EXHIBIT 1.2
================================================================================
GREATER ATLANTIC FINANCIAL CORP.
(A DELAWARE CORPORATION)
2,000,000 Shares of Common Stock*
UNDERWRITING AGREEMENT
______ __, 1999
================================================================================
--------------------
*Plus an option to purchase from the Company up to 300,000 additional
shares.
TABLE OF CONTENTS
PAGE
PURCHASE AGREEMENT..............................................................................................-1-
SECTION 1. REPRESENTATIONS AND WARRANTIES................................................................-2-
(a) Representations and Warranties by the Company.................................................-2-
(i) Compliance with Registration Requirements........................................-2-
(ii) Independent Accountants..........................................................-3-
(iii) Financial Statements.............................................................-3-
(iv) No Material Adverse Change in Business. ........................................-4-
(v) Good Standing of the Company....................................................-4-
(vi) Good Standing of the Subsidiaries................................................-4-
(vii) Foreign Qualifications...........................................................-4-
(viii) Capital Stock Duly Authorized and Validly Issued.................................-4-
(ix) Capitalization...................................................................-5-
(x) Authorization of Agreement.......................................................-5-
(xi) Authorization and Description of Securities......................................-5-
(xii) Investment Company Act...........................................................-5-
(xiii) Absence of Defaults and Conflicts................................................-5-
(xiv) Absence of Labor Dispute.........................................................-6-
(xv) Absence of Proceedings...........................................................-6-
(xvi) Absence of Further Requirements..................................................-6-
(xvii) Accuracy of Exhibits.............................................................-7-
(xviii) Possession of Intellectual Property..............................................-7-
(xix) Possession of Licenses and Permits...............................................-7-
(xx) Compliance with Laws and Regulations.............................................-7-
(xxi) Title to Property................................................................-8-
(xxii) Registration Rights..............................................................-8-
(xxiii) Warrants, Options and Other Rights...............................................-8-
(xxiv) Environmental Laws...............................................................-8-
(xxv) Tax Matters......................................................................-9-
(xxvi) Insurance........................................................................-9-
(xxvii) Accounting Controls..............................................................-9-
(xxiii) Fees.............................................................................-9-
(xxix) Lock-up Agreements...............................................................-9-
(xxx) Use of Prospectus...............................................................-10-
(b) Officer's Certificates.......................................................................-10-
SECTION 2. SALE AND DELIVERY TO UNDERWRITER; CLOSING....................................................-10-
(a) Initial Securities...........................................................................-10-
(b) Option Securities............................................................................-10-
(c) Payment......................................................................................-11-
(d) Denominations; Registration..................................................................-11-
SECTION 3. COVENANTS OF THE COMPANY. ..................................................................-11-
(a) Compliance with Securities Regulations and Commission Requests...............................-11-
(b) Filing of Amendments.........................................................................-12-
(c) Delivery of Registration Statements..........................................................-12-
(d) Delivery of Prospectuses.....................................................................-12-
(e) Continued Compliance with Securities Laws....................................................-12-
(f) Blue Sky Qualifications......................................................................-13-
(g) Rule 158.....................................................................................-13-
(h) Use of Proceeds..............................................................................-13-
(i) Listing......................................................................................-13-
(j) Restriction on Sale of Securities............................................................-13-
(k) Reporting Requirements.......................................................................-14-
SECTION 4. PAYMENT OF EXPENSES AND ADVISORY FEE.........................................................-14-
(a) Expenses.....................................................................................-14-
(b) Advisory Fee.................................................................................-15-
(c) Termination of Agreement.....................................................................-15-
(d) Allocation of Expenses.......................................................................-15-
SECTION 5. CONDITIONS OF UNDERWRITER'S OBLIGATIONS......................................................-15-
(a) Effectiveness of Registration Statement......................................................-15-
(b) Opinion of Counsel for the Company...........................................................-15-
(c) Opinion of Counsel for the Underwriter.......................................................-16-
(d) Officers' Certificate........................................................................-16-
(e) Accountant's Comfort Letter..................................................................-16-
(f) Bring-down Comfort Letter....................................................................-16-
(g) Approval of Listing..........................................................................-16-
(h) No Objection.................................................................................-16-
(i) Lock-up Agreements...........................................................................-16-
(j) Conditions to Purchase of Option Securities..................................................-16-
(i) Officers' Certificate...........................................................-17-
(ii) Opinion of Counsel of the Company...............................................-17-
(iii) Opinion of Counsel for the Underwriter..........................................-17-
(iv) Bring-down Comfort Letter.......................................................-17-
(k) Additional Documents.........................................................................-17-
(l) Termination of Agreement.....................................................................-17-
SECTION 6. INDEMNIFICATION..............................................................................-18-
(a) Indemnification of the Underwriter...........................................................-18-
(b) Indemnification of Company, Directors and Officers...........................................-19-
(c) Actions against Parties; Notification........................................................-19-
(d) Settlement without Consent if Failure to Reimburse...........................................-19-
SECTION 7. CONTRIBUTION.................................................................................-20-
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY...............................-21-
SECTION 9. TERMINATION OF AGREEMENT.....................................................................-21-
(a) Termination; General.........................................................................-21-
(b) Liabilities..................................................................................-21-
SECTION 10. NOTICES......................................................................................-22-
SECTION 11. PARTIES......................................................................................-22-
SECTION 12. GOVERNING LAW AND TIME.......................................................................-23-
SECTION 13. EFFECT OF HEADINGS...........................................................................-23-
SCHEDULE A............................................................................................Schedule A-1
SCHEDULE B............................................................................................Schedule B-1
SCHEDULE C............................................................................................Schedule C-1
SCHEDULE D.............................................................................................Schedule D-1
SCHEDULE E............................................................................................Schedule E-1
-ii-
GREATER ATLANTIC FINANCIAL CORP.
(a Delaware corporation)
2,000,000 Shares of Common Stock
(Par Value $.01 Per Share)
UNDERWRITING AGREEMENT
_______ __, 1999
XXXX XXXXX XXXX XXXXXX, INCORPORATED
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Ladies and Gentlemen:
Greater Atlantic Financial Corp., a Delaware corporation (the "Company"),
confirms its agreement with Xxxx Xxxxx Xxxx Xxxxxx, Incorporated (the
"Underwriter"), with respect to (i) the sale by the Company and the purchase by
the Underwriter of 2,000,000 shares of Common Stock, par value $.01 per share,
of the Company ("Common Stock") and (ii) the grant by the Company to the
Underwriter of the option described in Section 2(b) hereof to purchase all or
any part of 300,000 additional shares of Common Stock to cover over-allotments,
if any. The aforesaid 2,000,000 shares of Common Stock (the "Initial
Securities") to be purchased by the Underwriter and all or any part of the
300,000 shares of Common Stock subject to the option described in Section 2(b)
hereof (the "Option Securities") are hereinafter called, collectively, the
"Securities."
The Company understands that the Underwriter proposes to make a public
offering of the Securities (the "Offering") as soon as it deems advisable after
this Agreement has been executed and delivered. The Underwriter may assemble and
manage a selling group of broker-dealers that are members of the National
Association of Securities Dealers, Inc. ("NASD") to participate in the
solicitation of purchase orders for the Securities under the form of a master
selected dealer agreement or similar form of dealer agreement, which the
Underwriter has entered into with such broker dealers.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form SB-2 (No. 333-______) covering
the registration of the Securities under the Securities Act of 1933, as amended
(the "1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will either
(i) prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations or (ii) if
the Company has elected to rely upon Rule 434 ("Rule 434") of the 1933 Act
Regulations, prepare and file a term sheet (a "Term Sheet") in accordance with
the provisions of Rule 434 and Rule 424(b). The information included in such
prospectus or in such Term Sheet, as the case may be, that was omitted from such
registration statement at the time it became effective but that is deemed to be
part of such registration statement at the time it became effective (a) pursuant
to paragraph (b) of Rule 430A is referred to as "Rule 430A Information" or (b)
pursuant to paragraph (d) of Rule 434 is referred to as "Rule 434 Information."
Each prospectus used before such registration statement became effective, and
any prospectus that omitted, as applicable, the Rule 430A Information or the
Rule 434 Information, that was used after such effectiveness and prior to the
execution and delivery of this Agreement, is herein called a "preliminary
prospectus." Such registration statement, including the exhibits thereto and
schedules thereto at the time it became effective and including the Rule 430A
Information and the Rule 434 Information, as applicable, is herein called the
"Registration Statement." Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. The final prospectus in
the form first furnished to the Underwriter for use in connection with the
offering of the Securities is herein called the "Prospectus." If Rule 434 is
relied on, the term "Prospectus" shall refer to the preliminary prospectus dated
________ __, 1999 together with the Term Sheet and all references in this
Agreement to the date of the Prospectus shall mean the date of the Term Sheet.
For purposes of this Agreement, all references to the Registration Statement,
any preliminary prospectus, the Prospectus or any Term Sheet or any amendment or
supplement to any of the foregoing shall be deemed to include the copy filed
with the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval ("XXXXX") system.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) Representations and Warranties by the Company. The Company represents
and warrants to the Underwriter as of the date hereof, as of the Closing Time
referred to in Section 2(c) hereof, and as of each Date of Delivery (if any)
referred to in Section 2(b) hereof, and agrees with the Underwriter, as follows:
(i) Compliance with Registration Requirements. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are contemplated by the Commission, and
any request on the part of the Commission for additional information
has been complied with.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto
became effective and at the Closing Time (and, if any Option Securities
are purchased, at the Date of Delivery), the Registration Statement,
the Rule 462(b) Registration Statement and any amendments and
supplements
-2-
thereto complied and will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and did not
and will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading. Neither the Prospectus nor
any amendments or supplements thereto, at the time the Prospectus or
any such amendment or supplement was issued and at the Closing Time
(and, if any Option Securities are purchased, at the Date of Delivery),
included or will include an untrue statement of a material fact or
omitted or will omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading. If Rule 434 is used, the Company
will comply with the requirements of Rule 434 and the Prospectus shall
not be "materially different", as such term is used in Rule 434, from
the prospectus included in the Registration Statement at the time it
became effective. The representations and warranties in this subsection
shall not apply to statements in or omissions from the Registration
Statement or Prospectus made in reliance upon and in conformity with
information furnished to the Company in writing by the Underwriter
expressly for use in the Registration Statement or Prospectus.
Each preliminary prospectus and the Prospectus filed as part of
the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
complied when so filed in all material respects with the 1933 Act
Regulations and each preliminary prospectus and the Prospectus
delivered to the Underwriter for use in connection with this Offering
was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to XXXXX, except to the extent permitted
by Regulation S-T.
(ii) Independent Accountants. The accountants who certified the
financial statements and supporting schedules included in the
Registration Statement are independent public accountants within the
meaning of the 1933 Act and the 1933 Act Regulations.
(iii) Financial Statements. The financial statements included in
the Registration Statement and the Prospectus, together with the
related schedules and notes, present fairly the financial position of
the Company and its consolidated subsidiaries at the dates indicated
and the results of operations, shareholders' equity and cash flows of
the Company and its consolidated subsidiaries for the periods
specified; and said financial statements have been prepared in
conformity with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved. The
supporting schedules included in the Registration Statement present
fairly in accordance with GAAP the information required to be stated
therein. The selected consolidated financial data and the summary
consolidated financial data included in the Prospectus present fairly
the information shown therein and have been compiled on a basis
consistent with that of the audited financial statements included in
the Registration Statement.
-3-
(iv) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Registration Statement
and the Prospectus, except as otherwise stated therein, (A) there has
been no material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects
of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business (a "Material
Adverse Effect"), (B) there have been no transactions entered into by
the Company or any of its subsidiaries, other than those in the
ordinary course of business, which are material with respect to the
Company and its subsidiaries considered as one enterprise, and (C)
there has been no dividend or distribution of any kind declared, paid
or made by the Company on any class of its capital stock.
(v) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware and has the corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and to enter into and perform
its obligations under this Agreement; and the Company is duly
registered as a savings and loan holding company under the Home Owners'
Loan Act, as amended (the "HOLA").
(vi) Good Standing of the Subsidiaries. Greater Atlantic Bank (the
"Bank") and Greater Atlantic Mortgage Corporation ("GAMC") (each a
"Subsidiary" and together, the "Subsidiaries") are the only
subsidiaries of the Company; the Bank is a federal savings bank duly
organized, validly existing and in good standing under the laws of the
United States with corporate power and authority under such laws to
own, lease and operate its properties and conduct its business as
described in the Prospectus; the deposit accounts of the Bank are
insured by the Savings Association Insurance Fund ("SAIF") of the
Federal Deposit Insurance Corporation ("FDIC") up to the maximum
allowable limits thereof; GAMC has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of Maryland and has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus.
(vii) Foreign Qualifications. The Company and the Subsidiaries are
each duly qualified as a foreign corporation to transact business and
are each in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure to so qualify or be in good standing would not result in a
Material Adverse Effect (as defined in Section l(a)(iv) hereof).
(viii) Capital Stock Duly Authorized and Validly Issued. All of
the issued and outstanding capital stock of the Company has been duly
authorized and validly issued and is fully paid and nonassessable and
none of the capital stock of the Company was issued in violation of the
preemptive rights of any shareholder of the Company; all of the issued
and outstanding capital stock of the Subsidiaries has been duly
authorized and validly issued, is fully paid and nonassessable and is
owned by the Company, directly or through subsidiaries,
-4-
free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equitable right; and none of such outstanding
shares of capital stock of the Subsidiaries was issued in violation of
any preemptive or similar rights arising by operation of law, or under
the charter or by-laws of the Company or the Subsidiaries or under any
agreement to which the Company or any Subsidiary is a party.
(ix) Capitalization. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectus in the
column entitled "Actual" under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to this Agreement, pursuant to
reservations, agreements or employee benefit plans referred to in the
Prospectus or pursuant to the exercise of convertible securities or
options referred to in the Prospectus).
(x) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Company.
(xi) Authorization and Description of Securities. The Securities
to be purchased by the Underwriter from the Company have been duly
authorized for issuance and sale to the Underwriter pursuant to this
Agreement and, when issued and delivered by the Company pursuant to
this Agreement against payment of the consideration set forth herein,
will be validly issued and fully paid and non-assessable; the Common
Stock conforms to all statements relating thereto contained in the
Prospectus and such description conforms to the rights set forth in the
instruments defining the same; no holder of the Securities will be
subject to personal liability by reason of being such a holder; and the
issuance of the Securities is not subject to the preemptive or other
similar rights of any securityholder of the Company.
(xii) Investment Company Act. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the
Prospectus will not be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended (the "1940 Act").
(xiii) Absence of Defaults and Conflicts. Neither the Company nor
any of its Subsidiaries is in violation of its charter or by-laws or in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or other agreement
or instrument to which the Company or any of its Subsidiaries is a
party or by which it or any of them may be bound, or to which any of
the property or assets of the Company or any Subsidiary is subject
(collectively, the "Agreements and Instruments") except for such
defaults that would not, individually or in the aggregate, result in a
Material Adverse Effect; and the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated
herein and in the Registration Statement (including the issuance and
sale of the Securities and the use of the proceeds from the sale of the
Securities as
-5-
described in the Prospectus under the caption "Use of Proceeds") and
compliance by the Company with its obligations hereunder have been duly
authorized by all necessary corporate action and do not and will not,
whether with or without the giving of notice or passage of time or
both, conflict with or constitute a breach of, or a default or
Repayment Event (as defined below) under, give rise to any right of
termination under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any
Subsidiary pursuant to, any of the Agreements and Instruments (except
for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not, individually or in the aggregate, result
in a Material Adverse Effect), nor will such action result in any
violation of the provisions of the charter or by-laws of the Company or
any Subsidiary or any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over
the Company or any Subsidiary or any of their assets, properties or
operations, including without limitation the Office of Thrift
Supervision ("OTS") and the FDIC (collectively, "Governmental
Entities"). As used herein, a "Repayment Event" means any event or
condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder's behalf)
the right to require the repurchase, redemption or repayment of all or
a portion of such indebtedness by the Company or any Subsidiary.
(xiv) Absence of Labor Dispute. No labor dispute with the
employees of the Company or any Subsidiary exists or, to the knowledge
of the Company, is threatened.
(xv) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or Governmental
Entity, now pending, or, to the knowledge of the Company, threatened,
against or affecting the Company or any Subsidiary, which is required
to be disclosed in the Prospectus (other than as disclosed therein), or
which would reasonably be expected to result in a Material Adverse
Effect, or which would reasonably be expected to materially and
adversely affect the properties or assets thereof or the consummation
of the transactions contemplated in this Agreement or the performance
by the Company of its obligations hereunder; the aggregate of all
pending legal or governmental proceedings to which the Company or any
Subsidiary is a party or of which any of their respective property or
assets is the subject which are not described in the Prospectus,
including ordinary routine litigation incidental to the business, could
not reasonably be expected to result in a Material Adverse Effect.
(xvi) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company of
its obligations hereunder, in connection with the offering, issuance or
sale of the Securities hereunder or the consummation of the
transactions contemplated by this Agreement, except such as have been
already obtained or as may be required under the 1933 Act or the 1933
Act Regulations or state securities laws.
-6-
(xvii) Accuracy of Exhibits. There are no contracts or documents
which are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits thereto which have not been so
described or filed as required.
(xviii) Possession of Intellectual Property. The Company and its
Subsidiaries own or possess, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property") material
to the business of the Company and its subsidiaries now operated by
them, and neither the Company nor any of its Subsidiaries has received
any written notice or is otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any
Intellectual Property or of any facts or circumstances which would
render any Intellectual Property invalid or inadequate to protect the
interest of the Company or any of its Subsidiaries therein, and which
infringement or conflict (if the subject of any unfavorable decision,
ruling or finding) or invalidity or inadequacy, individually or in the
aggregate, would result in a Material Adverse Effect.
(xix) Possession of Licenses and Permits. The Company and its
Subsidiaries possess such certificates, authorities, permits, licenses,
approvals, consents and other authorizations (collectively,
"Governmental Licenses") issued by the appropriate Government Entities
necessary to conduct the business now operated by them; the Company and
its Subsidiaries are in compliance with the terms and conditions of all
such Governmental Licenses, except where the failure so to comply would
not, individually or in the aggregate, have a Material Adverse Effect;
all of the Governmental Licenses are valid and in full force and
effect, except when the invalidity of such Governmental Licenses or the
failure of such Governmental Licenses to be in full force and effect
would not have a Material Adverse Effect; and neither the Company nor
any of its Subsidiaries has received any notice of proceedings relating
to the revocation or modification of any such Governmental Licenses
which, individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a Material
Adverse Effect.
(xx) Compliance with Laws and Regulations. Neither the Company nor
any Subsidiary is or has been (by virtue of any action, omission to
act, contract to which it is a party or by which it is bound, or any
occurrence or state of facts whatsoever) in violation of any applicable
federal, state, municipal, or local statutes, laws, ordinances, rules,
regulations and/or orders issued pursuant to foreign, federal, state,
municipal, or local statutes, laws, ordinances, rules, or regulations
(including those relating to any aspect of banking, savings and loan
holding companies, environmental protection, occupational safety and
health, and equal employment practices) heretofore or currently in
effect, except such violation that has been fully cured or satisfied
without recourse or that is not reasonably likely to have a Material
Adverse Effect.
-7-
(xxi) Title to Property. Each of the Company and each of its
Subsidiaries has good and marketable title to all properties (real and
personal) owned by the Company or its Subsidiaries, free and clear of
all mortgages, pledges, liens, security interests, claims, restrictions
or encumbrances of any kind except such as (a) are described in the
Prospectus or (b) do not, individually or in the aggregate, materially
affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company or any of
its Subsidiaries; and all of the leases and subleases material to the
business of the Company and its Subsidiaries, considered as one
enterprise, and under which the Company or any of its Subsidiaries
holds properties described in the Prospectus, are in full force and
effect, and neither the Company nor any Subsidiary has any written
notice of any material claim of any sort that has been asserted by
anyone adverse to the rights of the Company or any Subsidiary under any
of the leases or subleases mentioned above, or affecting or questioning
the rights of the Company or such Subsidiary to the continued
possession of the leased or subleased premises under any such lease or
sublease.
(xxii) Registration Rights. There are no persons with registration
rights or other similar rights to have any securities registered
pursuant to the Registration Statement or otherwise registered by the
Company under the 1933 Act.
(xxiii) Warrants, Options and Other Rights. Except as disclosed in
the Prospectus, there are no outstanding options, warrants or other
rights calling for the issuance of, and no commitments, plans or
arrangements to issue, any shares of capital stock of the Company or
any of its Subsidiaries or any security convertible into or
exchangeable for capital stock of the Company or any of its
Subsidiaries.
(xxiv) Environmental Laws. Except as described in the Registration
Statement and except as would not, individually or in the aggregate,
result in a Material Adverse Effect, (A) neither the Company nor any of
its Subsidiaries is in violation of any federal, state, local or
foreign statute, law, rule, regulation, ordinance, code, policy or rule
of common law or any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent, decree or
judgment, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or
threatened release of chemicals, pollutants, contaminants, wastes,
toxic substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials (collectively, "Environmental
Laws"), (B) the Company and its Subsidiaries have all permits,
authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements,
(C) there are no pending or, to the knowledge of the Company,
threatened, administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or
violation, investigation or proceedings relating to any Environmental
Law against the Company or any of its Subsidiaries and (D) there are no
-8-
events or circumstances that might reasonably be expected to form the
basis of an order for clean-up or remediation, or an action, suit or
proceeding by any private party or governmental body or agency, against
or affecting the Company or any of its Subsidiaries relating to
Hazardous Materials or any Environmental Laws.
(xxv) Tax Matters. The Company and its Subsidiaries have timely
filed all federal, state, local and foreign tax returns that are
required to be filed or have duly requested extensions thereof and have
timely paid all taxes required to be paid by any of them and any
related assessments, fines or penalties, except for any such tax,
assessment, fine or penalty that is being contested in good faith and
by appropriate proceedings; and adequate charges, accruals and reserves
have been provided for in the financial statements referred to in
Section 1(a)(iii) above in respect of all federal, state, local and
foreign taxes for all periods as to which the tax liability of the
Company or any of its Subsidiaries has not been finally determined or
remains open to examination by applicable taxing authorities.
(xxvi) Insurance. The Company and its Subsidiaries carry or are
entitled to the benefits of insurance in such amounts and covering such
risks as is generally maintained by companies of established repute
engaged in the same or similar business, and all such insurance is in
full force and effect.
(xxvii) Accounting Controls. The Company and its Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance
with management's general and specific authorizations; (ii)
transactions are recorded as necessary to permit the preparation of
financial statements in conformity with GAAP and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorizations; and
(iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(xxviii) Fees. Other than as contemplated by this Agreement, there
is no broker, finder or other party that is entitled to receive from
the Company or any of its Subsidiaries any brokerage or finder's fee or
any other fee, commission or payment as a result of the transactions
contemplated by this Agreement.
(xix) Lock-up Agreements. The Company has obtained and delivered
to the Underwriter the agreements of the persons and entities named in
Schedule A hereto to the effect that each such person and entity will
not, for a period of 180 days from the date hereof and except as
otherwise provided therein, without the prior written consent of the
Underwriter directly or indirectly, (i) offer, pledge, sell, contract
to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant for the sale
of, or otherwise dispose of or transfer any shares of the Common Stock
or any securities convertible into or exchangeable or exercisable for
Common Stock or file or cause to be filed any registration statement
under the 1933 Act with respect to any of the
-9-
foregoing or (ii) enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Common Stock,
whether any such swap or transaction is to be settled by delivery of
Common Stock or other securities, in cash or otherwise; provided,
however, that such restrictions shall not apply to a bona fide gift of
shares of Common Stock by such person to a person or entity who, prior
to such transfer, shall have executed and delivered to the Underwriter
an agreement, substantially in the form of the agreement contemplated
by this Section 1(a)(xxix), not to take any action prohibited by such
agreement with respect to such shares of Common Stock.
(xxx) Use of Prospectus. The Company has not distributed and,
prior to the later to occur of (i) the Closing Time and (ii) completion
of the distribution of the Securities, will not distribute any
prospectus (as such term is defined in the 1933 Act and the 1933 Act
Regulations) in connection with the offering and sale of the Securities
other than the Registration Statement, any preliminary prospectus, the
Prospectus or other materials, if any, permitted by the 1933 Act or by
the 1933 Act Regulations and approved by the Underwriter.
(b) Officer's Certificates. Any certificate signed by any duly
authorized officer of the Company or any Subsidiary and delivered to you or to
counsel for the Underwriter shall be deemed a representation and warranty by the
Company to the Underwriter as to the matters covered thereby.
SECTION 2. SALE AND DELIVERY TO THE UNDERWRITER; CLOSING.
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to the Underwriter and the Underwriter agrees
to purchase from the Company 2,000,000 shares of the Securities at the price per
share set forth in Schedule B reflecting an underwriting discount equal to 7.0%
of the public offering price; provided however, the underwriting discount shall
be reduced to 3.0% on sales of Securities to the Company's original investors
and members of the Board of Directors of the Company as listed in Schedule C in
an aggregate amount of Securities not to exceed $5.0 million based upon the
initial offering price.
(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the Underwriter to purchase,
in addition to the Initial Securities, 300,000 shares of the Option Securities
at the price per share set forth in Schedule B, less an amount per share equal
to any dividends or distributions declared by the Company and payable on the
Initial Securities but not payable on the Option Securities. The option hereby
granted will expire 30 days after the date hereof and may be exercised in whole
or in part from time to time only for the purpose of covering over-allotments
which may be made in connection with the offering and distribution of the
Initial Securities upon notice by the Underwriter to the Company setting forth
the aggregate number of Option Securities as to which the Underwriter is then
exercising the option and the time and date of payment and delivery for such
Option Securities. Any such time and date of delivery (a "Date of
-10-
Delivery") shall be determined by the Underwriter, but shall not be later than
seven full business days after the exercise of said option, nor in any event
prior to the Closing Time, as hereinafter defined.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of Elias,
Matz, Xxxxxxx & Xxxxxxx L.L.P., 000 00xx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000,
or at such other place as shall be agreed upon by the Underwriter and the
Company at 10:00 A.M. (Eastern time) on the third (fourth, if the pricing occurs
after 4:30 P.M. (Eastern time) on any given day) business day after the date
hereof or such other time not later than ten business days after such date as
shall be agreed upon by the Underwriter and the Company (such time and date of
payment and delivery being herein called "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriter, payment of the purchase price for, and delivery of
certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Underwriter and
the Company on each Date of Delivery as specified in the notice from the
Underwriter to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to bank accounts designated by the Company as the case may be,
against delivery to the Underwriter of certificates for the Securities to be
purchased.
(d) Denominations; Registration. Certificates for the Initial
Securities and the Option Securities, if any, shall be in such denominations and
registered in such names as the Underwriter may request in writing at least one
full business day before the Closing Time or the relevant Date of Delivery, as
the case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
Underwriter in the city of Washington, D.C. not later than 10:00 A.M. (Eastern
time) on the business day prior to the Closing Time or the relevant Date of
Delivery, as the case may be.
SECTION 3. COVENANTS OF THE COMPANY.
The Company covenants with the Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests. The
Company, subject to Section 3(b), will comply with the requirements of Rule 430A
or Rule 434, as applicable, and will notify the Underwriter immediately, and
confirm such notice in writing, (i) when any post-effective amendment to the
Registration Statement shall become effective, or any supplement to the
Prospectus or any amended Prospectus shall have been filed, (ii) of the receipt
of any comments from the Commission, (iii) of any request by the Commission for
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus or for additional information, and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any
-11-
preliminary prospectus, or of the suspension of the qualification of the
Securities for offering or sale in any jurisdiction, or of the initiation or
threatening of any proceedings for any of such purposes. The Company will
promptly effect the filings necessary pursuant to Rule 424(b) and will take such
steps as shall be necessary to ascertain promptly whether the form of prospectus
transmitted for filing under Rule 424(b) was received for filing by the
Commission and, in the event that it was not, it will promptly file such
prospectus. The Company will make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(b) Filing of Amendments. The Company will give the Underwriter notice
of its intention to file or prepare any amendment to the Registration Statement
(including any filing under Rule 462(b)), any Term Sheet or any amendment,
supplement or revision to either the prospectus included in the Registration
Statement at the time it became effective or to the Prospectus, will furnish the
Underwriter with copies of any such documents a reasonable amount of time prior
to such proposed filing or use, as the case may be, and will not file or use any
such document to which the Underwriter or counsel for the Underwriter shall
object.
(c) Delivery of Registration Statements. The Company has furnished or
will deliver to the Underwriter and counsel for the Underwriter, without charge,
signed copies of the Registration Statement as originally filed and of each
amendment thereto (including exhibits filed therewith or incorporated by
reference therein) and signed copies of all consents and certificates of
experts, and will also deliver to the Underwriter, without charge, a conformed
copy of the Registration Statement as originally filed and of each amendment
thereto (without exhibits). The copies of the Registration Statement and each
amendment thereto furnished to the Underwriter will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
XXXXX, except to the extent permitted by Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to the
Underwriter, without charge, as many copies of each preliminary prospectus as
such Underwriter reasonably requested, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act. The Company will
furnish to Underwriter, without charge, during the period when the Prospectus is
required to be delivered under the 1933 Act or the Securities Exchange Act of
1934 (the "1934 Act"), such number of copies of the Prospectus (as amended or
supplemented) as such Underwriter may reasonably request. The Prospectus and any
amendments or supplements thereto furnished to the Underwriter will be identical
to the electronically transmitted copies thereof filed with the Commission
pursuant to XXXXX, except to the extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will comply
with the 1933 Act and the 1933 Act Regulations so as to permit the completion of
the distribution of the Securities as contemplated in this Agreement and in the
Prospectus. If at any time when a prospectus is required by the 1933 Act to be
delivered in connection with sales of the Securities, any event shall occur or
condition shall exist as a result of which it is necessary, in the opinion of
counsel for the Underwriter or for the Company, to amend the Registration
Statement or amend or supplement the
-12-
Prospectus in order that the Prospectus will not include any untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein not misleading in the light of the circumstances existing at
the time it is delivered to a purchaser, or if it shall be necessary, in the
opinion of such counsel, at any such time to amend the Registration Statement or
amend or supplement the Prospectus in order to comply with the requirements of
the 1933 Act or the 1933 Act Regulations, the Company will promptly prepare and
file with the Commission, subject to Section 3(b), such amendment or supplement
as may be necessary to correct such statement or omission or to make the
Registration Statement or the Prospectus comply with such requirements, and the
Company will furnish to the Underwriter such number of copies of such amendment
or supplement as the Underwriter may reasonably request.
(f) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the Underwriter, to qualify the Securities for offering and
sale under the applicable securities laws of such states and other jurisdictions
(domestic or foreign) as the Underwriter may designate and to maintain such
qualifications in effect for a period of not less than one year from the later
of the effective date of the Registration Statement and any Rule 462(b)
Registration Statement; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Securities have been so qualified, the Company will
file such statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for a period of not less
than one year from the effective date of the Registration Statement and any Rule
462(b) Registration Statement.
(g) Rule 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds received by
it from the sale of the Securities in the manner specified in the Prospectus
under "Use of Proceeds."
(i) Listing. The Company will use its best efforts to effect and
maintain the quotation of the Securities on the Nasdaq Stock Market, Inc.
SmallCap Market (the "Nasdaq SmallCap Market") and will file with the Nasdaq
Stock Market, Inc. all documents and notices required by the Nasdaq Stock
Market, Inc. of companies that have securities that are traded in the over-
the-counter market and quotations for which are reported by the Nasdaq SmallCap
Market.
(j) Restriction on Sale of Securities. During a period of 180 days from
the date of the Prospectus, the Company will not, without the prior written
consent of the Underwriter, (i) directly or indirectly, offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of any shares of Common Stock or any securities convertible
into or exercisable or
-13-
exchangeable for Common Stock or file or cause to be filed any registration
statement under the 1933 Act with respect to any of the foregoing or (ii) enter
into any swap or any other agreement or any transaction that transfers, in whole
or in part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction described in clause (i) or
(ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not apply to (A)
the Securities to be sold hereunder, (B) any shares of Common Stock issued by
the Company upon the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof and referred to in the Prospectus, (C)
any shares of Common Stock issued or options to purchase Common Stock granted
pursuant to existing employee benefit plans of the Company referred to in the
Prospectus or (D) any shares of Common Stock issued pursuant to any non-employee
director stock plan.
(k) Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will
file all documents required to be filed with the Commission pursuant to the 1934
Act within the time periods required by the 1934 Act and the rules and
regulations of the Commission thereunder.
SECTION 4. PAYMENT OF EXPENSES AND ADVISORY FEE.
(a) Expenses. The Company will pay or cause to be paid all expenses
incident to the performance of its obligations under this Agreement, including
(i) the preparation, printing and filing of the Registration Statement
(including financial statements and exhibits) as originally filed and of each
amendment thereto, (ii) the preparation, printing and delivery to the
Underwriter of this Agreement and such other documents as may be required in
connection with the offering, purchase, sale, issuance or delivery of the
Securities, (iii) the preparation, issuance and delivery of the certificates for
the Securities to the Underwriter, including any stock or other transfer taxes
and any stamp, capital or other duties payable upon the sale, issuance or
delivery of the Securities to the Underwriter, (iv) the fees and disbursements
of the Company's counsel, accountants and other advisors, (v) the qualification
of the Securities under securities laws in accordance with the provisions of
Section 3(f) hereof, including filing fees and the fees and disbursements of
counsel for the Underwriter in connection therewith and in connection with the
preparation of the Blue Sky Survey and any supplement thereto, (vi) the printing
and delivery to the Underwriter of copies of each preliminary prospectus, any
Term Sheets and of the Prospectus and any amendments or supplements thereto,
(vii) the preparation, printing and delivery to the Underwriter of copies of the
Blue Sky Survey and any supplement thereto, (viii) the fees and expenses of any
transfer agent or registrar for the Securities, (ix) the filing fees incident
to, and the fees and disbursements of counsel to the Underwriter in connection
with, the review by the National Association of Securities Dealers, Inc. (the
"NASD") of the terms of the sale of the Securities, (x) the fees and expenses
incurred in connection with the inclusion of the Securities in the Nasdaq
SmallCap Market, and (xi) the Company's travel in connection with "roadshow"
informational meetings and presentations for the brokerage community and
institutional investors.
-14-
(b) Advisory Fee. The Company acknowledges and agrees that the
Underwriter has provided and is expected to continue to provide the Company with
financial advice with respect to the structuring and terms of the Offering. Upon
and subject to the closing of the Offering and in consideration of the
Underwriter's financial advisory services, the Company will pay to the
Underwriter a fee in the amount of $50,000 at the Closing Time. Payment of this
financial advisory fee and the related expenses shall not reduce or in any way
affect the amount of any other fees or expense reimbursements from the Company
to the Underwriter in connection with the Offering, including those payable
pursuant to Sections 2 and 4 of this Agreement.
(c) Termination of Agreement. If this Agreement is terminated by the
Underwriter in accordance with the provisions of Section 5(1) or, Section 9(a)
hereof, the Company shall reimburse the Underwriter for all of its out-of-pocket
expenses, including but not limited to the reasonable fees and disbursements of
counsel for the Underwriter and expenses in connection with the financial
advisory services described in Section 4(b) hereof, in an amount not to exceed
$100,000.
(d) Allocation of Expenses. The provisions of this Section shall not
affect and, as between the Underwriter, on the one hand, and the Company on the
other hand, shall not be affected by, any agreement that the Company may make
for the sharing of such costs and expenses.
SECTION 5. CONDITIONS OF UNDERWRITER'S OBLIGATIONS.
The obligations of the Underwriter hereunder are subject to the
accuracy of the representations and warranties of the Company contained in
Section 1 hereof or in certificates of any officer of the Company or any
Subsidiary of the Company delivered pursuant to the provisions hereof, to the
performance by the Company of its respective covenants and other obligations
hereunder, and to the following further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, shall have become
effective and at Closing Time no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act or proceedings
therefor initiated or threatened by the Commission, and any request on the part
of the Commission for additional information shall have been complied with to
the reasonable satisfaction of counsel to the Underwriter. A prospectus
containing the Rule 430A Information shall have been filed with the Commission
in accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with the
requirements of Rule 430A) or, if the Company has elected to rely upon Rule 434,
a Term Sheet shall have been filed with the Commission in accordance with Rule
424(b).
(b) Opinion of Counsel for Company. At Closing Time, the Underwriter
shall have received the favorable opinion, dated as of Closing Time, of Xxxxxxx,
Xxxxxx & Xxxxxxxx LLP, counsel for the Company, in form and substance
satisfactory to counsel for the Underwriter, substantially in the form set forth
in Schedule D.
-15-
(c) Opinion of Counsel for the Underwriter. At Closing Time, the
Underwriter shall have received the favorable opinion, dated as of Closing Time,
of Elias, Matz, Xxxxxxx & Xxxxxxx L.L.P., counsel for the Underwriter, with
respect to the Securities and other related matters as the Underwriter may
require.
(d) Officers' Certificate. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company and its Subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Underwriter shall have
received a certificate of the President or a Vice President of the Company and
of the chief financial or chief accounting officer of the Company, dated as of
Closing Time, to the effect that (i) there has been no such material adverse
change, (ii) the representations and warranties in Section 1(a) hereof are true
and correct with the same force and effect as though expressly made at and as of
Closing Time, (iii) the Company has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied at or prior to Closing
Time, and (iv) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or are contemplated by the Commission.
(e) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Underwriter shall have received from BDO Xxxxxxx, LLP a letter
dated such date, in form and substance satisfactory to the Underwriter
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in the Registration
Statement and the Prospectus.
(f) Bring-down Comfort Letter. At Closing Time, the Underwriter shall
have received from BDO Xxxxxxx, LLP a letter, dated as of Closing Time, in form
and substance satisfactory to the Underwriter, to the effect that they reaffirm
the statements made in the letter furnished pursuant to subsection (e) of this
Section, except that the specified date referred to shall be a date not more
than three business days prior to Closing Time.
(g) Approval of Listing. At Closing Time, the Securities shall have
been approved for inclusion in the Nasdaq SmallCap Market, subject only to
official notice of issuance.
(h) No Objection. The NASD shall have confirmed that it has not raised
any objection with respect to the fairness and reasonableness of the
underwriting terms and arrangements.
(i) Lock-up Agreements. At the date of this Agreement, the Underwriter
shall have received an agreement substantially in the form of Schedule E hereto
signed by the persons listed on Schedule A hereto (which includes each director
and officer of the Company and each shareholder, and holder of option, warrants
or other securities exercisable, convertible or
-16-
exchangeable for Common Stock, who beneficially owns 2% or more of the
outstanding Common Stock).
(j) Conditions to Purchase of Option Securities. In the event that the
Underwriter exercises its option provided in Section 2(b) hereof to purchase all
or any portion of the Option Securities, the representations and warranties of
the Company contained herein and the statements in any certificates furnished by
the Company, any Subsidiary of the Company shall be true and correct as of each
Date of Delivery and, at the relevant Date of Delivery, and the Underwriter
shall have received:
(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the President or a Vice President of the Company and of
the chief financial or chief accounting officer of the Company
confirming that the certificate delivered at the Closing Time pursuant
to Section 5(d) hereof remains true and correct as of such Date of
Delivery.
(ii) Opinion of Counsel of the Company. The favorable opinion of
Xxxxxxx, Xxxxxx & Xxxxxxxx LLP, counsel for the Company, in form and
substance satisfactory to counsel for the Underwriter, dated such Date
of Delivery, relating to the Option Securities to be purchased on such
Date of Delivery and otherwise to the same effect as the opinion
required by Section 5(b) hereof.
(iii) Opinion of Counsel for the Underwriter. The favorable
opinion of Elias, Matz, Xxxxxxx & Xxxxxxx L.L.P., counsel for the
Underwriter, dated such Date of Delivery, relating to the Option
Securities to be purchased on such Date of Delivery and otherwise to
the same effect as the opinion required by Section 5(c) hereof.
(iv) Bring-down Comfort Letter. A letter from BDO Xxxxxxx, LLP in
form and substance satisfactory to the Underwriter and dated such Date
of Delivery, substantially in the same form and substance as the letter
furnished to the Underwriter pursuant to Section 5(e) hereof, except
that the "specified date" in the letter furnished pursuant to this
paragraph shall be a date not more than five days prior to such Date of
Delivery.
(k) Additional Documents. At Closing Time and at each Date of Delivery
counsel for the Underwriter shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Securities
as herein contemplated shall be satisfactory in form and substance to the
Underwriter and counsel for the Underwriter.
(l) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of the Option
Securities on a Date of Delivery which is after the Closing Time, the
-17-
obligations of the Underwriter to purchase the relevant Option Securities, may
be terminated by the Underwriter by notice to the Company at any time at or
prior to the Closing Time or such Date of Delivery, as the case may be, and such
termination shall be without liability of any party to any other party except as
provided in Section 4 and except that Sections 1, 6, 7 and 8 shall survive any
such termination and remain in full force and effect.
SECTION 6. INDEMNIFICATION.
(a) Indemnification of the Underwriter. The Company agrees to indemnify
and hold harmless the Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein in light
of the circumstances under which they were made not misleading or
arising out of any untrue statement or alleged untrue statement of a
material fact included in any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission; provided
that (subject to Section 6(d) below) any such settlement is effected
with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by the
Underwriter), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above; provided, however, that
this indemnity agreement shall not apply to any loss, liability, claim,
damage or expense to the extent arising out of any untrue statement or
omission or alleged untrue statement or omission made in reliance upon
and in conformity with written information furnished to the Company by
any Underwriter through the Underwriter expressly for use in the
Registration Statement (or any amendment thereto), including the Rule
430A Information
-18-
and the Rule 434 Information, if applicable, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).
(b) Indemnification of Company, Directors and Officers. Underwriter
agrees to indemnify and hold harmless the Company, its directors, each of its
officers who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act, against any and all loss, liability, claim, damage and
expense described in the indemnity contained in subsection (a) of this Section,
as incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto), including the Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by such Underwriter expressly for
use in the Registration Statement (or any amendment thereto) or such preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by the Underwriter, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses
-19-
of counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 6(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
SECTION 7. CONTRIBUTION.
If the indemnification provided for in Section 6 hereof is for any
reason unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, liabilities, claims, damages or expenses referred to
therein, then each indemnifying party shall contribute to the aggregate amount
of such losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and the
Underwriter on the other hand from the offering of the Securities pursuant to
this Agreement or (ii) if the allocation provided by clause (i) is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and of the Underwriter on the other hand in
connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company on the one hand and the
Underwriter on the other hand in connection with the offering of the Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Securities
pursuant to this Agreement (before deducting expenses) received by the Company
and the total underwriting discount received by the Underwriter, in each case as
set forth on the cover of the Prospectus, or, if Rule 434 is used, the
corresponding location on the Term Sheet bear to the aggregate initial public
offering price of the Securities as set forth on such cover.
The relative fault of the Company on the one hand and the Underwriter
on the other hand shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriter and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Underwriter agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or
-20-
defending against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or omission or alleged
omission.
Notwithstanding the provisions of this Section 7, Underwriter shall not
be required to contribute any amount in excess of the amount by which the total
price at which the Securities 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 any 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 0000 Xxx) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
Subsidiaries submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of Underwriter
or controlling person, or by or on behalf of the Company, and shall survive
delivery of the Securities to the Underwriter.
SECTION 9. TERMINATION OF AGREEMENT.
(a) Termination; General. The Underwriter may terminate this Agreement,
by notice to the Company at any time at or prior to Closing Time (i) if there
has been, since the time of execution of this Agreement or since the respective
dates as of which information is given in the Prospectus, any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its Subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business, or
(ii) if there has occurred any material adverse change in the financial markets
in the United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the Underwriter, impracticable to market
the Securities or to enforce contracts for the sale of the
-21-
Securities, or (iii) if trading in any securities of the Company has been
suspended or limited by the Commission or the Nasdaq Stock Market, Inc., or if
trading generally on the American Stock Exchange or the New York Stock Exchange
or in the Nasdaq Stock Market, Inc. has been suspended or limited, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices have
been required, by any of said exchanges or by such system or by order of the
Commission, the NASD or any other governmental authority, or (iv) if a banking
moratorium has been declared by either Federal, New York or Maryland
authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.
SECTION 10. NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Underwriter shall be directed to Xxxx
Xxxxx Xxxx Xxxxxx, Incorporated, 0000 Xxxxxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx,
X.X. 00000, attention of Xxxx X. Xxxxxxx with a copy to Xxxxxx X. Xxxxx, Esq.,
Elias, Matz, Xxxxxxx & Xxxxxxx L.L.P., 000 00xx Xxxxxx, X.X., Xxxxxxxxxx, X.X.
00000, and notices to the Company shall be directed to it at Greater Atlantic
Financial Corp., 00000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000,
attention of Xxxxxxx X. Xxxx with a copy to Xxxxxx X. Xxxxxx, Xx., Esq.,
Xxxxxxx, Xxxxxx & Xxxxxxxx LLP, 0000 Xxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X.
00000.
SECTION 11. PARTIES.
This Agreement shall each inure to the benefit of and be binding upon
the Underwriter, the Company and their respective successors. Nothing expressed
or mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than the Underwriter, the Company and their
respective successors and the controlling persons and officers and directors
referred to in Sections 6 and 7 and their heirs and legal representative, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision herein contained. This Agreement and all conditions and
provisions hereof are intended to be for the sole and exclusive benefit of the
Underwriter and the Company and their respective successors, and said
controlling persons and officers and directors and their heirs and legal
representative, and for the benefit of no other person, firm or corporation. No
purchaser of Securities from any Underwriter shall be deemed to be a successor
by reason merely of such purchase.
-22-
SECTION 12. GOVERNING LAW AND TIME.
This agreement shall be governed by and construed in accordance with
the laws of the State of Maryland. Except as otherwise set forth herein,
specified times of day refer to Eastern time.
SECTION 13. EFFECT OF HEADINGS.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
-23-
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the Underwriter and the Company in accordance with its terms.
Very truly yours,
GREATER ATLANTIC FINANCIAL CORP.
By:
------------------------------------
Xxxxxxx X. Xxxx
President and Chief Executive Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXX XXXXX XXXX XXXXXX, INCORPORATED
By :
---------------------------------
Xxxx X. Xxxxxxx
Managing Director
-24-
SCHEDULE A
----------
List of Shareholders subject to lock-up agreements
--------------------------------------------------
Schedule A-1
SCHEDULE B
----------
2,000,000 Shares of Common Stock
(Par Value $.01 Per Share)
1. The initial public offering price per share for the Securities, determined
as provided in said Section 2, shall be $_____.
2. The purchase price per share for ____ Securities to be paid by the
Underwriter shall be $_____, being an amount equal to the initial public
offering price set forth above less $____ per share and the purchase price
per share for _____ Securities to be paid by the Underwriters for shares
sold to persons listed on Schedule C shall be $_____, being an amount equal
to the initial public offering price set forth above less $_____ per share;
provided that the purchase price per share for any Option Securities
purchased upon the exercise of the over-allotment option described in
Section 2(b) shall be reduced by an amount per share equal to any dividends
or distributions declared by the Company and payable on the Initial
Securities but not payable on the Option Securities.
Schedule B-1
SCHEDULE C
----------
Number of Shares
----------------
Xxxxxxx Xxxxxxxxx
Xxxxx Xxxxxxx
Xxxxx Xxxxxxxxx
Xxxxxx Xxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxx Xxxxxxxxxxx
Xxxxxx X. Xxxx
Xxxxxx X. Xxxxx, Irrevocable Trust #1
Xxxxxx X. Xxxxxxxxx
Xxxxx X. Xxxxxxx
Xxxxxxxx Xxxxxx
Xxxxx Xxxx
Schedule C-1
SCHEDULE D
----------
FORM OF OPINION OF COUNSEL
The opinion of counsel for the Company to be delivered pursuant to
Section 5(b) of the Underwriting Agreement shall be substantially to the effect
that:
1. The Registration Statement has become effective under the 1933 Act
and no stop order suspending the effectiveness of the Registration Statement has
been issued under the 1933 Act and no proceedings for that purpose have been
instituted or are pending or, to our knowledge, are contemplated by the
Commission. At the time the Registration Statement became effective and at the
Closing Time, the Registration Statement complied in all material respects with
the requirements of the 1933 Act and the 1933 Act Regulations, except that we do
not express any opinion as to the financial statements, schedules and other
financial, statistical or accounting data included therein or the exhibits to
the Registration Statement. The Prospectus filed as part of the Registration
Statement as originally filed and as filed pursuant to Rule 424 under the 1933
Act, complied when so filed in all material respects with the 1933 Act
Regulations, except that we do not express any opinion as to the financial
statements, schedules and other financial, statistical or accounting data
included or incorporated by reference therein or the exhibits to the
Registration Statement.
2. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
3. The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the Underwriting
Agreement.
4. The Company is duly registered as a savings and loan holding company
under the Home Owners' Loan Act, as amended, and, to our knowledge, the Company
possesses the foreign qualifications necessary to carry on the business of the
Company, as described in the Prospectus, except where the failure to have such
qualifications would not have a material adverse effect on the condition
(financial or otherwise), earnings, business affairs or business prospects of
the Company and its subsidiaries, considered as a whole.
5. The Bank has been duly incorporated and is validly existing as a
federal savings bank under the laws of the United States and has the corporate
power and authority and foreign qualifications necessary to own, lease and
operate its properties and to conduct its business, as described in the
Prospectus, except where the failure to have such authority or qualifications
would not have a material adverse effect on the condition (financial or
otherwise), earnings, business affairs or business prospects of the Company and
its subsidiaries, considered as a whole; all of the issued and outstanding
capital stock of the Bank has been duly authorized and validly issued, is fully
paid and non-assessable and is owned directly by the Company, free and clear of
any security interest,
Schedule D-1
mortgage, pledge, lien, encumbrance, claim or equity; and none of such shares
was issued in violation of the preemptive rights of any stockholder of the Bank.
6. GAMC has been duly organized and is validly existing as a
corporation in god standing under the laws of the State of Maryland and has the
corporate power and authority and foreign qualifications necessary to own, lease
and operate its properties and to conduct its business, as described in the
Prospectus, except where the failure to have such authority or qualifications
would not have a material adverse effect on the condition (financial or
otherwise), earnings, business affairs or business prospects of the Company and
its subsidiaries, considered as a whole; all of the issued and outstanding
capital stock of GAMC has been duly authorized and validly issued, is fully paid
and non-assessable and is owned in directly by the Company, free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim or equity; and
none of such shares was issued in violation of the preemptive rights of any
stockholder of GAMC.
7. The Company had at the date indicated a duly authorized
capitalization as set forth in the Prospectus; all of the outstanding shares of
capital stock of the Company have been duly authorized and validly issued and
are fully paid and non-assessable; and the stockholders of the Company have no
preemptive rights.
8. The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
9. The Securities have been duly authorized for issuance by the
Company; and the Securities, when delivered and paid for in accordance with the
Underwriting Agreement, will be validly issued, fully paid and nonassessable
shares of Common Stock of the Company.
10. Neither the Company nor any of its Subsidiaries is in violation of
its charter or by-laws or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease or
other agreement or instrument to which the Company or any of its Subsidiaries is
a party or by which it or any of them may be bound, or to which any of the
property or assets of the Company or any Subsidiary is subject except for such
defaults that would not, individually or in the aggregate, result in a material
adverse effect on the condition (financial or otherwise), earnings, business
affairs or business prospects of the Company and its Subsidiaries, considered as
a whole.
11. At the time the Registration Statement became effective, the
Registration Statement (except for the financial statements, notes to financial
statements, schedules and other financial or statistical information and data
included therein, as to which we express no opinion) complied as to form in all
material respects with the requirements of the 1933 Act and the 1933 Act
Regulations.
During the course of preparation of the Prospectus, we reviewed the
Prospectus and participated in discussions with officers of the Company and the
Bank, and their advisors and
Schedule D-2
discussed the business and affairs of the Company with officers and
representatives of the Company. Although we have not undertaken to determine
independently, and are not passing upon or assuming any responsibility for, the
accuracy, completeness or fairness of the statements contained in the Prospectus
or the Registration Statement, on the basis of such review and discussions,
nothing has come to our attention that caused us to believe that the
Registration Statement (other than the financial statements, notes to financial
statements, schedules and other financial and statistical information and data
included therein or omitted therefrom, as to which we express no opinion), at
the time it became effective or the date hereof contained or contains an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein, or necessary to make the statements therein, not misleading or
that the Prospectus (other than the financial statements, notes to financial
statements, schedules and other financial and statistical information and data
included therein or omitted therefrom, as to which we express no opinion), as of
its date or the date hereof contained or contains an untrue statement of a
material fact or omitted to state a material fact required to be stated therein,
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
Schedule D-3
SCHEDULE E
----------
FORM OF LOCK-UP AGREEMENT
TO: Greater Atlantic Financial Corp.
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated
The undersigned hereby agrees that, without first obtaining the prior
written consent of Xxxx Xxxxx Xxxx Xxxxxx, Incorporated ("Xxxx Xxxxx"), which
shall not be unreasonably withheld, he or she will not, directly or indirectly,
sell or otherwise dispose of, or offer or contract to sell, any shares of Common
Stock of Greater Atlantic Financial Corp. (the "Company") or any securities
convertible into the Common Stock of the Company (i) during the period of the of
underwritten public offering by Xxxx Xxxxx which is conducted pursuant to an
underwriting agreement executed by the Company with Xxxx Xxxxx, and (ii) for an
additional period extending 180 days after the completion of such offering.
The undersigned understands that the prospectus pertaining to the
offering will disclose the above agreement of the undersigned, as part of
similar commitments of other executive officers, directors and certain
stockholders of the Company as a group, and that any breach by the undersigned
of this agreement could subject the undersigned to legal action by the Company,
Xxxx Xxxxx or others for damages and injunctive relief.
The undersigned represents and acknowledges that this agreement is
being executed in order to induce Xxxx Xxxxx to enter into the underwriting
agreement with respect to the Company's public offering, and that Xxxx Xxxxx
would not enter into such underwriting agreement in the absence of this
agreement by the undersigned. This agreement shall be governed by the laws of
the State of Maryland.
--------------------------------------
(signature)
--------------------------------------
(print name)
Accepted:
GREATER ATLANTIC FINANCIAL CORP.
By:
-------------------------
Name:
-------------------
Title:
-------------------
XXXX XXXXX XXXX XXXXXX, INCORPORATED
By:
-------------------------
Name:
-------------------
Title:
-------------------
Schedule E-1
