their
respective businesses as presently conducted or as the Prospectus
indicates the Company or the Subsidiary proposes to conduct; to the
best knowledge of the Company, neither the Company nor the Subsidiary
has infringed or is infringing, and neither the Company nor the
Subsidiary has received notice of infringement with respect to,
asserted Intangibles of others; and, to the best knowledge of the
Company, there is no infringement by others of Intangibles of the
Company or the Subsidiary.
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(bb) The Company and the Subsidiary are insured by insurers of
recognized financial responsibility against such losses and risks and
in such amounts as are prudent and customary in the businesses in which
they are engaged; and neither the Company nor the Subsidiary has any
reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue
its business at a comparable cost, except as disclosed in the
Prospectus.
(cc) Each of the Company and the Subsidiary makes and keeps
accurate books and records reflecting its assets and maintains internal
accounting controls which provide reasonable assurance that (i)
transactions are executed in accordance with management's
authorization, (ii) transactions are recorded as necessary to permit
preparation of the Company's consolidated financial statements in
accordance with generally accepted accounting principles and to
maintain accountability for the assets of the Company, (iii) access to
the assets of the Company and the Subsidiary is permitted only in
accordance with management's authorization, and (iv) the recorded
accountability for assets of the Company and the Subsidiary is compared
with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences. The Company's software systems
include design, performance and functionality so that the Company does
not reasonably expect to experience invalid or incorrect results or
abnormal software operation related to calendar year 2000. The
Company's software systems include calendar year 2000 date conversion
and compatibility capabilities, including, but not limited to, date
data century recognition, same century and multiple century formula and
date value calculations, and user interface date data values that
reflect the century.
(dd) The Subsidiary is not currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any
other distributions on its capital stock, from repaying to the Company
any loans or advances to the Subsidiary or from transferring any of its
property or assets to the Company or any other subsidiary of the
Company, except as disclosed in the Prospectus.
(ee) The Company and the Subsidiary have filed all foreign,
federal, state and local tax returns that are required to be filed by
them and have paid all taxes shown as due on such returns as well as
all other taxes, assessments and governmental charges that are due and
payable; and no deficiency with respect to any such return has been
assessed or proposed.
(ff) The Company is not, will not become as a result of the
transactions contemplated hereby, and does not intend to conduct its
business in a manner that would cause it to become, an "investment
company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940.
(gg) Other than as contemplated by this Agreement, there is no
broker, finder or other party that is entitled to receive from the
Company any brokerage or finder's fee or other fee or commission as a
result of any of the transactions contemplated by this Agreement.
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(hh) The Company has taken such action as necessary to have
the Shares authorized for trading, and all of the Shares have been
approved for listing, on the National Association of Securities Dealers
Automated Quotation National Market System (the "Nasdaq National
Market").
(ii) No statement, representation, or warranty made by the
Company in this Agreement or made in any certificate or document
required by this Agreement to be delivered to you was, or will be when
made, inaccurate, untrue or incorrect in any material respect.
2. PURCHASE AND SALE OF SHARES. Subject to the terms and conditions
herein set forth, the Company agrees to issue and sell an aggregate of 2,250,000
Firm Shares, and each of the Underwriters agrees, severally and not jointly, to
purchase at a purchase price of $_______ per share, the number of Firm Shares
set forth opposite the name of such Underwriter in SCHEDULE I hereto. In the
event and to the extent that the Underwriters shall exercise the election to
purchase Optional Shares as provided below, the Selling Shareholders agree to
issue and sell to each of the Underwriters the aggregate number of Optional
Shares set forth opposite such Selling Shareholder's name in SCHEDULE II hereto,
and each of the Underwriters agrees, severally and not jointly, to purchase from
the Selling Shareholders, at the purchase price per share set forth in the
immediately preceding sentence, that portion of the number of Optional Shares as
to which such election shall have been exercised (to be adjusted by you so as to
eliminate fractional shares) determined by multiplying such number of Optional
Shares by a fraction, the numerator of which is the maximum number of Optional
Shares that 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 number of the Optional Shares that all of the Underwriters are
entitled to purchase hereunder.
The Selling Shareholders hereby grant to the Underwriters the right to
purchase at their election in whole or in part from time to time up to 337,500
Optional Shares at the purchase price per share set forth in the paragraph
above, for the sole purpose of covering over-allotments in the sale of Firm
Shares. Any such election to purchase Optional Shares may be exercised by
written or telegraphic notice from you to the Company and the Selling
Shareholders, given from time to time within a period of 30 calendar days after
the date of this Agreement and setting forth the aggregate number of Optional
Shares to be purchased and the date on which such Optional Shares are to be
delivered, as determined by you but in no event earlier than the First Time of
Delivery (as hereinafter defined) or, unless you and the Selling Shareholders
otherwise agree in writing, earlier than two or later than ten business days
after the date of such notice. In the event you elect to purchase all or a
portion of the Optional Shares, the Company and the Selling Shareholders agree
to furnish or cause to be furnished to you the certificates, letters and
opinions, and to satisfy all conditions, set forth in Section 8 hereof at each
Subsequent Time of Delivery (as hereinafter defined). In the event you elect to
purchase less than all of the 337,500 Optional Shares, the number of Optional
Shares to be purchased from and sold by each Selling Shareholder shall be, as
nearly as practicable, in the respective proportions to which the total shares
to be sold by each Selling Shareholder bears to the total number of shares to be
sold by all Selling Shareholders.
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3. OFFERING BY THE UNDERWRITERS. Upon the authorization by you of the
release of the Shares, the several Underwriters propose to offer the Shares for
sale upon the terms and conditions disclosed in the Prospectus.
4. DELIVERY OF SHARES; CLOSING. Certificates for the Shares to be
purchased by each Underwriter hereunder, in such denominations and registered in
such names as The Xxxxxxxx-Xxxxxxxx Company, LLC may request upon at least 48
hours' prior notice to the Company, shall be delivered by or on behalf of the
Company to you for the account of such Underwriter, against payment by such
Underwriter on its behalf of the purchase price therefor by wire transfer of
immediately available funds to an account designated by the Company. The closing
of the sale and purchase of the Shares shall be held at the offices of Xxxxxx
Xxxxxxx Xxxxx & Scarborough, L.L.P., 000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 0000,
Xxxxxxx, Xxxxxxx 00000, except that physical delivery of such certificates shall
be made at the office of The Depository Trust Company, 00 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000. The time and date of such delivery and payment shall be,
with respect to the Firm Shares, at 10:00 a.m., Atlanta time, on the third full
business day after the execution of this Agreement or at such other time and
date as you and the Company may agree upon in writing, and, with respect to the
Optional Shares, at 10:00 a.m., Atlanta time, on the date specified by you in
the written notice given by you of the Underwriters' election to purchase all or
part of such Optional Shares, or at such other time and date as you and the
Company may agree upon in writing. Such time and date for delivery of the Firm
Shares is herein called the "First Time of Delivery," such time and date for
delivery of the Optional Shares, if not the First Time of Delivery, is herein
called a "Subsequent Time of Delivery," and each such time and date for delivery
is herein called a "Time of Delivery." The Company will make such certificates
available for checking and packaging at least 24 hours prior to each Time of
Delivery at the office of The Depository Trust Company, 00 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 or at such other location in New York, New York specified
by you in writing at least 48 hours prior to such Time of Delivery.
5. COVENANTS OF THE COMPANY. The Company covenants and agrees with each
of the Underwriters:
(a) If the Registration Statement has been declared effective
prior to the execution and delivery of this Agreement, the Company will
file either (A) the Prospectus with the Commission pursuant to and in
accordance with subparagraph (1) (or, if applicable and if consented to
by you, subparagraph (4)) of Rule 424(b) or (B) a Term Sheet with the
Commission pursuant to and in accordance with Rule 434 not later than
the earlier of (i) the second business day following the execution and
delivery of this Agreement or (ii) the fifth business day after the
date on which the Registration Statement is declared effective. The
Company will advise you promptly of any such filing pursuant to Rule
424(b) or Rule 434.
(b) The Company will not file with the Commission the
prospectus or the amendment referred to in the second sentence of
Section 1 (a) of this Agreement, any amendment or supplement to the
Prospectus, any Term Sheet, any amendment to the Registration Statement
or any Rule 462(b) Registration Statement unless you have received a
reasonable period of time to review any such proposed amendment or
supplement and consented to the filing thereof or unless in the written
opinion of counsel for the Company (which opinion is provided to you
prior to any such filing) such amendment or supplement
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is required by law, and will use its best efforts to cause any such
amendment to the Registration Statement to be declared effective as
promptly as possible. Upon the request of the Representatives or
counsel for the Underwriters, the Company will promptly prepare and
file with the Commission, in accordance with the rules and regulations
of the Commission, any amendments to the Registration Statement or
amendments or supplements to the Prospectus or any Term Sheet that may
be necessary or advisable in connection with the distribution of the
Shares by the several Underwriters and will use its best efforts to
cause any such amendment to the Registration Statement to be declared
effective as promptly as possible. If required, the Company will file
any amendment or supplement to the Prospectus or any Term Sheet with
the Commission in the manner and within the time period required by
Rule 424(b) and Rule 434, as applicable, under the Act. The Company
will advise the Representatives, promptly after receiving notice
thereof, of the time when the Original Registration Statement or any
amendment thereto or any Rule 462(b) Registration Statement has been
filed or declared effective or the Prospectus or any amendment or
supplement thereto has been filed and will provide evidence to the
Representatives of each such filing or effectiveness.
(c) The Company will advise you promptly after receiving
notice or obtaining knowledge of (i) the issuance by the Commission of
any stop order suspending the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement or any part thereof
or any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto,
(ii) the suspension of the qualification of the Shares for offer or
sale in any jurisdiction or of the initiation or threatening of any
proceeding for any such purpose, or (iii) any request made by the
Commission or any securities authority of any other jurisdiction for
amending the Registration Statement or any Rule 462(b) Registration
Statement, for amending or supplementing the Prospectus or for
additional information. The Company will use its best efforts to
prevent the issuance of any such stop order and, if any such stop order
is issued, to obtain the withdrawal thereof as promptly as possible.
(d) If the delivery of a prospectus relating to the Shares is
required under the Act at any time prior to the expiration of nine
months after the date of the Prospectus and if at such time any events
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 light of the circumstances under which they were
made, not misleading, or if for any reason it is necessary during such
same period to amend or supplement the Prospectus to comply with the
Act or the rules and regulations thereunder, the Company will promptly
notify you and upon your request (but at the Company's expense) prepare
and file with the Commission an amendment or supplement to the
Prospectus that corrects such statement or omission or effects such
compliance and will furnish without charge to each Underwriter and to
any dealer in securities as many copies of such amended or supplemented
Prospectus as you may from time to time reasonably request. If the
delivery of a prospectus relating to the Shares is required under the
Act at any time nine months or more after the date of the Prospectus,
upon your request but at the expense of such Underwriter, the Company
will prepare and deliver to such Underwriter as many copies as you may
request of an amended or
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supplemented Prospectus complying with Section 10(a)(3) of the Act.
Neither your consent to, nor the Underwriters' delivery of, any such
amendment or supplement shall constitute a waiver of any of the
conditions set forth in Section 8.
(e) The Company promptly from time to time will take such
action as you may reasonably request to qualify the Shares for offering
and sale under the securities or blue sky laws of such jurisdictions as
you may request and will continue such qualifications in effect for as
long as may be necessary to complete the distribution of the Shares,
provided that in connection therewith the Company shall not be required
to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction in which the Company is not
currently so subject.
(f) The Company will promptly provide you, without charge, (i)
four manually executed copies of the Registration Statement and any
Rule 462(b) Registration Statement as originally filed with the
Commission and of each amendment thereto, (ii) for each other
Underwriter a conformed copy of the Registration Statement and any Rule
462(b) Registration Statement as originally filed and of each amendment
thereto, without exhibits, and (iii) so long as a prospectus relating
to the Shares is required to be delivered under the Act, as many copies
of each Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto as you may reasonably request.
(g) As soon as practicable, but in any event not later than
the last day of the thirteenth month after the effective date of the
Registration Statement and any Rule 462(b) Registration Statement, the
Company will make generally available to its security holders an
earnings statement (which need not be audited) of the Company and the
Subsidiary, if any, covering a period of at least 12 months beginning
after the effective date of the Registration Statement and any Rule
462(b) Registration Statement complying with Section 11(a) of the Act
and the rules and regulations thereunder.
(h) During the period beginning from the date hereof and
continuing to and including the date 180 days after the date of the
Prospectus, the Company will not, without your prior written consent,
offer, pledge, issue, sell, contract to sell, grant any option for the
sale of, or otherwise dispose of (or announce any offer, pledge, sale,
grant of an option to purchase or other disposition), directly or
indirectly, any shares of Common Stock or securities convertible into,
exercisable or exchangeable for, shares of Common Stock, except as
provided in Section 2 and except for the grant of options pursuant to
the Company's 1998 Stock Option Plan.
(i) During a period of three years from the later of the
effective date of the Original Registration Statement or any Rule
462(b) Registration Statement, the Company will furnish to you and,
upon request, to each of the other Underwriters, without charge, (i)
copies of all reports or other communications (financial or other)
furnished to shareholders, (ii) 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, and (iii) such
additional information concerning the business and financial condition
of the Company and the Subsidiary, if any, as you may reasonably
request.
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(j) Neither the Company nor any of its officers, directors or
affiliates will (i) take, directly or indirectly, prior to the
termination of the underwriting syndicate contemplated by this
Agreement, any action designed to cause or to result in, or that might
reasonably be expected to constitute, the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or
resale of any of the Shares, (ii) sell, bid for, purchase or pay anyone
any compensation for soliciting purchases of, the Shares or (iii) pay
or agree to pay to any person any compensation for soliciting another
to purchase any other securities of the Company.
(k) The Company will, from time to time after the effective
date of the Registration Statement, file with the Commission such
reports as are required by the Act, the Exchange Act and the rules and
regulations thereunder, and shall also file with the state securities
commissions in states where the Shares have been sold by the
Underwriters, such reports as are required to be filed by the
securities acts and regulations of those states.
(l) The Company will apply the net proceeds from the offering
in the manner set forth under "Use of Proceeds" in the Prospectus and
will report the use of such proceeds in accordance with rule 463 under
the Act.
(m) The Company will cause the Shares to be listed on the
Nasdaq National Market at each Time of Delivery and for at least one
year from the date hereof.
(n) If at any time during the period beginning on the later of
the date the Registration Statement or any Rule 462(b) Registration
Statement becomes effective and ending on the later of (i) the date 30
days after such effective date and (ii) the date that is the earlier of
(A) the date on which the Company first files with the Commission a
Quarterly Report on Form 10-Q after such effective date and (B) the
date on which the Company first issues a quarterly financial report to
shareholders after such effective date, any rumor, publication or event
relating to or affecting the Company shall occur as a result of which
in your reasonable opinion the market price of the Common Stock has
been or is likely to be materially affected (regardless of whether such
rumor, publication or event necessitates an amendment of or supplement
to the Prospectus), the Company will, after written notice from you
advising the Company to the effect set forth above, forthwith prepare,
consult with you concerning the substance of, and disseminate a press
release or other public statement, reasonably satisfactory to you,
responding to or commenting on such rumor, publication or event.
(o) If the Company elects to rely upon Rule 462(b), the
Company shall both file a Rule 462(b) Registration Statement with the
Commission in compliance with rule 462(b) and pay the applicable fees
in accordance with Rule 111 promulgated under the Act by the earlier of
(i) 10:00 p.m., Washington, D.C. time, on the date of this Agreement
and (ii) the time confirmations are sent or given, as specified by Rule
462(b)(2).
6. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS. Each of
the Selling Shareholders, severally and not jointly, represents and warrants to,
and agrees with, each of the Underwriters that:
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(a) Such Selling Shareholder will have good and valid title to
the Shares set forth in SCHEDULE II to be sold by such Selling
Shareholder, free and clear of any liens, encumbrances, equities and
claims (other than as imposed by the Act or this Agreement), and full
right, power and authority to effect the sale and delivery of such
Shares; and upon the delivery of and payment for the Shares to be sold
by such Selling Shareholder pursuant to this Agreement, good and valid
title thereto, free and clear of any liens, encumbrances, equities and
claims, will be transferred to the Underwriters.
(b) Such Selling Shareholder has duly executed and delivered
the Custody Agreement and Power of Attorney (the "Custody Agreement")
in the form previously delivered to the Representatives, appointing
Xxxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxx, and each of them, as such
Selling Shareholder's attorney-in-fact (the "Attorney-in-Fact") and
National City Bank, Cleveland, Ohio, as custodian (the "Custodian").
The Attorney-in-Fact is authorized to execute, deliver and perform this
Agreement on behalf of such Selling Shareholder, to deliver the Shares
to be sold by such Selling Shareholder hereunder, to accept payment
therefor and otherwise to act on behalf of such Selling Shareholder in
connection with this Agreement. Certificates, in suitable form for
transfer by delivery or accompanied by duly executed instruments of
transfer or assignment in blank, representing the Shares to be sold by
such Selling Shareholder hereunder have been deposited with the
Custodian pursuant to the Custody Agreement for the purpose of delivery
pursuant to this Agreement. Such Selling Shareholder agrees that the
Common Stock represented by the certificates on deposit with the
Custodian are subject to the interests of the Company, the Underwriters
and the other Selling Shareholders hereunder, that the arrangements
made for such custody and the appointment of the Attorney-in-Fact are
to that extent irrevocable, and that the obligations of such Selling
Shareholder hereunder shall not be terminated except as provided in
this Agreement and the Custody Agreement. If such Selling Shareholder
should die, become disabled or be declared incompetent, dissolve or
become insolvent, or if any other event should occur before the
delivery of the Shares of such Selling Shareholder hereunder, the
certificates for such Shares deposited with the Custodian shall be
delivered by the Custodian in accordance with the terms and conditions
of this Agreement as if such death, disability, incompetency,
dissolution, insolvency or other event had not occurred, regardless of
whether or not the Custodian or the Attorney-in-Fact shall have
received notice thereof.
(c) Such Selling Shareholder, acting individually or through
its duly authorized Attorney-in-Fact, has duly executed and delivered
this Agreement and the Custody Agreement; this Agreement constitutes a
legal valid and binding obligation of such Selling Shareholder; all
authorizations and consents necessary for the execution and delivery of
this Agreement and the Custody Agreement on behalf of such Selling
Shareholder and for the sale and delivery of the Shares to be sold by
such Selling Shareholder hereunder have been given, except as may be
required by the Act or state securities laws or the NASD; and such
Selling Shareholder has the legal capacity and full right, power and
authority to execute this Agreement and the Custody Agreement.
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(d) The performance of this Agreement and the Custody
Agreement and the consummation of the transactions contemplated hereby
and thereby by each of the Selling Shareholders will not result in a
material breach or violation of, or material conflict with, any of the
terms or provisions of, or constitute a material default by such
Selling Shareholder under, any indenture, mortgage, deed of trust
(constructive or other), loan agreement, lease, franchise, license or
other agreement or instrument to which such Selling Shareholder or any
of its properties is bound, any statute, or any judgment, decree,
order, rule or regulation or any court or governmental agency or body
applicable to such Selling Shareholder or any of its properties.
(e) Such Selling Shareholder has not taken and will not take,
directly or indirectly, any action designed to, or which might
reasonably be expected to, cause or result in stabilization or
manipulation of the price of the Common Stock. Such Selling Shareholder
has not distributed and will not distribute any prospectus or other
offering material in connection with the offer and sale of the Shares
other than any preliminary prospectus prepared and filed by the Company
with the Commission or the Prospectus or other material permitted by
the Act.
(f) To the knowledge of such Selling Shareholder, the
representations and warranties of the Company contained in Section 1 of
this Agreement are true and correct in all material respects; such
Selling Shareholder has reviewed and is familiar with the Registration
Statement as originally filed with the Commission and the Preliminary
Prospectus contained therein. To the knowledge of such Selling
Shareholder, the Preliminary Prospectus does not include an untrue
statement of a material fact, or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; other than as
disclosed to the Underwriters, such Selling Shareholder is not prompted
to sell the Shares to be sold by such Selling Shareholder by any
material, non-public information concerning the Company that is not set
forth in the Preliminary Prospectus or the Prospectus.
(g) To the extent that any statements or omissions made in the
Registration Statement, any preliminary prospectus, the Prospectus or
any amendment or supplement thereto are made in reliance upon and in
conformity with written information furnished to the Company by such
Selling Shareholder expressly for use therein, such Registration
Statement, preliminary prospectus and Prospectus and any amendments or
supplements thereto did not and will not contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading.
(h) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory body, administrative or
other governmental body is necessary in connection with the execution
and delivery of this Agreement by such Selling Shareholder, and the
consummation by it of the transactions herein contemplated (other than
as required by the Act, state securities laws and the NASD).
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(i) Any certificates signed by or on behalf of such Selling
Shareholder as such and delivered to the Representatives or to counsel
for the Representatives shall be deemed a representation and warranty
by such Selling Shareholder to each Underwriter as to the matters
covered thereby.
(j) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated such Selling Shareholder agrees to deliver to you prior to
or at the Closing Date a properly completed and executed United States
Treasury Department Form W-9 (or other applicable form or statement
specified by Treasury Department regulations in lieu thereof).
7. EXPENSES. The Company will pay all costs and expenses incident to
the performance of its obligations under this Agreement, whether or not the
transactions contemplated hereby are consummated or this Agreement is terminated
pursuant to Section 11 hereof, including without limitation all costs and
expenses incident to (i) the fees, disbursements and expenses of the Company's
counsel and accountants in connection with the registration of the Shares under
the Act and all other expenses in connection with the preparation, printing and,
if applicable, filing of the Registration Statement and any Rule 462(b)
Registration Statement (including all amendments thereto), any Preliminary
Prospectus, the Prospectus and any amendments and supplements thereto, this
Agreement and any blue sky memoranda; (ii) the delivery of copies of the
foregoing documents to the Underwriters; (iii) the filing fees of the Commission
and the National Association of Securities Dealers, Inc. relating to the Shares;
(iv) the preparation, issuance and delivery to the Underwriters of any
certificates evidencing the Shares, including transfer agent's and registrar's
fees; (v) the qualification of the Shares for offering and sale under state
securities and blue sky laws, including filing fees and fees and disbursements
of counsel for the Underwriters relating thereto; (vi) any listing of the Shares
on the Nasdaq National Market and (vii) any expenses for travel, lodging and
meals incurred by the Company and any of its officers, directors and employees
in connection with any meetings with prospective investors in the Shares. It is
understood, however, that, except as provided in this Section, Section 9 and
Section 11 hereof, the Underwriters will pay all of their own costs and
expenses, including the fees of their counsel, stock transfer taxes on resale of
any of the Shares by them, and any advertising expenses relating to the offer
and sale of the Shares.
8. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations of the
Underwriters hereunder to purchase and pay for the Shares to be delivered at
each Time of Delivery shall be subject, in their discretion, to the accuracy of
the representations and warranties of the Company contained herein as of the
date hereof and as of such Time of Delivery, to the accuracy of the statements
of Company officers made pursuant to the provisions hereof, to the performance
by the Company of its covenants and agreements hereunder, and to the following
additional conditions precedent:
(a) If the Original Registration Statement as amended to date
has not become effective prior to the execution of this Agreement, such
Original Registration Statement and , if the Company has elected to
rely upon Rule 462(b), the Rule 462(b) Registration Statement shall
have been declared effective not later than the earlier of (i) 11:00
a.m., Atlanta time, on the date of this Agreement or (ii) the time
confirmations are sent or given as
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specified by Rule 462(b)(2), or, with respect to the Original
Registration Statement, such later date and/or time as you shall have
consented to in writing. The Prospectus and any amendment or supplement
thereto or a Term Sheet shall have been filed with the Commission
pursuant to Rule 424(b) or Rule 434, as applicable, within the
applicable time period prescribed for such filing and in accordance
with Section 5(a) of this Agreement; no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement, respectively, or any part thereof shall have
been issued and no proceedings for that purpose shall have been
instituted, threatened or, to the knowledge of the Company and the
Representatives, contemplated 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 Xxxxxxx Xxxxx & Xxxxxxxxxxx, L.L.P., counsel for
the Underwriters, shall have furnished to you such opinion or opinions,
dated such Time of Delivery, with respect to the incorporation of the
Company, the validity of the Shares being delivered at such Time of
Delivery, the Registration Statement, the Prospectus, and other related
matters as you may reasonably request, and the Company shall have
furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters. In rendering such
opinion, such counsel may rely as to all matters of law upon the
opinion of Kahn, Kleinman, Xxxxxxxx & Xxxxxx Co., L.P.A., referred to
in paragraph (c) below.
(c) You shall have received an opinion, dated such Time of
Delivery, of Kahn, Kleinman, Xxxxxxxx & Xxxxxx Co., L.P.A., counsel for
the Company, in form and substance satisfactory to you and your
counsel, to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Ohio, with corporate power and authority
to own or lease its properties and conduct its business as
described in the Prospectus and to enter into and perform its
obligations under the Underwriting Agreement. The Company is
duly qualified to transact business as a foreign corporation
and is in good standing in the States of Connecticut,
Massachusetts, Michigan, New York, Pennsylvania, Rhode Island
and Tennessee.
(ii) The Subsidiary has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Ohio, with the corporate power and
authority to own or lease its properties and conduct its
businesses as described in the Prospectus.
(iii) The authorized, issued and outstanding capital
stock of the Company is as set forth in the Prospectus under
the caption "Capitalization" and conforms as to legal matters
in all material respects to the description thereof contained
in the Prospectus. The issued and outstanding shares of
capital stock of the Company have been duly authorized and
validly issued and are fully paid and nonassessable. The
issued and outstanding shares of capital stock of the Company
and Subsidiary and are each free of preemptive rights.
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(iv) The issued and outstanding shares of capital
stock of Subsidiary have been duly authorized and validly
issued and are fully paid and nonassessable. One hundred
percent (100%) of the outstanding capital stock of the
Subsidiary is owned by the Company free and clear of any lien,
encumbrance, security interest, pledge, charge, shareholders'
agreement, voting trust or claim of any nature whatsoever.
Based solely on the Certificate, to our knowledge, the Company
does not own, directly or indirectly, any capital stock or
other equity interest of any other corporation, partnership,
joint venture or other association.
(v) The certificates evidencing the Shares to be
delivered pursuant to the Underwriting Agreement comply with
all applicable requirements of the State of Ohio and when
countersigned by the Company's transfer agent and delivered to
the Representative or upon the Representative's order against
payment of the agreed consideration therefor in accordance
with the provisions of the Underwriting Agreement, the Shares
represented thereby will be duly authorized and validly
issued, fully paid and nonassessable and will conform to the
description of the common stock contained in the Prospectus.
The Shares have been duly and validly authorized and qualified
for inclusion on the Nasdaq National Market, subject to
official notice of issuance.
(vi) The Registration Statement and any Rule 462(b)
Registration Statement has become effective under the Act, and
no stop order suspending the effectiveness of the Registration
Statement and any Rule 462(b) Registration Statement, or any
part thereof, has been issued and to the best of our
knowledge, no proceedings for that purpose have been
instituted or are pending or contemplated under the Act; the
Registration Statement (and the information deemed to be part
of the Registration Statement at the time of effectiveness
pursuant to Rule 430A(b), if applicable), any Rule 462(b)
Registration Statement and the Prospectus and each amendment
or supplement thereto (except for the financial statements and
other statistical and financial data included therein as to
which we express no opinion), as of their respective effective
or issue dates and each Time of Delivery, comply as to form in
all material respects with the applicable requirements of the
Act and the rules and regulations thereunder; and we have no
reason to believe that either the Registration Statement
(including the information deemed to be part of the
Registration Statement at the time of effectiveness and as of
each Time of Delivery pursuant to Rule 430A(b), if applicable)
or the Prospectus, or the Registration Statement or the
Prospectus as amended or supplemented (except for the
financial statements and other statistical data included
therein as to which we express no opinion), as of their
respective effective or issue dates and each Time of Delivery,
contained any untrue statement of a material fact or omitted
or omits to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading or that the Prospectus, or any amendment or
supplement thereto, as of the date thereof and each Time of
Delivery contained any untrue statement of a material fact or
omitted to state any material fact necessary to make the
statements therein not misleading in the light of the
circumstances under which they were made; and
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any required filing of the Prospectus pursuant to Rule 424(b)
has been made in the manner and within the time period
required by Rule 424(b).
(vii) The statements under the captions
"Capitalization," "Management", "Certain Transactions",
"Shares Eligible for Future Sale" and "Description of Capital
Stock" in the Prospectus, insofar as such statements
constitute a summary of transactions or documents referred to
therein of statutes or other matters of law, are, to the best
of our knowledge, accurate summaries of such transactions or
documents or matters of law, and fairly and accurately
present, in all material respects, the information required to
be disclosed with respect to such transactions, documents and
matters by the Act and the rules and regulations thereunder.
(viii) The Underwriting Agreement and the performance
of the Company's obligations thereunder have been duly
authorized by all necessary corporate action, and have been
duly executed and delivered by and on behalf of the Company;
and no approval, authorization or consent or order or
declaration of or from or registration, qualification or
filing with any court or governmental agency or body is
required to be obtained by the Company in connection with the
issue and sale of the Shares by the Company pursuant to the
Underwriting Agreement or the consummation by the Company of
any other transactions contemplated thereby (other than under
the Act and the rules and regulations promulgated thereunder,
applicable state or province securities laws and the rules of
the NASD).
(ix) Neither the Company nor Subsidiary is in
violation of its respective Articles or Regulations or, to the
best of our knowledge, is in breach of, or in default under
(nor has any event occurred that, with notice, lapse of time
or both would constitute a breach of, or default under) any
indenture, lease, loan agreement, mortgage, deed of trust, or
other agreement or instrument to which the Company or
Subsidiary is a party or to which any of their respective
properties or assets is subject and that has been filed as an
exhibit to the Registration Statement or which is a lease of
real property, where such violation or breach or default would
have a Material Adverse Effect.
(x) The performance of the Underwriting Agreement,
the issuance and sale of the Shares being issued at such Time
of Delivery, and the consummation by the Company of the
transactions provided for in the Underwriting Agreement will
not (x) contravene any of the provisions of, result in a
breach or violation of, or result in a default under, any
indenture, mortgage, deed of trust, loan agreement, lease or
other agreement or instrument to which the Company or
Subsidiary is a party or by which the property of either of
them is bound and that has been filed as an exhibit to the
Registration Statement or which is a lease of real property,
where the contravention or default could have a Material
Adverse Effect, (y) conflict with or violate any of the
provisions of the Company's Articles of Incorporation or
Subsidiary's Articles of Incorporation or the Company's Code
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of Regulations or the Subsidiary's Code of Regulations or (z)
to our knowledge, violate any statute, rule or regulation or
any order, judgment or decree of any court or governmental
agency or body having jurisdiction over the Company or
Subsidiary or any of their respective properties or assets.
(xi) To the best of our knowledge, there are no
contracts, agreements or understandings between the Company
and any person granting such person the right to require the
Company to file a registration statement under the 1933 Act
with respect to any securities of the Company owned or to be
owned by such person or to require the Company to include such
securities in the securities registered pursuant to the
Registration Statement or in any securities being registered
pursuant to any other registration statement filed by the
Company under the Act.
(xii) To our knowledge, all offers and sales of the
Company's capital stock prior to the date hereof were at all
relevant times exempt from the registration requirements of
the Act. There exist no recission rights under either federal
or state securities laws with respect to the Company's
outstanding capital stock.
(xiii) The Company is not, and will not be as a
result of the transactions contemplated by the Underwriting
Agreement, an "investment company" or a company "controlled
by" an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(xiv) Except as disclosed in the Prospectus, there
are no outstanding (A) securities or obligations of the
Company or the Subsidiary convertible into or exchangeable for
any capital stock of the Company or Subsidiary, (B) warrants,
rights or options to subscribe for or purchase from the
Company or Subsidiary any such capital stock or any such
convertible or exchangeable securities or obligations, or (C)
obligations of the Company or Subsidiary to issue any shares
of capital stock, any such convertible or exchangeable
securities or obligations, or any such warrants, rights or
options.
(xv) All real property and buildings held under lease
by the Company or Subsidiary are held by the Company or the
Subsidiary under valid, subsisting and enforceable leases with
such exceptions as are disclosed in the Prospectus or are not
material and do not interfere with the use made and proposed
to be made of such property and buildings by the Company or
the Subsidiary.
(xvi) To our knowledge and other than as disclosed in
or contemplated by the Prospectus, there is no litigation,
arbitration, claim, proceeding (formal or informal) or
investigation pending or threatened (or any basis therefor) in
which the Company or the Subsidiary is a party or of which any
of their respective properties or assets is the subject that,
if determined adversely to the Company or Subsidiary, would
have a Material Adverse Effect and, to our knowledge, neither
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the Company nor Subsidiary is in violation of, or in default
with respect to, any statute, rule, regulation, order,
judgment or decree, except as described in the Prospectus, nor
is the Company or the Subsidiary required to take any action
in order to avoid any such violation or default.
In rendering any such opinion, such counsel may rely (i) as to matters
of fact, to the extent such counsel deem proper, upon certificates of
responsible officers of the Company and public officials, (ii) as to the number
of shares of Common Stock at any time or times outstanding, upon the certificate
of National City Bank, the transfer agent of the Common Stock, and (iii) as to
legal matters in jurisdictions other than those in which they are domiciled, on
the opinion of local counsel satisfactory to such counsel. If such counsel
relies on certificates of officers of the Company or on opinions of local
counsel, their opinion shall state that they are so doing and copies of such
certificates or opinions are to be attached to the opinion unless such opinions
or certificates (or, in the case of certificates, the information therein) have
been furnished to the Representatives in written form.
(d) The Underwriters shall have received an opinion, dated the
Option Closing Date and satisfactory in form and substance to your
counsel, from Kahn, Kleinman, Xxxxxxxx and Arson, Co., L.P.A., counsel
to the Selling Shareholders, to the effect that:
(i) The Underwriting Agreement and the Custody
Agreement have been duly executed and delivered by or on
behalf of each of the Selling Shareholders, and constitute
valid and binding obligations of such Selling Shareholders in
accordance with their terms, except as enforceability may be
limited by applicable equity principles or by bankruptcy,
insolvency, moratorium, reorganization or similar laws from
time to time in effect affecting the enforcement of creditors'
rights and except that the enforceability of the rights to
indemnity and contribution contained in the Underwriting
Agreement may be limited by federal or state laws and public
policy underlying such laws.
(ii) Assuming that the Underwriters will take
delivery of the Shares for value in good faith and without
notice of any adverse claim and that the Underwriters are not
parties themselves to any fraud or illegality affecting the
Shares, and by delivery of a certificate or certificates
therefor, each Selling Shareholder will pass good and
marketable title to such Shares to the several Underwriters,
free and clear, to our knowledge, of any pledge, lien,
security interest, charge, claim, equity or encumbrance of any
kind.
(iii) No consent, approval, authorization or order of
any court or governmental agency or body is required for the
consummation by any Selling Shareholder of the transactions
contemplated by the Underwriting Agreement in connection with
the Shares to be sold by each Selling Shareholder thereunder,
except which may have been obtained and in full force and
effect, such as have been obtained under the Act and such as
may be required under the state securities or blue sky laws of
any jurisdiction in connection with the purchase and
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distribution of the Shares by the Underwriters as to which
such counsel need express no opinion.
(iv) The sale of the Shares being sold by any Selling
Shareholder and the compliance by any Selling Shareholder with
the provisions of the Underwriting Agreement and the Custody
Agreement and the consummation of the transactions
contemplated thereby will not conflict with, result in a
breach or violation of, or constitute a default under any
terms of any indenture, mortgage, deed of trust, loan
agreement or other instrument known to us to which any Selling
Shareholder is a party or bound or to which any of the
property or assets of such Selling Shareholder is subject, or
any statute, order, rule or regulation of any court or
governmental body having jurisdiction over any Selling
Shareholder known to us to be applicable to any Selling
Shareholder or to which the property or assets of such Selling
Shareholder is subject.
In rendering such opinion, such counsel may rely as to matters of fact,
to the extent proper, on certificates of the Selling Shareholders and the
representations and warranties contained in the Custody Agreement executed by
such Selling Shareholder. Such counsel also may rely as to matters of fact, to
the extent deemed proper, on certificates of responsible officers of the Company
and public officials.
(e) You shall have received from KPMG Peat Marwick, LLP
letters dated, respectively, the date hereof (or, if the Registration
Statement has been declared effective prior to the execution and
delivery of this Agreement, dated such effective date and the date of
this Agreement) and each Time of Delivery, in form and substance
satisfactory to you, to the effect set forth in Annex I hereto. In the
event that the letters referred to in the immediately preceding
sentence set forth any changes, decreases or increases in the items
specified in paragraph __ of Annex 1, it shall be a further condition
to the obligations of the Underwriters that (i) such letters shall be
accompanied by a written explanation by the Company as to the
significance thereof, unless the Representatives deem such explanation
unnecessary, and (ii) such changes, decreases or increases do not, in
your sole judgment, make it impracticable or inadvisable to proceed
with the purchase, sale and delivery of the Shares being delivered at
such Time of Delivery as contemplated by the Registration Statement, as
amended as of the date of such letter.
(f) Since the date of the latest audited financial statements
included in the Prospectus, neither the Company nor the Subsidiary
shall have sustained (i) any loss or interference with their respective
businesses from fire, explosion, flood, hurricane 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 disclosed in
or contemplated by the Prospectus, or (ii) any change, or any
development involving a prospective change (including without
limitation a change in management or control of the Company), in or
affecting the financial position, results of operations, net worth or
business prospects of the Company and the Subsidiary, otherwise than as
disclosed in or contemplated by the Prospectus, the effect of which, in
either such case, is in your judgment so material and adverse as to
make it impracticable or inadvisable to proceed with the purchase, sale
and
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delivery of the Shares being delivered at such Time of Delivery as
contemplated by the Registration Statement, as amended as of the date
hereof.
(g) Subsequent to the date hereof there shall not have
occurred any of the following: (i) any suspension or limitation in
trading in securities generally on the New York Stock Exchange, or any
setting of minimum prices for trading on such exchange, or in the
Common Stock by the Commission or the Nasdaq National Market; (ii) a
moratorium on commercial banking activities in New York declared by
either federal or state authorities; or (iii) any outbreak or
escalation of hostilities involving the United States, declaration by
the United States of a national emergency or war or any other national
or international calamity or emergency if the effect of any such event
specified in this clause (iii) in your judgment makes it impracticable
or inadvisable to proceed with the purchase, sale and delivery of the
Shares being delivered at such Time of Delivery as contemplated by the
Registration Statement, as amended as of the date hereof.
(h) The Company shall have 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 (f) of this Section 8, and as to such other matters as you may
reasonably request.
(i) The Shares shall be listed on the Nasdaq National Market.
9. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to 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, in
whole or in part: (i) any untrue statement or alleged untrue statement
made by the Company in Section 1 of this Agreement or by the Selling
Shareholders in Section 6 of this Agreement; (ii) any failure of the
Company or the Selling Shareholders to perform their obligations
hereunder or under applicable law; (iii) any untrue statement or
alleged untrue statement of any material fact contained in the
Registration Statement or any amendment thereto, any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto, or
(iv) the omission or alleged omission to state in the Registration
Statement or any amendment thereto, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto, 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, defending against or appearing as a
third-party witness in connection with any such loss, claim, damage,
liability or action; PROVIDED, HOWEVER, that the Company shall not be
liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of or is based upon an untrue
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statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement or any Rule 462(b) Registration
Statement or any amendment thereto, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto in reliance upon and
in conformity with written information furnished to the Company by any
Underwriter through you expressly for use therein. The Company will
not, without the prior written consent of each Underwriter, settle or
compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding (or related cause of
action or portion thereof) in respect of which indemnification may be
sought hereunder (whether or not such Underwriter is a party to such
claim, action, suit or proceeding), unless such settlement, compromise
or consent includes an unconditional release of such Underwriter from
all liability arising out of such claim, action, suit or proceeding (or
related cause of action or portion thereof).
(b) The Selling Shareholders agree to 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, in whole or in part: (i) any untrue statement or
alleged untrue statement made by the Company in Section 1 of this
Agreement or by the Selling Shareholders in Section 6 of this
Agreement; (ii) any failure of the Company or the Selling Shareholders
to perform their obligations hereunder or under applicable law; (iii)
any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement or any amendment thereto, any
Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, or (iv) the omission or alleged omission to state in the
Registration Statement or any amendment thereto, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto, a
material fact required to be stated therein or necessary to make the
statements therein not misleading. The Selling Shareholders will
reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating,
defending against or appearing as a third-party witness in connection
with any such loss, claim, damage, liability or action; PROVIDED,
HOWEVER, that the Selling Shareholders shall not be liable in any such
case to the extent that any such loss, claim, damage, liability or
action arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in the
Registration Statement or any Rule 462(b) Registration Statement or any
amendment thereto, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through
you expressly for use therein. The Selling Shareholders will not,
without the prior written consent of each Underwriter, settle or
compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding (or related cause of
action or portion thereof) in respect of which indemnification may be
sought hereunder (whether or not such Underwriter is a party to such
claim, action, suit or proceeding), unless such settlement, compromise
or consent includes an unconditional release of such Underwriter from
all liability arising out of such claim, action, suit or proceeding (or
related cause of action or portion thereof).
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(c) Each Underwriter, severally but not jointly, agrees to
indemnify and hold harmless the Company and its directors and officers
who sign the Registration Statement 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 (i) any
failure of the Underwriters to perform their obligations hereunder or
under applicable law, or (ii) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement
or any amendment thereto, any Preliminary Prospectus, 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 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 reasonably incurred by the
Company in connection with investigating or defending any such loss,
claim, damage, liability or action. The Underwriters will not, without
the prior written consent of the Company, settle or compromise or
consent to the entry of any judgment in any pending or threatened
claim, action, suit or proceeding (or related cause of action or
portion thereof) in respect of which indemnification may be sought
hereunder (whether or not the Company is a party to such claim, action,
suit or proceeding), unless such settlement, compromise or consent
includes an unconditional release of the Company from all liability
arising out of such claim, action, suit or proceeding (or related cause
of action or portion thereof).
(d) Promptly after receipt by an indemnified party under
subsection (a), (b) and (c) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is
to be made against the 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); PROVIDED, HOWEVER, that if the defendants in
any such action include both the indemnified party and the indemnifying
party and the indemnified party shall have reasonably concluded that
there may be one or more legal defenses available to it or other
indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnifying party shall not
have the right to assume the defense of such action on behalf of such
indemnified party and such indemnified party shall have the right to
select separate counsel to defend such action on behalf of such
indemnified party. After such notice from the indemnifying party to
such indemnified party of its election so to assume the defense thereof
and approval by such indemnified party of counsel appointed to defend
such action, the indemnifying party will not be liable to such
indemnified party under this Section 9 for any legal or other expenses,
other than reasonable costs of investigation, subsequently
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incurred by such indemnified party in connection with the defense
thereof, unless (i) the indemnified party shall have employed separate
counsel in accordance with the proviso to the next preceding sentence
or (ii) the indemnifying party has authorized the employment of counsel
for the indemnified party at the expense of the indemnifying party.
Nothing in this Section 9(d) shall preclude an indemnified party from
participating at its own expense in the defense of any such action so
assumed by the indemnifying party.
(e) If the indemnification provided for in this Section 9 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 Shares. 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 that 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
(before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters.
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 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 Shares 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
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misrepresentation. The Underwriters' obligations in this subsection (d)
to contribute are several in proportion to their respective
underwriting obligations and not joint.
(f) The obligations of the Company under this Section 9 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 9 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 and to each person, if any,
who controls the Company within the meaning of the Act.
10. DEFAULT OF UNDERWRITERS.
(a) If any Underwriter defaults in its obligation to purchase
Shares at a Time of Delivery, you may in your discretion arrange for
you or another party or other parties to purchase such Shares on the
terms contained herein. If within thirty-six (36) hours after such
default by any Underwriter you do not arrange for the purchase of such
Shares, the Company shall be entitled to a further period of thirty-six
(36) hours within which to procure another party or other parties
satisfactory to you to purchase such Shares 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 Shares, or the
Company notifies you that it has so arranged for the purchase of such
Shares, you or the Company shall have the right to postpone a 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 that in your opinion may
thereby be made necessary. The cost of preparing, printing and filing
any such amendments shall be paid for by the Underwriters. The term
"Underwriter" as used in this Agreement shall include any person
substituted under this Section with like effect as if such person had
originally been a party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by
you and the Company as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased does not exceed
one-eleventh of the aggregate number of Shares to be purchased at such
Time of Delivery, then the Company shall have the right to require each
non-defaulting Underwriter to purchase the number of Shares 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 number of Shares which such Underwriter
agreed to purchase hereunder) of the Shares 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.
11. DEFAULT BY A SELLING SHAREHOLDER. If any of the Selling
Shareholders shall fail to sell and deliver the number of Optional Shares that
such Selling Shareholder is obligated to sell, the Underwriters may, at their
option, by notice to the Company, either (a) require the Company
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to sell and deliver such number of shares of Common Stock as to which the
Selling Shareholders have defaulted, (b) elect to purchase the Firm Shares and
the Optional Shares that the Company and the non-defaulting Selling Shareholders
have agreed to sell pursuant to this Agreement, or (c) terminate this Agreement
if the Company shall have refused to sell and deliver to the Underwriters the
Common Stock referred to in clause (a) of this Section 11.
In the event of a default under this Section 11 that does not result in
the termination of this Agreement, either the Underwriters or the Company shall
have the right to postpone the Closing Date or Option Closing Date for a period
not exceeding seven days in order to effect any required changes in the
Registration Statement or Prospectus or in any other documents or arrangements.
No action taken pursuant to this Section 11 shall relieve the Company or the
Selling Shareholder so defaulting from liability, if any, in respect of such
default.
12. TERMINATION.
(a) This Agreement may be terminated with respect to the Firm
Shares or any Optional Shares in the sole discretion of the
Representatives by notice to the Company given prior to the First Time
of Delivery or any Subsequent Time of Delivery, respectively, in the
event that (i) any condition to the obligations of the Underwriters set
forth in Section 8 hereof has not been satisfied, or (ii) the Company
shall have failed, refused or been unable to deliver the Shares or to
perform all obligations and satisfy all conditions on its part to be
performed or satisfied hereunder at or prior to such Time of Delivery,
in either case other than by reason of a default by any of the
Underwriters. If this Agreement is terminated pursuant to this Section
12(a), the Company will reimburse the Underwriters severally upon
demand for all out-of-pocket expenses (including reasonable counsel
fees and disbursements) that shall have been incurred by them in
connection with the proposed purchase and sale of the Shares. The
Company shall not in any event be liable to any of the Underwriters for
the loss of anticipated profits from the transactions covered by this
Agreement.
(b) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by
you and the Company as provided in Section 10(a), the aggregate number
of such Shares which remains unpurchased exceeds one-eleventh of the
aggregate number of Shares to be purchased at such Time of Delivery, or
if the Company shall not exercise the right described in Section 10(b)
to require non-defaulting Underwriters to purchase Shares of a
defaulting Underwriter or Underwriters, then this Agreement (or, with
respect to a Subsequent Time of Delivery, the obligations of the
Underwriters to purchase and of the Company to sell the Optional
Shares) 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 7
hereof and the indemnity and contribution agreements in Section 9
hereof; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
13. SURVIVAL. The respective indemnities, agreements, representations,
warranties and other statements of the Company, its officers 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
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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 referred to in Section 9(f) or the Company, or any officer or
director or controlling person of the Company referred to in Section 9(f), and
shall survive delivery of and payment for the Shares. The respective agreements,
covenants, indemnities and other statements set forth in Sections 7 and 9 hereof
shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement.
14. NOTICES. All communications hereunder shall be in writing and, if
sent to any of the Underwriters, shall be mailed, delivered or telegraphed and
confirmed in writing to you in care of The Xxxxxxxx-Xxxxxxxx Company, LLC, 0000
Xxxxxxxxx Xxxx, X.X., Xxxxxxx, Xxxxxxx 00000, Attention: Corporate Finance
Department (with a copy which shall not constitute notice to Xxxxxx Xxxxxxx
Xxxxx & Scarborough, L.L.P., 000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 0000, Xxxxxxx,
Xxxxxxx 00000, Attention: Xxxxx X. Xxxxx, Esq.); and if sent to the Company,
shall be mailed, delivered or telegraphed and confirmed in writing to the
Company at 0000 Xxxxx Xxxxxx Xxxxx, Xxxxxxxx, Xxxx 00000, Attention: Xxxxxxx X.
Xxxxxxx, Chief Executive Officer (with a copy which shall not constitute notice
to Kahn, Kleinman, Xxxxxxxx and Xxxxxx Co, ,L.P.A., 0000 Xxxx Xxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxxxx, Xxxx 00000, Attention: Xxxx X. Xxxxxxxxxxx, Esq.).
15. REPRESENTATIVES. You will act for the several Underwriters in
connection with the transactions contemplated by this Agreement, and any action
under this Agreement taken by you jointly or by The Xxxxxxxx-Xxxxxxxx Company,
LLC will be binding upon all the Underwriters.
16. BINDING EFFECT. 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 9 and 12 hereof, the officers and directors and controlling
persons referred to therein 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
Shares from any Underwriter shall be deemed a successor or assign by reason
merely of such purchase.
17. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia without giving effect to any
provisions regarding conflicts of laws.
18. COUNTERPARTS. 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.
19. WAIVER OF JURY TRIAL. The Company, each Selling Shareholder and you
each hereby irrevocably waive any right they may have to a trial by jury in
respect of any claim based upon or arising out of this Agreement or the
transactions contemplated hereby.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us one of the counterparts hereof, and upon
the acceptance hereof by The Xxxxxxxx-Xxxxxxxx Company, LLC, on behalf of each
of the Underwriters, this letter will constitute a binding agreement among the
Underwriters and the Company. It is understood that your acceptance of this
letter on behalf of each of the Underwriters is pursuant to the authority set
forth in the Master
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Agreement among Underwriters, a copy 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,
RAINBOW RENTALS, INC.
By:
-----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Executive Officer
[Signatures continue on following page]
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SELLING SHAREHOLDERS
By:
-----------------------------------
Xxxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxxxx X. Xxxxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxxx
The foregoing Agreement is hereby
confirmed and accepted as of the
date first written above at
Atlanta, Georgia.
THE XXXXXXXX-XXXXXXXX COMPANY, LLC.
XXXX XXXXXXXX XXXXXXX
SUNTRUST EQUITABLE SECURITIES CORPORATION
By: The Xxxxxxxx-Xxxxxxxx Company, LLC
By:
--------------------------------------
(Authorized Representative)
On behalf of each of the Underwriters
32
33
SCHEDULE I
----------
Total
Number of Firm
Shares to be
Underwriter Purchased
----------- ---------
The Xxxxxxxx-Xxxxxxxx Company, LLC
Xxxx Xxxxxxxx Xxxxxxx
SunTrust Equitable Securities Corporation
---------
Total....................................... 2,250,000
=========
34
SCHEDULE II
Number of
Optional
Shares to be
Sold if
Maximum
Option
Name of Selling Shareholder Exercised
--------------------------- ---------
Xxxxxxx X. Xxxxxxx 182,500
Xxxxxxxx X. Xxxxxxxxx 91,000
Xxxxxxx X. Xxxxxxxx 64,000
--------
Total....................................... 337,500
========
35
ANNEX I
Pursuant to Section 8(e) of the Underwriting Agreement, KPMG Peat
Marwick LLP shall furnish letters to the Underwriters to the effect that:
(i) they are independent certified public accountants with respect to
the Company and the Subsidiary within the meaning of the Act and the applicable
rules and regulations thereunder;
(ii) in their opinion, the consolidated financial statements and any
supplementary financial information and schedules audited (and, if applicable,
prospective financial statements 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 rules and regulations thereunder;
(iii) the financial statements of the Company as of and for the quarter
ended March 31, 1998 were reviewed by them in accordance with the standards
established by the American Institute of Certified Public Accountants and based
upon their review they are not aware of any material modifications that should
be made to such financial statements for them to be in conformity with generally
accepted accounting principles, and such financial statements comply as to form
in all material respects with the applicable accounting requirements of the Act
and the applicable rules and regulations thereunder
(iv) On the basis of limited procedures, not constituting an audit 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
the Subsidiary, inspection of the minute books of the Company and the Subsidiary
since the date of the latest audited financial statements included in the
Prospectus, inquiries of officials of the Company and the Subsidiary responsible
for financial 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) the unaudited consolidated condensed financial statements
of the Company and the Subsidiary included in the Registration
Statement and the Prospectus do not comply inform in all material
respects with the applicable accounting requirements of the Act and the
related published rules and regulations thereunder or are not in
conformity with generally accepted principles applied on a basis
substantially consistent with that of the audited consolidated
financial statements included in the Registration Statement and the
Prospectus;
(B) as of a specified date not more than 5 days prior to the
date of such letter, there were any changes in the capital stock or any
increase in inventories or the long-term debt or short-term debt of the
Company and the Subsidiary, or any decreases in net current assets or
net assets or other items specified by the Representatives, or any
increases in any other 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,
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36
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 (C) there were any decreases in revenues or operating income
or the total or per share amounts of 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 increases or decreases which the Prospectus discloses have
occurred or may occur, or which are described in such letter; and
(v) In addition to the audit 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 paragraph (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 that are
included in the Registration Statement and the Prospectus, or which appear in
Part II of, or in exhibits or schedules to, the Registration Statement and have
compared certain of such amounts, percentages and financial information with the
accounting records of the Company and the Subsidiary and have found them to be
in agreement.
References to the Registration Statement and the Prospectus in this
Annex I shall include any amendment or supplement thereto at the date of such
letter.
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