3,333,333 SHARES
COMMON STOCK
XXXXXXXX.XXX, INC.
WORLD TRADE CENTER - BALTIMORE
000 XXXX XXXXX XXXXXX, 00XX XXXXX
XXXXXXXXX, XXXXXXXX 00000
UNDERWRITING AGREEMENT
_________, 2000
The Xxxxxxx Co.
as Representative of the several Underwriters
identified on Schedule I hereto
World Trade Center - Baltimore
000 Xxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
XXxxxxxx.xxx, Inc., a Maryland corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
underwriters named in Schedule I hereto (the "Underwriters") for which The
Xxxxxxx Co. is acting as Representative (the "Representative") an aggregate of
3,333,333 shares (the "Firm Shares") of common stock, $0.001 par value per share
(the "Common Stock"). The Company and a certain stockholder of the Company named
in Schedule II hereto (the "Selling Stockholder"), each propose, subject to the
terms and conditions stated herein, to sell to the Underwriters, for the sole
purpose of covering over-allotments in connection with the sale of the Firm
Shares, and at the option of the Underwriters, up to an additional 120,000
shares and 80,000 shares respectively, (collectively, the "Additional Shares"),
of Common Stock. The Underwriters agree that to the extent the Underwriters
exercise their option with respect to the Additional Shares, such option shall
be exercised first with respect to the Additional Shares held by the Selling
Stockholder. The Firm Shares and the Additional Shares are referred to herein
collectively as the "Shares." The Shares are more fully described in the
EChapman Registration Statement referred to below.
On November 15, 1999, the Company entered into separate merger
agreements (the "Merger Agreements") with Xxxxxxx Holdings, Inc. ("CHI"),
Xxxxxxx Capital Management Holdings, Inc. ("CCMHI") and Xxxxxxx Insurance
Holdings, Inc. ("CIHI"), whereby each of CHI, CCMHI and CIHI will merge with and
into a separate wholly owned subsidiary of the Company (each a "Merger" and
together the "Mergers"). As a result of the Mergers, the Company will become a
holding company owning 100% of the outstanding capital stock of CHI, CCMHI and
CIHI, which will own 100% of the capital stock of their respective subsidiaries,
The Xxxxxxx Co., Xxxxxxx Capital Management, Inc.
The Xxxxxxx Co.
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Page 2
and Xxxxxxx Insurance Agency, Inc. CHI, CCMHI and CIHI are sometimes referred to
herein individually as a "Xxxxxxx Entity" and collectively as the "Xxxxxxx
Entities." Upon the closing and consummation of the Mergers, references in this
Agreement to the Company shall be deemed to refer to the Company and its
subsidiaries, the Xxxxxxx Entities, after giving effect to the Mergers.
SECTION 1. REPRESENTATIONS OF THE COMPANY
The Company represents and warrants to the Underwriters that:
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form SB-2 (Registration No.
333-90987), as amended by [Amendment Nos. 1 and 2 thereto], and related
preliminary prospectuses, as amended, for the registration under the Securities
Act of 1933, as amended (the "Securities Act"), of the sale of 3,533,283 shares
(including the Additional Shares) of Common Stock, which registration statement,
as so amended, has been declared effective by the Commission on the date hereof
and copies of which have heretofore been delivered to the Underwriters. The
registration statement, as amended at the time it became effective, including
the exhibits and information (if any) deemed to be a part of the registration
statement at the time of effectiveness pursuant to paragraph (b) of Rule 430A of
the rules and regulations of the Commission under the Securities Act (the
"Securities Act Regulations"), and any post-effective amendments thereto under
Rule 462(d) through the Closing Date (as defined below) is hereinafter called
the "eChapman Registration Statement." If the Company has filed or is required
by the terms hereof to file a registration statement pursuant to Rule 462(b)
under the Securities Act Regulations registering additional shares of Common
Stock (a "Rule 462(b) Registration Statement"), then, and unless otherwise
specified, any reference herein to the term "EChapman Registration Statement"
shall be deemed to include such Rule 462(b) Registration Statement. Other than a
Rule 462(b) Registration Statement, if any, which became effective upon filing,
no other document with respect to the EChapman Registration Statement has
heretofore been filed with the Commission (other than acceleration requests
under Rule 461 under the Securities Act Regulations and prospectuses filed
pursuant to Rule 424(b) of the Securities Act Regulations, each in the form
heretofore delivered to the Underwriters). No stop order suspending the
effectiveness of the EChapman Registration Statement (including any Rule 462(b)
Registration Statement) has been issued and no proceeding for that purpose has
been initiated or, to the Company's knowledge, threatened by the Commission, and
any request on the part of the Commission for additional information has been
complied with. The prospectus relating to the Shares, in the form in which it is
to be filed with the Commission pursuant to Rule 424(b) of the Securities Act
Regulations, is hereinafter referred to as the "Prospectus," except that,
subject to Sections 5(a)
The Xxxxxxx Co.
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Page 3
and 5(b) below, if any revised prospectus or prospectus supplement shall be
provided to the Underwriters by the Company for use in connection with the
offering and sale of the Shares (the "Offering") which differs from the
Prospectus (whether or not such revised prospectus or prospectus supplement is
required to be filed by the Company pursuant to Rule 424(b) of the Securities
Act Regulations), the term "Prospectus" shall refer to such revised prospectus
or prospectus supplement, as the case may be, from and after the time it is
first provided to the Underwriters for such use. Any preliminary prospectus or
prospectus subject to completion related to the Offering included in the
EChapman Registration Statement or filed by the Company with the Commission
pursuant to Rule 424 under the Securities Act is hereafter called a "Preliminary
Prospectus." All references in this Agreement to the EChapman Registration
Statement, the Rule 462(b) Registration Statement, a Preliminary Prospectus and
the Prospectus, or any amendments or supplements to any of the foregoing, shall
be deemed to include any copy thereof filed with the Commission pursuant to the
Commission's Electronic Data Gathering Analysis and Retrieval System ("XXXXX").
(b) The Company has filed with the Commission a registration statement
on Form S-4 (Registration No. 333-91251), as amended by Amendment Nos. 1
thereto, and related preliminary proxy statement/prospectus, as amended, for the
registration under the Securities Act of the issuance of 5,709,204 shares of
Common Stock (the "CHI Shares") to stockholders of CHI in the Merger of CHI with
and into a wholly-owned subsidiary of the Company, which registration statement,
as so amended, has been declared effective by the Commission and copies of which
have heretofore been delivered to the Underwriters. The registration statement,
as amended at the time it became effective, is hereinafter called the "CHI
Registration Statement." No stop order suspending the effectiveness of the CHI
Registration Statement has been issued and no proceeding for that purpose has
been initiated or, to the Company's knowledge, threatened by the Commission, and
any request on the part of the Commission for additional information has been
complied with. The proxy statement/prospectus relating to the Shares is
hereinafter referred to as the "CHI Proxy Statement/Prospectus." All references
in this Agreement to the CHI Registration Statement and the CHI Proxy
Statement/Prospectus, or any amendments or supplements to any of the foregoing,
shall be deemed to include any copy thereof filed with the Commission pursuant
to XXXXX.
(c) The Company has filed with the Commission a registration statement
on Form S-4 (Registration No. 333-91329), as amended by [Amendment Nos. 1 and 2
thereto], and related preliminary proxy statement/prospectus, as amended, for
the registration under the Securities Act of the issuance of 7,485,640 shares of
Common Stock (the "CCMHI Shares") to stockholders of CCMHI in the Merger of
CCMHI with and into a wholly-owned subsidiary of the Company, which registration
statement, as so amended, has
The Xxxxxxx Co.
_________, 2000
Page 4
been declared effective by the Commission and copies of which have heretofore
been delivered to the Underwriters. The registration statement, as amended at
the time it became effective, is hereinafter called the "CCMHI Registration
Statement." No stop order suspending the effectiveness of the CCMHI Registration
Statement has been issued and no proceeding for that purpose has been initiated
or, to the Company's knowledge, threatened by the Commission, and any request on
the part of the Commission for additional information has been complied with.
The proxy statement/prospectus relating to the Shares is hereinafter referred to
as the "CCMHI Proxy Statement/Prospectus." All references in this Agreement to
the CCMHI Registration Statement and the CCMHI Proxy Statement/Prospectus, or
any amendments or supplements to any of the foregoing, shall be deemed to
include any copy thereof filed with the Commission pursuant to XXXXX. The
EChapman Registration Statement, the CHI Registration Statement and the CCMHI
Registration Statement are collectively referred to herein as the "Xxxxxxx
Registration Statements."
(d) the Company has an authorized capitalization as set forth in the
Prospectus under the caption "Capitalization"; the outstanding shares of capital
stock of the Company and each of the Xxxxxxx Entities have been duly and validly
authorized and issued and are fully paid and non-assessable; except as disclosed
in the Prospectus, the CHI Proxy Statement/Prospectus or the CCMHI Proxy
Statement/Prospectus, as the case may be, there are no outstanding (i)
securities or obligations of the Company or such other Xxxxxxx Entity
convertible into or exchangeable for any capital stock of the Company or such
other Xxxxxxx Entity, as the case may be, (ii) warrants, rights or options to
subscribe for or purchase from the Company or such other Xxxxxxx Entity, as the
case may be, any capital stock or any convertible or exchangeable securities or
obligations, or (iii) obligations of the Company or such other Xxxxxxx Entity to
issue any shares of capital stock, any convertible or exchangeable securities or
obligations, or any such warrants, rights or options;
(e) the Company and each of the Xxxxxxx Entities has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of its respective jurisdiction of incorporation with full corporate power
and authority to own its respective properties and to conduct its respective
business as described in the EChapman Registration Statement and the Prospectus;
(f) the Company and each of the Xxxxxxx Entities is duly qualified or
licensed by each jurisdiction in which it conducts its respective business and
in which the failure, individually or in the aggregate, to be so qualified or
licensed could reasonably be expected to have a material adverse effect on the
assets, operations, business, prospects or condition (financial or otherwise) of
the Company or any such Xxxxxxx Entity, and the Company and each of the Xxxxxxx
Entities is duly qualified, and is in good standing, in each jurisdiction in
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_________, 2000
Page 5
which it owns or leases real property or maintains an office and in which such
qualification is necessary, except where, individually or in the aggregate, the
failure to be so qualified and in good standing would not have a material
adverse effect on the assets, operations, business, prospects or condition
(financial or otherwise) of the Company or any such Xxxxxxx Entity; except as
disclosed in the Prospectus, none of the Xxxxxxx Entities is prohibited or
restricted, directly or indirectly, from (i) paying dividends to the Company,
(ii) making any other distribution with respect to its capital stock, (iii)
repaying the Company for any loans or advances made to it by the Company or (iv)
from transferring their property or assets to the Company;
(g) the Company and each of the Xxxxxxx Entities is in compliance with
all applicable federal, state, local and foreign laws, rules and regulations,
including, without limitation, the Securities Act, the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), the Investment Company Act of 1940, as
amended (the "Investment Company Act"), the Investment Advisers Act of 1940, as
amended, and the regulations promulgated thereunder (collectively, the
"Securities Laws"), orders, decrees and judgments, including those relating to
transactions with affiliates, except where, in the aggregate, the failure to be
in compliance therewith would not materially and adversely affect (a) the
assets, operations, business, prospects or condition (financial or otherwise) of
the Company and any such Xxxxxxx Entity or (b) the ability of the Company and
its subsidiaries, subsequent to the consummation of the Mergers, to conduct
their businesses as described in the Prospectus;
(h) neither the Company nor any of the Xxxxxxx Entities is in breach
of, or in default under, nor has any event occurred which with giving of notice,
lapse of time, or both would constitute a breach of, or default under, its
respective articles of incorporation or charter or bylaws or in the performance
or observance of any obligation, agreement, covenant or condition contained in
any license, indenture, mortgage, deed of trust, loan or credit agreement or
other agreement or instrument to which the Company or any of the Xxxxxxx
Entities is a party or by which any of them or their respective properties is
bound, except for such breaches or defaults which, individually or in the
aggregate, would not have a material adverse effect on the assets, operations,
business, prospects or condition (financial or otherwise) of the Company or any
such Xxxxxxx Entity; and the execution, delivery and performance of this
Agreement, the Qualified Independent Underwriters Agreement (the "QIU
Agreement"), by and between the Company and Xxxxxx, Xxxxx Xxxxx, Incorporated
(the "QIU"), and the Merger Agreements, and consummation of the transactions
contemplated hereby and thereby will not result in the creation or imposition of
any lien, charge, claim or encumbrance upon any property or asset of the Company
or any of the Xxxxxxx Entities, or conflict with, or result in any breach of, or
constitute a default under, or constitute an event which with giving of notice,
lapse of time, or both would constitute a breach of, or default
The Xxxxxxx Co.
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Page 6
under, (i) any provision of the articles of incorporation or charter or by-laws
of the Company or any of the Xxxxxxx Entities, or (ii) any provision of any
license, indenture, mortgage, deed of trust, loan or credit agreement or other
agreement or instrument to which the Company or any of the Xxxxxxx Entities is a
party or by which any of them or their respective properties may be bound or
affected, or (iii) any federal, state, local or foreign law, regulation or rule,
including, without limitation, the Securities Laws, or any decree, judgment or
order applicable to the Company or any of the Xxxxxxx Entities, except in the
case of clauses (ii) and (iii) for such breaches or defaults that, individually
or in the aggregate, would not materially and adversely affect (a) the assets,
operations, business, prospects or condition (financial or otherwise) of the
Company or any of the Xxxxxxx Entities or (b) the ability of the Company and its
subsidiaries, subsequent to the consummation of the Mergers, to conduct their
respective businesses as described in the Prospectus;
(i) this Agreement has been duly authorized, executed and delivered by
the Company and is a legal, valid and binding agreement of the Company
enforceable against the Company in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, and by general principles of equity, and
except to the extent that the indemnification and contribution provisions of
Section 11 hereof may be limited by federal or state securities laws and public
policy considerations in respect thereof;
(j) no approval, authorization, consent or order of or filing with any
federal, state or local governmental or regulatory commission, board, body,
authority or agency is required in connection with the execution, delivery and
performance of this Agreement, the QIU Agreement and the Merger Agreements, the
consummation of the transactions contemplated hereby and thereby, or the sale
and delivery of the Shares by the Company as contemplated hereby other than (i)
such as have been obtained, or will have been obtained at each Closing Date
under the Securities Act and the Exchange Act, (ii) such approvals as have been
obtained or will have been obtained by the Closing Date in connection with the
approval of the quotation of the Shares on the Nasdaq National Market and (iii)
any necessary qualification under the securities or blue sky laws of the various
jurisdictions in which the Shares, the CHI Shares and the CCMHI Shares are being
offered;
(k) the Company and each Xxxxxxx Entity has all necessary licenses,
authorizations, consents and approvals and has made all necessary filings
required under any federal, state, local and foreign law, regulation and rule,
including, without limitation, the Securities Laws, and has obtained all
necessary authorizations, consents and approvals from other persons, required in
order to conduct their respective businesses as described in the Prospectus,
except to the extent that any failure to have any such licenses, authorizations,
The Xxxxxxx Co.
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Page 7
consents or approvals, to make any such filings or to obtain any such
authorizations, consents or approvals would not materially and adversely affect
(a) the assets, operations, business prospects or condition (financial or
otherwise) of the Company or any of the Xxxxxxx Entities or (b) the ability of
the Company and its subsidiaries, subsequent to the consummation of the Mergers,
to conduct their respective businesses as described in the Prospectus; neither
the Company nor any of the Xxxxxxx Entities is in violation of, in default
under, or has received any notice regarding a possible violation, default or
revocation of any such license, authorization, consent or approval applicable to
the Company or any of the Xxxxxxx Entities, and no such license, authorization,
consent or approval contains a materially burdensome restriction that is not
adequately disclosed in the Registration Statement and the Prospectus;
(l) the Preliminary Prospectus and the EChapman Registration Statement
comply and the Prospectus and any further amendments or supplements thereto
will, when they have become effective or are filed with the Commission, as the
case may be, comply in all material respects with the Securities Act
Regulations; the EChapman Registration Statement did not, and any amendment
thereto will not, in each case as of the applicable effective date, contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; and the
Preliminary Prospectus does not, and the Prospectus or any amendment or
supplement thereto will not, as of the applicable filing date and at the Closing
Date contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
PROVIDED, HOWEVER, that the Company makes no warranty or representation with
respect to any statement contained in the EChapman Registration Statement or the
Prospectus in reliance upon and in conformity with the information concerning
the Underwriters and furnished in writing by or on behalf of the Underwriters to
the Company expressly for use in the EChapman Registration Statement or the
Prospectus (that information being limited to that described in Section 10(e)
hereof);
(m) the CHI Proxy Statement/Prospectus and the CHI Registration
Statement comply in all material respects with the requirements of the
Securities Act, the Securities Act Regulations and the proxy rules promulgated
under the Exchange Act (the "Proxy Rules"); the CHI Registration Statement did
not, and any amendment thereto will not, in each case as of the applicable
effective date, contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and the CHI Proxy Statement/Prospectus or any amendment or
supplement thereto will not, as of the applicable filing date and at the Closing
Date contain
The Xxxxxxx Co.
_________, 2000
Page 8
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
(n) the CCMHI Proxy Statement/Prospectus and the CCMHI Registration
Statement comply in all material respects with the requirements of the
Securities Act, the Securities Act Regulations and Proxy Rules; the CCMHI
Registration Statement did not, and any amendment thereto will not, in each case
as of the applicable effective date, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; and the CCMHI Proxy Statement/Prospectus or any
amendment or supplement thereto will not, as of the applicable filing date and
at the Closing Date contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
(o) all legal or governmental proceedings, contracts or documents of a
character required to be filed as exhibits to the Xxxxxxx Registration
Statements or to be summarized or described in the Prospectus, the CHI Proxy
Statement/Prospectus or the CCMHI Proxy Statement/Prospectus have been so filed,
summarized or described as required and any such summaries or descriptions
present fairly the information required to be shown;
(p) there are no actions, suits, proceedings, inquiries or
investigations pending or, to the Company's knowledge, threatened against the
Company or the Xxxxxxx Entities or any of their respective officers or directors
or to which the properties, assets or rights of any such entity are subject, at
law or in equity, before or by any federal, state, local or foreign court,
governmental or regulatory commission, board, body, authority, arbitration panel
or agency which, individually or in the aggregate, could result in a judgment,
decree, award or order materially and adversely affecting (a) the assets,
operations, business prospects or condition (financial or otherwise) of the
Company or any of the Xxxxxxx Entities or (b) the ability of the Company and its
subsidiaries, subsequent to the consummation of the Mergers, to conduct their
respective businesses as described in the Prospectus;
(q) the financial statements, including the notes thereto, included in
the Registration Statement and the Prospectus present fairly the respective
consolidated financial position of the Company, CHI and CCMHI as of the dates
indicated and the consolidated results of operations and changes in
stockholders' equity and cash flows of the Company, CHI and CCMHI for the
periods specified; such financial statements have been prepared in conformity
with generally accepted accounting principles applied on a consistent basis
The Xxxxxxx Co.
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Page 9
during the periods involved (except as indicated in the notes thereto); the
financial statement schedules included in the EChapman Registration Statement
and the amounts in the Prospectus under the captions "Prospectus Summary -
Consolidated Summary Financial Data," "Capitalization," "Dilution," "Selected
Historical and Pro Forma Financial Data" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" fairly present the
information shown therein and have been compiled on a basis consistent with the
financial statements included in the EChapman Registration Statement and the
Prospectus;
(r) Xxxxxx Xxxxxxxx LLP, whose reports on the consolidated financial
statements of CHI and CCMHI are filed with the Commission as part of the
EChapman Registration Statement and Prospectus, are and were during the periods
covered by their reports independent public accountants as required by the
Securities Act and the Securities Act Regulations;
(s) subsequent to the respective dates as of which information is given
in the EChapman Registration Statement and the Prospectus, and except as may be
otherwise stated in the EChapman Registration Statement or the Prospectus, there
has not been (i) any material adverse change, in the assets, liabilities,
capital, operations, business or condition (financial or otherwise), present or
prospective, of the Company or any of the Xxxxxxx Entities, whether or not
arising in the ordinary course of business, (ii) any transaction, which is
material to the Company or any of the Xxxxxxx Entities contemplated or entered
into by the Company or any of the Xxxxxxx Entities, (iii) any obligation,
contingent or otherwise, directly or indirectly incurred by the Company or any
of the Xxxxxxx Entities, which is material to the Company or any of the Xxxxxxx
Entities or (iv) any dividend or distribution of any kind declared, paid or made
by the Company or any of the Xxxxxxx Entities on any class of capital stock;
(t) the Company is not, and upon the sale of the Shares as herein
contemplated will not be, an investment company, which is required to register
under the Investment Company Act;
(u) the Shares will conform in all material respects to the description
thereof contained in the Registration Statement and the Prospectus;
(v) except as disclosed in the Prospectus, there are no persons with
registration or other similar rights to have any equity securities registered
pursuant to the Registration Statement or otherwise registered by the Company
under the Securities Act;
(w) the Shares have been duly authorized and, when the Shares have been
issued and duly delivered against payment therefor as contemplated by
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this Agreement and the Prospectus, the Shares will be validly issued, fully paid
and nonassessable, free and clear of any pledge, lien, encumbrance, security
interest, mortgage or other claim whatsoever, and the issuance and sale of the
Shares by the Company is not subject to preemptive or other similar rights
arising by operation of law, under the articles of incorporation or bylaws of
the Company, under any agreement to which the Company or any of the Xxxxxxx
Entities is a party, or otherwise;
(x) other than any stabilization activities conducted by the
Underwriters in accordance with Rule 104 of Regulation M promulgated under the
Exchange Act, the Company has not taken, and will not take, directly or
indirectly, any action which is designed to or which has constituted or which
might reasonably be expected to cause or result in stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Shares;
(y) in connection with the Offering, the Company has not offered and
will not offer its Common Stock or any other securities convertible into or
exchangeable or exercisable for Common Stock in a manner in violation of the
Securities Act;
(z) except as disclosed in the Prospectus, the Company has not incurred
any liability for any finder's fees or similar payments in connection with the
transactions herein contemplated;
(aa) The Company, and each of the Xxxxxxx Entities and their
predecessors have filed all necessary federal, state and foreign income and
franchise tax returns that they were required to file and have paid all taxes
shown as due thereon (including, but not limited to, all penalties, interest and
other additions thereto), except for failures to file or pay which would not,
individually or in the aggregate, have a material adverse effect on the assets,
operations, business, prospects or condition (financial or otherwise) of the
Company or any of the Xxxxxxx Entities or materially and adversely affect the
ability of the Company and its subsidiaries, subsequent to the consummation of
the Mergers, to conduct their respective businesses as described in the
Prospectus. All such tax returns were correct and complete in all material
respects. All tax liabilities are adequately provided for on the books of the
Company and each of the Xxxxxxx Entities, except to such extent as would not,
individually or in the aggregate, have a material adverse affect on the assets,
operations, business, prospects or condition (financial or otherwise) of the
Company and the Xxxxxxx Entities or materially and adversely affect the ability
of the Company and its subsidiaries, subsequent to the consummation of the
Mergers, to conduct their respective businesses as described in the Prospectus.
The Company, the Xxxxxxx Entities and their predecessors have made all necessary
payroll and employment tax payments and are current and
The Xxxxxxx Co.
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Page 11
up-to-date with respect to such tax payments as of the date of this Agreement,
except where failure to make any such payment would not, individually or in the
aggregate, have a material adverse affect on the assets, operations, business,
prospects or condition (financial or otherwise) of the Company or any of the
Xxxxxxx Entities or materially and adversely affect the ability of the Company
and its subsidiaries, subsequent to the Mergers, to conduct their respective
businesses as described in the Prospectus. The Company has no knowledge of any
tax proceedings or other action pending or threatened against the Company or any
of the Xxxxxxx Entities which, individually or in the aggregate, could have a
material adverse affect on the assets, operations, business, prospects or
condition (financial or otherwise) of the Company or any of the Xxxxxxx
Entities.
(bb) The Company and each of the Xxxxxxx Entities maintain insurance
covering its respective properties, operations, personnel and businesses with
institutions it believes to be financially responsible. Such insurance insures
against such losses and risks as are adequate in accordance with customary
industry practice to protect the Company, each of the Xxxxxxx Entities and their
respective businesses. None of the Company or any of the Xxxxxxx Entities has
received notice from any insurer or agent of such insurer that substantial
capital improvements or other expenditures will have to be made in order to
continue such insurance. All such insurance is outstanding and duly in force on
the date hereof, subject only to changes made in the ordinary course of
business, consistent with past practice, which do not, either individually or in
the aggregate, materially alter the coverage thereunder or the risks covered
thereby. None of the Company, or any of the Xxxxxxx Entities has any reason to
believe that it will not be able (a) to renew its existing insurance coverage as
and when such policies expire or (b) to obtain comparable coverage from similar
institutions as may be necessary or appropriate to conduct its business as now
conducted or as presently contemplated and at a reasonable cost.
(cc) The Company and any "employee benefit plan" (as defined under
ERISA) established or maintained by the Company or its "ERISA Affiliates" (as
defined below) are in compliance in all material respects with ERISA. "ERISA
Affiliate" means, with respect to the Company and assuming that the Mergers have
occurred, any member of any group organizations described in Sections 414(b),
(c), (m) or (o) of the Internal Revenue Code of 1986, as amended, and the
regulations and published interpretations thereunder (the "Code") of which the
Company is a member. The Company does not have, nor has it ever had, any
"employee benefit plan" subject to Title IV of ERISA. Neither the Company nor
any of its ERISA Affiliates has incurred or expects to incur any liability under
Sections 4975 or 4980B of the Code which, individually or in the aggregate,
could be reasonably expected to have a material adverse effect on the assets,
operations, business, prospects or condition (financial or otherwise) of the
The Xxxxxxx Co.
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Company or any of the Xxxxxxx Entities. Each "employee benefit plan" established
or maintained by the Company or any of its ERISA Affiliates that is intended to
be qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or failure to act, which
could reasonably be expected to cause the loss of such qualification.
(dd) The computer systems of the Company and each of the Xxxxxxx
Entities and their respective subsidiaries (including all software, hardware,
workstations and related components, automated devices, embedded chips and other
date sensitive equipment) are Year 2000 Ready or will be Year 2000 Ready by
December 31, 1999 other than any failure to be Year 2000 Ready that could not
reasonably have a material adverse effect on the Company or the Xxxxxxx
Entities. "Year 2000 Ready" means that the computer systems: (i) are capable of
recognizing, processing, managing, representing, interpreting and manipulating
correctly date-related data for dates earlier and later than January 1, 2000,
including calculating, comparing, sorting, storing, tagging and sequencing,
without resulting in or causing logical or mathematical errors or
inconsistencies in any user-interface functionalities or otherwise, including
data input and retrieval, data storage, data fields, calculations, reports,
processing or any other input or output; (ii) have the ability to provide date
recognition for any data element without limitation (including date-related data
represented without a century designation, date-related data whose year is
represented by only two digits and date fields assigned special values); (iii)
have the ability to function automatically into and beyond the year 2000 without
human intervention and without any change in operations associated with the
advent of the year 2000; (iv) have the ability to interpret data, dates and time
correctly into and beyond the year 2000; (v) have the ability not to produce
noncompliance in existing information, nor otherwise corrupt such data into and
beyond the year 2000; (vi) have the ability to process correctly after January
1, 2000 data containing dates before that date; and (vii) have the ability to
recognize all "leap years," including February 29, 2000.
(ee) any certificate signed by any officer of the Company delivered to
the Underwriters or to counsel for the Underwriters pursuant to or in connection
with this Agreement shall be deemed a representation and warranty by the Company
to each of the Underwriters and its counsel as to the matters covered thereby;
and
(ff) the form of certificate used to evidence the Common Stock complies
in all material respects with all applicable statutory requirements, with any
applicable requirements of the articles of incorporation and by-laws of the
Company, and with the requirements of the Nasdaq National Market.
The Xxxxxxx Co.
_________, 2000
Page 13
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDER
The Selling Stockholder represents and warrants to the Underwriters that:
(a) The Selling Stockholder is the lawful owner of the Shares to be
sold by such Selling Stockholder pursuant to this Agreement and has good, valid
and marketable title to the Shares to be sold by it pursuant to this Agreement,
free and clear of all liens, encumbrances, adverse claims, security interests,
restrictions on transfer, stockholders' agreements, voting trusts, options and
other defects in title whatsoever, with full power to deliver such Shares
hereunder, and, upon the delivery of and payment for such Shares as herein
contemplated, the Underwriters will receive good, valid and marketable title to
the Shares purchased by it from the Selling Stockholder, free and clear of all
liens, encumbrances, adverse claims, security interests, restrictions on
transfer, stockholders' agreements, voting trusts, options and other defects in
title whatsoever created by or relating to the Selling Stockholder.
(b) The Selling Stockholder has, and will have at the time of delivery
of the Shares to be sold by it, full legal right, power, authority and capacity,
and, except as required under the Securities Act and state securities and Blue
Sky laws, all necessary consents, approvals, authorizations, orders,
registrations, filings, qualifications, licenses and permits of and from all
public, regulatory or governmental agencies and bodies, as are required for the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby, including the sale, assignment, transfer
and delivery of the Shares to be sold, assigned, transferred and delivered by
the Selling Stockholder hereunder.
(c) This Agreement has been duly and validly authorized, executed and
delivered by the Selling Stockholder and is the valid and binding obligation of
the Selling Stockholder, enforceable against the Selling Stockholder in
accordance with its terms.
(d) The execution, delivery and performance of this Agreement by or on
behalf of the Selling Stockholder, the offering and sale of the Shares being
sold by the Selling Stockholder hereunder and the consummation of the
transactions contemplated hereby will not violate, conflict with or constitute a
breach of any of the terms and provisions of, or constitute a default (or an
event which with notice or lapse of time, or both, would constitute a default)
or require consent under, or result in the creation or imposition of any lien,
charge or encumbrance upon any properties or assets of the Selling Stockholder,
or result in an acceleration of any indebtedness of the Selling Stockholder,
pursuant to (i) any bond, debenture, note, indenture, mortgage, deed of trust,
contract or other agreement or instrument to which the Selling Stockholder is a
party or by which his properties or assets are or may be bound, (iii) any
statute, rule or
The Xxxxxxx Co.
_________, 2000
Page 14
regulation applicable to the Selling Stockholder or any of his properties or
assets or (iv) any judgment, order or decree of any court or governmental agency
or authority having jurisdiction over the Selling Stockholder or any of his
properties or assets. No consent, approval, authorization, order, registration,
filing, qualification, license or permit of or with (i) any court or any
governmental agency or authority having jurisdiction over the Selling
Stockholder or any of his properties or assets or (ii) any other person is
required for (A) the execution, delivery and performance by the Selling
Stockholder of this Agreement, (B) the sale and delivery of the Shares to be
sold and delivered by the Selling Stockholder hereunder and the consummation of
the transactions contemplated hereby, except such as have been obtained under
the Securities Act and such consents, approvals, authorizations, orders,
registrations, filings, qualifications, licenses and permits as may be required
under state securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters.
(e) The Selling Stockholder has not directly or indirectly (i) taken
(other than through the actions, if any, of the Underwriters) any action
designed to, or that might reasonably be expected to, cause or result in or
which constitutes or which 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
Preliminary Prospectus (A) sold, bid for, purchased or paid any person any
compensation for soliciting purchases of, shares of Common Stock or (B) paid or
agreed to pay to any person any compensation for soliciting another to purchase
any other securities of the Company.
(f) The Selling Stockholder (i) does not directly or indirectly have
any preemptive right, co-sale right or right of first refusal or other similar
right to purchase any of the Shares that are to be sold by the Underwriters
pursuant to this Agreement, and (ii) does not directly or indirectly own any
warrants, options or similar rights to acquire, and does not directly or
indirectly have any right or arrangement to acquire, any capital stock, rights,
warrants, options or other securities from the Company.
(g) The Selling Stockholder does not directly or indirectly possess any
registration rights with respect to any securities of the Company.
(h) The information in the Registration Statement under the caption
"Principal and Selling Stockholders" which specifically relates to the Selling
Stockholder does not, and will not on the Closing Date, 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, in the light of the
circumstances under which they were made, not misleading.
The Xxxxxxx Co.
_________, 2000
Page 15
(i) If there is any change in the information referred to in Section
2(h) from the first business day after the date of this Agreement and from time
to time thereafter for such period as in the opinion of counsel for the
Underwriters a prospectus is required by law to be delivered in connection with
sales by an underwriter or a dealer, the Selling Stockholder will immediately
notify you of such change.
(j) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Code with respect to the
transactions herein contemplated, the Selling Stockholder will deliver to you
prior to or on 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).
(k) Each certificate signed by the Selling Stockholder and delivered to
the Underwriters or counsel for the Underwriters pursuant to this Agreement
shall be deemed to be a representation and warranty by the Selling Stockholder
to the Underwriters as to the matters covered thereby.
The Selling Stockholder acknowledges that the Underwriters and, for
purposes of the opinion to be delivered to the Underwriters pursuant to Section
9(a) hereof, counsel to the Company will rely upon the accuracy and truth of the
foregoing representations and hereby consents to such reliance.
SECTION 3. PURCHASE, SALE AND DELIVERY OF THE SHARES
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, (i) the Company agrees to sell 3,333,333 of the Firm Shares to each of
the Underwriters, (ii) the Underwriters severally and not jointly agree to
purchase from the Company, at a purchase price per share of $_______, the number
of Firm Shares set forth opposite the name of such Underwriter on Schedule I
hereto.
(b) Payment of the purchase price for, and delivery of certificates
for, the Shares shall be made at the office of Venable, Xxxxxxx & Xxxxxx, LLP, 0
Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000, or at such other place as shall be
agreed upon by you, as Representative, and the Company, at 10:00 A.M. on the
third or fourth business day (as permitted by Rule 15c6-1 under the Exchange
Act) following the date of the effectiveness of the Registration Statement (or,
if the Company has elected to rely upon Rule 430A of the Securities Act
Regulations, the third or fourth business day (as permitted by Rule 15c6-1 under
the Exchange Act) after the determination of the initial public offering price
of the Shares), or such other time not later than ten business days after such
date as shall be agreed upon by you, as Representative, and the Company (such
time and date of payment and delivery being herein called the "Closing Date").
The Xxxxxxx Co.
_________, 2000
Page 16
Payment shall be made to the Company and the Selling Stockholder by wire
transfer in same day funds, against delivery to you for the account of the
Underwriters of certificates for the Shares. Certificates for the Shares shall
be registered in such name or names and in such authorized denominations as you
may request in writing at least two full business days prior to the Closing
Date. The Company will permit you to examine and package such certificates for
delivery at least one full business day prior to the Closing Date.
(c) In addition, the Company hereby grants the Underwriters the option
to purchase up to 120,000 Additional Shares and the Selling Stockholder hereby
grants to the Underwriters the option to purchase up to 80,000 Additional Shares
at the same purchase price per share to be paid by the Underwriters to the
Company for the Firm Shares as set forth in Section 3(a) hereof, for the sole
purpose of covering over-allotments, if any, in the sale of Firm Shares by the
Underwriters. This option may be exercised at any time, in whole or in part, on
or before the thirtieth day following the date of the Prospectus, by written
notice to the Company and Selling Stockholder from the Underwriters and shall,
if exercised in part, be exercised as to the Additional Shares held by the
Selling Stockholder first. Such notice shall set forth the aggregate number of
Additional Shares as to which the option is being exercised and the date and
time, as reasonably determined by the Underwriters, when the Additional Shares
are to be delivered (such date and time being herein sometimes referred to as
the "Additional Closing Date"); PROVIDED, HOWEVER, that the Additional Closing
Date shall not be earlier than the Closing Date or, if thereafter, earlier than
the second full business day after the date on which the option shall have been
exercised nor later than the fourth full business day after the date on which
the option shall have been exercised. Certificates for the Additional Shares
shall be registered in such name or names and in such authorized denominations
as you may request in writing at least two full business days prior to the
Additional Closing Date. The Company will permit you to examine and package such
certificates for delivery at least one full business day prior to the Additional
Closing Date.
Payment for the Additional Shares shall be made by wire transfer in
same day funds to the Company and the Selling Stockholder, as applicable. The
Additional Closing shall be held at the offices of Venable, Baetjer & Xxxxxx,
LLP, 0 Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000 on the Additional Closing Date,
or such other location as may be agreed upon between you, the Company and the
Selling Stockholder as applicable, upon delivery of the certificates for the
Additional Shares to you for the respective accounts of the Underwriters.
SECTION 4. OFFERING
Upon your authorization of the release of the Firm Shares, the
Underwriters proposes to offer the Firm Shares for sale to the public upon the
terms set forth in the Prospectus.
The Xxxxxxx Co.
_________, 2000
Page 17
SECTION 5. CERTAIN COVENANTS OF THE COMPANY
(a) If the EChapman Registration Statement has not yet been declared
effective on the date of this Agreement, the Company will use its best efforts
to cause the EChapman Registration Statement and any amendments thereto to
become effective as promptly as possible, and if Rule 430A is used or the filing
of the Prospectus is otherwise required under Rule 424(b) or Rule 434, the
Company will file the Prospectus (properly completed if Rule 430A has been used)
pursuant to Rule 424(b) or Rule 434 within the prescribed time period and will
provide evidence satisfactory to you of such timely filing. If the Company
elects to rely on Rule 434, the Company will prepare and file a term sheet that
complies with the requirements of Rule 434.
The Company will notify you, as Representative, immediately (and, if
requested by you, will confirm such notice in writing) (i) when the EChapman
Registration Statement and any amendments thereto become effective, (ii) of any
request by the Commission for any amendment of or supplement to the EChapman
Registration Statement or the Prospectus or for any additional information,
(iii) of the mailing or the delivery to the Commission for filing of any
amendment of or supplement to the EChapman Registration Statement or the
Prospectus, (iv) of the issuance by the Commission of any stop order suspending
the effectiveness of the EChapman Registration Statement or any post-effective
amendments thereto or of the initiation, or the threatening, of any proceedings
therefor, (v) of the receipt of any comments from the Commission and (vi) of the
receipt by the Company of any notification with respect to the suspension of the
qualification of the Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for that purpose. If the Commission shall propose
or enter a stop order at any time, the Company will use its best efforts to
prevent the issuance of any such stop order and, if issued, to obtain the
lifting of such order as soon as possible. The Company will not file any
amendment to the EChapman Registration Statement or any amendment of or
supplement to the Prospectus (including the prospectus required to be filed
pursuant to Rule 424(b) or Rule 434) or any amendment of or supplement to any
Preliminary Prospectus that differs from the prospectus on file at the time of
the effectiveness of the EChapman Registration Statement before or after the
effective date of the EChapman Registration Statement to which you shall
reasonably object in writing after being timely furnished in advance a copy
thereof.
(b) If at any time when a prospectus relating to the Shares is required
to be delivered under the Securities Act any event shall have occurred as a
result of which any Preliminary Prospectus as then amended or supplemented or
the Prospectus as then amended or supplemented would, in the judgment of the
Underwriters or the Company include an untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
The Xxxxxxx Co.
_________, 2000
Page 18
make the statements therein, in the light of the circumstances under which they
were made, not misleading, or if it shall be necessary at any time to amend or
supplement any Preliminary Prospectus, the Prospectus or the Xxxxxxx
Registration Statements to comply with the Securities Act or the Securities Act
Regulations, the Company will notify you promptly and prepare and file with the
Commission an appropriate amendment or supplement (in form and substance
reasonably satisfactory to you) which will correct such statement or omission
and will use its best efforts to have any amendment to the Registration
Statement declared effective as soon as possible.
(c) The Company will promptly deliver to you two signed copies of the
EChapman Registration Statement, including exhibits and all amendments thereto,
and the Company will promptly deliver to each of the Underwriters such number of
copies of any preliminary prospectus, the Prospectus, the EChapman Registration
Statement, and all amendments of and supplements to such documents, if any, as
they may reasonably request.
(d) The Company will endeavor in good faith, in cooperation with you,
at or prior to the time of effectiveness of the EChapman Registration Statement,
to qualify the Shares for offering and sale under the securities laws relating
to the offering or sale of the Shares of such jurisdictions as you, as
Representative, may designate and to maintain such qualification in effect for
so long as required for the distribution thereof; except that in no event shall
the Company be obligated in connection therewith to qualify as a foreign
corporation or to execute a general consent to service of process.
(e) The Company will make generally available (within the meaning of
Section 11(a) of the Securities Act) to its security holders and to you as soon
as practicable, but not later than 45 days after the end of its fiscal quarter
in which the first anniversary date of the effective date of the EChapman
Registration Statement occurs, an earnings statement (in form complying with the
provisions of Rule 158 of the Securities Act Regulations) covering a period of
at least twelve consecutive months beginning after the effective date of the
Registration Statement.
(f) Except for the sale of the Additional Shares by the Selling
Stockholder pursuant to the terms of this Agreement, and the issuance of the CHI
Shares and the CCMHI Shares in Mergers pursuant to the CHI Registration
Statement and the CCMHI Registration Statement, during the period of 180 days
from the date hereof, the Company and the Selling Stockholder will not, directly
or indirectly, to issue, sell, offer or agree to sell, grant any option for the
sale of, pledge, make any short sale or maintain any short position, establish
or maintain a "put equivalent position" (within the meaning of Rule 16a1(h)
under the Exchange Act), enter into any swap, derivative transaction or other
arrangement that transfers to another, in whole or in part, any of the economic
The Xxxxxxx Co.
_________, 2000
Page 19
consequences of ownership of the Common Stock (whether any such transaction is
to be settled by delivery of Common Stock, other securities, cash or other
consideration) or otherwise dispose of, any Common Stock (or any securities
convertible into, exercisable for or exchangeable for Common Stock) or any
interest therein or announce any intention to do any of the foregoing without
the prior written consent of the Underwriters provided that the Company may,
without such consent, (i) grant options or other awards pursuant to the
Company's employee stock option plans, (ii) issue Common Stock upon the exercise
of outstanding options or warrants to purchase shares of Common Stock (iii)
issue Common Stock as consideration for acquisitions provided that prior to the
issuance thereof, the recipient thereof agrees in writing to be bound by the
same restrictions applicable to the Company for the remaining balance of such
180 day period or (iv) engage in market making activities in the ordinary course
of its brokerage subsidiary's business.
(g) During a period of three years from the effective date of the
EChapman Registration Statement, the Company will furnish or make available to
you copies of (i) all reports to its stockholders and (ii) all reports,
financial statements and proxy or information statements filed by the Company
with the Commission, the Nasdaq National Market or any national securities
exchange.
(h) The Company will apply its net proceeds from the sale of the Shares
as set forth under the caption "Use of Proceeds" in the Prospectus.
(i) The Company will use its best efforts to cause the Shares to be
listed on the Nasdaq National Market.
(j) The Company will report the use of its net proceeds from the
Offering to the extent required pursuant to Rule 463 of the Securities Act
Regulations.
(k) If the Company elects to rely upon Rule 462(b) of the Securities
Act Regulations, the Rule 462(b) Registration Statement shall have become
effective by 10:00 p.m., Baltimore time, on the date of this Agreement, no stop
order suspending the effectiveness of the EChapman Registration Statement or any
part thereof shall have been issued and no proceeding for that purpose shall
have been initiated or threatened by the Commission, and all requests for
additional information on the part of the Commission shall have been complied
with to the Representative's reasonable satisfaction.
(l) The Company, during the period when the Prospectus is required to
be delivered under the Securities Act or the Exchange Act, shall file all
documents required to be filed with the Commission pursuant to Section 13, 14,
or 15 of the Exchange Act within the time periods set forth in the Exchange Act
and the rules and regulations thereunder.
The Xxxxxxx Co.
_________, 2000
Page 20
SECTION 6. CERTAIN COVENANTS OF THE SELLING STOCKHOLDER
The Selling Stockholder covenants and agrees with you and the Company that:
(a) The Selling Stockholder will pay or cause to be paid all transfer
taxes payable in connection with the transfer of the Additional Shares to be
sold by the Selling Stockholder to the Underwriters.
(b) The Selling Stockholder will do and perform all things to be done
and performed by the Selling Stockholder under this Agreement prior to the
Closing Date and to satisfy all conditions precedent to the delivery of the
Additional Shares to be sold by the Selling Stockholder pursuant to this
Agreement.
SECTION 7. EXPENSES
Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, the Company will pay all fees,
costs and expenses incident to the performance by the Company of its obligations
hereunder, including: (a) the preparation, printing, filing and distribution of
the EChapman Registration Statement (including the exhibits thereto), all
amendments and supplements thereto and the Prospectus; (b) the preparation,
printing, and issuance of the Shares including any stamp taxes and transfer
agent and registrar fees payable in connection with the original issuance of the
Shares; (c) the registrations or qualifications referred to in Section 1 hereof
including fees and disbursements of counsel relating to such registrations or
qualifications; (d) the fees and expenses of the Company's accountants and the
fees and expenses of counsel for the Company; (e) the expenses of delivery to
the Underwriters of copies of the Prospectus, as may be requested for use in
connection with the Offering; (f) any filings required to be made by the
Underwriters with the National Association of Securities Dealers, Inc.; (g) the
fees and expenses of the QIU and its counsel; and (h) the fees and expenses
incurred with respect to the quotation of the Shares on the Nasdaq National
Market.
SECTION 8. SURVIVAL OF AGREEMENTS, REPRESENTATIONS AND WARRANTIES
The respective indemnities of the Company, the Selling Stockholder and
the Underwriters and the representations and warranties of the Company and the
Selling Stockholder set forth in or made pursuant to this Agreement will remain
in full force and effect, regardless of any termination or cancellation of this
Agreement or any investigation by or on behalf of the Company, the Selling
Stockholder or the Underwriters or any controlling person thereof, and shall
survive the issuance of the Shares, and any successor or assign of each of the
The Xxxxxxx Co.
_________, 2000
Page 21
Underwriters, the Company or the Selling Stockholder or any controlling person
of each of the foregoing or any legal representative of such controlling person
shall be entitled to the benefit of the respective indemnities, agreements,
warranties and representations.
SECTION 9. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS
The obligations of each Underwriter hereunder are subject to the
accuracy of the representations and warranties on the part of the Company and
the Selling Stockholder in all material respects on the date hereof and on the
Closing Date, the performance by the Company and the Selling Stockholder of
their respective obligations hereunder in all material respects and to the
following further conditions:
(a) The Company shall furnish to the Underwriters on the Closing Date
and on the Additional Closing Date, if any, an opinion of Venable, Xxxxxxx and
Xxxxxx, LLP, counsel for the Company, addressed to the Underwriters and dated as
of the Closing Date or the Additional Closing Date, as the case may be, and in a
form reasonably satisfactory to Xxxxxxxxx, Xxxxxx & Preston L.L.P., counsel for
the Underwriters, stating that:
(i) the Company has an authorized capitalization as
set forth in the Prospectus under the caption "Capitalization;" the
outstanding shares of capital stock of the Company have been duly and
validly authorized and issued and are fully paid and non-assessable;
except as disclosed in the Prospectus, to such counsel's knowledge,
there are no outstanding (A) securities or obligations of the Company
convertible into or exchangeable for any capital stock of the Company,
(B) warrants, rights or options to subscribe for or purchase from the
Company any such capital stock or any such convertible or exchangeable
securities or obligations, or (C) obligations of the Company to issue
any shares of capital stock, any such convertible or exchangeable
securities or obligations, or any such warrants, rights or options;
(ii) the Company and each of the Xxxxxxx Entities has
been duly incorporated and is validly existing as a corporation in good
standing under the laws of its respective jurisdiction of incorporation
with full corporate power and authority to own its respective
properties and to conduct its respective business as described in the
EChapman Registration Statement and the Prospectus and to execute and
deliver this Agreement and the QIU Agreement;
The Xxxxxxx Co.
_________, 2000
Page 22
(iii) the execution, delivery and performance of this
Agreement and the QIU Agreement by the Company and the consummation by
the Company of the transactions contemplated under this Agreement or
the QIU Agreement, as the case may be, do not and will not (A) conflict
with, or result in any breach of, or constitute a default under, or
constitute an event which with giving of notice, lapse of time, or both
would constitute a breach of or default under, (I) any provisions of
the articles of incorporation, charter or by-laws of the Company or any
of the Xxxxxxx Entities, (II) to the best of such counsel's knowledge,
any provision of any material license, indenture, mortgage, deed of
trust, loan or credit agreement or other agreement or instrument to
which the Company or any of the Xxxxxxx Entities is a party or by which
any of them or their respective properties may be bound or affected, or
(III) to the best of such counsel's knowledge, any law or regulation,
including, without limitation, the Securities Laws, or any decree,
judgment or order applicable to the Company or any of the Xxxxxxx
Entities, except in the case of clause (I) for such conflicts, breaches
or defaults which, individually or in the aggregate, would not have a
material adverse effect on the assets, operations, business, prospects
or condition (financial or otherwise) of the Company or any of the
Xxxxxxx Entities; or (B) to such counsel's knowledge, result in the
creation or imposition of any lien, charge, claim or encumbrance upon
any property or assets of the Company or any of the Xxxxxxx Entities;
(iv) to such counsel's knowledge, no approval,
authorization, consent or order of or filing with any federal or state
governmental or regulatory commission, board, body, authority or agency
is required in connection with the execution, delivery and performance
of this Agreement and the QIU Agreement, the consummation of the
transactions contemplated hereby and thereby, the sale and delivery of
the Shares by the Company as contemplated hereby other than such as
have been obtained or made under the Securities Act and Exchange Act,
and except that such counsel need express no opinion as to any
necessary qualification under the rules of the NASD or state securities
laws;
(v) the Company is not, and upon the sale of the
Shares as herein contemplated will not be an investment company
required to be registered under the Investment Company Act;
(vi) the Shares have been duly authorized and, when
the Shares have been issued by the Company and duly delivered against
payment therefor as contemplated by this Agreement, the
The Xxxxxxx Co.
_________, 2000
Page 23
Shares will be validly issued, fully paid and nonassessable, free and
clear of any pledge, lien, encumbrance, security interest, mortgage or
other claim whatsoever;
(vii) the issuance and sale of the Shares by the
Company is not subject to preemptive or other similar rights arising by
operation of law, under the articles of incorporation or by-laws of the
Company, under any agreement known to such counsel to which the Company
or any of the Xxxxxxx Entities is a party or, to the best of such
counsel's knowledge, otherwise;
(viii) the form of certificate used to evidence the
Common Stock complies in all material respects with all applicable
statutory requirements, with any applicable requirements of the
articles of incorporation and by-laws of the Company and the
requirements of the Nasdaq National Market;
(ix) the EChapman Registration Statement has become
effective under the Securities Act and no stop order suspending the
effectiveness of the EChapman Registration Statement has been issued
and, to the best of such counsel's knowledge, no proceedings with
respect thereto have been commenced or threatened;
(x) as of the Effective Date, the EChapman
Registration Statement and the Prospectus (except as to the financial
statements and other financial and statistical data contained in such
registration statements or prospectuses, as to which such counsel need
express no opinion) complied as to form in all material respects with
the requirements of the Securities Act and the Securities Act
Regulations;
(xi) the statements under the captions
"Capitalization," "Business -- Government Regulation," "Certain
Transactions," "Description of Capital Stock," and "Shares Eligible for
Future Sale," in the EChapman Registration Statement and the
Prospectus, insofar as such statements constitute a summary of the
legal matters referred to therein, constitute accurate summaries
thereof in all material respects;
(xii) except as set forth in the Prospectus, to the
best of such counsel's knowledge, there are no material legal or
governmental proceedings pending or threatened against, or involving
the properties of the Company or any of the Xxxxxxx Entities required
to be disclosed in the Prospectus; provided that
The Xxxxxxx Co.
_________, 2000
Page 24
for this purpose such counsel need not regard any litigation or
governmental proceedings to be "threatened" unless the potential
litigant or governmental authority has manifested to the Company or
any of the Xxxxxxx Entities, or to their management, a present
intention to initiate such proceedings;
(xiii) to such counsel's knowledge, there are no
contracts or documents of a character which are required to be filed as
exhibits to the EChapman Registration Statement or to be described or
summarized in the Prospectus which have not been so filed, summarized
or described;
(xiv) The Selling Stockholder has, and will have at
the time of delivery of the Additional Shares, full legal right, power,
authority and capacity, and, except as required under the Securities
Act and state securities and Blue Sky laws, all necessary consents,
approvals, authorizations, orders, registrations, filings,
qualifications, licenses and permits of and from all public, regulatory
or governmental agencies and bodies, as are required for the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby, including the sale, assignment,
transfer and delivery of the Additional Shares to be sold, assigned,
transferred and delivered by the Selling Stockholder hereunder; and
(xv) The Underwriters (assuming they are BONA FIDE
purchasers within the meaning of the Uniform Commercial Code) have
acquired good and marketable title to the shares being sold by the
Selling Stockholder on the Additional Closing Date, free and clear of
any and all claims, liens, encumbrances and security interests.
In addition, such counsel shall state that they have participated in
the preparation of the Prospectus and the EChapman Registration Statement and in
conferences with officers and other representatives of the Company and
representatives of the independent public accountants for the Company and with
the Underwriters and the QIU at which the contents of the Prospectus and the
EChapman Registration Statement and related matters were discussed and, although
such counsel is not passing upon and does not assume responsibility for the
accuracy, completeness or fairness of the statements contained in the Prospectus
and the EChapman Registration Statement and has not made any independent
investigation or verification thereof, nothing has come to their attention
during the course of such participation that leads them to believe that at the
time the EChapman Registration Statement became effective, the Prospectus and
the EChapman Registration Statement (other than the financial
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statements and schedules and other financial and statistical data and
information included therein or omitted therefrom, as to which they need express
no opinion) contained an untrue statement of a material fact or omitted to state
a material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) the Underwriters shall have received, on each of the date hereof
and the Closing Date, a letter dated the date hereof or such Closing Date, as
the case may be, in form and substance satisfactory to the Underwriters, from
Xxxxxx Xxxxxxxx LLP, independent public accountants, confirming that they are
independent public accountants within the meaning of the Securities Act and the
Securities Act Regulations and stating that in their opinion the financial
statements examined by them and included in the EChapman Registration Statement
comply in form in all material respects with the applicable accounting
requirements of the Securities Act and the Securities Act Regulations; and
containing the information and statements of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in the EChapman
Registration Statement and the Prospectus.
(c) No amendment or supplement to the EChapman Registration Statement
or the Prospectus shall have been filed to which the Underwriters have objected
in writing.
(d) Prior to the completion of the Offering (i) no stop order
suspending the effectiveness of the eChapman Registration Statement or any order
preventing or suspending the use of any Preliminary Prospectus or the Prospectus
shall have been issued by the Commission, (ii) no suspension of the
qualification of the Shares for offering or sale in any jurisdiction shall have
occurred, and no proceeding for such suspension shall have been initiated or
threatened; and (iii) the EChapman Registration Statement and the Prospectus
shall not contain an untrue statement of material fact or omit to state a
material fact, individually or in the aggregate, required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(e) Prior to the completion of the Offering (i) no stop order
suspending the effectiveness of the CHI Registration Statement or the CCMHI
Registration Statement or any order preventing or suspending the use of the CHI
Proxy Statement/Prospectus or the CCMHI Proxy Statement/Prospectus shall have
been issued by the Commission, (ii) no suspension of the qualification of the
CHI Shares or the CCMHI Shares for offering or sale in any jurisdiction shall
have occurred, and no proceeding for such suspension shall have been initiated
or threatened; and (iii) none of the CHI Registration Statement, the CCMHI
Registration Statement, the CHI Proxy Statement/Prospectus or the CCMHI Proxy
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Statement/Prospectus shall contain an untrue statement of material fact or omit
to state a material fact, individually or in the aggregate, required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(f) Between the time of execution of this Agreement and the Closing
Date (i) no material and unfavorable change in the assets, operations, business,
prospects or condition (financial or otherwise) of the Company and the Xxxxxxx
Entities taken as a whole, shall have occurred or become known (whether or not
arising in the ordinary course of business), and (ii) no transaction which is
material and unfavorable to the Company shall have been entered into by the
Company or any of the Xxxxxxx Entities.
(g) On the Effective Date, the QIU Agreement shall have been entered
into and delivered by all required parties.
(h) On or before the Closing Date, the stockholders of both CHI and
CCMHI shall have approved the Mergers by the vote required under the Maryland
General Corporation Law.
(i) On or before the Closing Date, all conditions to the Mergers, other
than the closing of the Offering, shall have been satisfied.
(j) On the Closing Date, all filings required to have been made
pursuant to Rules 424, 430A or 462(c)under the Securities Act have been made.
(k) The NASD shall not have raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements.
(l) The Company shall, on the date hereof and at the Closing Date,
deliver to the Underwriters a certificate of its president and its chief
financial officer to the effect that, to each of such officer's knowledge, the
representations and warranties of the Company set forth in this Agreement and
the conditions set forth in paragraphs (c) through (i) inclusive of this Section
9 have been met and are true and correct as of such date.
(m) The Company shall have furnished to the Underwriters such other
documents and certificates as to the accuracy and completeness of any statement
in the EChapman Registration Statement and the Prospectus, the representations,
warranties and statements of the Company contained herein, and the performance
by the Company of the covenants contained herein, and the fulfillment of any
conditions contained herein or therein, as of the Closing Date as the
Underwriters may reasonably request.
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(n) The Company shall have performed such of its obligations under this
Agreement as are to be performed by the terms hereof at or before the Closing
Date.
SECTION 10. INDEMNIFICATION AND CONTRIBUTION
(a) The Company agrees to indemnify and hold harmless each Underwriter
and its directors, officers and each person, if any, who controls the
Underwriter within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act from and against any and all losses, claims, damages,
liabilities and judgments (including, without limitation, any legal or other
expenses incurred in connection with investigating or defending any matter,
including any action, that could give rise to any such losses, claims, damages,
liabilities or judgments and any amount paid in settlement of, any action, suit
or proceeding commenced or any claim asserted), to which the Underwriters may
become subject under the Securities Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, related to, based
upon or arising out of (i) an untrue statement or alleged untrue statement of a
material fact contained in the EChapman Registration Statement, the Prospectus,
or any amendment or supplement thereto, or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or (ii) any breach or alleged breach by
the Company of its representations, warranties and agreements contained in this
Agreement.
The Selling Stockholder agrees to indemnify and hold harmless each
Underwriter and its directors, officers and each person, if any, who controls
the Underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as foregoing indemnity from
the Company to each Underwriter, but only with respect to (i) any breach or
alleged breach by the Selling Stockholder of the representations and warranties
contained in Section 2 of this Agreement or (ii) information furnished in
writing by or on behalf of the Selling Stockholder expressly for use in the
EChapman Registration Statement or the Prospectus.
Each Underwriter, severally, and not jointly, agrees to indemnify and
hold harmless the Company, its directors and officers who signed the EChapman
Registration Statement, the Selling Stockholder, and each person, if any, who
controls the Company or the Selling Stockholder within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act to the same
extent as the foregoing indemnity from the Company to each Underwriter, but only
with respect to (i) any breach or alleged breach by any Underwriter of its
representations, warranties and agreements contained in this Agreement or (ii)
information relating to any Underwriter furnished in writing by the Underwriter
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Page 28
expressly for use in the EChapman Registration Statement, the Prospectus, or any
amendment or supplement thereto.
(b) In case any action shall be commenced involving any person in
respect of which indemnity may be sought under this Section 10, such person
shall promptly notify each indemnifying party in writing and such indemnifying
party shall assume the defense thereof, including the employment of counsel
reasonably satisfactory to such indemnified party, and the payment of all fees
and expenses of such counsel, as incurred. Any indemnified party shall have the
right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such indemnified party unless (i) the employment of such counsel by
such indemnified party shall have been specifically authorized in writing by the
indemnifying parties, (ii) the indemnifying party shall have failed to assume
the defense of such action or employ counsel reasonably satisfactory to the
indemnified party, or (iii) the named parties to any such action (including any
impleaded parties) include both the indemnified party and the indemnifying
party, and the indemnified party shall have been advised by such counsel that
there may be one or more legal defenses available to it which are different from
or additional to those available to the indemnifying party (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the indemnified party). In any such case, the indemnifying party
shall not, in connection with any one action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all indemnified parties and all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by the Underwriters,
in the case of parties indemnified pursuant to the first and second paragraphs
of Section 10(a), and by the Company, in the case of the parties indemnified
pursuant to the third paragraph of Section 10(a). The indemnifying party shall
indemnify and hold harmless the indemnified party from and against any and all
losses, claims, damages, liabilities and judgments by reason of any settlement
of any action (i) effected with its written consent or (ii) effected without its
written consent if the settlement is entered into more than twenty business days
after the indemnifying party shall have received a request from the indemnified
party for reimbursement for the fees and expense of counsel (in any case where
such fees and expenses are at the expense of the indemnifying party) and, prior
to the date of such settlement, the indemnifying party shall have failed to
comply with such reimbursement request. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement or
compromise of, or consent to the entry of judgment with respect to, any pending
or threatened action in respect of which the indemnified party is or could have
been a party and indemnity or contribution may be or could have been sought
hereunder by the indemnified party, unless such settlement, compromise or
The Xxxxxxx Co.
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Page 29
judgment (i) includes an unconditional release of the indemnified party from all
liability on claims that are or could have been the subject matter of such
action and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of the indemnified party.
(c) To the extent the indemnification provided for in Section 10(a) is
unavailable to, or insufficient to hold harmless any indemnified party under
Section 10(a), in respect of any loss, claim, damage, liability or judgment
referred to therein, then each indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities and
judgments (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, the Underwriters and the Selling Stockholder
from the Offering or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, or if the indemnified party failed to give the
notice required under Section 10(b), in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company, the Underwriters and the Selling Stockholder
in connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative benefits received by the Company, the
Underwriters and the Selling Stockholder shall be deemed to be in the same
proportion as the total net proceeds from the Offering (after deducting
expenses) bear to the total fee paid to the Underwriters pursuant to Section 3.
The relative fault of the Company, the Underwriters and the Selling Stockholder
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company, the
Underwriters or the Selling Stockholder, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company, the Underwriters and the Selling Stockholder agree that it
would not be just and equitable if contribution pursuant to this Section 10(c)
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or judgments
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any matter, including any action that could have given rise to such
losses, claims, damages, liabilities or judgments. Notwithstanding the
provisions of this Section 10, 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
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Page 30
the public exceeds the amount of any damages that such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(d) The remedies provided for in this Section 10 are not exclusive and
shall not limit any rights or remedies that may otherwise be available to any
indemnified party at law or in equity.
(e) The statements under the caption "Underwriting" in the Prospectus
constitute the only information furnished to the Company in writing on behalf of
the Underwriters expressly for use in the EChapman Registration Statement, the
Prospectus or any amendment or supplement thereto, or any preliminary
prospectus.
(f) The indemnity and contribution agreements contained in this Section 10, and
the covenants, representations and warranties of the Company in this Agreement,
shall remain operative and in full force and effect regardless of (i) any
investigation made by or on behalf of the Underwriters or by or on behalf of any
person who controls the Underwriters or (ii) any termination of this Agreement
or the Offering.
(g) Notwithstanding any other provision hereof, the liability of the
Selling Stockholder under such Selling Stockholder's representations and
warranties contained in Section 2 hereof and under the indemnity, contribution
and reimbursement agreements contained in the provisions of this Section 10
hereof shall be limited to an amount equal to the public offering price of the
stock sold by such Selling Stockholder to the Underwriters.
SECTION 11. MISCELLANEOUS
(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto.
(b) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(c) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
The Xxxxxxx Co.
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(d) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(e) This Agreement shall be governed by and shall be construed in
accordance with the laws of the State of Maryland without reference to
principles of conflict of law.
(f) This Agreement has been and is made solely for the benefit of the
Underwriters, the Company, the Selling Stockholder and their respective
successors, executors, administrators, heirs and assigns, and the officers,
directors and controlling persons referred to herein, and no other person will
have any right or obligation hereunder. The term "successors" shall not include
any purchaser of the Shares merely because of such purchase.
(g) This Agreement embodies the entire agreement between the
Underwriters, the Company and the Selling Stockholder relating to the subject
matter hereof and supersedes all prior agreements, representations and
understandings, if any, relating to the subject matter hereof.
Please confirm that the foregoing correctly sets forth the agreement
between the Underwriters, the Company and the Selling Stockholder.
Very truly yours,
XXXXXXXX.XXX, INC
By:__________________________
Xxxxxx X. Xxxxxxx, Xx.
President
Accepted, as of the date first above
written ,on behalf of itself and as
representative of the several
Underwriters named in Schedule I hereto
THE XXXXXXX CO. Accepted,
SELLING STOCKHOLDER
By:_____________________________________
Xxxxxx X. Xxxxxxx, Xx. By:______________________________
President Xxxxxx X. Xxxxxxx, Xx.,
