1
FIRST CHARTER CORPORATION
COMMON STOCK
UNDERWRITING AGREEMENT
March 23, 1999
THE XXXXXXXX-XXXXXXXX COMPANY, LLC
As representative of the several Underwriters
named in Schedule I hereto,
c/o The Xxxxxxxx-Xxxxxxxx Company, LLC
0000 Xxxxxxxxx Xxxx, XX
Xxxxxxx, Xxxxxxx 00000
Dear Sirs:
One shareholder of First Charter Corporation, a North Carolina
corporation (the "Company"), named in Schedule II hereto (the "Selling
Shareholder") proposes, subject to the terms and conditions stated herein, to
sell to the Underwriters (the "Underwriters") named in Schedule I hereto an
aggregate of 429,708 shares of common stock of the Company, no par value
("Common Stock") (hereinafter referred to as the "Shares"). In your capacity as
representative of the several Underwriters, you are referred to herein as the
"Representative." To the extent there are no additional Underwriters listed on
Schedule I other than you, the term "Representative," as used herein, shall mean
you, as Underwriter, and the term "Underwriters" shall mean either the singular
or plural, as the context requires.
1. REPRESENTATIONS AND WARRANTIES
(a) REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, each of the Underwriters that:
(i)The conditions for use of a Registration
Statement on Form S-3 set forth in the General Instructions to
Form S-3 have been satisfied with respect to the Company and the
transactions contemplated by this Agreement and the Registration
Statement under the Securities Act of 1933, as amended (the
"Act"). A registration statement on Form S-3 (File No. 333-71495)
with respect to the Shares, including a prospectus, has been
filed by the Company with the Securities and Exchange Commission
(the "Commission") under the Act, and one or more amendments to
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such registration statement may have been so filed, for the registration under
the Act of the Shares and the offering thereof from time to time in accordance
with Rule 415 of the rules and regulations under the Act. Such registration
statement has become effective under the Act. Since the effective date of the
registration statement, the Company has filed a prospectus pursuant to Rule
424(b)(3) under the Act. Each of such documents has been previously furnished to
you. The Company will next file with the Commission one of the following: (1)
after the effective date of such registration statement, a prospectus in
accordance with Rules 430A and 424(b), or (2) a prospectus in accordance with
Rules 415 and 424(b). In the case of clause (1), the Company has included in
such registration statement, as amended at the effective date, all information
(other than Rule 430A Information) required by the Act and the rules thereunder
to be included in such registration statement and the Prospectus. As filed, such
amendment and form of final prospectus, or such final prospectus, shall contain
all Rule 430A Information, together with all other such required information,
and, except to the extent the Representative shall agree in writing to a
modification, shall be in all substantive respects in the form furnished to you
prior to the execution of this Agreement or, to the extent not completed at the
execution of this Agreement, shall contain only such specific additional
information and other changes (beyond that contained in the latest Preliminary
Prospectus) as the Company has advised you, prior to the execution of this
Agreement, will be included or made therein. If the Registration Statement
contains the undertaking specified by Regulation S-K Item 512(a), the
Registration Statement, at the effective date, meets the requirements set forth
in Rule 415(a)(1)(x). As used in this Agreement, the term "Registration
Statement" means such registration statement, as hereafter amended, including a
registration statement filed pursuant to Rule 462(b) and also including (i) all
financial statement schedules and exhibits thereto, (ii) all documents
incorporated by reference therein filed under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and (iii) any information omitted
therefrom pursuant to Rule 430A under the Act and included in the Prospectus (as
hereinafter defined); the term "Preliminary Prospectus" means each prospectus
subject to completion and any prospectus supplement thereto included in such
registration statement or any amendment (or post-effective amendment) thereto
(including the prospectus subject to completion, if any, included in the
Registration Statement at the time it was or is declared effective), including
all documents incorporated by reference therein filed under the Exchange Act;
and the term "Prospectus" means the final prospectus and any prospectus
supplement relating to the Shares that is filed pursuant to Rule 424(b) after
the execution of this Agreement or, if no prospectus is required to be filed
under Rule 424(b), such term means the prospectus included in the Registration
Statement at the time it was declared effective, in either case, including all
documents incorporated by reference therein filed under the Exchange Act. Any
reference in this Agreement to an "amendment or supplement" to any Preliminary
Prospectus or the Prospectus or an "amendment" to any registration statement
(including the Registration Statement) shall be deemed to include any document
incorporated by reference therein and filed with the Commission under the
Exchange Act after the date of such Preliminary Prospectus, Prospectus or
Registration Statement, as the case may be. For purposes of the preceding
sentence, any reference to the "effective date" of an amendment to a
registration statement shall, if such amendment is effected by means of the
filing with the Commission under the Exchange Act of a document incorporated by
reference in such registration statement, be deemed to refer to the date on
which such document was so filed with the Commission. As used herein, any
reference to
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any statement or information as being "made", "included", "contained",
"disclosed", or "set forth" in any Preliminary Prospectus, a Prospectus or any
amendment or supplement thereto, or the Registration Statement or any amendment
thereto (or other similar references) shall refer both to information and
statements actually appearing in such document as well as information and
statements incorporated by reference therein. For purposes of the following
representations and warranties, to the extent reference is made to the
Prospectus and at the relevant time the Prospectus is not yet in existence, such
reference shall be deemed to be to the most recent Preliminary Prospectus.
(ii) No order preventing or suspending the use of any Prospectus
or Preliminary Prospectus has been issued and no proceeding for that purpose has
been instituted or overtly threatened by the Commission or the securities
authority of any state or other jurisdiction. No stop order suspending the
effectiveness of the Registration Statement or any part thereof has been issued
and no proceeding for that purpose has been instituted or overtly threatened or,
to the knowledge of the Company, contemplated by the Commission or the
securities authority of any state or other jurisdiction.
(iii) When any Preliminary Prospectus and any amendment or
supplement thereto was filed with the Commission it (A) contained all statements
required to be stated therein in accordance with, and complied in all material
respects with the requirements of, the Act and the rules and regulations of the
Commission thereunder and (B) did not include any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. When the Registration Statement or any amendment thereto
was or is declared effective, and at the Time of Delivery (as hereinafter
defined), it (A) contained or will contain all statements required to be stated
therein in accordance with, and complied or will comply in all material respects
with the requirements of, the Act and the rules and regulations of the
Commission thereunder and (B) did not or will not include any untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein not misleading. When the Prospectus or any amendment or
supplement thereto was or is filed with the Commission pursuant to Rule 424(b)
(or, if the Prospectus or such amendment or supplement is not required to be so
filed, when the Registration Statement or the amendment thereto containing such
amendment or supplement to the Prospectus was or is declared effective) and at
the Time of Delivery, the Prospectus, as amended or supplemented at any such
time, (A) contained or will contain all statements required to be stated therein
in accordance with, and complied or will comply in all material respects with
the requirements of, the Act and the rules and regulations of the Commission
thereunder and (B) did not or will not include any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The foregoing provisions of this paragraph (iii) do not
apply to statements or omissions made in any Preliminary Prospectus and any
amendment or supplement thereto, the Registration Statement or any amendment
thereto or the Prospectus or any amendment or supplement thereto in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through the Representative specifically for use therein.
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(iv) The descriptions in the Registration Statement and the
Prospectus of statutes, legal and governmental proceedings or contracts and
other documents are accurate in all material respects and fairly present in all
material respects the information required to be shown under the Act and the
rules and regulations of the Commission; and there are no statutes or legal or
governmental proceedings required under the Act and the rules and regulations of
the Commission to be described in the Registration Statement or the Prospectus
that are not described as required and there are no contracts or documents of a
character that are required under the Act and the rules and regulations of the
Commission to be described in the Registration Statement or the Prospectus or to
be filed as exhibits to the Registration Statement that are not described or
filed as required.
(v)The Company has been duly incorporated or organized, is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation or organization and has all requisite power and
authority (corporate and other) to own or lease its properties and conduct its
business as described in the Prospectus. The Company is a duly registered "bank
holding company" under the Bank Holding Company Act of 1956, as amended (the
"BHC Act"), and is in compliance in all material respects with the BHC Act and
the rules and regulations thereunder. The Company's only significant subsidiary
is First Charter National Bank, a national banking association (the "Bank"). The
Bank is a member of the Federal Reserve System and of the Bank Insurance Fund
(the "BIF") of the Federal Deposit Insurance Corporation ("FDIC"). The Bank and
any other subsidiaries of the Company are hereinafter referred to as the
"subsidiaries". Each of the subsidiaries is validly existing in good standing
under the laws of its jurisdiction of incorporation or organization and has all
requisite power and authority (corporate and other) to own or lease its
properties and conduct its business as described in the Prospectus. The Company
has full power and authority (corporate and other) to enter into this Agreement
and to perform its obligations hereunder. Each of the Company and its
subsidiaries is duly qualified to transact business as a foreign corporation or
association and is in good standing under the laws of each other jurisdiction in
which it owns or leases properties, or conducts any business, so as to require
such qualification, except where the failure to so qualify would not have a
material adverse effect on the financial position, results of operations,
business or properties of the Company and its subsidiaries taken as a whole
("Material Adverse Effect").
(vi) The Company's authorized, issued and outstanding common
stock is as disclosed in the Prospectus. All of the issued shares of common
stock of the Company have been duly authorized and validly issued, are fully
paid and nonassessable and conform to the description of the Common Stock
contained in the Prospectus. None of the issued shares of common stock of the
Company, or issued shares of common stock of any of its subsidiaries, has been
issued or is owned or held in violation of any preemptive rights of
shareholders, and no person or entity (including any holder of outstanding
shares of common stock interests of the Company or its subsidiaries) has any
statutory preemptive or other rights to subscribe for any of the Shares. The
Underwriters will receive good title to the Shares to be delivered hereunder, in
good delivery form and free and clear of all pledges, liens, hypothecations,
encumbrances, claims, security interests, restrictions, agreements, voting
trusts and adverse interests whatsoever. The Shares have been approved for
inclusion on the Nasdaq National Market.
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(vii) Except as disclosed in the Prospectus, the issued
shares of common stock of each of the Company's subsidiaries have been duly
authorized and validly issued, are fully paid and nonassessable and, except for
directors qualifying shares and as otherwise disclosed in the Prospectus, are
directly or indirectly owned beneficially by the Company free and clear of all
liens, security interests, pledges, charges, encumbrances, defects,
shareholders' agreements, voting trusts, equities or claims of any nature
whatsoever. Other than the subsidiaries and except for short-term working
capital cash investments, the Company does not own, directly or indirectly, any
capital stock or other equity securities of any other corporation or any
partnership interest in any partnership, joint venture or other association.
(viii) Except as disclosed in the Prospectus, there are no
outstanding (A) securities or obligations of the Company or any of its
subsidiaries convertible into or exchangeable for any capital stock of the
Company or any such subsidiary, (B) warrants, rights or options to subscribe for
or purchase from the Company or any such subsidiary any such capital stock or
any such convertible or exchangeable securities or obligations, or (C)
obligations of the Company or any such subsidiary to issue any shares of capital
stock, any such convertible or exchangeable securities or obligations, or any
such warrants, rights or options.
(ix) Since the date of the most recent audited financial
statements included in the Prospectus, neither the Company nor any of its
subsidiaries has sustained any material loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, otherwise than as disclosed in or contemplated by the Prospectus.
(x)Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, (A) neither the Company nor any
of its subsidiaries has incurred any liabilities or obligations, direct or
contingent, or entered into any transactions, not in the ordinary course of
business, that are material to the Company and its subsidiaries taken as a
whole, (B) the Company has not purchased any of its outstanding capital stock or
declared, paid or otherwise made any dividend or distribution of any kind on its
capital stock, (C) there has not been any change in the capital stock (except as
a result of shares issued upon exercise of stock options pursuant to existing
stock option plans of the Company), long-term debt or short-term debt of the
Company or any of its subsidiaries, (D) there has not been any material adverse
change, or any development involving a prospective material adverse change, in
or affecting the financial position, results of operations or business of the
Company and its subsidiaries taken as a whole, in each case other than as
disclosed in or contemplated by the Prospectus, and (E) there has not been any
material transaction entered into or any material transaction that is probable
of being entered into by the Company, other than transactions in the ordinary
course of business and changes and transactions described in or contemplated by
the Prospectus.
(xi) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and any person
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granting such person the right to require the Company to file a registration
statement under the Act with respect to any securities of the Company owned or
to be owned by such person or to require the Company to include such securities
in the securities registered pursuant to the Registration Statement (or any such
right has been effectively waived) or any securities being registered pursuant
to any other registration statement filed by the Company under the Act.
(xii) All offers and sales of the Company's capital stock by
the Company prior to the date hereof were at all relevant times duly registered
under the Act or exempt from the registration requirements of the Act and were
duly registered or the subject of an available exemption from the registration
requirements of the applicable state securities or blue sky laws.
(xiii) Neither the Company nor any of its subsidiaries is, or
with the giving of notice or passage of time or both would be (A) in violation
of its Articles of Incorporation or Bylaws, or (B) in default under any
indenture, mortgage, deed of trust, loan agreement, lease or other agreement or
instrument to which the Company or any of its subsidiaries is a party or to
which any of their respective properties or assets are subject, except where
such default (other than in respect of its Articles of Incorporation and Bylaws)
would not have a Material Adverse Effect.
(xiv) The sale of the Shares and the performance of this
Agreement and the consummation of the transactions herein contemplated will not
conflict with, or (with or without the giving of notice or the passage of time
or both) result in a breach or violation of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed of trust, loan
agreement, lease, or other agreement or instrument to which the Company or any
of its subsidiaries is a party or to which any of their respective properties or
assets is subject, nor will such action conflict with or violate any provision
of the Articles of Incorporation or Bylaws of the Company or any of its
subsidiaries or any statute, rule or regulation or any order, judgment or decree
of any court or governmental agency or body having jurisdiction over the Company
or any of its subsidiaries or any of their respective properties or assets,
except where such breach, violation, or default (other than in respect of its
Articles of Incorporation or Bylaws) would not have a Material Adverse Effect,
or except where the sale of Shares is to a "party in interest" (as defined in
Section 3(14) of the Employee Retirement Income Security Act of 1974, as
amended) or a "disqualified person" (as defined in Section 4975(e)(2) of the
Internal Revenue Code of 1986, as amended (the "Code").
(xv) The Company and its subsidiaries have good and
marketable title in fee simple to all real property, if any, and good title to
all personal property owned by them, in each case free and clear of all liens,
security interests, pledges, charges, encumbrances, mortgages and defects,
except such as are disclosed in the Prospectus or such as do not materially and
adversely affect the value of such property and do not interfere with the use
made or proposed to be made of such property by the Company and its
subsidiaries; and any real property and buildings held under lease by the
Company or any of its subsidiaries are held under valid, subsisting and
enforceable leases, with such exceptions as are disclosed in the Prospectus or
are not material and do not interfere with the use made or
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proposed to be made of such property and buildings by the Company or such
subsidiaries.
(xvi) No consent, approval, authorization, order or
declaration of or from, or registration, qualification or filing with, any court
or governmental agency or body is required for the sale of the Shares or the
consummation of the transactions contemplated by this Agreement, except the
registration of the Shares under the Act (which, if the Registration Statement
is not effective as of the time of execution hereof, shall be obtained as
provided in this Agreement) and such as may be required under state securities
or blue sky laws or the bylaws and rules and regulations of the National
Association of Securities Dealers, Inc. ("NASD") in connection with the offer,
sale and distribution of the Shares by the Underwriters.
(xvii) Other than as disclosed in the Prospectus, there is no
litigation, arbitration, claim, proceeding (formal or informal) or investigation
pending or, to the Company's knowledge, threatened, in which the Company or any
of its subsidiaries is a party or of which any of their respective properties or
assets are the subject which, if determined adversely to the Company or any such
subsidiary, would individually or in the aggregate have a Material Adverse
Effect. Neither the Company nor any of its subsidiaries is in violation of, or
in default with respect to, any statute, rule, regulation, order, judgment or
decree, and neither the Company nor any of its subsidiaries is required to take
any action in order to avoid any such violation or default.
(xviii) The Company is conducting its business (including that
of its subsidiaries) in compliance with all the laws, rules, regulations,
orders, judgments or decrees of the jurisdictions in which it is conducting
business, except where the failure to so comply would not have, individually or
in the aggregate, a Material Adverse Effect and, without limiting the foregoing,
the Company holds and is operating in compliance with all licenses,
authorizations, consents, approvals, certificates and permits (individually, a
"Permit") from any regulatory body or administrative agency or other
governmental body having jurisdiction over the operations of the Company, all of
which Permits are current, except where the failure to so hold or comply with
any Permit would not have, individually or in the aggregate, a Material Adverse
Effect. The Company is not aware, nor has it received any notice of, any pending
or threatened proceedings, or any circumstances which could lead it to believe
that any such proceedings are imminent, relating to the revocation or
modification of any such Permit which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
(xix) KPMG LLP, who has rendered a report with respect to
certain financial statements of the Company and its consolidated subsidiaries,
is and was during the periods covered by its report included in the Registration
Statement and the Prospectus, independent public accountants as required by the
Act and the Exchange Act and the respective rules and regulations of the
Commission thereunder.
(xx) The consolidated financial statements and schedules
(including the related notes) of the Company and its consolidated
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subsidiaries included in the Registration Statement, the Prospectus or any
Preliminary Prospectus were prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved
(except as may be otherwise indicated in the notes thereto) and fairly present
(subject, in the case of unaudited statements, to normal recurring audit
adjustments) the financial position, results of operations, cash flows and
changes in shareholders' equity of the Company and its subsidiaries, on a
consolidated basis, at the dates and for the periods presented. All adjustments
necessary for a fair presentation of results for such periods have been made.
Except for the pro forma financial statements discussed below, no other
financial statements are required to be included in the Registration Statement.
Supporting schedules required to be included in the Registration Statement have
been so included. The selected financial data, the tables and financial and
statistical data set forth in the Prospectus fairly present, on the basis stated
in the Prospectus, the information included therein on a basis consistent with
that of the audited and pro forma financial statements contained in the
Registration Statement and the books and records of the Company. The pro forma
financial statements of the Company together with the related notes thereto
included in the Prospectus and in the Registration Statement present fairly the
information contained therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial statements
and have been properly presented on the pro forma basis described therein, and
the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions and
circumstances referred to therein. The financial statements and schedules
included in the Registration Statement and the Prospectus conform to the
requirements of Regulation S-X of the Commission applicable thereto and present
fairly the information presented therein for the periods shown. The statistical
information required by Commission Industry Guide 3 to be included in the
Registration Statement and the Prospectus presents fairly the information set
forth therein, is in compliance with the Act, the regulations promulgated under
the Act and such Guide 3 and is consistent with the consolidated financial
statements included in the Registration Statement and the Prospectus. The
Company has no material contingent obligations that are required to be disclosed
in the Company's financial statements in accordance with generally accepted
accounting principles which have not been so disclosed in the financial
statements included in the Registration Statement.
(xxi) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the valid and binding agreement of the
Company enforceable against the Company in accordance with its terms, subject,
as to enforcement, to applicable bankruptcy, insolvency, reorganization and
moratorium laws and other laws relating to or affecting the enforcement of
creditors' rights generally and to general equitable principles, and except as
the enforceability of rights to indemnity and contribution under this Agreement
may be limited under applicable securities laws or the public policy underlying
such laws.
(xxii) Neither the Company nor, to the Company's knowledge,
any of its officers, directors or affiliates has (A) taken, directly or
indirectly, any action designed to cause or result in, or that has constituted
or might reasonably be expected to constitute, the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Shares or (B) since
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the filing of the Registration Statement (1) sold, bid for, purchased or paid
anyone any compensation for soliciting purchases of, the Shares or (2) paid or
agreed to pay to any person any compensation for soliciting another to purchase
any other securities of the Company. No one has been authorized by the Company
or any person purporting to act in the name or on behalf of the Company to give
any information or to make any representations or warranties with respect to any
matters described in or incorporated by reference into the Prospectus, other
than those contained in the Prospectus.
(xxiii) The Company has obtained for the benefit of the Company
and the Underwriters from each of the Company's directors and executive officers
a written agreement that for a period of 90 days from the date of the Prospectus
or the most recent Prospectus supplement, whichever is later, such director or
officer will not, without the prior written consent of The Xxxxxxxx-Xxxxxxxx
Company, LLC, directly or indirectly (A) sell, pledge, offer to sell, solicit an
offer to buy, contract to sell, grant any option, right or warrant to purchase,
sell any option or contract to purchase, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock, or any securities
convertible into or exercisable or exchangeable for Common Stock (including,
without limitation, shares of Common Stock or securities convertible into or
exercisable or exchangeable for Common Stock which may be deemed to be
beneficially owned by such person in accordance with the rules and regulations
of the Securities and Exchange Commission), (B) enter into any swap or other
arrangement that transfers all or a portion of the economic consequences
associated with the ownership of the Common Stock (regardless of whether any of
the transactions described in clause (A) or (B) is to be settled by the delivery
of Common Stock, or such other securities, in cash or otherwise), or (C) make
any demand for or exercise any right with respect to the registration of any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock; provided, however, that such consent shall not be
required for dispositions pursuant to Section 2 hereof or for shares of Common
Stock disposed of as bona fide gifts so long as each donee agrees in writing to
be bound by the terms hereof. Prior to the expiration of such period, such
persons will not announce or disclose any intention to do anything after the
expiration of such period which such person is prohibited, as provided in the
preceding sentence, from doing during such period.
(xxiv) Neither the Company nor any of its subsidiaries, nor
any director, officer, agent, employee or other person associated with and
acting on behalf of the Company or any such subsidiary has, directly or
indirectly: used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity; made
any unlawful payment to foreign or domestic government officials or employees or
to foreign or domestic political parties or campaigns from corporate funds;
violated any provision of the Foreign Corrupt Practices Act of 1977, as amended;
or made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment.
(xxv) The operations of the Company and its subsidiaries with
respect to any real property currently leased or owned or by any means
controlled by the Company or any subsidiary (the "Real Property") are in
compliance with all federal, state, and local laws, ordinances, rules, and
regulations relating to occupational health and safety and the environment
(collectively,
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"Laws"), except where such noncompliance would not have a Material Adverse
Effect; and the Company and its subsidiaries have all licenses, permits and
authorizations necessary to operate its business under all Laws and are in
compliance in all material respects with all terms and conditions of such
licenses, permits and authorizations; neither the Company nor any subsidiary has
authorized, conducted or has knowledge of the generation, transportation,
storage, use, treatment, disposal or release of any hazardous substance,
hazardous waste, hazardous material, hazardous constituent, toxic substance,
pollutant, contaminant, petroleum product, natural gas, liquefied gas or
synthetic gas defined or regulated under any environmental law on, in or under
any Real Property in violation of any Laws except which individually or in the
aggregate would not have a Material Adverse Effect; and there is no pending or
threatened claim, litigation or any administrative agency proceeding, nor has
the Company or any subsidiary received any written or oral notice from any
governmental entity or third party, that: (A) alleges a violation of any Laws by
the Company or any subsidiary; (B) alleges the Company or any subsidiary is a
liable party under the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. Section 9601 et seq. or any state superfund law; (C)
alleges possible contamination of the environment by the Company or any
subsidiary; or (D) alleges possible contamination of the Real Property.
(xxvi) The Company and its subsidiaries own or have the right
to use all patents, patent applications, trademarks, trademark applications,
trade names, service marks, copyrights, franchises, trade secrets, proprietary
or other confidential information and intangible properties and assets
(collectively, "Intangibles") necessary to their respective businesses as
presently conducted or as the Prospectus indicates the Company or such
subsidiary proposes to conduct; to the knowledge of the Company, neither the
Company nor any subsidiary has infringed or is infringing, and neither the
Company nor any subsidiary has received notice of infringement with respect to,
asserted Intangibles of others; and, to the knowledge of the Company, there is
no infringement by others of Intangibles of the Company or any of its
subsidiaries except those, in any case, which individually or in the aggregate
would not have a Material Adverse Effect.
(xxvii) The Company has delivered or made available to the
Representative or its counsel, copies of all pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus or other incentive plans, all other written
employee programs, arrangements or agreements, all medical, vision, dental or
other health plans, all life insurance plans and all other employee benefit
plans or fringe benefit plans, including, without limitation, "employee benefit
plans" as that term is defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), adopted, maintained, sponsored in
whole or in part or contributed to by the Company, its subsidiaries or its
predecessors for the benefit of employees, retirees, dependents, spouses,
directors, independent contractors or other beneficiaries and under which
employees, retirees, dependents, spouses, directors, independent contractors or
other beneficiaries are eligible to participate (collectively, the "Company
Benefit Plans").
The Company and each of its subsidiaries or predecessors that
adopted or contributed to a Company Benefit Plan have maintained all Company
Benefit
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Plans (including filing all reports and returns required to be filed with
respect thereto) in accordance with their terms and is in compliance with all
presently applicable provisions of ERISA, the Code and any other applicable
federal and state laws, except where the failure to comply would not have a
Material Adverse Effect. Each Company Benefit Plan which is intended to be
qualified under Section 401(a) of the Code has either received a favorable
determination letter from the Internal Revenue Service or will timely request
such a letter prior to the expiration of any remedial amendment period
applicable without penalty to the Company Benefit Plan under the Code and has at
all times been maintained in accordance with Section 401 of the Code, except
where the failure to so maintain the Company Benefit Plan would not have a
Material Adverse Effect. Neither the Company nor any subsidiary has engaged in a
transaction with respect to any Company Benefit Plan that, assuming the taxable
period of such transaction expired as of the date hereof, would subject the
Company or any subsidiary to a tax or penalty imposed by either Section 4975 of
the Code or Section 502(i) of ERISA if the imposition of such tax or penalty
would have a Material Adverse Effect.
Neither the Company nor any member of a group of trades or
businesses under common control (as defined in ERISA Sections 4001(a)(14) and
4001(b)(1)) with the Company, have at any time within the last six years
sponsored, contributed to or been obligated under Title I or IV of ERISA to
contribute to a "defined benefit plan" (as defined in ERISA Section 3(35)).
Within the last six years, neither the Company nor any member of a group of
trades or businesses under common control (as defined in ERISA Sections
4001(a)(14) and 4001(b)(1)) with the Company, have had an "obligation to
contribute" (as defined in ERISA Section 4212) to a "multiemployer plan" (as
defined in ERISA Sections 4001(a)(3) and 3(37)(A)).
(xxviii) No labor dispute exists or, to the knowledge of the
Company, is imminent with the Company's employees which could reasonably be
expected to have a Material Adverse Effect.
(xxix) The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent in the businesses in which they are engaged;
and neither the Company nor any such subsidiary has knowledge of any facts or
circumstances that would prevent the renewal of its existing insurance coverage
as and when such coverage expires or the procurement of similar coverage from
similar insurers as may be necessary to continue its business at a comparable
cost.
(xxx) The Company has developed and is implementing a program
to address on a timely basis the Year 2000 issues and reasonably anticipates
that it will on a timely basis successfully resolve the Year 2000 issues
relating to the Company and its subsidiaries. The Company has not received, and
does not reasonably expect to receive, a "Year 2000 Deficiency Notification
Letter" (as such term is employed in the Federal Reserve's Supervision and
Regulation Letter No. SR-98-3 (SUP), dated March 4, 1998). The Company's
disclosure with respect to its Year 2000 compliance included under the caption
"Year 2000 Considerations" in the Company's Management's Discussion and Analysis
of Financial Condition and Results of Operations section of the Company's
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12
Annual Report on Form 10-K for the fiscal year ended December 31, 1998,
accurately reflects the Company's preparedness for the Year 2000 issues. The
Company is in compliance with the Commission's Staff Legal Bulletin No. 5 dated
January 12, 1998 and Release Nos. 33-7558 and 34-40277 effective August 4, 1998
related to disclosure of Year 2000 compliance.
(xxxi) The Company has filed all foreign, federal, state and
local tax returns that are required to be filed by it and has paid all taxes
shown as due on such returns as well as all other material taxes, assessments
and governmental charges that are due and payable, and, to the knowledge of the
Company, no material deficiency with respect to any such return has been
assessed or proposed. All applicable income and employment taxes have been
withheld and paid for any individuals who would be considered common law
employees of the Company for federal income and employment tax withholding
purposes. The Company has prepared or filed all tax information reports,
currency transaction reports and secured all IRS W-9 forms or begun back-up
withholding as required by law, except where the failure to so file is not
reasonably likely to have a Material Adverse Effect. There is no tax deficiency
that has been asserted against the Company that is reasonably likely to have a
Material Adverse Effect.
(xxxii) There are no related-party transactions involving the
Company or any other person, which transactions are required to be described in
the Prospectus and which have not been described as required.
(xxxiii) Each of the Company and its subsidiaries makes and
keeps accurate books, records and accounts, which, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of its assets
and maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (A) transactions are executed in accordance with
management's general or specific authorization, (B) transactions are recorded as
necessary to permit preparation of the Company's consolidated financial
statements in accordance with generally accepted accounting principles and to
maintain accountability for the assets of the Company, (C) access to the assets
of the Company and each of its subsidiaries is permitted only in accordance with
management's general or specific authorization, (D) the recorded accountability
for assets of the Company and each of its subsidiaries is compared with existing
assets at reasonable intervals and appropriate action is taken with respect to
any differences, and (E) such controls would prevent or detect errors or
irregularities in amounts that would be material in relation to the Company's
consolidated financial statements.
(xxxiv) Except as disclosed in the Prospectus, no subsidiary of
the Company is currently prohibited, directly or indirectly, from paying any
dividends to the Company, from making any other distributions on such
subsidiary's capital stock to the Company, from repaying to the Company any
loans or advances to such subsidiary or from transferring any of such
subsidiary's property or assets to the Company or any other subsidiary of the
Company.
(xxxv) Except as disclosed in the financial statements
included in the Registration Statement and Prospectus, the Company does not have
any liabilities, whether accrued, absolute, contingent or otherwise due or to
become due other than liabilities incurred in the ordinary course of business
consistent with
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13
past practice since the date of such financial statements and
which would not have, individually or in the aggregate, a
Material Adverse Effect.
(xxxvi) No statement, certificate,
instrument, or other writing furnished or to be furnished by the
Company to the Representative pursuant to this Agreement or any
other document, agreement, or instrument referred to herein
contains or will contain any untrue statement of material fact or
will omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading. No document to be filed by the
Company with any regulatory authority in connection with the
transactions contemplated hereby will, at the respective time
such documents are filed, be false or misleading with respect to
any material fact, or omit to state any material fact. All
documents that the Company is responsible for filing with any
regulatory authority in connection with the transactions
contemplated hereby will comply as to form in all material
respects with the provisions of applicable law.
(xxxvii) The Company is not, will not become
as a result of the transactions contemplated hereby, and does not
intend to conduct its business in a manner that would cause it to
become, an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company
Act of 1940, as amended.
(xxxviii) The Common Stock is registered
pursuant to Section 12(g) of the Exchange Act and is qualified as
a Nasdaq National Market security of The Nasdaq Stock Market,
Inc. The Company has taken no action designed to terminate, or
likely to have the effect of terminating, the registration of the
Common Stock under the Exchange Act or qualification of the
Common Stock on the Nasdaq National Market, nor has the Company
received any notification that the Commission or the NASD is
contemplating terminating such registration or qualification.
(b) REPRESENTATIONS AND WARRANTIES RELATED TO THE SELLING
SHAREHOLDER. Each of the Company and the Selling Shareholder represents and
warrants to, and agrees with the Underwriter that:
(i)The Selling Shareholder has full right, power
and authority to enter into this Agreement, the Power of Attorney
and the Custody Agreement (as hereinafter defined) and to sell,
assign, transfer and deliver to the Underwriter the Shares to be
sold by such Selling Shareholder hereunder; and the execution and
delivery of this Agreement, the Power of Attorney and the Custody
Agreement have been duly authorized by all necessary action of
such Selling Shareholder.
(ii)The Selling Shareholder has duly executed and
delivered this Agreement, the Power of Attorney and the Custody
Agreement, and each constitutes the valid and binding agreement
of such Selling Shareholder enforceable against such Selling
Shareholder in accordance with its terms, subject, as to
enforcement, to applicable bankruptcy, insolvency, reorganization
and moratorium laws and other laws relating to or affecting the
enforcement of creditors' rights generally and to general
equitable principles and, with respect to this Agreement, except
as the enforceability of rights to indemnity and contribution
under this Agreement may be limited under applicable securities
laws or the public policy underlying such laws.
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14
(iii) No consent, approval, authorization, order or
declaration of or from, or registration, qualification or filing with, any court
or governmental agency or body is required for the sale of the Shares to be sold
by the Selling Shareholder or the consummation of the transactions contemplated
by this Agreement, the Power of Attorney or the Custody Agreement, except the
registration of such Shares under the Act (which, if the Registration Statement
is not effective as of the time of execution hereof, shall be obtained as
provided in this Agreement) and such as may be required under state securities
or blue sky laws or the bylaws and rules and regulations of the NASD in
connection with the offer, sale and distribution of such Shares by the
Underwriters.
(iv) The sale of the Shares to be sold by the Selling
Shareholder and the performance of this Agreement, the Power of Attorney and the
Custody Agreement and the consummation of the transactions herein and therein
contemplated will not conflict with, or (with or without the giving of notice or
the passage of time or both) result in a breach or violation of any of the terms
or provisions of, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement, lease, or other agreement or instrument to which the
Selling Shareholder is a party or to which any of its respective properties or
assets is subject, nor will such action conflict with or violate any provisions
of any statute, rule or regulation or any order, judgment or decree of any court
or governmental agency or body having jurisdiction over the Selling Shareholder
or any of the Selling Shareholder's properties or assets, except those, in each
such case, which would not have a material adverse effect on the ability of such
Selling Shareholder to consummate the transactions contemplated by this
Agreement, or except where the sale of Shares is to a "party in interest" (as
defined in Section 3(14) of ERISA) or a "disqualified person" (as defined in
Section 4975(e)(2) of the Code).
(v)The Selling Shareholder has, and immediately prior to the Time
of Delivery (as hereinafter defined), the Selling Shareholder will have, good
and valid title to the Shares to be sold by the Selling Shareholder hereunder,
without notice of any adverse claim, free and clear of all liens, security
interests, pledges, charges, encumbrances, defects, shareholders' agreements,
voting trusts, equities or claims of any nature whatsoever; and, upon delivery
of such Shares against payment therefor as provided herein (assuming that such
Shares are purchased in good faith without notice of adverse claim) good and
valid title to such Shares, free and clear of all liens, security interests,
pledges, charges, encumbrances, defects, shareholders' agreements, voting
trusts, equities or claims of any nature whatsoever, will pass to the
Underwriter.
(vi) The Selling Shareholder has not (A) taken, directly or
indirectly, any action designed to cause or result in, or that has constituted
or might reasonably be expected to constitute, the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Shares or (B) since the filing of the Registration Statement (1) sold, bid
for, purchased or paid anyone any compensation for soliciting purchases of, the
Shares or (2) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.
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15
In order to document the Underwriter's compliance with the reporting
and withholding provisions of the Internal Revenue Code of 1986, as amended,
with respect to the transactions herein contemplated, the Selling Shareholder
agrees to deliver to the Representative prior to or at the First Time of
Delivery 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).
The Selling Shareholder represents and warrants that certificates in
negotiable form representing all of the Shares to be sold by such Selling
Shareholder hereunder have been placed in custody under a custody agreement, in
the form heretofore furnished to and approved by you (the "Custody Agreement"),
duly executed and delivered by such Selling Shareholder to First Union National
Bank of North Carolina, as custodian (the "Custodian")
The Selling Shareholder specifically agrees that the Shares represented
by the certificates held in custody for such Selling Shareholder under the
Custody Agreement are subject to the interests of the Underwriters hereunder,
and that the arrangements made by such Selling Shareholder for such custody are
irrevocable. The Selling Shareholder specifically agrees that the obligations of
the Selling Shareholder hereunder shall not be terminated by operation of law,
and in the case of the trust, by the incapacity of any trustee or the
termination of such trust , or by the occurrence of any other event.
2. PURCHASE AND SALE OF SHARES. Subject to the terms and conditions
herein set forth, the Selling Shareholder agrees to sell to the Underwriter, and
the Underwriter agrees to purchase from the Selling Shareholder, at a purchase
price of $16.675 per share, the Shares.
3. OFFERING BY THE UNDERWRITER. Upon the authorization by the
Underwriter of the release of the Shares, the Underwriter proposes to offer the
Shares for sale upon the terms and conditions disclosed in the Prospectus.
4. DELIVERY OF SHARES; CLOSING. Certificates in definitive form for
the Shares to be purchased by the Underwriter hereunder, and in such
denominations and registered in such names as The Xxxxxxxx-Xxxxxxxx Company, LLC
may request upon at least 48 hours' prior notice to the Company, shall be
delivered by or on behalf of the Selling Shareholder to the Underwriter, against
payment by the Underwriter on its behalf of the purchase price therefor by
official bank check or checks (payable in same day funds) drawn on an Atlanta,
Georgia bank, payable to the order of the Selling Shareholder. The closing of
the sale and purchase of the Shares shall be held at the offices of Xxxxx,
Xxxxxxxx & Xxxxxxx, LLP, Suite 3100, Promenade II, 0000 Xxxxxxxxx Xxxxxx, X.X.,
Xxxxxxx, Xxxxxxx 00000-0000, except that physical delivery of such certificates
shall be made at the office of The Depository Trust Company, 00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000. The time and date of such delivery and payment shall
be at 10:00 a.m., Atlanta time, on the third full business day after this
Agreement is executed or at such other time and date as the Representative, the
Company and the Selling Shareholder may agree upon in writing. Such time and
date for delivery of the Shares is herein called the "Time of Delivery." The
Company will make such certificates available for checking and packaging at
least 24 hours prior to the Time of Delivery at the office of The Depository
Trust Company, 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or at such other
location in New York, New York specified by the Underwriters in writing at least
48 hours prior to such Time of Delivery.
5. COVENANTS.
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16
(a) COVENANTS OF THE COMPANY. The Company covenants and agrees
with each of the Underwriters:
(i) The Company will use its best efforts to cause
the Registration Statement, if not effective at the time of
execution of this Agreement, and any amendment thereof, to become
effective. If the Registration Statement has become or becomes
effective pursuant to Rule 430A, or filing of the Prospectus or a
supplement is otherwise required under Rule 424(b), the Company
will cause the Prospectus, properly completed, and any supplement
thereto to be filed with the Commission pursuant to the
applicable paragraph of Rule 424(b) within the time period
prescribed and will provide evidence satisfactory to the
Representative of such timely filing. The Company will promptly
advise the Representative (1) when the Registration Statement, if
not effective at the execution of this Agreement, shall have
become effective, (2) when the Prospectus, and any supplement
thereto, shall have been filed (if required) with the Commission
pursuant to Rule 424(b) or when any Rule 462(b) Registration
Statement shall have been filed with the Commission, (3) when,
prior to termination of the offering of the Shares, any amendment
to the Registration Statement shall have been filed or become
effective, (4) of any request by the Commission or its staff for
any amendment of the Registration Statement, or any Rule 462(b)
Registration Statement, or for any supplement to the Prospectus
or for any additional information, (5) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any
proceeding for that purpose and (6) 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
institution or threatening of any proceeding for such purpose.
(ii) The Company will not file with the Commission
the Prospectus or any amendment or supplement to the Prospectus
or any amendment to the Registration Statement or any Rule 462(b)
Registration Statement unless the Representative has received a
reasonable period of time to review any such proposed document
and consented to the filing thereof and will use its best efforts
to cause any such amendment to the Registration Statement to be
declared effective as promptly as possible. Upon the request of
the Representative or counsel for the Underwriters, the Company
will promptly prepare and file with the Commission, in accordance
with the rules and regulations of the Commission, any amendments
to the Registration Statement or amendments or supplements to the
Prospectus that may be necessary or advisable in connection with
the distribution of the Shares by the Underwriters and will use
its best efforts to cause any such amendment to the Registration
Statement to be declared effective as promptly as possible. If
required, the Company will file any amendment or supplement to
the Prospectus with the Commission in the manner and within the
time period required by Rule 424(b) under the Act.
(iii) If the Company elects to rely upon
Rule 462(b), the Company shall file a Rule 462(b) Registration
Statement with the Commission in compliance with Rule 462(b) by
10:00 p.m. Eastern Standard Time, on the date of this Agreement,
and the Company shall at the time of filing either pay to the
Commission the filing fee for the Rule 462(b) Registration
Statement or give irrevocable instructions for the payment of
such fee pursuant to Rule 111(b) under the Act.
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17
(iv) The Company will advise the Representative promptly
after receiving notice or obtaining knowledge of (A) the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or any part thereof or any order preventing or suspending the use of
any Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, (B) the suspension of the qualification of the Shares for offer or sale
in any jurisdiction or of the initiation or threatening of any proceeding for
any such purpose, or (C) any request made by the Commission or any securities
authority of any other jurisdiction for amending the Registration Statement, for
amending or supplementing the Prospectus or for additional information. The
Company will use its best efforts to prevent the issuance of any such stop order
and, if any such stop order is issued, to obtain the withdrawal thereof as
promptly as possible.
(v)If the delivery of a prospectus relating to the Shares is
required under the Act at any time prior to the expiration of nine months after
the date of the Prospectus and if at such time any events have occurred as a
result of which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading, or if for any reason it is necessary
during such same period to amend or supplement the Prospectus or to file under
the Exchange Act any document incorporated by reference in the Prospectus to
comply with the Act or the Exchange Act or the respective rules and regulations
thereunder, the Company will promptly notify the Representative and upon the
request of the Representative (but at the Company's expense) prepare and file
with the Commission an amendment or supplement to the Prospectus or any such
document incorporated by reference that corrects such statement or omission or
effects such compliance and will furnish without charge to each Underwriter and
to any dealer in securities as many copies of such amended or supplemented
Prospectus as the Representative may from time to time reasonably request. If
the delivery of a prospectus relating to the Shares is required under the Act at
any time nine months or more after the date of the Prospectus, upon the request
of the Representative but at the expense of such Underwriter, the Company will
prepare and deliver to such Underwriter as many copies as the Representative may
request of an amended or supplemented Prospectus complying with Section 10(a)(3)
of the Act. Neither the Representative's consent to, nor the Underwriters'
delivery of, any such amendment or supplement shall constitute a waiver of any
of the conditions set forth in Section 7.
(vi) The Company promptly from time to time will take such
action as the Representative may reasonably request to qualify the Shares for
offering and sale under the securities or blue sky laws of such jurisdictions as
the Representative may request and will continue such qualifications in effect
for as long as may be necessary to complete the distribution of the Shares,
provided that in connection therewith the Company shall not be required to
qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction.
(vii) The Company will promptly provide the Representative,
without charge, (A) two conformed copies of the Registration Statement as
originally filed with the Commission and of each amendment thereto,
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18
including all documents or information incorporated by reference therein, (B)
for each other Underwriter a conformed copy of the Registration Statement as
originally filed and of each amendment thereto, without exhibits but including
all documents or information incorporated by reference therein, and (C) so long
as a prospectus relating to the Shares is required to be delivered under the
Act, as many copies of each Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto as the Representative may reasonably request.
(viii) As soon as practicable, but in any event not later than
45 days after the end of the Company's fiscal quarter in which the first
anniversary of the effective date of the Registration Statement occurs, the
Company will make generally available to its security holders and the
Representative an earnings statement of the Company and its subsidiaries, if
any, covering a period of at least 12 months beginning after the effective date
of the Registration Statement (which need not be audited) complying with Section
11(a) of the Act and the rules and regulations thereunder.
(ix) During the period beginning from the date hereof and
continuing to and including the date 90 days after the date of the Prospectus or
the most recent Prospectus supplement, whichever is later, the Company will not,
without the prior written consent of The Xxxxxxxx-Xxxxxxxx Company, LLC, offer,
pledge, issue, sell, contract to sell, grant any option, right or warrant for
the sale of, or otherwise dispose (or announce any offer, pledge, sale, grant or
other disposition) of, directly or indirectly, any shares of Common Stock or
securities convertible into, exercisable or exchangeable for, shares of Common
Stock, except as provided in Section 2 and except for the issuance of Common
Stock upon the exercise of stock options outstanding on the date of this
Agreement to the extent that such stock options are disclosed in the Prospectus
and except for the grant of stock options under the Company's existing stock
option plans.
(x)During a period of three years from the effective date of the
Registration Statement, the Company will furnish to the Representative and, upon
request, to each of the other Underwriters, without charge, (A) copies of all
reports or other communications (financial or other) furnished to shareholders,
(B) as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission, the NASD or any national
securities exchange, and (C) such additional information concerning the business
and financial condition of the Company and its subsidiaries, if any, as the
Representative may reasonably request.
(xi) Neither the Company nor any of its officers, directors
or affiliates will (A) take, directly or indirectly, prior to the termination of
the underwriting syndicate contemplated by this Agreement, any action designed
to cause or to result in, or that might reasonably be expected to constitute,
the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Shares, (B) sell, bid for, purchase
or pay anyone any compensation for soliciting purchases of, the Shares, or (C)
pay or agree to pay to any person any compensation for soliciting another to
purchase any other securities of the Company.
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19
(xii) At the Time of Delivery and for a
period of at least one year from the date hereof, the Company
will use its best efforts to cause the Shares to continue to be
listed on the Nasdaq National Market.
(xiii) If at any time during the period
beginning on the date of this Agreement and ending on the later
of (A) the date 30 days after the date of this Agreement and (B)
the date on which the Company next files with the Commission a
Quarterly Report on Form 10-Q or Annual Report on Form 10-K after
the date of this Agreement, any rumor, publication or event
relating to or affecting the Company shall occur as a result of
which in the opinion of the Representative the market price of
the Common Stock has been or is likely to be materially affected
(regardless of whether such rumor, publication or event
necessitates an amendment of or supplement to the Prospectus),
the Company will, after notice from the Representative advising
the Company to the effect set forth above, forthwith prepare,
consult with the Representative concerning the substance of, and
disseminate a press release or other public statement, reasonably
satisfactory to the Representative, responding to or commenting
on such rumor, publication or event.
(b) COVENANTS OF THE SELLING SHAREHOLDER. The Selling Shareholder
covenants and agrees with each of the Underwriters:
(i)Such Selling Shareholder, prior to the
termination of the underwriting syndicate contemplated by this
Agreement, will not (A) take, directly or indirectly, any action
designed to cause or to result in, or that might reasonably be
expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or
resale of any of the Shares, (B) sell, bid for, purchase or pay
anyone any compensation for soliciting purchases of, the Shares
or (C) pay to or agree to pay any person any compensation for
soliciting another to purchase any other securities of the
Company.
6. EXPENSES. The Company and the Selling Shareholder will pay all
costs and expenses incident to the performance of their obligations under this
Agreement, in such proportions as they may agree among themselves, whether or
not the transactions contemplated hereby are consummated or this Agreement is
terminated pursuant to Section 10 hereof, including, without limitation, all
costs and expenses incident to (i) the fees, disbursements and expenses of the
Company's counsel and accountants in connection with the registration of the
Shares under the Act and all other expenses in connection with the preparation,
printing and, if applicable, filing of the Registration Statement (including all
amendments thereto), any Preliminary Prospectus, the Prospectus and any
amendments and supplements thereto, this Agreement and any blue sky memoranda;
(ii) the delivery of copies of the foregoing documents to the Underwriters;
(iii) the filing fees of the Commission and the National Association of
Securities Dealers, Inc. relating to the Shares; (iv) the preparation, issuance
and delivery to the Underwriters of any certificates evidencing the Shares,
including transfer agent's and registrar's fees; (v) the qualification of the
Shares for offering and sale under state securities and blue sky laws, including
filing fees and reasonable fees and disbursements of counsel for the
Underwriters relating thereto; (vi) any listing of the Shares on the Nasdaq
National Market and (vii) any expenses for travel, lodging and meals incurred by
the Company and any of its officers, directors and employees in connection with
any meetings with prospective investors in the Shares. In addition, the Selling
Shareholder will pay all costs and expenses incident to (i) the fees,
disbursements and expenses of separate counsel for such Selling Shareholder,
(ii) such Selling
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Shareholder's pro rata share of the fees and expenses of the Attorneys-In-Fact
and the Custodian, and (iii) the sale and delivery of the Shares to be sold by
such Selling Shareholder to the Underwriters hereunder. It is understood,
however, that, except as provided in this Section, Section 8 and Section 10
hereof, the Underwriters will pay all of their own costs and expenses, including
the fees of their counsel, stock transfer taxes on resale of any of the Shares
by them, and any advertising expenses relating to the offer and sale of the
Shares.
7. CONDITIONS OF THE UNDERWRITER'S OBLIGATION. The obligation of the
Underwriter hereunder to purchase and pay for the Shares to be delivered at the
Time of Delivery shall be subject, in its discretion, to the accuracy of the
representations and warranties of the Company and the Selling Shareholder
contained herein as of the date hereof and as of such Time of Delivery, to the
accuracy of the statements of Company officers made pursuant to the provisions
hereof, to the performance by the Company and the Selling Shareholder of their
respective covenants and agreements hereunder, and to the following additional
conditions precedent:
(a) If the Registration Statement as amended to date has not
become effective prior to the execution of this Agreement, such Registration
Statement shall have been declared effective not later than 11:00 a.m., Atlanta
time, on the date of this Agreement or such later date and/or time as shall have
been consented to by the Representative in writing. The Prospectus and any
amendment or supplement thereto shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for such
filing and in accordance with Section 5(a) of this Agreement; no stop order
suspending the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceedings for that purpose shall have been
instituted, threatened or, to the knowledge of the Company and the
Representative, contemplated 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.
(b) Xxxxx, Xxxxxxxx & Xxxxxxx, LLP, counsel for the Underwriters,
shall have furnished to the Representative such opinion or opinions, dated the
Time of Delivery, with respect to the incorporation of the Company, the validity
of the Shares being delivered at the Time of Delivery, the Registration
Statement, the Prospectus, and other related matters as the Representative may
reasonably request, and the Company shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon such
matters. In rendering such opinion, such counsel may rely as to all matters of
North Carolina law upon the opinion of Company counsel referred to in paragraph
(c) below.
(c) The Representative shall have received an opinion, dated the
Time of Delivery, of Xxxxxx & Bird LLP, counsel for the Company, in form and
substance satisfactory to the Representative and its counsel, to the effect
that:
(i)The Company is validly existing as a
corporation in good standing under the laws of its jurisdiction
of incorporation and has all requisite corporate power and
authority to own or lease its properties and conduct its business
as described in the Registration Statement and the Prospectus and
to enter into this Agreement and perform its obligations
hereunder.
(ii) Each of the subsidiaries of the Company is
validly existing as a corporation, limited partnership or
association in good standing under the laws of its jurisdiction
of incorporation or organization, and has all requisite corporate
power and authority to own or lease its properties and conduct
its business as described in the Registration Statement and the
Prospectus.
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21
(iii) The Company's authorized capital stock is as disclosed
in the Prospectus. All of the issued shares of capital stock of the Company
(including the Shares to be sold by the Selling Shareholder) have been duly
authorized and validly issued, are fully paid and nonassessable and conform to
the description of the Common Stock contained in the Prospectus.
(iv) The Registration Statement has become effective under
the Act; and to the knowledge of such counsel no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceeding
for that purpose has been instituted or threatened by the Commission.
(v)Each part of the Registration Statement, when such part
became effective, and the Prospectus and any amendment or supplement thereto, on
the date of filing thereof with the Commission, complied as to form in all
material respects with the requirements of the Act and the regulations
promulgated thereunder.
(vi) The descriptions in the Registration Statement and
Prospectus of statues, legal and governmental proceedings, contracts and other
documents are accurate and fairly present the information required to be shown;
and such counsel does not know of any statutes or legal or governmental
proceedings required to be described in the Prospectus that are not described as
required, or of any contracts or documents of a character required to be
described in the Registration Statement or Prospectus or to be filed as exhibits
to the Registration Statement that are not described and filed as required.
(vii) This Agreement has been duly authorized, executed and
delivered by the Company; the performance of this Agreement and the consummation
of the transactions herein contemplated will not result in a breach or violation
of any of the terms and provisions of, any statute, any material agreement or
instrument known to such counsel to which the Company or its subsidiaries is a
party or by which it is bound or to which any of the property of the Company or
its subsidiaries is subject, the Articles of Incorporation or By-laws of the
Company and its subsidiaries, or any order, rule or regulation known to such
counsel of any court or governmental agency or body having jurisdiction over the
Company or its subsidiaries or any of their properties (except that such opinion
shall not constitute an opinion as to compliance with the anti-fraud provisions
of federal or state securities laws); and no consent, approval, authorization or
order of, or filing with, any court or governmental agency or body is required
for the consummation of the transactions contemplated by this Agreement in
connection with the sale of the Shares, except such as have been obtained under
the Act and such as may be required under state securities laws in connection
with the offer and sale of the Shares.
(viii) To the knowledge of such counsel, there is not pending
or threatened in writing any action, suit or proceeding with respect thereto to
which the Company or its subsidiaries is a party, before or by any court or
governmental or arbitrational official, agency or body that might reasonably be
expected to have a Material Adverse Effect, or that might affect the validity of
the Shares, or that is required to be disclosed in the Prospectus which is not
disclosed as required.
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22
(ix) The Company is not an "investment
company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940.
Such counsel shall also state that no facts have come to their
attention that have caused such counsel to believe that the
Registration Statement, or any further amendment thereto made prior to
the Time of Delivery, on its effective date and as of the Time of
Delivery, contained or contains any untrue statement of a material fact
or omitted or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, or
that the Prospectus, or any amendment or supplement thereto made prior
to the Time of Delivery, as of its issue date and as of the Time of
Delivery, contained or contains any untrue statement of a material fact
or omitted or omits to state a material fact necessary in order to make
the statements therein, in light of the circumstances under which they
were made, not misleading (provided that such counsel need express no
belief regarding the financial statements and related schedules and
other financial data contained in the Registration Statement, any
amendment thereto, or the Prospectus, or any amendment or supplement
thereto).
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and public officials and, as to matters involving the
application of laws of any jurisdiction other than the state of North Carolina
or the United States, to the extent satisfactory in form and scope to counsel
for the Underwriters, upon the opinion of local counsel, provided that such
counsel states such counsel believes that the Underwriters are justified in
relying upon such opinion and copies of such opinion are delivered to the
Representatives and counsel for the Underwriters.
(d) The Representative shall have received an opinion, dated the
Time of Delivery, of Xxxxxx & Bird LLP, counsel for the Selling Shareholder, in
form and substance satisfactory to the Representative and its counsel, to the
effect that:
(i)This Agreement, the Custody Agreement and the
Power of Attorney have been duly authorized, executed and
delivered by the Selling Shareholder and the performance of this
Agreement by the Selling Shareholder and the consummation by the
Selling Shareholder of the transactions herein contemplated will
not result in a breach or violation of any of the terms and
provisions of, or constitute a default under any material
agreement or instrument known to such counsel to which the
Selling Shareholder is a party or by which it is bound or to
which any of the property or assets of the Selling Shareholder is
subject, or any statute or order, rule or regulation known to
such counsel of any court or governmental agency or body having
jurisdiction over the Selling Shareholder or any of its
properties (but excluding Section 404(a) of ERISA, and any
regulations thereunder, and further provided that the foregoing
opinion shall not apply with respect to any person purchasing the
Shares who is a "party in interest" (as defined in Section 3(14)
of ERISA) or a "disqualified person" (as defined in Section
4975(e)(2) of the Code)); and no consent, approval, authorization
or order of, or filing with, any court or governmental agency or
bodies is required for the consummation of the transactions
contemplated by this Agreement in connection with the sale of the
Shares to be sold by the Selling Shareholder hereunder, except
such as have been obtained under the Act and such as may be
required under state securities laws in connection with the offer
and sale of such Shares.
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23
(ii) The person(s) who purchase the Shares will,
assuming such person(s) has(have) purchased the Shares in good
faith and without notice of any adverse claim, acquire good title
to such Shares, free of any adverse claim (including any claim
arising under any voting trust arrangement, lien or security
interest and any restriction on transfer imposed by the Company
or, to such counsel's knowledge, any other person, but excluding
any restriction on transfer due solely to the status of such
purchaser as an affiliate or 5% or greater shareholder of the
Company and further provided that the foregoing opinion shall not
apply with respect to any person purchasing the Shares who is a
"party in interest" (as defined in Section 3(14) of ERISA) or a
"disqualified person" (as defined in Section 4975(e)(2) of the
Code).
In rendering such opinion, such counsel may rely upon a certificate of
the Selling Shareholder respecting ownership of and any security interests,
other encumbrances or adverse claims on the Shares sold by the Selling
Shareholder and other factual matters, provided that such counsel shall state
that they believe that both you and they are justified in relying upon such
certificates.
(e) The Representative shall have received from KPMG LLP letters
dated, respectively, the date of this Agreement and the Time of Delivery, in
form and substance satisfactory to the Representative, to the effect set forth
in Annex I hereto. In the event that the letters referred to in this Section
7(e) set forth any changes, decreases or increases in the items specified in
paragraph (iv) of Annex I, it shall be a further condition to the obligations of
the Underwriters that (i) such letters shall be accompanied by a written
explanation by the Company as to the significance thereof, unless the
Representative deems such explanation unnecessary, and (ii) such changes,
decreases or increases do not, in the reasonable judgment of the Representative,
make it impracticable or inadvisable to proceed with the purchase, sale and
delivery of the Shares being delivered at the Time of Delivery as contemplated
by the Registration Statement, as amended as of the date of such letter.
(f) Since the date of the latest audited financial statements
included in the Prospectus, neither the Company nor any of its subsidiaries
shall have sustained (i) any loss or interference with their respective
businesses from fire, explosion, flood, hurricane or other calamity, whether or
not covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as disclosed in or contemplated by the
Prospectus, or (ii) any change, or any development involving a prospective
change (including without limitation a change in management or control of the
Company), in or affecting the position (financial or otherwise), results of
operations, net worth or business prospects of the Company and its subsidiaries,
otherwise than as disclosed in or contemplated by the Prospectus, the effect of
which, in either such case, is in the judgment of the Representative so material
and adverse as to make it impracticable or inadvisable to proceed with the
purchase, sale and delivery of the Shares being delivered at the Time of
Delivery as contemplated by the Registration Statement, as amended as of the
date hereof.
(g) Subsequent to the date hereof there shall not have occurred
any of the following: (i) any suspension or limitation in trading in securities
generally on the New York Stock Exchange, or any setting of minimum prices for
trading on such exchange, or in the Common Stock by the Commission or the Nasdaq
National Market; (ii) a moratorium on commercial banking activities in New York
declared by either federal or state authorities; or (iii) any outbreak or
escalation of hostilities involving the United States, declaration by the United
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24
States of a national emergency or war or any other national or international
calamity or emergency if the effect of any such event specified in this clause
(iii) in the judgment of the Representative makes it impracticable or
inadvisable to proceed with the purchase, sale and delivery of the Shares being
delivered at the Time of Delivery as contemplated by the Registration Statement,
as amended as of the date hereof; (iv) the enactment, publication, decree or
other promulgation of any statute, regulation, rule or order of any court or
other governmental authority which in your opinion materially and adversely
affects or may materially and adversely affect the business or operations of the
Company; or (v) the taking of any action by any governmental body or agency in
respect of its monetary or fiscal affairs which in your reasonable opinion has a
material adverse effect on the securities markets in the United States.
(h) The Company and the Selling Shareholder shall have furnished
to the Representative at the Time of Delivery certificates of officers of the
Company and certificates of the Selling Shareholder, satisfactory to the
Representative, as to the accuracy of the representations and warranties of the
Company and such Selling Shareholder herein at and as of the Time of Delivery,
as to the performance by the Company and such Selling Shareholder of all of
their respective obligations hereunder to be performed at or prior to the Time
of Delivery, and the Company shall have furnished or caused to be furnished
certificates as to the matters set forth in subsections (a) and (f) of this
Section 7, and as to such other matters as the Representative may reasonably
request.
(i) The Shares shall be listed on the Nasdaq National Market.
(j) The Lock-up Agreements described herein shall be in full
force and effect.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon: (i) any untrue statement or
alleged untrue statement of any material fact contained in (A) the Registration
Statement or any amendment thereto, any Preliminary Prospectus or the Prospectus
or any amendment or supplement thereto, or (B) any application or other
document, or any amendment or supplement thereto, executed by the Company or
based upon written information furnished by or on behalf of the Company filed in
any jurisdiction in order to qualify the Shares under the securities or blue sky
laws thereof or filed with the Commission or any securities association or
securities exchange (each an "Application"); (ii) the omission or alleged
omission to state in the Registration Statement or any amendment thereto, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto,
or any Application a material fact required to be stated therein or necessary to
make the statements therein not misleading; or (iii) any failure of the Company
to perform its obligations hereunder or under law, and will reimburse upon
demand each Underwriter or controlling person or representative of such
Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating, defending against or appearing as
a third-party witness in connection with any such loss, claim, damage, liability
or action whether or not such Underwriter or controlling person or
representative of such Underwriter is a party to any action or proceeding;
provided, however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or action arises out of or
is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement or any amendment thereto,
any Preliminary Prospectus, the Prospectus or any amendment or supplement
thereto or any Application in
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25
reliance upon and in conformity with written information furnished to the
Company by any Underwriter through the Representative expressly for use therein
(provided that the Company and the Underwriters hereby acknowledge that the
following constitutes the only information furnished in writing to the Company
by the Underwriters specifically for use in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or any such amendment or supplement:
the statements under the caption "Underwriting" in the Prospectus supplement
dated March 23, 1999); provided, further, that with respect to any Preliminary
Prospectus, the foregoing indemnity agreement shall not inure to the benefit of
any Underwriter from whom the person asserting any loss, claim, damage,
liability or expense purchased Shares, or any person controlling such
underwriter, if copies of the Prospectus were timely delivered to the
Underwriter and a copy of the Prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) was not sent
or given by or on behalf of such Underwriter to such person, if required by law
so to have been delivered, at or prior to the written confirmation of the sale
of the Shares to such person, and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss, claim,
damage, liability or expense, unless the failure to deliver such Prospectus was
the result of the Company's non-compliance with its obligations under Sections
5(a)(ii) and 5(a)(vii) hereof. The Company will not, without the prior written
consent of each Underwriter, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit or proceeding (or
related cause of action or portion thereof) in respect of which indemnification
may be sought hereunder (whether or not such Underwriter is a party to such
claim, action, suit or proceeding), unless such settlement, compromise or
consent includes an unconditional release of such Underwriter from all liability
arising out of such claim, action, suit or proceeding (or related cause of
action or portion thereof).
(b) Each Underwriter, severally but not jointly, agrees to
indemnify and hold harmless the Company and the Selling Shareholder against any
losses, claims, damages or liabilities to which the Company or the Selling
Shareholder may become subject under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or any amendment thereto,
any Preliminary Prospectus, the Prospectus or any amendment or supplement
thereto, or any Application or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through the Representative expressly for use therein (provided that the Company,
the Selling Shareholder and the Underwriters hereby acknowledge that the
following constitutes the only information furnished in writing to the Company
and the Selling Shareholder by the Underwriters specifically for use in the
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
such amendment or supplement: the statements under the caption "Underwriting" in
the Prospectus supplement dated March 23, 1999), and will reimburse the Company
and the Selling Shareholder for any legal or other expenses reasonably incurred
by the Company or such Selling Shareholder in connection with investigating or
defending any such loss, claim, damage, liability or action. In addition, in a
situation when an Underwriter is an indemnifying party under this subsection
(b), the Underwriter will not, without the prior written consent of the Company,
settle or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding (or related cause of action or
portion thereof) in respect of which indemnification may be sought hereunder
(whether or not the Company is a party to such claim, action, suit or
proceeding), unless such settlement, compromise or consent includes an
unconditional release of the Company and the
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26
Selling Shareholder from all liability arising out of such claim, action, suit
or proceeding (or related cause of action or portion thereof).
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnify-ing party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party); provided, however, that if the defendants in any such action include
both the indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be one or more legal defenses
available to it or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnifying party
shall not have the right to assume the defense of such action on behalf of such
indemnified party and such indemnified party shall have the right to select
separate counsel to defend such action on behalf of such indemnified party.
After such notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof and approval by such indemnified party
of counsel appointed to defend such action, the indemnifying party will not be
liable to such indemnified party under this Section 8 for any legal or other
expenses, other than reasonable costs of investigation, subsequently incurred by
such indemnified party in connection with the defense thereof, unless:
(i)the indemnified party shall have employed
separate counsel in accordance with the proviso to the next
preceding sentence (it being understood, however, that in
connection with such action the indemnifying party shall not be
liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but
substantially similar actions in the same jurisdiction arising
out of the same general allegations or circumstances, which
separate counsel shall be designated by the Representatives in
the case of indemnity arising under paragraph (a) of this Section
8); or
(ii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of
the indemnifying party. Nothing in this Section 8(c) shall
preclude an indemnified party from participating at its own
expense in the defense of any such action so assumed by the
indemnifying party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or
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27
payable by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative benefits received by the Company and the Selling
Shareholder on the one hand and the Underwriters on the other from the offering
of the Shares. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law or if the indemnified party failed
to give the notice required under subsection (c) above, then each indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company and the Selling Shareholder on the
one hand and the Underwriters on the other in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Shareholder on the one hand and the Underwriters on the other shall be deemed to
be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company and the Selling Shareholder bear to
the total underwriting discounts and commissions received by the Underwriters.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Selling Shareholder on the one hand or the
Underwriters on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Shareholder and the Underwriters agree that it would
not be just and equitable if contributions pursuant to this subsection (d) were
determined by pro rata allocation (even if the Under-writers were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
subsection (d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company under this Section 8 shall be
in addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who controls
any Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company and to each
person, if any, who controls the Company within the meaning of the Act.
(f) Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or contribution under
this Section 8 shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Company and the Selling Shareholder set
forth in this Agreement shall remain operative and in full force and effect,
regardless of: (i) any investigation made by or on behalf of any Underwriter or
any person controlling any Underwriter, the Company, its directors or officers
or any persons controlling the Company, (ii) acceptance of any Shares and
payment therefor hereunder, and (iii) any termination of this Agreement. A
successor to any Underwriter, or to the Company, its directors or officers, or
any person controlling the Company, or to the Selling Shareholder shall be
entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 8.
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28
9. DEFAULT OF UNDERWRITERS.
(a) If any Underwriter defaults in its obligation to purchase
Shares at a Time of Delivery, the Representative may in its discretion arrange
for the Representative or another party or other parties to purchase such Shares
on the terms contained herein. If within thirty-six (36) hours after such
default by any Underwriter the Representative does not arrange for the purchase
of such Shares, the Company and the Selling Shareholder shall be entitled to a
further period of thirty-six (36) hours within which to procure another party or
other parties satisfactory to the Representative to purchase such Shares on such
terms. In the event that, within the respective prescribed periods, the
Underwriters notify the Company and the Selling Shareholder that the
Representative has so arranged for the purchase of such Shares, or the Company
and the Selling Shareholder notify the Representative that they have so arranged
for the purchase of such Shares, the Representative or the Company and the
Selling Shareholder, as the case may be, shall have the right to postpone the
Time of Delivery for a period of not more than seven days in order to effect
whatever changes may thereby be made necessary in the Registration Statement or
the Prospectus, or in any other documents or arrangements, and the Company
agrees to file promptly any amendments to the Registration Statement or the
Prospectus that in the opinion of the Representative may thereby be made
necessary. The cost of preparing, printing and filing any such amendments shall
be paid for by the Underwriters. The term "Underwriter" as used in this
Agreement shall include any person substituted under this Section with like
effect as if such person had originally been a party to this Agreement with
respect to such Shares. The thirty-six (36) hour periods referred to in this
subsection (a) shall not include the hours between (i) 5:00 p.m., Atlanta time,
on any Friday through 9:00 a.m., Atlanta time, the following Monday or (ii) 5:00
p.m., Atlanta time, on the day preceding a day on which the New York Stock
Exchange is closed for trading (a "holiday") through 9:00 a.m., Atlanta time, on
the day following that holiday.
(b) If, after giving effect to any arrangements for the purchase
of the Shares of a defaulting Underwriter or Underwriters by the Representative
and the Company and the Selling Shareholder as provided in subsection (a) above,
the aggregate number of such Shares which remains unpurchased does not exceed
10% of the aggregate number of Shares to be purchased at the Time of Delivery,
then the Company and the Selling Shareholder shall have the right to require
each non-defaulting Underwriter to purchase the number of Shares which such
Underwriter agreed to purchase hereunder at the Time of Delivery and, in
addition, to require each non-defaulting Underwriter to purchase its pro rata
share (based on the number of Shares which such Underwriter agreed to purchase
hereunder) of the Shares of such defaulting Underwriter or Underwriters for
which such arrangements have not been made, but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
10. TERMINATION.
(a) This Agreement may be terminated in the sole discretion of
the Representative by notice to the Company given prior to the Time of Delivery
in the event that (i) any condition to the obligations of the Underwriters set
forth in Section 7 hereof has not been satisfied, or (ii) the Selling
Shareholder shall have failed, refused or been unable to deliver the Shares or
the Company or the Selling Shareholder shall have failed to perform all
obligations and satisfy all conditions on their parts to be performed or
satisfied hereunder at or prior to the Time of Delivery, in either case other
than by reason of a default by any of the Underwriters. If this Agreement is
terminated pursuant to this Section 10(a), the Company and the Selling
Shareholder will reimburse the Underwriters severally upon demand for all
reasonable out-of-pocket expenses
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29
(including counsel fees and disbursements) that shall have been incurred by them
in connection with the proposed purchase and sale of the Shares. Neither the
Company nor any Selling Shareholder shall in any event be liable to any of the
Underwriters for the loss of anticipated profits from the transactions covered
by this Agreement.
(b) If, after giving effect to any arrangements for the purchase
of the Shares of a defaulting Underwriter or Underwriters by the Representative
and the Company and the Selling Shareholder as provided in Section 9(a), the
aggregate number of such Shares which remains unpurchased exceeds 10% of the
aggregate number of Shares to be purchased at the Time of Delivery, or if the
Company and the Selling Shareholder shall not exercise the right described in
Section 9(b) to require non-defaulting Underwriters to purchase Shares of a
defaulting Underwriter or Underwriters, then this Agreement shall thereupon
terminate, without liability on the part of any non-defaulting Underwriter, the
Company or the Selling Shareholder, except for the expenses to be borne by the
Company, the Selling Shareholder and the Underwriters as provided in Section 6
hereof and the indemnity and contribution agreements in Section 8 hereof; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
11. SURVIVAL. The respective indemnities, agreements,
representations, warranties and other statements of the Company, its officers,
the Selling Shareholder and the several Underwriters, as set forth in this
Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person referred to in Section 8(e) or the
Company, any Selling Shareholder, or any officer or director or controlling
person of the Company or any Selling Shareholder referred to in Section 8(e),
and shall survive delivery of and payment for the Shares. The respective
agreements, covenants, indemnities and other statements set forth in Sections 6
and 8 hereof shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement.
12. NOTICES. All communications hereunder shall be in writing and, if
sent to any of the Underwriters, shall be mailed (certified, return receipt
requested), delivered or telegraphed and confirmed in writing to the
Representative in care of The Xxxxxxxx-Xxxxxxxx Company, LLC, 0000 Xxxxxxxxx
Xxxx, X.X., Xxxxxxx, Xxxxxxx 00000, Attention: Corporate Finance Department,
with a copy to Xxxxx, Xxxxxxxx & Xxxxxxx, LLP, Suite 3100, Promenade II, 0000
Xxxxxxxxx Xxxxxx, X.X., Xxxxxxx, Xxxxxxx 00000-0000; if to the Selling
Shareholder it shall be sufficient in all respects if delivered or sent by mail
(certified, return receipt requested) to counsel for such Selling Shareholder at
its address set forth in Schedule II hereto; and if sent to the Company, shall
be mailed (certified, return receipt requested), delivered or telegraphed and
confirmed in writing to the Company at 00 Xxxxx Xxxxxx Xxxxx, Xxxxxxx, Xxxxx
Xxxxxxxx 00000, Attention: President, with a copy to counsel for the Company.
13. BINDING EFFECT. This Agreement shall be binding upon, and inure
solely to the benefit of, the Underwriters, the Company and the Selling
Shareholder and to the extent provided in Sections 8 and 10 hereof, the officers
and directors and controlling persons referred to therein and their respective
heirs, executors, administrators, successors and assigns, and no other person
shall acquire or have any right under or by virtue of this Agreement. No
purchaser of any of the Shares from any Underwriter shall be deemed a successor
or assign by reason merely of such purchase.
14. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Georgia without giving effect to any
provisions regarding conflicts of laws.
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15. COUNTERPARTS. This Agreement may be executed by any one or more of
the parties hereto in any number of counterparts, each of which shall be deemed
to be an original, but all such counterparts shall together constitute one and
the same instrument.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us one of the counterparts hereof, and upon
the acceptance hereof by The Xxxxxxxx-Xxxxxxxx Company, LLC, this letter will
constitute a binding agreement among the Underwriter, the Company and the
Selling Shareholder.
Very truly yours,
FIRST CHARTER CORPORATION
By:
Xxxxxxxx X. Xxxxxxxxx
President and Chief Executive Officer
Selling Shareholder
By:
Xxxxxxxx X. Xxxxxxxxx, as Trustee acting
on behalf of the Home Federal Savings and
Loan Employee Stock Ownership Plan
By:
Xxxxxx X. Xxxxxxx, as Trustee acting on
behalf of the Home Federal Savings and
Loan Employee Stock Ownership Plan
By:
Xxxxx X. Xxxxxxx, as Trustee acting on
behalf of the Home Federal Savings and
Loan Employee Stock Ownership Plan
The foregoing Agreement is hereby
confirmed and accepted as of the
date first written above at
Atlanta, Georgia.
THE XXXXXXXX-XXXXXXXX COMPANY, LLC
By:
(Authorized Representative)
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31
SCHEDULE I
TOTAL
NUMBER OF
SHARES TO BE
UNDERWRITER PURCHASED
--------------------------------------------------------------------------------
The Xxxxxxxx-Xxxxxxxx Company, LLC................... 429,708
SCHEDULE II
..............TOTAL
--------------
NUMBER
OF SHARES
SELLING SHAREHOLDER TO BE SOLD
--------------
.................
------------------
Home Federal Savings and Loan Employee Stock Ownership .......429,708
Plan
------------------
(1) The Selling Shareholder is represented by Xxxxxx & Bird LLP, One
Atlantic Center, 0000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx
00000-0000.
ANNEX I
Pursuant to Section 7(e) of the Underwriting Agreement, KPMG LLP
shall furnish letters to the Underwriters to the effect that:
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(i) they are independent public accountants with respect to
the Company within the meaning the Act and the applicable published
rules and regulations thereunder;
(ii) in their opinion, the financial statements and schedules
audited by them and included in the Prospectus and the Registration Statement
comply as to form in all material respects with the applicable accounting
requirements of the Act and the related published rules and regulations
thereunder with respect to Registration Statements on Form S-3;
(iii) the unaudited summary and selected financial information
included in the Prospectus agrees with the corresponding amounts in the audited
financial statements included in the Prospectus or previously reported on by
them;
(iv) On the basis of limited procedures, not constituting an
audit in accordance with generally accepted auditing standards, consisting of a
reading of the latest available interim financial statements of the Company,
inspection of the minute books of the Company since the date of the latest
audited financial statements included in the Prospectus, inquiries of officials
of the Company responsible for financial accounting matters and such other
inquiries and procedures as may be specified in such letter, nothing came to
their attention that caused them to believe that:
(A) the unaudited financial statements of the
Company included in the Registration Statement and the
Prospectus do not comply as to form in all material respects
with the applicable accounting requirements of the Act and the
related published rules and regulations thereunder or are not
in conformity with generally accepted principles applied on
the basis substantially consistent with that of the audited
consolidated financial statements included in the Registration
Statement and the Prospectus;
(B) as of a specified date not more than five (5)
days prior to the date of such letter, there were any changes
in the capital stock (other than the issuance of capital stock
upon exercise of options which were outstanding on the date of
the latest balance sheet included in the Prospectus) or any
increase in the long-term debt or short-term debt of the
Company, or any decreases in net current assets or net assets
or other items specified by the Representatives, or any
increases in any items specified by the Representatives, in
each case as compared with amounts shown in the latest balance
sheet included in the Prospectus, except in each case for
changes, increases or decreases which the Prospectus discloses
have occurred or may occur or which are described in such
letter; and
(C) for the period from the date of the latest
financial statements included in the Prospectus to the
specified date referred to in Clause (B) there were any
decreases in revenues or operating income or the total or per
share amounts of net income or other items specified by the
Representatives, or any increases in any items specified by
the Representatives, in each case as compared with the
comparable period of the preceding year and with any other
period of corresponding length specified by the
Representatives, except in each
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33
case for increases or decreases which the Prospectus discloses
have occurred or may occur which are described in such letter;
and
(v) In addition to the audit referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of
minute books, inquiries and other procedures referred to in paragraph
(iv) above, they have carried out certain specified procedures, not
constituting an audit in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Representatives which are derived from the
general accounting records of the Company, included in the Registration
Statement and the Prospectus, or which appear in Part II of, or in
exhibits and schedules to, the Registration Statement specified by the
Representatives, and have compared and agreed such amounts, percentages
and financial information with the accounting records of the Company or
to analyses and schedules prepared by the Company from its detailed
accounting records.
(vi) On the basis of a reading of the unaudited pro forma
condensed financial statements included in the Registration Statement
and the Prospectus, carrying out certain specified procedures that
would not necessarily reveal matters of significance with respect to
the comments set forth in this paragraph (vi), inquiries of certain
officials of the Company who have responsibility for financial and
accounting matters and proving the arithmetic accuracy of the
application of the pro forma adjustments to the historical amounts in
the unaudited pro forma condensed financial statements, nothing came to
their attention that caused them to believe that the unaudited pro
forma condensed financial statements do not comply as to form in all
material respects with the applicable accounting requirements of
Regulation S-X or that the pro forma adjustments have not been properly
applied to the historical amounts in the compilation of such
statements.
References to the Registration Statement and the Prospectus in this
Annex I shall include any amendment or supplement thereto at the date of such
letter.
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