Exhibit 1.2
____________, 1998
Xxxxxxx Capital Management Holdings, Inc.
Xxxxxxx Capital Management, Inc.
World Trade Center - Baltimore
000 Xxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
The Xxxxxxx Co.
World Trade Center - Baltimore
000 Xxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Re: Agreement to Act as "Qualified Independent Underwriter"
Ladies and Gentlemen:
You have advised us that Xxxxxxx Capital Management Holdings, Inc. (the
"Company"), a Maryland corporation, has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form SB-2 (Reg. No.
333-51883), relating to the offering by the Company of up to 1,250,000 shares of
the common stock, par value $.001 per share, of the Company (the "Common Stock"
or the "Shares").
The Company intends to engage The Xxxxxxx Co. (sometimes referred to
herein as the "Underwriter") to sell the Common Stock in an initial public
offering on a best-efforts basis (the "Offering"). The Underwriter will not
purchase the Shares from the Company but rather will act on an agency basis
pursuant to an Underwriting Agreement to be entered into by the Company and
the Underwriter (the "Underwriting Agreement").
We understand that, as a member of the National Association of Securities
Dealers, Inc. ("NASD"), the Underwriter may participate in the Offering only if
the price at which the Common Stock is to be offered to the public is no higher
than the price recommended by a "Qualified Independent Underwriter" (as such
term is defined in Rule 2720(b)(15) of the NASD Conduct Rules) and such
Qualified Independent Underwriter participates in the preparation of the
registration statement and prospectus relating to the Offering and exercises the
usual standards of due diligence with respect thereto. This Agreement describes
the terms on which Xxxxxx Xxxxx Xxxxx, Incorporated ("FBW") agrees to serve as
a
Xxxxxxx Capital Management Holdings, Inc.
Xxxxxxx Capital Management, Inc.
The Xxxxxxx Co.
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Qualified Independent Underwriter in connection with the Offering. In
connection with the services to be provided by FBW hereunder and based upon the
representations and warranties of, and subject to the performance of the
covenants by, the Company herein set forth and FBW's satisfaction with the
results of its due diligence review, FBW agrees to deliver to the Company and
the Underwriter, and file with the NASD, a letter (the "Letter"), substantially
in the form of Appendix A hereto, on the date the Registration Statement (as
hereinafter defined) is first declared effective by the Commission (the
"Effective Date") or, if the Offering is not priced on the Effective Date, on
the date of the pricing of the Offering (the "Pricing Date"), and at each
subsequent Closing Date (as defined). As a condition to the delivery of the
Letter, the Registration Statement and each amendment thereto will include any
revisions that in the reasonable judgment of FBW and its legal counsel are
required to enable FBW to deliver the Letter.
As herein used, the term "Registration Statement" means the registration
statement on Form SB-2 (including the related prospectuses, financial
statements, exhibits, schedules and all other documents filed as parts thereof
or incorporated therein) for the registration of the Common Stock under the
Securities Act of 1933, as amended (the "Securities Act"), in the form declared
effective, filed with the Commission and any amendments thereto. The term
"Prospectus" means the prospectus, including any preliminary or final prospectus
(including the form of prospectus first filed with the Commission pursuant to
Rule 424(b) or 430A under the Securities Act after the Registration Statement
with respect to such Offering becomes effective or, if no such filing is
required, each prospectus in the form included in the Registration Statement
with respect to such Offering at the time it is first declared effective), and
any amendment or supplement thereto, to be used in connection with the Offering.
1. NASD Requirement. FBW hereby confirms its agreement to act in
connection with the Offering as a "Qualified Independent Underwriter" within the
meaning of Rule 2720 of the NASD Conduct Rules and represents that FBW satisfies
or will satisfy at the times designated in Rule 2720(b)(15) the requirements set
forth therein.
2. Consent. FBW hereby consents to be named in the Registration
Statement and Prospectus with respect to the Offering as having acted as the
Qualified Independent Underwriter and to the filing of this Agreement as an
exhibit to the Registration Statement. All references to FBW in the
Registration
Xxxxxxx Capital Management Holdings, Inc.
Xxxxxxx Capital Management, Inc.
The Xxxxxxx Co.
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Statement or Prospectus or in any other filing, report, document, release or
other communication prepared, issued or transmitted in connection with the
Offering by the Company or the Underwriter or any entity controlling, controlled
by or under common control with, or by any of them, shall be subject to FBW's
prior consent with respect to location, form and substance. FBW's obligation to
act as a Qualified Independent Underwriter hereunder shall terminate if the
Company shall breach in any material respect any representation, warranty or
covenant hereunder and such breach shall not be cured within ten days of written
notice thereof to the Company.
3. Fees and Expenses. The Company agrees to pay FBW a fee equal to the
greater of $100,000 or 30% of the aggregate underwriting discount of 7.0% for
each share of Common Stock sold in the Offering (the "Fee") for its services
hereunder, which shall be payable on each date on which payment for and delivery
of any of the Shares are made (each a "Closing Date"). The Company also agrees
to reimburse FBW for all reasonable out-of-pocket expenses, including all
reasonable fees and expenses of FBW's counsel (including accrued expenses),
incurred by FBW in connection with this Agreement and the Offering. If, for
whatever reason, it is determined that the Offering shall not commence or will
not be consummated, FBW shall be entitled to be paid in full for the
above-mentioned expenses, including fees and expenses of counsel, promptly
following such determination, and shall continue to be entitled to any amount
payable to FBW under Section 7 hereof.
4. Representations, Warranties and Covenants of the Company. The
Company represents and warrants to FBW that:
(a) On January 8, 1998, Xxxxxxx Capital Management, Inc. ("CCM")
became a wholly-owned subsidiary of the Company when: (i) The Xxxxxxx Co.
caused the Company to be organized; and (ii) The Xxxxxxx Co. transferred all
of the outstanding equity securities of CCM to the Company in exchange for
the issuance of shares of common stock of the Company. The formation of the
Company and the subsequent transfer of CCM's equity securities (collectively,
the "Formation Transactions") were conducted in accordance with all
applicable Federal and state laws and regulations, was duly authorized,
approved and adopted by all requisite corporate action of all constituent
corporations and under Section 1032(a) of the Code, the Company did not
recognize gain or loss as a result of the Formation Transactions.
Xxxxxxx Capital Management Holdings, Inc.
Xxxxxxx Capital Management, Inc.
The Xxxxxxx Co.
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(b) On February 26, 1998, The Xxxxxxx Co. and its sole
stockholder, Xxxxxxx Holdings, Inc. ("CHI"), effected a spin-off transaction
pursuant to which all of the outstanding equity securities of the Company were
distributed by The Xxxxxxx Co. to CHI and, immediately following such
distribution, all of such securities were distributed by CHI to its then
existing stockholders (the "Spin-offs"). The Spin-offs were conducted in
accordance with all applicable Federal and state laws and regulations, and
were duly authorized, approved and adopted by all requisite corporate action
of all constituent corporations.
(c) The Company has an authorized capitalization as set forth in the
Prospectus under the caption "Capitalization;" the outstanding shares of capital
stock of the Company and CCM, have been duly and validly authorized and issued
and are fully paid and non-assessable; except as disclosed in the Prospectus,
there are no outstanding (i) securities or obligations of the Company or CCM
convertible into or exchangeable for any capital stock of the Company or CCM,
(ii) warrants, rights or options to subscribe for or purchase from the Company
or CCM any such capital stock or any such convertible or exchangeable securities
or obligations, or (iii) obligations of the Company or CCM to issue any shares
of capital stock, any such convertible or exchangeable securities or
obligations, or any such warrants, rights or options;
(d) the Company's only subsidiary is CCM and the Company and CCM
each has been duly incorporated and is validly existing as a corporation in
good standing under the laws of its respective jurisdiction of incorporation
with full corporate power and authority to own its respective properties and
to conduct its respective business as described in the Registration Statement
and the Prospectus;
(e) the Company and CCM are duly qualified or licensed by each
jurisdiction in which they conduct their respective businesses and in which the
failure, individually or in the aggregate, to be so qualified or licensed could
reasonably be expected to have a material adverse effect on the
Xxxxxxx Capital Management Holdings, Inc.
Xxxxxxx Capital Management, Inc.
The Xxxxxxx Co.
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assets, operations, business, prospects or condition (financial or otherwise) of
the Company and CCM taken as a whole; except as disclosed in the Prospectus, CCM
is not prohibited or restricted, directly or indirectly, from paying dividends
to the Company, or from making any other distribution with respect to CCM's
capital stock or from paying the Company any loans or advances to CCM from the
Company or from transferring CCM's property or assets to the Company;
(f) the Company and CCM are in compliance with all applicable
federal, state, local and foreign laws, rules and regulations, including,
without limitation, the Securities Act, the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the Investment Company Act of 1940, as amended
(the "Investment Company Act"), the Investment Advisers Act of 1940, as amended,
and the regulations promulgated thereunder (collectively, the "Securities
Laws"), orders, decrees and judgments, including those relating to transactions
with affiliates, except where, individually or in the aggregate, the failure to
be in compliance in a material respect therewith would not have a material
adverse effect on the assets, operations, business, prospects or condition
(financial or otherwise) of the Company and CCM taken as a whole;
(g) neither the Company nor CCM is in breach of, or in default
under, nor has any event occurred which with giving of notice, lapse of time,
or both would constitute a breach of, or default under, its respective
articles of incorporation or charter or by-laws or in the performance or
observance of any obligation, agreement, covenant or condition contained in
any license, indenture, mortgage, deed of trust, loan or credit agreement or
other agreement or instrument to which the Company or CCM is a party or by
which any of them or their respective properties is bound, except for such
breaches or defaults which, individually or in the aggregate, would not have
a material adverse effect on the assets, operations, business, prospects or
condition (financial or otherwise) of the Company and CCM taken as a whole,
and the execution, delivery and performance of this Agreement and the
Underwriting Agreement, and consummation of the transactions contemplated
hereby and thereby will not result in the creation or imposition of any lien,
charge, claim or encumbrance upon any property or asset of the Company or
CCM, or conflict with, or result in any breach of, or constitute a default
under, or constitute an event which with giving of notice, lapse of time, or
both would constitute a breach of, or default under, (i) any provision of the
articles of incorporation or charter or by-laws of the Company or CCM, or
(ii) any provision of any license, indenture, mortgage, deed of trust, loan
or credit agreement or other
Xxxxxxx Capital Management Holdings, Inc.
Xxxxxxx Capital Management, Inc.
The Xxxxxxx Co.
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agreement or instrument to which the Company or CCM is a party or by which
either of them or their respective properties may be bound or affected, or (iii)
any federal, state, local or foreign law, regulation or rule, including, without
limitation, the Securities Laws, or any decree, judgment or order applicable to
the Company or CCM, except in the case of this clause (iii) for such breaches or
defaults which, individually or in the aggregate, would not have a material
adverse effect on the assets, operations, business, prospects or condition
(financial or otherwise) of the Company and CCM taken as a whole;
(h) 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 7 hereof may be limited by federal or state securities laws and public
policy considerations in respect thereof;
(i) no approval, authorization, consent or order of or filing with
any federal, state or local governmental or regulatory commission, board, body,
authority or agency is required in connection with the execution, delivery and
performance of this Agreement and the Underwriting Agreement, 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, (ii) such approvals as have been obtained or will have been
obtained by the Initial Closing Date in connection with the approval of the
quotation of the Shares on the Nasdaq SmallCap Market (the "SmallCap Market")
and (iii) any necessary qualification under the securities or blue sky laws of
the various jurisdictions in which the Shares are being offered through the
Underwriter;
(j) each of the Company and CCM has all necessary licenses,
authorizations, consents and approvals and has made all necessary filings
required under any federal, state, local and foreign law, regulation and rule,
including, without limitation, the Securities Laws, and has obtained all
necessary authorizations, consents and approvals from other persons, required in
order to conduct their respective businesses as described in the Prospectus,
except to the extent that any failure to have any such licenses, authorizations,
consents or
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Xxxxxxx Capital Management, Inc.
The Xxxxxxx Co.
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approvals, to make any such filings or to obtain any such authorizations,
consents or approvals would not, individually or in the aggregate, have a
material adverse effect on the assets, operations, business, prospects or
condition (financial or otherwise) of the Company and CCM taken as a whole;
neither the Company nor CCM is in violation of, in default under, or has
received any notice regarding a possible violation, default or revocation of any
such license, authorization, consent or approval applicable to the Company or
CCM, the effect of which, individually or in the aggregate, could be material
and adverse to the assets, operations, business, prospects or condition
(financial or otherwise) of the Company and CCM taken as a whole; and no such
license, authorization, consent or approval contains a materially burdensome
restriction that is not adequately disclosed in the Registration Statement and
the Prospectus;
(k) each of the Registration Statement and any Rule 462(b)
Registration Statement has become effective under the Securities Act and no stop
order suspending the effectiveness of the Registration Statement or any Rule
462(b) Registration Statement has been issued under the Securities Act and no
proceedings for that purpose have been instituted or are pending or, to the
knowledge of the Company, are threatened by the Commission, and any request on
the part of the Commission for additional information has been complied with;
(l) the Preliminary Prospectus and the Registration Statement comply
and the Prospectus and any further amendments or supplements thereto will, when
they have become effective or are filed with the Commission, as the case may be,
comply in all material respects with the requirements of the Securities Act and
the regulations promulgated thereunder (the "Securities Act Regulations"); the
Registration Statement did not, and any amendment thereto will not, in each case
as of the applicable effective date, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; and the Preliminary Prospectus does not, and the
Prospectus or any amendment or supplement thereto will not, as of the applicable
filing date and at each Closing Date contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that the Company makes no
warranty or representation
Xxxxxxx Capital Management Holdings, Inc.
Xxxxxxx Capital Management, Inc.
The Xxxxxxx Co.
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with respect to any statement contained in the Registration Statement or the
Prospectus in reliance upon and in conformity with the information concerning
FBW and furnished in writing by or on behalf of FBW to the Company expressly for
use in the Registration Statement or the Prospectus (that information being
limited to that described in Section 7(e) hereof);
(m) the Preliminary Prospectus was and the Prospectus delivered to
the Underwriter for use in connection with the Offering will be identical in all
material respects to the versions of the Preliminary Prospectus and the
Prospectus created to be transmitted to the Commission for filing via the
Electronic Data Gathering Analysis and Retrieval System ("XXXXX"), except to the
extent permitted by Regulation S-T;
(n) all legal or governmental proceedings, contracts or documents of
a character required to be filed as exhibits to the Registration Statement or to
be summarized or described in the Prospectus have been so filed, summarized or
described as required and any such summaries or descriptions present fairly the
information required to be shown;
(o) there are no actions, suits, proceedings, inquiries or
investigations pending or, to the Company's knowledge, threatened against the
Company or CCM or any of their respective officers or directors or to which the
properties, assets or rights of either entity are subject, at law or in equity,
before or by any federal, state, local or foreign court, governmental or
regulatory commission, board, body, authority, arbitration panel or agency
which, individually or in the aggregate, could result in a judgment, decree,
award or order having a material adverse effect on the assets, operations,
business, prospects or condition (financial or otherwise) of the Company and CCM
taken as a whole;
(p) the financial statements, including the notes thereto, included
in the Registration Statement and the Prospectus present fairly the consolidated
financial position of the Company and CCM as of the dates indicated and the
consolidated results of operations and changes in stockholders' equity and cash
flows of the Company and CCM for the periods specified; such financial
statements have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis during the periods involved (except as
indicated in the notes thereto); the financial statement schedules included in
the Registration Statement and the amounts in the Prospectus under
Xxxxxxx Capital Management Holdings, Inc.
Xxxxxxx Capital Management, Inc.
The Xxxxxxx Co.
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the captions "Prospectus Summary -- Summary Financial Data," "Capitalization,"
"Dilution" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" fairly present the information shown therein and have
been compiled on a basis consistent with the financial statements included in
the Registration Statement and the Prospectus;
(q) Xxxxxx Xxxxxxxx LLP, whose reports on the consolidated financial
statements of the Company and CCM are filed with the Commission as part of the
Registration Statement and Prospectus, are and were during the periods covered
by their reports independent public accountants as required by the Securities
Act and the Securities Act Regulations;
(r) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as may be
otherwise stated in the Registration Statement or the Prospectus, there has not
been (i) any material adverse change, in the assets, liabilities, capital,
operations, business or condition (financial or otherwise), present or
prospective, of the Company and CCM taken as a whole, whether or not arising in
the ordinary course of business, (ii) any transaction, which is material to the
Company and CCM taken as a whole, contemplated or entered into by the Company or
CCM, (iii) any obligation, contingent or otherwise, directly or indirectly
incurred by the Company or CCM, which is material to the Company and CCM taken
as a whole or (iv) any dividend or distribution of any kind declared, paid or
made by the Company or CCM on any class of capital stock;
(s) 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;
(t) the Shares will conform in all material respects to the
description thereof contained in the Registration Statement and the Prospectus;
(u) 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;
(v) the Shares have been duly authorized and, when the Shares have
been issued and duly delivered against payment therefor as
Xxxxxxx Capital Management Holdings, Inc.
Xxxxxxx Capital Management, Inc.
The Xxxxxxx Co.
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contemplated by the Underwriting 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 by-laws of the Company, under any agreement to which the
Company or CCM is a party, or otherwise;
(w) 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;
(x) any certificate signed by any officer of the Company or CCM
delivered to FBW or to counsel for FBW pursuant to or in connection with this
Agreement shall be deemed a representation and warranty by the Company to each
of FBW and its counsel as to the matters covered thereby;
(y) the form of certificate used to evidence the Common Stock
complies in all material respects with all applicable statutory requirements,
with any applicable requirements of the articles of incorporation and by-laws of
the Company, and with the requirements of the SmallCap Market;
(z) 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;
(aa) except as disclosed in the Prospectus, the Company has not
incurred any liability for any finder's fees or similar payments in connection
with the transactions herein contemplated; and
(bb) The Company, CCM and their predecessors have filed all necessary
federal, state and foreign income and franchise tax returns that they were
required to file and have paid all taxes shown as due thereon (including, but
not limited to, all penalties, interest and other additions thereto), except for
failures to file or pay which would not, individually or in the aggregate, have
a material adverse effect on the assets, operations, business, prospects or
Xxxxxxx Capital Management Holdings, Inc.
Xxxxxxx Capital Management, Inc.
The Xxxxxxx Co.
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condition (financial or otherwise) of the Company and CCM taken as a whole. All
such tax returns were correct and complete in all material respects. All tax
liabilities are adequately provided for on the books of the Company and CCM,
except to such extent as would not, individually or in the aggregate, have a
material adverse affect on the assets, operations, business, prospects or
condition (financial or otherwise) of the Company and CCM taken as a whole. The
Company, CCM and their predecessors have made all necessary payroll and
employment tax payments and are current and up-to-date with respect to such tax
payments as of the date of this Agreement, except where failure to make any such
payment would not, individually or in the aggregate, have a material adverse
affect on the assets, operations, business, prospects or condition (financial or
otherwise) of the Company and CCM taken as a whole. The Company and CCM have no
knowledge of any tax proceedings or other action pending or threatened against
the Company or CCM which, individually or in the aggregate, could have a
material adverse affect on the assets, operations, business, prospects or
condition (financial or otherwise) of the Company and CCM taken as a whole.
5. Certain Covenants of the Company. The Company hereby covenants and
agrees with FBW that:
(a) The Company will furnish such information as may be required and
otherwise to cooperate in qualifying the Shares for offering and sale under the
securities or blue sky laws of such states as the Underwriter may designate and
to maintain such qualifications in effect as long as required for the
distribution of the Shares, provided that the Company shall not be required to
qualify as a foreign corporation or to consent to the service of process under
the laws of any such state (except for service of process with respect to the
offering and sale of the Shares).
(b) The Company will prepare immediately an amended Prospectus in a
form approved by FBW and the Underwriter and file or transmit for filing such
Prospectus with the Commission in accordance with Rule 430A and to furnish
promptly to the Underwriter as many copies of the Prospectus (or of the
Prospectus as amended or supplemented if the Company shall have made any
amendments or supplements thereto after the effective date of the Registration
Statement) as the Underwriter may reasonably request for the purposes
contemplated by the Securities Act Regulations, which Prospectus and any
amendments or supplements thereto furnished to the Underwriter will be
Xxxxxxx Capital Management Holdings, Inc.
Xxxxxxx Capital Management, Inc.
The Xxxxxxx Co.
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identical to the version created to be transmitted to the Commission for filing
via XXXXX, except to the extent permitted by Regulation S-T.
(c) The Company will advise FBW promptly, confirming such advice in
writing, of (i) the receipt of any comments from, or any request by, the
Commission for amendments or supplements to the Registration Statement or the
Prospectus or for additional information with respect thereto, or (ii) the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus, or of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes. The
Company will make every reasonable effort to obtain the lifting or removal of
such order as soon as possible. The Company will advise FBW promptly of any
proposal to amend or supplement the Registration Statement or the Prospectus and
will file no such amendment or supplement to which FBW has reasonably objected
in writing.
(d) The Company will advise FBW promptly of the happening of any
event known to the Company within the time during which a Prospectus relating to
the Shares is required to be delivered under the Securities Act Regulations
which, in the judgment of the Company, would require the making of any change in
the Prospectus then being used so that the Prospectus would not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, and, during such
time, the Company will prepare and furnish, at the Company's expense, to FBW
promptly such amendments or supplements to such Prospectus as may be necessary
to reflect any such change and to furnish to FBW a copy of such proposed
amendment or supplement before filing any such amendment or supplement with the
Commission.
(e) The Company will furnish promptly to FBW a signed copy of the
Registration Statement, as initially filed with the Commission, and of all
amendments or supplements thereto (including all exhibits filed therewith or
incorporated by reference therein) and such number of conformed copies of the
foregoing as FBW may reasonably request.
Xxxxxxx Capital Management Holdings, Inc.
Xxxxxxx Capital Management, Inc.
The Xxxxxxx Co.
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(f) The Company will furnish to FBW, not less than one business day
before filing with the Commission subsequent to the effective date of the
Registration Statement and during the period referred to in paragraph (d) above,
a copy of any document proposed to be filed with the Commission pursuant to
Section 13, 14, or 15(d) of the Exchange Act.
(g) The Company will apply the net proceeds of the sale of the
Shares in accordance with its statements under the caption "Use of Proceeds"
in the Prospectus.
(h) The Company will make generally available to its security
holders as soon as practicable, but in any event not later than the end of
the fiscal quarter first occurring after the first anniversary of the
effective date of the Registration Statement, an earnings statement complying
with the provisions of Section 11(a) of the Securities Act (in form, at the
option of the Company, complying with the provisions of Rule 158 of the
Securities Act Regulations) covering a period of 12 months beginning after
the effective date of the Registration Statement.
(i) The Company will use its best efforts to effect and maintain the
quotation of the Shares on the SmallCap Market and to file with the SmallCap
Market all documents and notices required of companies that have securities
included for quotation on the SmallCap Market.
(j) At no time prior to the completion of the Offering will the
Company issue any press releases or other communications directly or indirectly
and will hold no press conferences with respect to the Company or CCM, on the
financial condition, results of operations, business, properties, assets or
liabilities of the Company or CCM, or the Offering of the Shares, without the
prior written consent of FBW.
6. Conditions of FBW's Obligations:
The obligations of FBW hereunder are subject to the accuracy of the
representations and warranties on the part of the Company in all material
respects on the date hereof and on each Closing Date, the performance by the
Company of its obligations hereunder in all material respects and to the
following further conditions:
Xxxxxxx Capital Management Holdings, Inc.
Xxxxxxx Capital Management, Inc.
The Xxxxxxx Co.
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(a) The Company shall furnish to FBW on the date hereof and on each
Closing Date an opinion of Xxxxxxx, Xxxxxxx and Xxxxxx, LLP, counsel for the
Company, addressed to FBW and dated as of each such Closing Date, and in a form
reasonably satisfactory to Xxxxxxxxx, Xxxxxx & Xxxxxxx L.L.P., counsel for FBW,
stating that:
(i) the Reorganization was duly authorized, approved and
adopted by all requisite corporate action of all constituent
corporations.
(ii) the Spin-off was duly authorized, approved and adopted
by all requisite corporate action of all constituent corporations.
(iii) the Company has an authorized capitalization as set
forth in the Prospectus under the caption "Capitalization;" the
outstanding shares of capital stock of the Company and CCM have been
duly and validly authorized and issued and are fully paid and
non-assessable; except as disclosed in the Prospectus, to such
counsel's knowledge, there are no outstanding (A) securities or
obligations of the Company or CCM convertible into or exchangeable
for any capital stock of the Company or CCM, (B) warrants, rights or
options to subscribe for or purchase from the Company or CCM any
such capital stock or any such convertible or exchangeable
securities or obligations, or (C) obligations of the Company or CCM
to issue any shares of capital stock, any such convertible or
exchangeable securities or obligations, or any such warrants, rights
or options;
(iv) the Company and CCM each has been duly incorporated
and is validly existing as a corporation in good standing under the
laws of its respective jurisdiction of incorporation with full
corporate power and authority to own its respective properties and
to conduct its respective business as described in the Registration
Statement and the Prospectus and to execute and deliver this
Agreement and the Underwriting Agreement;
(v) the execution, delivery and performance of this
Agreement and the Underwriting Agreement by the Company and
Xxxxxxx Capital Management Holdings, Inc.
Xxxxxxx Capital Management, Inc.
The Xxxxxxx Co.
________ 1998
Page 15
the consummation by the Company of the transactions contemplated
under this Agreement or the Underwriting Agreement, as the case may
be, do not and will not (A) conflict with, or result in any breach
of, or constitute a default under, or constitute an event which with
giving of notice, lapse of time, or both would constitute a breach
of or default under, (I) any provisions of the articles of
incorporation, charter or by-laws of the Company or CCM, (II) to the
best of such counsel's knowledge, any provision of any material
license, indenture, mortgage, deed of trust, loan or credit
agreement or other agreement or instrument to which the Company or
CCM is a party or by which either of them or their respective
properties may be bound or affected, or (III) to the best of such
counsel's knowledge, any law or regulation, including, without
limitation, the Securities Laws, or any decree, judgment or order
applicable to the Company or CCM, except in the case of clause (II)
for such conflicts, breaches or defaults which, individually or in
the aggregate, would not have a material adverse effect on the
assets, operations, business, prospects or condition (financial or
otherwise) of the Company and CCM taken as a whole; or (B) to such
counsel's knowledge, result in the creation or imposition of any
lien, charge, claim or encumbrance upon any property or assets of
the Company or CCM;
(vi) 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 Underwriting Agreement,
the consummation of the transactions contemplated hereby and
thereby, the sale and delivery of the Shares by the Company as
contemplated hereby other than such as have been obtained or made
under the Securities Act, and except that such counsel need express
no opinion as to any necessary qualification under the rules of the
NASD or the state securities or blue sky laws of the various
jurisdictions in which the Shares are being offered by the
Underwriter;
Xxxxxxx Capital Management Holdings, Inc.
Xxxxxxx Capital Management, Inc.
The Xxxxxxx Co.
________ 1998
Page 16
(vii) 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;
(viii) the Shares have been duly authorized and, when the
Shares have been issued and duly delivered against payment therefor
as contemplated by the Underwriting Agreement, the Shares will be
validly issued, fully paid and nonassessable, free and clear of any
pledge, lien, encumbrance, security interest, mortgage or other
claim whatsoever;
(ix) the issuance and sale of the Shares by the Company
is not subject to preemptive or other similar rights arising by
operation of law, under the articles of incorporation or by-laws of
the Company, under any agreement known to such counsel to which the
Company or CCM is a party or, to the best of such counsel's
knowledge, otherwise;
(x) the form of certificate used to evidence the Common
Stock complies in all material respects with all applicable
statutory requirements, with any applicable requirements of the
articles of incorporation and by-laws of the Company and the
requirements of the SmallCap Market;
(xi) the Registration Statement has become effective under
the Securities Act and no stop order suspending the effectiveness of
the Registration Statement has been issued and, to the best of such
counsel's knowledge, no proceedings with respect thereto have been
commenced or threatened;
(xii) as of the Effective Date, the Registration Statement
and the Prospectus (except as to the financial statements and other
financial and statistical data contained in such Registration
Statement or Prospectus, as to which such counsel need express no
opinion) complied as to form in all material respects with the
requirements of the Securities Act and the Securities Act
Regulations;
Xxxxxxx Capital Management Holdings, Inc.
Xxxxxxx Capital Management, Inc.
The Xxxxxxx Co.
________ 1998
Page 17
(xiii) the statements under the captions "Capitalization,"
"Risk Factors -- Regulatory Risks," "Business -- Government
Regulation," "Certain Transactions," "Description of Capital Stock,"
and "Shares Eligible for Future Sale," in the Registration Statement
and the Prospectus, insofar as such statements constitute a summary
of the legal matters referred to therein, constitute accurate
summaries thereof in all material respects; and
(xiv) except as set forth in the Prospectus, to the best
of such counsel's knowledge, there are no material legal or
governmental proceedings pending or threatened against, or involving
the properties of the Company or CCM required to be disclosed in the
Prospectus; provided that for this purpose such counsel need not
regard any litigation or governmental proceedings to be "threatened"
unless the potential litigant or governmental authority has
manifested to the Company or CCM, or to their management, a present
intention to initiate such proceedings.
(xv) to such counsel's knowledge, there are no contracts or
documents of a character which are required to be filed as exhibits
to the Registration Statement or to be described or summarized in
the Prospectus which have not been so filed, summarized or
described.
In addition, such counsel shall state that they have participated in
the preparation of the Prospectus and the Registration Statement and in
conferences with officers and other representatives of the Company and
representatives of the independent public accountants for the Company and
with FBW at which the contents of the Prospectus and the Registration
Statement and related matters were discussed and, although such counsel is
not passing upon and does not assume responsibility for the accuracy,
completeness or fairness of the statements contained in the Prospectus and
the Registration Statement and have not made any independent investigation or
verification thereof, nothing has come to their attention during the course
of such participation that leads them to believe that at the time the
Registration Statement became effective, the Prospectus and the Registration
Statement (other than the financial statements and schedules and other
financial and statistical data and information included therein or omitted
therefrom, as to
Xxxxxxx Capital Management Holdings, Inc.
Xxxxxxx Capital Management, Inc.
The Xxxxxxx Co.
________ 1998
Page 18
which they need express no opinion) contained or contains an untrue statement
of a material fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) The Company shall also furnish to FBW on the date hereof and
on each Closing Date a letter from of Xxxxxxx, Xxxxxxx and Xxxxxx, LLP,
counsel for the Company, addressed to FBW and dated as of each such Closing
Date, and in a form reasonably satisfactory to Xxxxxxxxx, Xxxxxx & Xxxxxxx
L.L.P., counsel for FBW, providing that FBW may continue to rely on the
portions of the opinion of Xxxxxxx, Xxxxxxx and Xxxxxx, LLP, dated
February 23, 1998 discussing certain federal income tax consequences of the
Formation Transactions to the Company and CCM.
(c) FBW shall have received, on each of the date hereof and each
Closing Date, a letter dated the date hereof or such Closing Date, as the case
may be, in form and substance satisfactory to FBW, from Xxxxxx Xxxxxxxx LLP,
independent public accountants, confirming that they are independent public
accountants within the meaning of the Securities Act and the Securities Act
Regulations and stating that in their opinion the financial statements examined
by them and included in the Registration Statement comply in form in all
material respects with the applicable accounting requirements of the Securities
Act and the Securities Act Regulations; and containing the information and
statements of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectus.
(d) No amendment or supplement to the Registration Statement or the
Prospectus shall have been filed to which FBW has objected in writing.
(e) Prior to the completion of the Offering (i) no stop order
suspending the effectiveness of the Registration Statement or any order
preventing or suspending the use of any Preliminary Prospectus or the Prospectus
shall have been issued by the Commission, (ii) no suspension of the
qualification of the Shares for offering or sale in any jurisdiction shall have
occurred, and no proceeding for such suspension shall have been initiated or
threatened; and (iii) the Registration Statement and the Prospectus shall not
contain an untrue statement of material fact or omit to state a material fact,
individually or in the aggregate, required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
Xxxxxxx Capital Management Holdings, Inc.
Xxxxxxx Capital Management, Inc.
The Xxxxxxx Co.
________ 1998
Page 19
(f) Between the time of execution of this Agreement and each Closing
Date (i) no material and unfavorable change in the assets, operations, business,
prospects or condition (financial or otherwise) of the Company and CCM taken as
a whole shall have occurred or become known (whether or not arising in the
ordinary course of business), and (ii) no transaction which is material and
unfavorable to the Company shall have been entered into by the Company or CCM
.
(g) On the Effective Date, the Underwriting Agreement shall have
been entered into and delivered by all required parties.
(h) On each Closing Date, all filings required to have been made
pursuant to Rules 424 or 430A under the Securities Act have been made.
(i) On the Initial Closing Date, the Shares shall have been approved
for listing upon notice of issuance on the SmallCap Market.
(j) The NASD shall not have raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements.
(k) FBW shall have received a letter from Xxxxxx X. Xxxxxxx, Xx., in
form and substance satisfactory to FBW, confirming his agreement that until
February 25, 1999 he will not sell any shares of Common Stock, or any securities
convertible into or exchangeable for any shares of Common Stock, or any option,
warrant or other right to acquire any shares of Common Stock, or publicly
announce any intention to do any of the foregoing, without the prior written
consent of FBW, which consent may be withheld in their sole discretion.
(l) The Company shall, on the date hereof and at each Closing Date,
deliver to FBW 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 (d) through (i) inclusive of this Section 6 have been met
and are true and correct as of such date.
(m) The Company shall have furnished to FBW such other documents and
certificates as to the accuracy and completeness of any statement in the
Registration Statement and the Prospectus, the representations,
Xxxxxxx Capital Management Holdings, Inc.
Xxxxxxx Capital Management, Inc.
The Xxxxxxx Co.
________ 1998
Page 20
warranties and statements of the Company contained herein, and the performance
by the Company of the covenants contained herein, and the fulfillment of any
conditions contained herein or therein, as of each Closing Date as FBW may
reasonably request.
(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 each
Closing Date.
7. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless FBW and its
directors, officers and each person, if any, who controls FBW within the meaning
of Section 15 of the 1933 Act or Section 20 of the Securities Exchange Act of
1934, as amended (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 FBW
may become subject under the 1933 Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, related to, based
upon or arising out of (i) an untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, or any preliminary prospectus (unless corrected
in the Prospectus), or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, (ii) any breach or alleged breach by the Company of its
representations, warranties and agreements contained in this Agreement or (iii)
FBW's performance of its duties under this Agreement; provided, however, that
the Company will have no obligation under this Section 7(a) to the extent that
any such loss, claim, damage, liability or action pursuant to clause (iii) above
shall have been determined in a final judgment of a court of competent
jurisdiction to have been due to the willful misconduct or gross negligence of
FBW.
FBW agrees to indemnify and hold harmless the Company, its directors and
officers, and each person, if any, who controls the Company within the meaning
of either Section 15 of the 1933 Act or Section 20 of the Exchange Act
Xxxxxxx Capital Management Holdings, Inc.
Xxxxxxx Capital Management, Inc.
The Xxxxxxx Co.
________ 1998
Page 21
to the same extent as the foregoing indemnity from the Company to FBW, but only
with respect to (i) any breach or alleged breach by FBW of its representations,
warranties and agreements contained in this Agreement or (ii) information
relating to FBW furnished in writing by FBW expressly for use in the
Registration Statement, the Prospectus, or any amendment or supplement thereto,
or any preliminary prospectus; provided, however, that the foregoing indemnity
by FBW shall not apply to any untrue statement or omission contained in any
preliminary prospectus which is not contained in the Prospectus.
(b) In case any action shall be commenced involving any person in
respect of which indemnity may be sought under this Section 7, 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 FBW, in the case
of parties indemnified pursuant to the first paragraph of Section 7(a), and by
the Company, in the case of the parties indemnified pursuant to the second
paragraph of Section 7(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)
Xxxxxxx Capital Management Holdings, Inc.
Xxxxxxx Capital Management, Inc.
The Xxxxxxx Co.
________ 1998
Page 22
effected with its written consent or (ii) effected without its written
consent if the settlement is entered into more than twenty business days
after the indemnifying party shall have received a request from the
indemnified party for reimbursement for the fees and expense of counsel (in
any case where such fees and expenses are at the expense of the indemnifying
party) and, prior to the date of such settlement, the indemnifying party
shall have failed to comply with such reimbursement request. No indemnifying
party shall, without the prior written consent of the indemnified party,
effect any settlement or compromise of, or consent to the entry of judgment
with respect to, any pending or threatened action in respect of which the
indemnified party is or could have been a party and indemnity or contribution
may be or could have been sought hereunder by the indemnified party, unless
such settlement, compromise or judgment (i) includes an unconditional release
of the indemnified party from all liability on claims that are or could have
been the subject matter of such action and (ii) does not include a statement
as to or an admission of fault, culpability or a failure to act, by or on
behalf of the indemnified party.
(c) To the extent the indemnification provided for in Section 7(a)
is unavailable to, or insufficient to hold harmless any indemnified party
under Section 7(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, on the one hand,
and FBW, on the other, from the Offering or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, or if the indemnified
party failed to give the notice required under Section 7(b), in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company,
on the one hand, and FBW, on the other, in connection with FBW's activities
under this Agreement or the statements or omissions that resulted in such
losses, claims, damages, liabilities or judgments, as well as any other
relevant equitable considerations. The relative benefits received by the
Company, on the one hand, and FBW, on the other, shall be deemed to be in the
same proportion as the total net proceeds from the Offering (after deducting
expenses) bear to the total fee paid to FBW pursuant to Section 3. The
relative fault of the Company, on the one hand, and of FBW, on the other,
shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission
Xxxxxxx Capital Management Holdings, Inc.
Xxxxxxx Capital Management, Inc.
The Xxxxxxx Co.
________ 1998
Page 23
to state a material fact relates to information supplied by the Company or by
FBW, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and FBW agree that it would not be just and equitable if
contribution pursuant to this Section 7(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 7, FBW shall not be
required to contribute any amount in excess of the amount by which the fee paid
to FBW pursuant to Section 3 exceeds the amount of any damages FBW has otherwise
been required to pay by reason of such activities under this Agreement or such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 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 7 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
(e) The statements with respect to FBW in the fourth paragraph under
the caption "Plan of Distribution" in the Prospectus constitute the only
information furnished to the Company in writing on behalf of FBW expressly for
use in the Registration Statement, the Prospectus or any amendment or supplement
thereto, or any preliminary prospectus.
(f) The indemnity and contribution agreements contained in this
Section 7, 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 FBW or on its behalf or by or on behalf of any
person who controls FBW or (ii) any termination of this Agreement or the
Offering.
Xxxxxxx Capital Management Holdings, Inc.
Xxxxxxx Capital Management, Inc.
The Xxxxxxx Co.
________ 1998
Page 24
8. Successors and Assigns. The benefits of this Agreement shall inure
to the respective successors and assigns of the parties hereto and the
obligations and liabilities assumed in this Agreement by the parties hereto
shall be binding upon their respective successors and assigns.
9. Amendments and Waivers. The provisions of this Agreement may not
be amended, modified or supplemented unless the Company, the Underwriter and
FBW consent in writing to such amendment, modification or supplement.
10. Notice. Whenever notice is required to be given pursuant to this
Agreement, such notice shall be in writing and shall be delivered by hand or by
commercial messenger service or mailed by first class mail, postage prepaid,
addressed (a) if to FBW, at 000 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000,
Attention: Xxxxxx X. Xxxx, (b) if to the Company or the Underwriter, at the
address on the first page of this Agreement, Attention: Xxxxxx X. Xxxxxxx, Xx.,
or such other address as to which any party shall notify the other parties
hereto in writing.
11. Governing Law. This Agreement shall be construed (both as to
validity and performance) and enforced in accordance with and governed by the
laws of the State of Maryland applicable to agreements made and to be
performed wholly within such jurisdiction. The Company and FBW irrevocably
consent to the service of any complaint, summons, notice or other process
relating to any such action or proceeding by delivery thereof to it in the
manner provided for in Section 9 hereof.
12. Counterparts. This Agreement may be signed in two or more
counterparts with the same force and effect as if the signatures thereto and
hereto were upon the same instrument.
13. Termination. This Agreement will terminate on the Termination
Date, except that the provisions of Section 7 hereof, shall survive the
termination of this Agreement.
14. Entire Agreement. This Agreement constitutes the entire agreement
of the parties to this Agreement and supersedes all prior written or oral and
all contemporaneous oral agreements, understandings and negotiations with
respect to the subject matter hereof and thereof.
Xxxxxxx Capital Management Holdings, Inc.
Xxxxxxx Capital Management, Inc.
The Xxxxxxx Co.
________ 1998
Page 25
SIGNATURES ON NEXT PAGE
Xxxxxxx Capital Management Holdings, Inc.
Xxxxxxx Capital Management, Inc.
The Xxxxxxx Co.
________ 1998
Page 26
If the above terms are in accordance with your understanding of our
agreement, please sign the enclosed copy of this Agreement and return such copy
to us.
Very truly yours,
XXXXXX XXXXX XXXXX, INCORPORATED
By:
--------------------------------
CONFIRMED AND AGREED TO AS OF
THE DATE FIRST ABOVE WRITTEN:
XXXXXXX CAPITAL MANAGEMENT HOLDINGS, INC.
By:
---------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: President
XXXXXXX CAPITAL MANAGEMENT, INC.
By:
---------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: President
THE XXXXXXX CO.
By:
---------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: President
Appendix A
to Exhibit 1.2
_______________, 1998
Xxxxxxx Capital Management Holdings, Inc.
World Trade Center - Baltimore
000 Xxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
The Xxxxxxx Co.
World Trade Center - Baltimore
000 Xxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Re: Qualified Independent Underwriter
Ladies and Gentlemen:
You have advised us that Xxxxxxx Capital Management Holdings, Inc.
(the "Company"), a Maryland corporation, has filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form SB-2
(Registration No. 333-______), relating to the offering by the Company of up
to 1,250,000 common stock, par value $.001 per share, of the Company (the
"Common Stock" or the "Shares"). It is anticipated that The Xxxxxxx Co.
(the "Underwriter") will act as an Underwriter of the Company in the sale
of the Shares to the public on a best efforts, minimum/maximum basis.
We understand that, as a member of the National Association of
Securities Dealers, Inc. (the "NASD"), the Underwriter may participate in the
Offering only if the price of each Share offered to the public is no higher
than the price recommended by a "Qualified Independent Underwriter." Pursuant
to a letter agreement, dated ______, 1998, among the Company, the Underwriter
and us (the "QIU Agreement"), we have been retained as a "Qualified
Independent Underwriter" (as such term is defined in Rule 2720(b)(15) of the
NASD Conduct Rules) to recommend to you the maximum price for the Shares to
be sold to the public.
We have participated in the preparation of the Registration Statement
and the Prospectus (as such terms are defined in the QIU Agreement) with
respect to the Offering, and have exercised the usual standards of due
diligence with respect thereto. Assuming that the Offering is commenced on
_______, 1998, and further assuming compliance by the Corporation and the
Appendix A
Page 2
Xxxxxxx Capital Management Holdings, Inc.
The Xxxxxxx Co.
_______________, 1998
Page 2
Underwriter with their representations, warranties and covenants in Sections
4 and 5 of the QIU Agreement, we recommend that the price of the Shares be no
higher than $______.
Very truly yours,
XXXXXX XXXXX XXXXX INCORPORATED
By:
-------------------------------------
Xxxxxx X. Xxxx
Senior Vice President
AGREED TO AND ACCEPTED:
THE XXXXXXX CO.
By:
--------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: President
XXXXXXX CAPITAL MANAGEMENT HOLDINGS, INC.
By:
--------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: President
