EXHIBIT 1.1
1,667,000 SHARES OF COMMON STOCK
UNITED FINANCIAL MORTGAGE CORP.
UNDERWRITING AGREEMENT
December ___, 2003
Maxim Group LLC
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
United Financial Mortgage Corp., a corporation organized and existing
under the laws of Illinois (the "COMPANY"), proposes, subject to the terms and
conditions stated herein, to sell and issue to Maxim Group LLC ("MAXIM") an
aggregate of 1,667,000 shares (the "FIRM SHARES") of its common stock, no par
value per share (the "COMMON STOCK"). In addition, The Xxxxxx Xxxxxxxx Trust,
under Trust Agreement dated September 22, 1995 (the "SELLING SHAREHOLDER")
proposes to sell to Maxim, upon the terms and conditions set forth in Section 2
hereof, up to an additional 250,050 shares of Common Stock (the "ADDITIONAL
SHARES"). The Firm Shares and any Additional Shares purchased by the Underwriter
are referred to herein as the "SHARES." The Shares are more fully described in
the Registration Statement and Prospectus referred to below. Maxim shall have
the right to engage, and, if so engaged, shall act as the lead manager of,
additional underwriters, selected dealers or selling agents (collectively with
Maxim, the "UNDERWRITERS") in connection with the offering and sale of the
Shares contemplated herein (the "OFFERING").
1. Representations and Warranties of the Company. The Company
represents, warrants and covenants to, and agrees with, Maxim and each of the
Underwriters as follows:
(a) The Company has filed with the Securities and Exchange
Commission (the "COMMISSION") a registration statement on Form SB-2
(Registration No. 333-109696), and amendments thereto, and related preliminary
prospectuses for the registration under the Securities Act of 1933, as amended
(the "SECURITIES ACT"), of the Shares which registration statement, as so
amended (including post-effective amendments, if any), has been declared
effective by the Commission and copies of which have heretofore been delivered
to Maxim. Such registration statement, as amended at the time it became
effective, including the prospectus, financial statements, schedules, exhibits
and other information (if any) deemed to be part of the registration statement
at the time of effectiveness pursuant to Rule 430A under the Securities Act, is
hereinafter referred to as the "REGISTRATION STATEMENT." If the Company has
filed or is required pursuant to the terms hereof to file a registration
statement pursuant to Rule 462(b) under the Securities Act registering
additional shares of Common Stock (a "RULE 462(b) REGISTRATION STATEMENT"),
then, unless otherwise specified, any reference herein to the term "Registration
Statement" shall be deemed to include such Rule 462(b) Registration Statement.
Other than a Rule 462(b) Registration Statement, which, if filed, becomes
effective upon filing,
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no other document with respect to the Registration Statement has heretofore been
filed with the Commission. All of the Shares have been registered under the
Securities Act pursuant to the Registration Statement or, if any Rule 462(b)
Registration Statement is filed, will be duly registered under the Securities
Act with the filing of such Rule 462(b) Registration Statement. Based on
communications from the Commission, no stop order suspending the effectiveness
of either the Registration Statement or the Rule 462(b) Registration Statement,
if any, has been issued and, to the Company's knowledge, no proceeding for that
purpose has been initiated or threatened by the Commission. The Company, if
required by the Securities Act and the rules and regulations of the Commission,
proposes to file the Prospectus with the Commission pursuant to Rule 424(b)
under the Securities Act ("RULE 424(b)"). The prospectus, in the form in which
it is to be filed with the Commission pursuant to Rule 424(b), or, if the
prospectus is not to be filed with the Commission pursuant to Rule 424(b), the
prospectus in the form included as part of the Registration Statement at the
time the Registration Statement became effective, is hereinafter referred to as
the "PROSPECTUS," except that if any revised prospectus or prospectus supplement
shall be provided to the Underwriters by the Company for use in connection with
the Offering which differs from the Prospectus (whether or not such revised
prospectus or prospectus supplement is required to be filed by the Company
pursuant to Rule 424(b)), the term "Prospectus" shall also refer to such revised
prospectus or prospectus supplement, as the case may be, from and after the time
it is first provided to the Underwriters for such use. The prospectus dated
November 6, 2003 delivered by the Company to Maxim for use in connection with
the Offering and any amendment to such prospectus included in the Registration
Statement or filed with the Commission pursuant to Rule 424 under the Securities
Act is hereafter called a "PRELIMINARY PROSPECTUS." All references in this
Agreement to the Registration Statement, the Rule 462(b) Registration Statement,
a Preliminary Prospectus and the Prospectus, or any amendments or supplements to
any of the foregoing shall be deemed to include any copy thereof filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
System ("XXXXX"). As used herein, the term "EXCHANGE ACT" shall mean the
Securities Exchange Act of 1934, as amended. The rules and regulations
promulgated by the Commission under the Securities Act, the Exchange Act or any
other federal securities law are referred to herein as the "RULES AND
REGULATIONS." When used herein, the term "to the Company's knowledge" (or
similar terms) means the knowledge, after due investigation with respect to
matters concerning their respective areas of responsibility within the Company,
of Xxxxxx Xxxxxxxx, Xxxxx X. Xxxxxxxx, Xxxxxx X. Xxxxx, Xxxxx X. Xxxxxxxxx,
Xxxxxxx X. Xxxxx and Xxxxxxxxx X. Xxxxxxx. When used herein, the term "Best
Efforts" means, with respect to the applicable obligation of the Company, the
highest standard of diligence recognized under Illinois law for similarly
situated, publicly - traded companies.
(b) At the time: (i) of the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement or the effectiveness of any
post-effective amendment to the Registration Statement, (ii) when the Prospectus
is first filed with the Commission pursuant to Rule 424(b), (iii) when any
supplement to or amendment of the Prospectus is filed with the Commission, and
(iv) at the Closing Date and the Additional Closing Date, if any (as hereinafter
respectively defined), the Registration Statement and the Prospectus and any
amendments thereof and supplements thereto complied or will comply in all
material respects with the applicable provisions of the Securities Act, the
Exchange Act and the Rules and Regulations and did not and will not contain an
untrue statement of a material fact and did not and will not omit to state any
material fact required to be stated therein or necessary in order to make the
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statements therein: (i) in the case of the Registration Statement, not
misleading, and (ii) in the case of the Prospectus, in light of the
circumstances under which they were made, not misleading.
(c) When any Preliminary Prospectus was first filed with the
Commission (whether filed as part of the Registration Statement or any amendment
thereto or pursuant to Rule 424(a) under the Securities Act) and when any
amendment thereof or supplement thereto was first filed with the Commission,
such Preliminary Prospectus and any amendments thereof and supplements thereto
complied in all material respects with the applicable provisions of the
Securities Act, the Exchange Act and the Rules and Regulations and did not
contain an untrue statement of a material fact and did not omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. No representation and warranty is made in subsections (b) and
(c) hereof, however, with respect to any information contained in or omitted
from the Registration Statement or the Prospectus or any related Preliminary
Prospectus or any amendment thereof or supplement thereto in reliance upon and
in conformity with information furnished in writing to the Company by or on
behalf of any Underwriter through Maxim or it's counsel, Ellenoff Xxxxxxxx &
Schole LLP ("UNDERWRITER'S COUNSEL") specifically for use therein. The parties
acknowledge and agree that such information provided by or on behalf of any
Underwriter consists solely of the following information contained in the
section of the Prospectus entitled "Underwriting": (i) the table following
paragraph 1 therein, and (ii) paragraphs 5, 6, 12 and 13 therein.
(d) Xxxxx Xxxxxx and Company LLC, whose report regarding the
certified the financial statements of the Company is included in the
Registration Statement, are independent public accountants as required by the
Securities Act, the Exchange Act and the Rules and Regulations.
(e) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, and except as
disclosed in the Registration Statement and the Prospectus, the Company has not
declared, paid or made any dividends or other distributions of any kind on or in
respect of its capital stock.
(f) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, there has been no
material adverse change, whether or not arising from transactions in the
ordinary course of business, in or affecting: (i) the business, condition
(financial or otherwise), results of operations, stockholders' equity,
properties or prospects of the Company and each subsidiary of the Company listed
on Exhibit A hereto (the "SUBSIDIARIES"), taken as a whole; or (ii) the
long-term debt or capital stock of the Company or any of its Subsidiaries (a
"MATERIAL ADVERSE CHANGE"). Since the date of the latest balance sheet presented
in the Registration Statement and the Prospectus, neither the Company nor any
Subsidiary has incurred or undertaken any liabilities or obligations, whether
direct or indirect, liquidated or contingent, matured or unmatured, or entered
into any transactions, including any acquisition or disposition of any business
or asset, which are material to the
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Company and the Subsidiaries taken as a whole, except for liabilities,
obligations and transactions which are disclosed in the Registration Statement
and the Prospectus or were undertaken in the Company's ordinary course of
business and were consistent with past practice of the Company.
(g) As of the dates indicated in the Registration Statement
and the Prospectus, the authorized, issued and outstanding capital stock of the
Company was as set forth in the Prospectus in the column headed "Actual" under
the caption "Capitalization" and, after giving effect to the issuance of the
Firm Shares, will be as set forth in the column headed "As Adjusted" under the
caption "Capitalization." All of the issued and outstanding shares of capital
stock of the Company are fully paid and non-assessable and have been duly and
validly authorized and issued, in compliance with all applicable state, federal
and foreign securities laws and not in violation of or subject to any preemptive
or similar right that does or will entitle any person, upon the issuance or sale
of any security, to acquire from the Company or any Subsidiary any Relevant
Security. For purposes of this Agreement, the term "RELEVANT SECURITY" shall
mean any Common Stock or other security of the Company or any Subsidiary that is
convertible into, or exercisable or exchangeable for Common Stock or equity
securities, or that holds the right to acquire any Common Stock or equity
securities of the Company or any Subsidiary or any other such Relevant Security,
except for such rights as may have been fully satisfied or waived prior to the
effectiveness of the Registration Statement.
(h) The Shares have been duly and validly authorized and, when
issued, delivered and paid for in accordance with this Agreement and as
described in the Prospectus on each of the Closing Date and the Additional
Closing Date, as applicable, will be duly and validly issued, fully paid and
non-assessable, will have been issued in compliance with all applicable state
and federal securities laws and will not have been issued in violation of or
subject to any preemptive or similar right that does or will entitle any person
to acquire any Relevant Security from the Company or any Subsidiary upon
issuance or sale of Shares in the Offering. The Common Stock conforms to the
descriptions thereof contained in the Registration Statement and the Prospectus.
Except as disclosed in the Registration Statement and the Prospectus, neither
the Company nor any Subsidiary has outstanding warrants, options to purchase, or
any preemptive rights or other rights to subscribe for or to purchase, or any
contracts or commitments to issue or sell, any Relevant Security.
(i) The Subsidiaries are the only subsidiaries of the Company
within the meaning of Rule 405 under the Securities Act. Except for the
Subsidiaries and as otherwise disclosed in the Registration Statement and the
Prospectus, the Company holds no ownership or other interest, nominal or
beneficial, direct or indirect, in any corporation, partnership, joint venture
or other business entity. All of the outstanding shares of capital stock of each
Subsidiary have been duly authorized and validly issued and are fully paid and
non-assessable and are owned directly by the Company free and clear of any lien,
charge, mortgage, pledge, security interest, claim, equity, trust or other
encumbrance, preferential arrangement, defect or restriction of any kind
whatsoever (any "LIEN"), except as disclosed in the Registration Statement or
the Prospectus.
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(j) Each of the Company and the Subsidiaries has been duly
incorporated and validly exists as a corporation in good standing under the laws
of its jurisdiction of organization. Each of the Company and the Subsidiaries
has all requisite corporate power and authority to carry on its business as it
is currently being conducted and as described in the Prospectus, and to own,
lease and operate its respective properties. Each of the Company and the
Subsidiaries is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which the character or location of
its properties (owned, leased or licensed) or the nature or conduct of its
business makes such qualification necessary, except for those failures to be so
qualified or in good standing which (individually and in the aggregate) could
not reasonably be expected to have a material adverse effect on: (i) the
business, condition (financial or otherwise), results of operations,
stockholders' equity, properties or prospects of the Company and the
Subsidiaries, taken as a whole, or (ii) the long-term debt or capital stock of
the Company or any Subsidiary (any such effect being a "MATERIAL ADVERSE
EFFECT").
(k) Each of the Company and the Subsidiaries has all necessary
consents, approvals, authorizations, orders, registrations, qualifications,
licenses, filings and permits of, with and from all applicable judicial,
regulatory and other legal or governmental agencies and bodies and all third
parties, foreign and domestic (collectively, the "CONSENTS"), to own, lease and
operate their respective properties and conduct their respective businesses as
are now being conducted and as disclosed in the Registration Statement and the
Prospectus, except where the failure to have any such Consent would not have a
Material Adverse Effect. Each such Consent is valid and in full force and
effect, and neither the Company nor any Subsidiary has received written notice
(or, to the Company's knowledge, other notice which would require disclosure
under the Securities Act, the Exchange Act or the Rules and Regulations) of any
investigation or proceedings which results in or, if decided adversely to the
Company or any Subsidiary, could reasonably be expected to result in, the
revocation of, or imposition of a materially burdensome restriction on, any
Consent. Each of the Company and the Subsidiaries is in compliance with all
applicable laws, rules, regulations, ordinances, directives, judgments, decrees
and orders, foreign and domestic, except where the failure to so comply does or
would not have a Material Adverse Effect. No Consent contains a materially
burdensome restriction not adequately disclosed in the Registration Statement
and the Prospectus.
(l) The Company has all corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated by this Agreement, the Registration
Statement and the Prospectus. The Company has duly and validly authorized this
Agreement and the transactions contemplated by this Agreement, the Registration
Statement and the Prospectus. This Agreement has been duly and validly executed
and delivered by the Company and constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally or except as enforceability may be subject to
general principles of equity (regardless of whether such enforceability is
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considered in a proceeding in equity or at law) and except as the rights to
indemnification or contribution hereunder may be actually limited by federal or
state securities laws.
(m) The execution, delivery, and performance of this Agreement
and consummation of the transactions contemplated by this Agreement, the
Registration Statement and the Prospectus do not and will not: (i) conflict
with, require consent under (other than those consents which have been obtained)
or result in a breach of any of the terms and provisions of, or constitute a
default (or an event which with notice or lapse of time, or both, would
constitute a default) under, or result in the creation or imposition of any Lien
upon any property or assets of the Company or any Subsidiary pursuant to, any
indenture, mortgage, deed of trust, loan agreement or other agreement,
instrument, franchise, license or permit to which the Company or any Subsidiary
is a party or by which the Company or any Subsidiary or their respective
properties, operations or assets may be bound or, (ii) violate or conflict with
any provision of the certificate or articles of incorporation or by-laws, of the
Company or any Subsidiary, or (iii) violate or conflict with any law, rule,
regulation, ordinance, directive, judgment, decree or order of any judicial,
regulatory or other legal or governmental agency or body, domestic or foreign,
except for, in each case, those conflicts and violations which would not have a
Material Adverse Effect.
(n) No Consent of, with or from any judicial, regulatory or
other legal or governmental agency or body or any third party, foreign or
domestic, is required for the execution, delivery and performance of this
Agreement or consummation of the transactions contemplated by this Agreement,
the Registration Statement and the Prospectus, including the issuance, sale and
delivery of the Shares to be issued, sold and delivered hereunder, except the
registration under the Securities Act of the Shares, which has become effective,
and such Consents as may be required under state securities or blue sky laws or
the by-laws and rules of the National Association of Securities Dealers, Inc.
(the "NASD"), NASD Regulation, Inc. ("NASDR") or the American Stock Exchange
("AMEX") in connection with the purchase and distribution of the Shares by the
Underwriters, each of which has been obtained and is in full force and effect.
(o) Except as disclosed in the Registration Statement and the
Prospectus, there is no judicial, regulatory, arbitral or other legal or
governmental proceeding or other litigation or arbitration, domestic or foreign,
pending to which the Company or any Subsidiary is a party or of which any
property, operations or assets of the Company or any Subsidiary is the subject
which, individually or in the aggregate, if determined adversely to the Company
or any Subsidiary, could reasonably be expected to have a Material Adverse
Effect. To the best of the Company's knowledge, no such proceeding, litigation
or arbitration is threatened or contemplated.
(p) The financial statements, including the notes thereto, and
the supporting schedules included in the Registration Statement and the
Prospectus present fairly, in all material respects and as of the dates
indicated and for the periods specified, the financial position and the cash
flows and results of operations of the Company and the Subsidiaries. Except as
otherwise stated in the Registration Statement and the Prospectus, such
financial statements have been
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prepared in conformity with United States generally accepted accounting
principles applied on a consistent basis throughout the periods involved. The
supporting schedules included in the Registration Statement and the Prospectus
present fairly the information required to be stated therein. No other financial
statements or supporting schedules are required to be included in the
Registration Statement. The other financial and statistical information included
in the Registration Statement and the Prospectus present fairly the information
included therein in all material respects.
(q) There are no pro forma or as adjusted financial statements
which are required to be included in the Registration Statement and the
Prospectus in accordance with applicable Rules and Regulations which are not
included therein.
(r) The Company is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act and files reports with the Commission on
the XXXXX System. The Common Stock is registered pursuant to Sections 12(b) or
12(g) of the Exchange Act and the outstanding shares of Common Stock (including
the Shares) are or will be listed on the AMEX and the Company has taken no
action designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or de-listing the Common
Stock from the AMEX, nor has the Company received any notification that the
Commission or the AMEX is contemplating terminating such registration or
listing.
(s) The Company and the Subsidiaries maintain a system of
internal accounting and other controls sufficient to provide reasonable
assurances that: (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of reliable financial statements in conformity with United
States generally accepted accounting principles and to maintain accountability
for assets, (iii) access to assets is permitted only in accordance with
management's general or specific authorization, and (iv) the recorded accounting
for assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any material differences.
(t) Neither the Company nor any of its Subsidiaries has
violated or is currently in violation of any provisions of: (a) any federal or
state environmental law, (b) Employee Retirement Income Security Act of 1974, as
amended, including the regulations and published interpretations thereunder
("ERISA"), (c) the Bank Secrecy Act, as amended, (d) the Money Laundering
Control Act of 1986, as amended, (e) the Foreign Corrupt Practices Act, or (f)
the Uniting and Strengthening of America by Providing Appropriate Tools Required
to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, and the rules
and regulations promulgated under any such law, or any successor law, except for
such violations which, singly or in the aggregate, would not have a Material
Adverse Effect.
(u) Neither the Company nor, to the Company's knowledge, any
of its affiliates (within the meaning of Rule 144 under the Securities Act) (an
"AFFILIATE") has taken, directly or indirectly, any action which constitutes or
is designed to cause or result in, or which
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could reasonably be expected to constitute, cause or result in, the
stabilization or manipulation of the price of the Common Stock to facilitate the
sale or resale of the Shares.
(v) Neither the Company nor, to the Company's knowledge, any
of its Affiliates has, prior to the date hereof, made any offer or sale of any
securities which could be "integrated" for purposes of the Securities Act or the
Rules and Regulations with the offer and sale of the Shares pursuant to the
Registration Statement. Except as disclosed in the Registration Statement and
the Prospectus, as disclosed in any Forms 4 or Schedule 13D or 13G filed with
the Commission, neither the Company nor, to the Company's knowledge, any of its
Affiliates has sold or issued any Relevant Security during the six-month period
preceding the date of the Prospectus, including but not limited to any sales
pursuant to Rule 144A or Regulation D or S under the Securities Act, other than
shares of Common Stock issued pursuant to employee benefit plans, qualified
stock option plans or employee compensation plans or pursuant to outstanding
options, rights or warrants as described in the Registration Statement and the
Prospectus.
(w) Except as disclosed in the Registration Statement and the
Prospectus, no holder of any Relevant Security has any rights to require
registration of any Relevant Security as part or on account of, or otherwise in
connection with, the offer and sale of the Shares contemplated hereby, and any
such rights so disclosed have either been fully complied with by the Company or
effectively waived by the holders thereof, and any such waivers remain in full
force and effect.
(x) The conditions for use of Form SB-2 to register the
Offering under the Securities Act, as set forth in the General Instructions to
such Form, have been satisfied.
(y) The exhibits filed with the Registration Statement, at the
time they were or hereafter are filed with the Commission, complied and will
comply in all material respects with the requirements of the Securities Act, the
Exchange Act and the Rules and Regulations, and, when read together with the
other information in the Prospectus, do 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, in the light of the circumstances
under which they were made, not misleading.
(z) The Company is not and, at all times up to and including
consummation of the transactions contemplated by this Agreement, the
Registration Statement and the Prospectus, and after giving effect to
application of the net proceeds of the Offering, will not be, subject to
registration as an "investment company" under the Investment Company Act of
1940, as amended, and is not and will not be an entity "controlled" by an
"investment company" within the meaning of such act.
(aa) There are no contracts or other documents (including,
without limitation, any voting agreement or trust instrument), which are
required to be described in the Registration Statement and the Prospectus or
filed as exhibits to the Registration Statement by the Securities
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Act or the Rules and Regulations which have not been so described or filed
(including by incorporation by reference).
(bb) No relationship, direct or indirect, exists between or
among any of the Company or any Affiliate of the Company, on the one hand, and
any director, officer, stockholder, customer or supplier of the Company or any
Affiliate of the Company, on the other hand, which is required by the Securities
Act, the Exchange Act or the Rules and Regulations to be described in the
Registration Statement, the Prospectus or the Company's filings with the
Commission which is not so described. There are no outstanding loans (except for
mortgage loans made in the ordinary course of business), advances (except normal
advances for business expenses in the ordinary course of business) or guarantees
of indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any of their respective family members, except as
disclosed in the Registration Statement and the Prospectus.
(cc) The Company is in material compliance with the provisions
of the Xxxxxxxx-Xxxxx Act of 2002 ("SARB-OX") and the rules and regulations
promulgated thereunder that are applicable to the Company at the date of this
Agreement and the Rules and Regulations with respect thereto that are applicable
to the Company at the date of this Agreement, including, without limitation,
related rules and regulations adopted by AMEX and approved by the Commission
that were required to be promulgated under Sarb-Ox, except for such violations
which, singly or in the aggregate, would not have a Material Adverse Effect. The
Company has not, in violation of Sarb-Ox, directly or indirectly, including
through a Subsidiary (other than as permitted under the Sarb-Ox for depositary
institutions), extended or maintained credit, arranged for the extension of
credit, or renewed an extension of credit, in the form of a personal loan to or
for any director or executive officer of the Company.
(dd) Except as disclosed in the Registration Statement and the
Prospectus or as contemplated by this Agreement, there are no contracts,
agreements or understandings between the Company and any person that would give
rise to a valid claim against the Company for a brokerage commission, finder's
fee or other like payment in connection with the transactions contemplated by
this Agreement, the Registration Statement and the Prospectus or, to the
Company's knowledge, any arrangements, agreements, understandings, payments or
issuance with respect to the Company or any of its officers, directors,
shareholders, partners, employees, Subsidiaries or Affiliates that may affect
the Underwriters' compensation as determined by the NASD.
(ee) The Company and each Subsidiary owns or leases all such
properties as are necessary to the conduct of its business as presently
operated. The Company and the Subsidiaries have good and marketable title in fee
simple to all real property and good and marketable title to all personal
property owned by them, in each case free and clear of all Liens except such as
are described in the Registration Statement and the Prospectus or such as do not
(individually or in the aggregate) materially interfere with the use made or
proposed to be made of such property by the Company and the Subsidiaries. Any
real property and buildings held under lease or sublease by the Company and the
Subsidiaries are held by them under valid and
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enforceable leases with such exceptions as are not material to, and do not
interfere with, the use made and proposed to be made of such property and
buildings by the Company and the Subsidiaries. Neither the Company nor any
Subsidiary has received any written notice (or, to the Company's knowledge, any
other notice) of any claim adverse to its ownership of any real or personal
property or of any claim against the continued possession of any real property,
whether owned or held under lease or sublease by the Company or any Subsidiary.
(ff) The Company and each Subsidiary: (i) owns or possesses
adequate right to use all patents, patent applications, trademarks, service
marks, trade names, trademark registrations, service xxxx registrations,
copyrights, licenses, formulae, customer lists, and know-how and other
intellectual property (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures,
"INTELLECTUAL PROPERTY") necessary for the conduct of their respective
businesses as being conducted and as described in the Registration Statement and
Prospectus, except where the failure to so own or possess such Intellectual
Property would have a Material Adverse Effect, and (ii) does not believe that
the conduct of their respective businesses does or will conflict with, and have
not received any notice of any claim of conflict with, any such right of others,
which conflict would have a Material Adverse Effect. To the best of the
Company's knowledge, all material technical information developed by and
belonging to the Company or any Subsidiary which has not been patented has been
kept confidential so as, among other things, all such information may be deemed
proprietary to the Company. To the Company's knowledge: (i) there is no
infringement by third parties of any such Intellectual Property; (ii) there are
no pending or, to the Company's knowledge, threatened actions, suits,
proceedings or claims by others challenging the Company's or any Subsidiary's
rights in or to any such Intellectual Property, and (iii) there are no facts
which would form a reasonable basis for any such claim. There is no pending or,
to the Company's knowledge, threatened action, suit, proceeding or claim by
others that the Company or any Subsidiary infringes or otherwise violates any
Intellectual Property rights of others, in each case which would be reasonably
likely to have a Material Adverse Effect, and the Company is unaware of any
other fact which would form a reasonable basis for any such claim.
(gg) The Company and the Subsidiaries maintain insurance in
such amounts and covering such risks, including, without limitation, director's
and officer's liability insurance for liabilities or losses arising under the
Securities Act, the Exchange Act, the Rules and Regulations, as the Company
reasonably considers adequate in all material respects for the conduct of its
business and the value of its properties and as is customary for similar
companies engaged in similar businesses in similar industries, all of which
insurance is in full force and effect. There are no material claims by the
Company or any Subsidiary under any such policy or instrument as to which any
insurance company is denying liability or defending under a reservation of
rights clause. The Company reasonably believes that it will be able to renew its
existing insurance as and when such coverage expires or will be able to obtain
replacement insurance adequate for the conduct of its business.
(hh) Each of the Company and the Subsidiaries has properly
prepared and timely filed all federal, state, foreign and other tax returns that
are required to be filed by it and
Maxim Group LLC
December ___, 2003
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has paid or made provision for the payment of, except such as may be contested
in good faith, all taxes, assessments, governmental or other similar charges,
including without limitation, all sales and use taxes and all taxes which the
Company or any Subsidiary is obligated to withhold from amounts owing to
employees, creditors and third parties, with respect to the periods covered by
such tax returns (whether or not such amounts are shown as due on any tax
return). No deficiency assessment with respect to a proposed adjustment of the
Company's or any Subsidiary' federal, state, local or foreign taxes is pending
or, to the Company's knowledge, threatened which, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse Effect.
The accruals and reserves on the books and records of the Company and the
Subsidiaries in respect of tax liabilities for any taxable period not finally
determined are adequate in all material respects to meet any assessments and
related liabilities for any such period and, since the date of the Company's
most recent audited financial statements, the Company and the Subsidiaries have
not incurred any liability for taxes other than in the ordinary course of its
business. There is no tax lien, whether imposed by any federal, state, foreign
or other taxing authority, outstanding against the assets, properties or
business of the Company or any Subsidiary.
(ii) No labor disturbance by the employees of the Company or
any Subsidiary currently exists or, to the Company's knowledge, is likely to
occur.
(jj) No "prohibited transaction" (as defined in either Section
406 of the ERISA or Section 4975 of the Internal Revenue Code of 1986, as
amended from time to time (the "CODE")), "accumulated funding deficiency" (as
defined in Section 302 of ERISA) or other event of the kind described in Section
4043(b) of ERISA (other than events with respect to which the 30-day notice
requirement under Section 4043 of ERISA has been waived) has occurred with
respect to any employee benefit plan for which the Company or any Subsidiary
would have any liability; each employee benefit plan of the Company or any
Subsidiary is in compliance in all material respects with applicable law,
including (without limitation) ERISA and the Code; the Company has not incurred
and does not expect to incur liability under Title IV of ERISA with respect to
the termination of, or withdrawal from any "pension plan"; and each employee
benefit plan of the Company or any Subsidiary that is intended to be qualified
under Section 401(a) of the Code is so qualified and nothing has occurred,
whether by action or by failure to act, which could cause the loss of such
qualification.
(kk) Neither the Company, any Subsidiary nor, to the Company's
knowledge, any of their respective employees or agents has at any time during
the last five (5) years: (i) made any unlawful contribution to any candidate for
foreign office, or failed to disclose fully any contribution in violation of
law, or (ii) made any payment to any federal or state governmental officer or
official, or other person charged with similar public or quasi-public duties,
other than payments that are not prohibited by the laws of the United States or
any jurisdiction thereof or any foreign jurisdiction.
(ll) Neither the Company nor any Subsidiary: (i) is in
violation of its certificate or articles of incorporation or by-laws or other
organizational documents, (ii) is in
Maxim Group LLC
December ___, 2003
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default under, and no event has occurred which, with notice or lapse of time or
both, would constitute a default under or result in the creation or imposition
of any Lien upon any of its property or assets pursuant to, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which it is a party or by which it is bound or to which any of its property or
assets is subject or (iii) is in violation in any respect of any law, rule,
regulation, ordinance, directive, judgment, decree or order of any judicial,
regulatory or other legal or governmental agency or body, foreign or domestic,
except as disclosed in the Registration Statement and the Prospectus or as would
not have a Material Adverse Effect.
(mm) The Company and the Subsidiaries are in compliance with,
and all of the loans represented as assets on the most recent financial
statements and selected financial information of the Company included in the
Registration Statement and Prospectus meet or are exempt from, all requirements
of federal, state and local law pertaining to lending, including, without
limitation all laws, rules and regulations referred to in the Prospectus under
the caption "Description of Business -- Regulation."
2. Purchase, Sale and Delivery of the Shares.
(a) On the basis of the representations, warranties, covenants
and agreements herein contained, but subject to the terms and conditions herein
set forth, the Company agrees to sell to each Underwriter and each Underwriter,
severally and not jointly, agrees to purchase from the Company, at a purchase
price per share of $_______, the number of Firm Shares set forth opposite their
respective names on Schedule I hereto together with any additional number of
Shares which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 9 hereof.
(b) Payment of the purchase price for, and delivery of
certificates representing, the Firm Shares shall be made at the office of
Ellenoff Xxxxxxxx & Schole LLP, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
("UNDERWRITERS' COUNSEL"), or at such other place as shall be agreed upon by
Maxim and the Company, at 10:00 A.M., New York City time, on the third (3rd) or,
as permitted under Rule 15c6-1 under the Exchange Act, fourth (4th) business day
(unless postponed in accordance with the provisions of Section 9 hereof)
following the date of the effectiveness of the Registration Statement (or, if
the Company has elected to rely upon Rule 430A under the Securities Act, the
third or, as permitted under Rule 15c6-1 under the Exchange Act, fourth business
day after the determination of the public offering price of the Shares), or such
other time not later than ten (10) business days after such date as shall be
agreed upon by Maxim and the Company in writing as permitted under Rule 15c6-1
(such time and date of payment and delivery being herein called the "CLOSING
DATE").
Payment of the purchase price for the Firm Shares shall be
made by wire transfer of immediately available funds to or as directed by the
Company upon delivery of certificates for the Firm Shares to Maxim through the
facilities of The Depository Trust Company for the respective accounts of the
several Underwriters. Certificates for the Firm Shares shall be registered in
such name or names and shall be in such denominations as Maxim may request at
Maxim Group LLC
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least two (2) business days before the Closing Date. The Company will permit
Maxim to examine and package such certificates for delivery at least one (1)
full business day prior to the Closing Date.
(c) In addition, on the basis of the representations,
warranties, covenants and agreements herein contained, but subject to the terms
and conditions herein set forth, Selling Shareholder hereby grants to the
Underwriters, acting severally and not jointly, the option to purchase the
Additional Shares at the same purchase price per share to be paid by the
Underwriters for the Firm Shares as set forth in Section 2(a) above, for the
sole purpose of covering over-allotments in the sale of Firm Shares by the
Underwriters. This option may be exercised at any time and from time to time, in
whole or in part on one or more occasions, on or before the forty-fifth (45th)
day following the final date of the Prospectus, by written notice from Maxim to
the Company and the Selling Shareholder. Such notice shall set forth the
aggregate number of Additional Shares as to which the option is being exercised,
the names in which the Additional Shares are to be registered, the denominations
in which the Additional Shares are to be issued and the date and time, as
reasonably determined by Maxim, when the Additional Shares are to be delivered
(any such date and time being herein sometimes referred to as the "ADDITIONAL
CLOSING DATE"); provided, however, that no Additional Closing Date shall occur
earlier than the Closing Date or earlier than the second (2nd) full business day
after the date on which the option shall have been exercised nor later than the
eighth full business day after the date on which the option shall have been
exercised (unless such time and date are postponed in accordance with the
provisions of Section 9 hereof). Upon any exercise of the option as to all or
any portion of the Additional Shares, each Underwriter, acting severally and not
jointly, agrees to purchase from the Selling Shareholder the number of
Additional Shares that bears the same proportion of the total number of
Additional Shares then being purchased as the number of Firm Shares set forth
opposite the name of such Underwriter on Schedule I hereto (or such number
increased as set forth in Section 9 hereof) bears to the total number of Firm
Shares that the Underwriters have agreed to purchased hereunder, subject,
however, to such adjustments to eliminate fractional shares as Maxim in its sole
discretion shall make.
(d) Payment of the purchase price for, and delivery of
certificates representing, the Additional Shares shall be made at the office of
Underwriters' Counsel, or at such other place as shall be agreed upon by Maxim
and the Company, at 10:00 A.M., New York City time, on the Additional Closing
Date (unless postponed in accordance with the provisions of Section 9 hereof),
or such other time as shall be agreed upon by Maxim and the Company.
Payment of the purchase price for the Additional Shares shall
be made by wire transfer in immediately available funds to or as directed by the
Selling Shareholder upon delivery of certificates for the Additional Shares to
Maxim through the facilities of The Depository Trust Company for the respective
accounts of the several Underwriters. Certificates for the Additional Shares
shall be registered in such name or names and shall be in such denominations as
Maxim may request at least two (2) business days before the Additional Closing
Date. The Company will permit Maxim to examine and package such certificates for
delivery at least one full business day prior to the Additional Closing Date.
Maxim Group LLC
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3. Offering. Upon authorization of the release of the Firm Shares by
Maxim, the Underwriters propose to offer the Shares for sale to the public upon
the terms and conditions set forth in the Prospectus.
4. Covenants of the Company. The Company covenants and agrees with the
Underwriters that:
(a) The Registration Statement and any amendments thereto have
been declared effective, and if Rule 430A is used or the filing of the
Prospectus is otherwise required under Rule 424(b), the Company will file the
Prospectus (properly completed if Rule 430A has been used) pursuant to Rule
424(b) within the prescribed time period and will provide evidence satisfactory
to Maxim of such timely filing.
The Company will notify Maxim immediately (and, if requested
by Maxim, will confirm such notice in writing): (i) when the Registration
Statement and any amendments thereto become effective, (ii) of any request by
the Commission for any amendment of or supplement to the Registration Statement
or the Prospectus or for any additional information, (iii) of the Company's
intention to file or prepare any supplement or amendment to the Registration
Statement or the Prospectus, (iv) of the mailing or the delivery to the
Commission for filing of any amendment of or supplement to the Registration
Statement or the Prospectus, including but not limited to Rule 462(b) under the
Securities Act, (v) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or any post-effective
amendment thereto or of the initiation, or the threatening, of any proceedings
therefor, it being understood that the Company shall make every effort to avoid
the issuance of any such stop order, (vi) of the receipt of any comments from
the Commission, and (vii) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for that
purpose. If the Commission shall propose or enter a stop order at any time, the
Company will undertake all commercially reasonable efforts to prevent the
issuance of any such stop order and, if issued, to obtain the lifting of such
order as soon as possible. The Company will not file any amendment to the
Registration Statement or any amendment of or supplement to the Prospectus
(including the prospectus required to be filed pursuant to Rule 424(b)) that
differs from the prospectus on file at the time of the effectiveness of the
Registration Statement or file any document under the Exchange Act if such
document would be deemed to be incorporated by reference into the Prospectus to
which Maxim shall reasonably object in writing after being timely furnished in
advance a copy thereof. The Company will provide Maxim with copies of all such
amendments, filings and other documents a sufficient time prior to any filing or
other publication thereof to permit Maxim a reasonable opportunity to review and
comment thereon.
(b) The Company shall comply with the Securities Act and all
applicable Rules and Regulations to permit completion of the distribution as
contemplated in this Agreement, the Registration Statement and the Prospectus.
If, at any time when a prospectus relating to the Shares is required to be
delivered under the Securities Act and all applicable Rules and Regulations in
connection with the sales of Shares, any event shall have occurred as a result
Maxim Group LLC
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of which the Prospectus as then amended or supplemented would, in the judgment
of the Company on the advice of counsel, include an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
existing at the time of delivery to the purchaser, not misleading, or if, to
comply with the Securities Act, the Exchange Act or the Rules and Regulations,
it shall be necessary at any time to amend or supplement the Prospectus or
Registration Statement, the Company will notify Maxim promptly and prepare and
file with the Commission, subject to Section 4(a) hereof, an appropriate
amendment or supplement (in form and substance reasonably satisfactory to Maxim)
which will correct such statement or omission or which will effect such
compliance and will use its Best Efforts to have any amendment to the
Registration Statement declared effective as soon as possible.
(c) The Company will promptly deliver to the Underwriters and
Underwriters' Counsel a signed copy of the Registration Statement, as initially
filed and all amendments thereto, including all consents and exhibits filed
therewith, and will maintain in the Company's files manually signed copies of
such documents for at least five (5) years after the date of filing thereof. The
Company will promptly deliver to each of the Underwriters such number of copies
of any Preliminary Prospectus, the Prospectus, the Registration Statement, and
all amendments of and supplements to such documents, if any, and all documents
incorporated by reference in the Registration Statement and Prospectus or any
amendment thereof or supplement thereto, as the Underwriters may reasonably
request. Prior to 10:00 A.M., New York time, on the business day next succeeding
the date of this Agreement and from time to time thereafter, the Company will
furnish the Underwriters with copies of the Prospectus in New York City in such
quantities as the Underwriters may reasonably request.
(d) The Company consents to the use and delivery of the
Preliminary Prospectus by the Underwriters in accordance with Rule 430 and
Section 5(b) of the Securities Act.
(e) The Company will use its commercially reasonable best
efforts, in cooperation with Maxim, at or prior to the time of effectiveness of
the Registration Statement, to qualify the Shares for offering and sale under
the securities laws relating to the offering or sale of the Shares of such
jurisdictions as Maxim may designate in writing and to maintain such
qualification in effect for so long as required for the distribution thereof;
except that in no event shall the Company be obligated in connection therewith
to qualify as a foreign corporation or to execute a general consent to service
of process.
(f) The Company will make generally available to its security
holders and to the Underwriters as soon as practicable after the effective date
of the Registration Statement (as defined in Rule 158(c) under the Securities
Act), an earnings statement of the Company and the Subsidiaries complying with
Section 11(a) of the Securities Act and the Rules and Regulations (including, at
the option of the Company, Rule 158).
Maxim Group LLC
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(g) At the Closing, the Company will deliver to Maxim
"lock-up" agreements, substantially in the form attached hereto as Annex I, duly
executed by the persons and entities set forth on Exhibit B hereto.
(h) For a period of nine (9) months following the Closing, the
Company will not: (i) offer or sell any of its securities at a discount from the
then current market price of the Common Stock without the prior written consent
of Maxim, which consent shall not be unreasonably withheld or delayed, or (ii)
offer or sell any convertible securities of the Company convertible at a price
that may, at the time of conversion, be less than the market price of the Common
Stock of the date of the original sale; provided, however, that such
restrictions shall not apply to: (i) the sale of the Company's securities to the
Underwriters pursuant to this Agreement; (ii) the grant of or shares issued upon
the exercise of options or other rights pursuant to the Company's stock option
plans or other employee benefit plans approved by the Company's board of
directors; (iii) the issuance by the Company of its securities in connection
with a merger, acquisition or similar transaction; or (iv) the sale of the
Company's securities in an underwritten public offering.
(i) For a period of six (6) months from the effective date of
the Registration Statement, the Company, at its expense, shall provide Maxim on
a weekly basis with a copy of the Company's daily transfer sheets from the
previous week and securities positions listings.
(j) During the period of three (3) years from the effective
date of the Registration Statement, the Company will furnish to the Underwriters
copies of all reports or other communications (financial or other) furnished to
security holders or from time to time published or publicly disseminated by the
Company, and will deliver to the Underwriters: (i) as soon as they are
available, copies of any reports, financial statements and proxy or information
statements furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company is listed; and (ii)
such additional information concerning the business and financial condition of
the Company as Maxim may from time to time reasonably request (such financial
information to be on a consolidated basis to the extent the accounts of the
Company and the Subsidiaries are consolidated in reports furnished to its
security holders generally or to the Commission); provided, however, that, to
the extent applicable, the Company will be deemed to have fulfilled its
obligation to provide such documents and information under this Section 4(j) by
filing such documents via the Commission's XXXXX system.
(k) Without Maxim's prior written consent, which consent shall
not be unreasonably withheld, the Company will not issue press releases or
engage in any other publicity, for a period ending after the twenty fifth (25th)
day following the Closing Date, other than normal and customary releases issued
in the ordinary course of the Company's business.
(l) The Company will use its Best Efforts to obtain key person
life insurance with a insurer rated at least AA or better in the most recent
addition of "Best's Life Reports" in the amount of $1,000,000 on the life of
Xxxxx X. Xxxxxxxx within sixty (60) days of
Maxim Group LLC
December ___, 2003
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the Closing Date. Such insurance shall be maintained in full force and effect
for a period of at least one (1) year from the date such insurance is obtained.
The Company shall be the sole beneficiary of such policy.
(m) Upon conclusion of the Offering, the Company will engage a
financial public relations firm mutually acceptable to the Company and Maxim
(with Maxim's approval thereof not to be unreasonably withheld, conditioned or
delayed) to provide corporate communications services to the Company. For a
period of ninety (90) days after the date hereof, the Company agrees and
undertakes to consult with Maxim prior to distribution to third parties of any
financial information, news releases, and/or other publicity regarding the
Company, its business, or any terms of the proposed Offering. Copies of all
documents, which the Company or its public relations advisors intend to
distribute to the public, will be provided to Maxim for review prior to such
distribution for a period of ninety (90) days after the date of the Prospectus.
(n) The Company will continue to retain as its transfer agent
for a period of one (1) year following the Closing Date either: (i) Corporate
Stock Transfer, Inc. or (ii) another transfer agent reasonably acceptable to
Maxim.
(o) The Company will apply the net proceeds from the sale of
the Shares as set forth under the caption "Use of Proceeds" in the Prospectus.
Without the written consent of Maxim, no proceeds of the Offering will be used
to pay: (i) outstanding loans from officers, directors or shareholders, or (ii)
except as (A) disclosed in the Registration Statement (including the exhibits
thereto) or (B) undertaken in the ordinary course of the Company's business or
consistent with past practice, any accrued salaries or bonuses to any employees
or former employees.
(p) The Company will use its commercially reasonable best
efforts to effect and maintain the listing of the Shares on the AMEX.
(q) The Company, during the period when the Prospectus is
required to be delivered under the Securities Act or the Exchange Act, will file
all documents required to be filed with the Commission pursuant to the
Securities Act, the Exchange Act and the Rules and Regulations within the time
periods required thereby.
(r) The Company will use its commercially reasonable best
efforts to do and perform all additional things required to be done or performed
under this Agreement by the Company prior to the Closing Date or the Additional
Closing Date, as the case may be, and shall use its Best Efforts to satisfy all
conditions precedent to the delivery of the Firm Shares and the Additional
Shares.
(s) The Company will not take, and will cause its Affiliates
not to take, directly or indirectly, any action which constitutes or is designed
to cause or result in, or which could reasonably be expected to constitute,
cause or result in, the stabilization or manipulation of the price of any
security to facilitate the sale or resale of the Shares.
Maxim Group LLC
December ___, 2003
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5. Consideration; Payment of Expenses; Right of First Refusal; Advisory
Agreement.
(a) In consideration of the services to be provided for
hereunder, the Company shall issue to Maxim or its designees or, at the
direction of Maxim, the other Underwriters or their designees, a warrant, or, if
so requested, warrants in substantially the form filed as Exhibit 4.1 to the
Registration Statement (the "UNDERWRITER'S WARRANT"), which shall be exercisable
to purchase up to an aggregate of 116,690 additional shares of Common Stock.
(b) In addition, Maxim shall also be entitled to a
non-accountable expense allowance equal to 2% of the gross proceeds of the
Offering (including proceeds, if any, from the sale of Additional Shares, which
portion shall be paid by the Selling Shareholder). The Company has heretofore
paid a $50,000 advance to Maxim, which shall be applied against the
non-accountable expense allowance attributable to the gross proceeds of the
Offering relating to the Firm Shares.
(c) Maxim reserves the right to reduce any item of its
compensation or adjust (in a manner no less favorable to the Company) the terms
thereof as specified herein (including the number, type and exercise price of
the Underwriter's Warrant) in the event that a determination shall be made by
the NASD to the effect that the Underwriters' aggregate compensation is in
excess of NASD rules or that the terms thereof require adjustment.
(d) Whether or not the transactions contemplated by this
Agreement, the Registration Statement and the Prospectus are consummated or this
Agreement is terminated, the Company hereby agrees to pay the following costs
and expenses incident to the performance of its obligations hereunder: (i) all
expenses in connection with the preparation, printing, and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and any
and all amendments and supplements thereto and the mailing and delivering of
copies thereof to and by the Underwriters; (ii) the fees, disbursements and
expenses of the Company's counsel and accountants in connection with the
registration of the Shares under the Securities Act and the Offering; (iii) the
cost of producing this Agreement and any agreement among Underwriters, blue sky
survey, closing documents and other instruments, agreements or documents
(including any compilations thereof) in connection with the Offering and the
cost of three (3) bound volumes of such documents; (iv) all expenses in
connection with the qualification of the Shares for offering and sale under
state securities or blue sky laws as provided in Section 4(e) hereof, including
the reasonable and accountable fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with any
blue sky survey (including "blue sky" legal fees of $5,000 for registration in
up to 15 states and disbursements of counsel); (v) the filing fees incident to,
and the reasonable and accountable fees and disbursements of counsel for the
Underwriters (not to exceed $7,500) in connection with, securing any required
Maxim Group LLC
December ___, 2003
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review by the NASD of the terms of the Offering; (vi) all fees and expenses in
connection with listing the Shares on the AMEX; (vii) all travel expenses of the
Company's officers and employees and any other expense of the Company incurred
in connection with attending or hosting meetings with prospective purchasers of
the Shares (the expenses described in this clause (vii) being referred to as
"ROAD SHOW EXPENSES"); (viii) fifty percent (50%) of all of Maxim's Road Show
Expenses, and (ix) any stock transfer taxes incurred in connection with this
Agreement or the Offering. The Company also will pay or cause to be paid: (w)
the cost of preparing stock certificates representing the Shares; (x) the cost
and charges of any transfer agent or registrar for the Shares; and (y) except as
provided for herein, all other costs and expenses incident to the performance of
its obligations hereunder which are not otherwise specifically provided for in
this Section 5; and (z) cost of "tombstone" advertisements to be placed in
appropriate daily or weekly periodicals as Maxim may reasonably request. It is
understood, however, that except as provided in this Section 5, and Sections 7,
8 and 11 hereof, the Underwriters will pay all of their own costs and expenses,
including the fees of their counsel and stock transfer taxes on resale of any of
the Shares by them. Notwithstanding anything to the contrary in this Section 5,
in the event that this Agreement is terminated pursuant to Section 6 or 11(b)
hereof, or subsequent to a Material Adverse Change, the Company will pay all
accountable expenses of the Underwriters (including but not limited to fees and
disbursements of counsel to the Underwriters) incurred in connection herewith.
(e) The Company shall pay, as due, any state registration,
qualification and filing fees, NASD filing fees and accountable out-of-pocket
disbursements in connection with such registration, qualification or filing;
(f) The Company hereby grants Maxim, for a period of one (1)
year from the Closing Date, the right to act as financial advisor to the Company
and the right of first refusal to act as lead underwriter or placement agent (or
minimally as co-manager) with at least fifty percent (50%) of the aggregate
financial remuneration (or, in the case of a three-handed deal, thirty-three
percent (33%) of the aggregate financial remuneration), for any and all future
public and private equity offerings of the Company or any successor to or any
subsidiary of the Company during such one (1) year period; provided, however,
that: (i) Maxim shall only have the right to twenty percent (20%) of the
aggregate financial remuneration in connection with any such financing
undertaken by the Company, the primary purpose of which is to finance the
acquisition by the Company of a "depository institution" (as defined in Section
19(b) of the Federal Reserve Act), and (ii) the rights set forth in this
paragraph (f) shall not be applicable to any private equity offering that is
self-underwritten by the Company in which the investors are officers, directors
and/or 5% or greater shareholders of the Company.
6. Conditions of Underwriters' Obligations. The obligations of the
Underwriters to purchase and pay for the Firm Shares and the Additional Shares
as provided herein shall be subject to the accuracy of the representations and
warranties of the Company herein contained, as of the date hereof and as of the
Closing Date (for purposes of this Section 6, the term "Closing Date" shall
refer to the Closing Date for the Firm Shares and any Additional Closing Date,
if different, for the Additional Shares), to the absence from any certificates,
opinions, written
Maxim Group LLC
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statements or letters furnished to you or to Underwriters' Counsel pursuant to
this Section 6 of any misstatement or omission, to the performance by the
Company of its obligations hereunder, and to each of the following additional
conditions:
(a) The Registration Statement shall have become effective and
all necessary regulatory or stock exchange approvals shall have been received
not later than 5:30 P.M., New York time, on the date of this Agreement, or at
such later time and date as shall have been consented to in writing by Maxim; if
the Company shall have elected to rely upon Rule 430A under the Securities Act,
the Prospectus shall have been filed with the Commission in a timely fashion in
accordance with Section 4(a) hereof and a form of the Prospectus containing
information relating to the description of the Shares and the method of
distribution and similar matters shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period; and, at or prior to
the Closing Date no stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereof shall have been issued and no
proceedings therefor shall have been initiated or threatened by the Commission.
(b) At the Closing Date, Maxim shall have received the
favorable written opinion of Barrack, Ferrazzano, Kirschbaum, Xxxxxxx &
Xxxxxxxxx LLC, legal counsel for the Company, dated the Closing Date addressed
to the Underwriters in a form mutually acceptable to such counsel and
Underwriters' Counsel.
(c) All proceedings taken in connection with the sale of the
Firm Shares and the Additional Shares as herein contemplated shall be
satisfactory in form and substance to Maxim and to Underwriters' Counsel, and
the Underwriters shall have received from Underwriters' Counsel a favorable
written opinion, dated as of the Closing Date, with respect to the issuance and
sale of the Shares, the Registration Statement and the Prospectus and such other
related matters as Maxim may require, and the Company shall have furnished to
Underwriters' Counsel such documents as they may reasonably request for the
purpose of enabling them to pass upon such matters.
(d) At the Closing Date, Maxim shall have received a
certificate of the President and Chief Executive Officer and Chief Financial
Officer of the Company, dated the Closing Date to the effect that: (i) the
condition set forth in subsection (a) of this Section 6 has been satisfied, (ii)
as of the date hereof and as of the Closing Date, the representations and
warranties of the Company set forth in Section 1 hereof are accurate in all
material respects, (iii) as of the Closing Date all agreements, conditions and
obligations of the Company to be performed or complied with hereunder on or
prior thereto have been duly performed or complied with in all material
respects, (iv) subsequent to the date of this Agreement, the Company and the
Subsidiaries have not sustained any material loss or interference with their
respective businesses, whether or not covered by insurance, or from any labor
dispute or any legal or governmental proceeding, (v) no stop order suspending
the effectiveness of the Registration Statement or any post-effective amendment
thereof has been issued and no proceedings therefor have been initiated or
threatened by the Commission, (vi) there are no pro forma or as adjusted
financial statements that are required to be included in the Registration
Statement and the Prospectus
Maxim Group LLC
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pursuant to the Rules and Regulations and (vii) subsequent to the respective
dates as of which information is given in the Registration Statement and the
Prospectus there has not been any material adverse change, whether or not
arising from transactions in the ordinary course of business, in or affecting
(x) the business, condition (financial or otherwise), results of operations,
stockholders' equity, properties or prospects of the Company and the
Subsidiaries, taken as a whole; (y) the long-term debt or capital stock of the
Company or any of its Subsidiaries; or (z) the Offering or consummation of any
of the other transactions contemplated by this Agreement, the Registration
Statement and the Prospectus.
(e) At the time this Agreement is executed and at the Closing
Date, Maxim shall have received a comfort letter, from Xxxxx Xxxxxx and Company
LLC, independent public accountants for the Company, dated, respectively, as of
the date of this Agreement and as of the Closing Date addressed to the
Underwriters and in form and substance reasonably satisfactory to the
Underwriters, Underwriters' Counsel and such independent public accountants.
(f) Subsequent to the execution and delivery of this Agreement
or, if earlier, the dates as of which information is given in the Registration
Statement (exclusive of any amendment thereof) and the Prospectus (exclusive of
any supplement thereto), there shall not have been any change in the capital
stock or long-term debt of the Company or any Subsidiary or any change or
development involving a change, whether or not arising from transactions in the
ordinary course of business, in the business, condition (financial or
otherwise), results of operations, stockholders' equity, properties or prospects
of the Company and the Subsidiaries, taken as a whole, including but not limited
to the occurrence of any fire, flood, storm, explosion, accident, act of war or
terrorism or other calamity, the effect of which, in any such case described
above, is, in the sole judgment of Maxim, so material and adverse as to make it
impracticable or inadvisable to proceed with the Offering on the terms and in
the manner contemplated in the Prospectus (exclusive of any supplement).
(g) Maxim shall have received a duly executed lock-up
agreement from each of the persons and entities set forth on Exhibit B, in each
case substantially in the form attached as Annex I hereto (it being understood
and agreed that: (i) the lock-up agreement for the Selling Shareholder shall be
in a separate form, based on the attached Annex I, the terms of which shall be
agreed upon by Maxim and the Selling Shareholder, (ii) the lock-up period for
the outside directors of the Company listed on Exhibit B shall be six (6)
months, and (iii) the lock-up period for all other individuals listed on Exhibit
B shall be twelve (12) months).
(h) At the Closing Date, the Shares shall have been approved
for quotation on the AMEX.
(i) At the Closing Date, 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.
Maxim Group LLC
December ___, 2003
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(j) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any federal,
state or foreign governmental or regulatory authority that would, as of the
Closing Date, prevent the issuance or sale of the Shares; and no injunction or
order of any federal or state court shall have been issued that would, as of the
Closing Date, prevent the issuance or sale of the Shares.
(k) The Company shall have furnished the Underwriters and
Underwriters' Counsel with such other certificates, opinions or other documents
as they may have reasonably requested.
If any of the conditions specified in this Section 6 shall not
have been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to Maxim or to
Underwriters' Counsel pursuant to this Section 6 shall not be reasonably
satisfactory in form and substance to Maxim and to Underwriters' Counsel, all
obligations of the Underwriters hereunder may be cancelled by Maxim at, or at
any time prior to, the Closing Date and the obligations of the Underwriters to
purchase the Additional Shares may be cancelled by Maxim at, or at any time
prior to, the Additional Closing Date. Notice of such cancellation shall be
given to the Company in writing.
7. Indemnification.
(a) The Company shall indemnify and hold harmless Maxim and,
as applicable, each Underwriter and each person, if any, who controls Maxim or
any Underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, against any and all losses, liabilities, claims,
damages and expenses whatsoever as incurred (including but not limited to
reasonable attorneys' fees of one firm of attorneys and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, as originally filed or any amendment thereof, or any
related Preliminary Prospectus or the Prospectus, or in any supplement thereto
or amendment thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
the Company will not be liable in any such case to the extent but only to the
extent that any such loss, liability, claim, damage or expense arises out of or
is based upon any such untrue statement or alleged untrue statement or omission
or alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter through
Maxim or Underwriter's Counsel expressly for use therein; and, provided,
further, that, as to any Preliminary Prospectus, the Company will not be liable
on account of any loss, liability, claim, damage or expense arising from the
sale of any Shares to any person by the Underwriter if the Underwriter failed to
send or give a copy of the Prospectus, as the same may
Maxim Group LLC
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be amended or supplemented, to that person within the time required by the
Securities Act, and the untrue statement or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact in such
Preliminary Prospectus was corrected in the Prospectus. The parties agree that
such information provided by or on behalf of any Underwriter through Maxim
consists solely of the material referred to in the last sentence of Section 1(c)
hereof. This indemnity agreement will be in addition to any liability, which the
Company may otherwise have, including but not limited to other liability under
this Agreement.
(b) Maxim and, as applicable, each Underwriter, severally and
not jointly, shall indemnify and hold harmless the Company, each of the
directors of the Company, each of the officers of the Company who shall have
signed the Registration Statement, and each other person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act, against any and all losses, liabilities, claims, damages
and expenses whatsoever as incurred (including but not limited to reasonable
attorneys' fees of one firm of attorneys and any and all expenses whatsoever
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, and any and all amounts paid
in settlement of any claim or litigation), joint or several, to which they or
any of them may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement, as originally filed or any amendment thereof, or any related
Preliminary Prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that any such loss, liability, claim, damage or
expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with information furnished in writing to the Company by or on
behalf of any Underwriter through Maxim or Underwriter's Counsel specifically
for use therein. The parties agree that such information provided by or on
behalf of any Underwriter through Maxim consists solely of the material referred
to in the last sentence of Section 1(c) hereof.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of any claims or the commencement of any
action, such indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under such subsection, notify each party
against whom indemnification is to be sought in writing of the claim or the
commencement thereof (but the failure so to notify an indemnifying party shall
not relieve the indemnifying party from any liability which it may have under
this Section 7 to the extent that it is not materially prejudiced as a result
thereof and in any event shall not relieve it from any liability that such
indemnifying party may have otherwise than on account of the indemnity agreement
hereunder). In case any such claim or action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate, at its own expense in the
defense of such action, and to the extent it may elect by written notice
delivered to the indemnified party promptly after receiving
Maxim Group LLC
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the aforesaid notice from such indemnified party, to assume the defense thereof
with counsel satisfactory to such indemnified party; provided however, that
counsel to the indemnifying party shall not (except with the written consent of
the indemnified party) also be counsel to the indemnified party. Notwithstanding
the foregoing, the indemnified party or parties shall have the right to employ
its or their own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of such indemnified party or parties unless (i)
the employment of such counsel shall have been authorized in writing by one of
the indemnifying parties in connection with the defense of such action, (ii) the
indemnifying parties shall not have employed counsel to have charge of the
defense of such action within a reasonable time after notice of commencement of
the action, (iii) the indemnifying party does not diligently defend the action
after assumption of the defense, or (iv) such indemnified party or parties shall
have reasonably concluded that there may be defenses available to it or them
which are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties), in any of which events such fees and expenses shall be borne by the
indemnifying parties; provided, however, that in no event shall the indemnifying
party bear the fees and expenses of more than one such separate counsel. No
indemnifying party shall, without the prior written consent of the indemnified
parties, effect any settlement or compromise of, or consent to the entry of
judgment with respect to, any pending or threatened claim, investigation, action
or proceeding in respect of which indemnity or contribution may be or could have
been sought by an indemnified party under this Section 7 or Section 8 hereof
(whether or not the indemnified party is an actual or potential party thereto),
unless (x) such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such claim,
investigation, action or proceeding and (ii) does not include a statement as to
or an admission of fault, culpability or any failure to act, by or on behalf of
the indemnified party, and (y) the indemnifying party confirms in writing its
indemnification obligations hereunder with respect to such settlement,
compromise or judgment. An indemnifying party shall not be obligated to
reimburse an indemnified party under this Section 7 for any amount paid to
effect settlement of any action or claim unless such settlement shall have been
reasonable consented to in writing by the indemnifying party without condition
or delay, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
8. Contribution. In order to provide for contribution in circumstances
in which the indemnification provided for in Section 7 hereof is for any reason
held to be unavailable from any indemnifying party or is insufficient to hold
harmless a party indemnified thereunder, the indemnifying party shall, in lieu
of indemnifying such indemnified party, contribute to the amount paid by such
indemnified party as a result of the aggregate losses, claims, damages,
liabilities and expenses of the nature contemplated by such indemnification
provision (including, without limitation any investigation, legal and other
expenses reasonably in connection with, and any amount paid in settlement of,
any action, suit or proceeding or any claims asserted, but after deducting in
the case of losses, claims, damages, liabilities and expenses suffered by the
Company, any contribution received by the Company from persons, other than the
Underwriters,
Maxim Group LLC
December ___, 2003
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who may also be liable for contribution, including persons who control the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, officers of the Company who signed the Registration Statement
and directors of the Company) as incurred to which the indemnified party may be
subject, in such proportions as is appropriate to reflect the relative benefits
received by the Company, on the one hand, and the Underwriters, on the other
hand, from the Offering or, if such allocation is not permitted by applicable
law, in such proportions as are appropriate to reflect not only the relative
benefits referred to above but also the relative fault of the Company and the
Underwriters in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and the Underwriters shall be deemed to be in the same proportion as (x) the
total proceeds from the Offering (net of underwriting discounts and commissions
but before deducting expenses) received by the Company bears to (y) the
underwriting discount or commissions received by the Underwriters, in each case
as set forth in the table on the cover page of the Prospectus. The relative
fault of each of the Company and of the Underwriters shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 8 were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to above in
this Section. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
8 shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any judicial, regulatory or
other legal or 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 8:
(i) no Underwriter shall be required to contribute any amount in excess of the
amount by which the aggregate offering price applicable to the Shares
underwritten by it and distributed to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission, and
(ii) no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 8, each person, if any, who controls an Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
shall have the same rights to contribution as such Underwriter, and each person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, each officer of the Company
who shall have signed the Registration Statement and each director of the
Company shall have the same rights to contribution as the Company, subject in
each case to clauses (i) and (ii) of the immediately preceding sentence. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim
Maxim Group LLC
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for contribution may be made against another party or parties, notify in writing
each party or parties from whom contribution may be sought, but the omission to
so notify such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have under this
Section 8 or otherwise. The obligations of the Underwriters to contribute
pursuant to this Section 8 are several in proportion to the respective number of
Shares to be purchased by each of the Underwriters hereunder and not joint.
9. Underwriter Default. To the extent that Maxim retains other
Underwriters or selling agents to participate in the Offering, the following
shall apply:
(a) If any Underwriter or Underwriters shall default in its or
their obligation to purchase Firm Shares or Additional Shares hereunder, and if
the Firm Shares or Additional Shares with respect to which such default relates
(the "DEFAULT SHARES") do not (after giving effect to arrangements, if any, made
by Maxim pursuant to subsection (b) below) exceed in the aggregate 10% of the
aggregate number of Firm Shares or Additional Shares, each non-defaulting
Underwriter, acting severally and not jointly, agrees to purchase from the
Company or the Selling Shareholder, as applicable, that number of Default Shares
that bears the same proportion of the total number of Default Shares then being
purchased as the number of Firm Shares set forth opposite the name of such
Underwriter on Schedule I hereto bears to the aggregate number of Firm Shares
set forth opposite the names of all of the remaining non-defaulting Underwriters
listed on Schedule I hereto, subject, however, to such adjustments to eliminate
fractional shares as Maxim in its sole discretion shall make.
(b) In the event that the aggregate number of Default Shares
exceeds 10% of the number of Firm Shares or Additional Shares, as the case may
be, Maxim may in its discretion arrange for itself or for another party or
parties (including any non-defaulting Underwriter or Underwriters who so agree)
to purchase the Default Shares on the terms contained herein. In the event that
within five (5) calendar days after such a default Maxim does not arrange for
the purchase of the Default Shares as provided in this Section 9, this Agreement
or, in the case of a default with respect to the Additional Shares, the
obligations of the Underwriters to purchase and of the Selling Shareholder to
sell the Additional Shares shall thereupon terminate, without liability on the
part of the Company with respect thereto (except in each case as provided in
Sections 5, 7, 8, 10 and 11(d)) or the Underwriters, but nothing in this
Agreement shall relieve a defaulting Underwriter or Underwriters of its or their
liability, if any, to the other Underwriters, the Company or, as the case may
be, the Selling Shareholder, for damages occasioned by its or their default
hereunder.
(c) In the event that any Default Shares are to be purchased
by the non-defaulting Underwriters, or are to be purchased by another party or
parties as aforesaid, Maxim or the Company or the Selling Shareholder, as
applicable, shall have the right to postpone the Closing Date or Additional
Closing Date, as the case may be, for a period not exceeding five (5) business
days, in order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus or in any other documents and
arrangements, and the Company agrees to file promptly any amendment or
supplement to the Registration Statement or
Maxim Group LLC
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the Prospectus which, in the reasonable opinion of Underwriters' Counsel (in
consultation with counsel to the Company), may thereby be made necessary or
advisable. The term "Underwriter" as used in this Agreement shall include any
party substituted under this Section 9 with like effect as if it had originally
been a party to this Agreement with respect to such Firm Shares and Additional
Shares.
10. Survival of Representations and Agreements. All representations and
warranties, covenants and agreements of the Company and Maxim contained in this
Agreement or in certificates of officers of the Company or any Subsidiary
submitted pursuant hereto, including the agreements contained in Section 5, the
indemnity agreements contained in Section 7 and the contribution agreements
contained in Section 8, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Underwriter or any
controlling person thereof or by or on behalf of the Company, any of its
officers and directors or any controlling person thereof, and shall survive
delivery of and payment for the Shares to and by the Underwriters. The
representations contained in Section 1 and the agreements contained in Sections
5, 7, 8, 10 and 11 hereof shall survive any termination of this Agreement,
including termination pursuant to Section 9 or 11 hereof.
11. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective upon the later of:
(i) receipt by Maxim and the Company of notification of the effectiveness of the
Registration Statement or (ii) the execution of this Agreement. Notwithstanding
any termination of this Agreement, the provisions of this Section 11 and of
Sections 1, 5, 7, 8 and 12 through 17, inclusive, shall remain in full force and
effect at all times after the execution hereof.
(b) Maxim shall have the right to immediately terminate this
Agreement at any time prior to the Closing Date or to immediately terminate the
obligations of the Underwriters to purchase the Additional Shares at any time
prior to the Additional Closing Date, as the case may be, if: (i) any domestic
or international event or act or occurrence has materially disrupted, or in the
opinion of Maxim will in the immediate future materially disrupt, the market for
the Company's securities or securities in general; or (ii) trading on the New
York Stock Exchange, The NASDAQ National Market or the AMEX shall have been
suspended or been made subject to material limitations, or minimum or maximum
prices for trading shall have been fixed, or maximum ranges for prices for
securities shall have been required, on the New York Stock Exchange, The NASDAQ
National Market or the AMEX or by order of the Commission or any other
governmental authority having jurisdiction; or (iii) a banking moratorium has
been declared by any state or federal authority or if any material disruption in
commercial banking or securities settlement or clearance services shall have
occurred; or (iv) (A) there shall have occurred any outbreak or escalation of
hostilities or acts of terrorism involving the United States or there is a
declaration of a national emergency or war by the United States or (B) there
shall have been any other calamity or crisis or any change in political,
financial or economic conditions, if the effect of any such event in (A) or (B),
in the reasonable judgment of Maxim, makes it impracticable or inadvisable to
proceed with the offering, sale and delivery of the Firm
Maxim Group LLC
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Shares or the Additional Shares, as the case may be, on the terms and in the
manner contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 11
shall be in writing.
12. Notices. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing, and:
(a) if sent to Maxim or any Underwriter, shall be mailed
(electronically or otherwise), delivered by hand or overnight courier, or faxed
to Maxim Group LLC, 000 Xxxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx
Xxxxxx, Managing Director, with a copy to Underwriters' Counsel at Ellenoff
Xxxxxxxx & Schole LLP, 000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx,
00000, Attention: Xxxxxxx X. Xxxxxxxx, Esq.;
(b) if sent to the Company, shall be mailed (electronically or
otherwise), delivered by hand or overnight courier, or faxed to the Company and
its counsel at the addresses set forth in the Registration Statement, provided,
however, that any notice to an Underwriter pursuant to Section 7 shall be
delivered or sent by mail or facsimile transmission to such Underwriter at its
address set forth in its acceptance facsimile to Maxim, which address will be
promptly supplied to any other party hereto by Maxim upon request. Any such
notices and other communications shall take effect at the time of receipt
thereof.
13. Parties. This Agreement shall inure solely to the benefit of, and
shall be binding upon, the Underwriters, the Company, the Selling Shareholder
and the controlling persons, directors, officers, employees and agents referred
to in Sections 7 and 8 hereof, and their respective successors and assigns, and
no other person shall have or be construed to have any legal or equitable right,
remedy or claim under or in respect of or by virtue 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 parties
hereto and said controlling persons and their respective successors, officers,
directors, heirs and legal representatives, and it is not for the benefit of any
other person, firm or corporation. The term "successors and assigns" shall not
include a purchaser, in its capacity as such, of Shares from any of the
Underwriters.
14. Governing Law. This Agreement shall be deemed to have been executed
and delivered in Illinois and both this Agreement and the transactions
contemplated hereby shall be governed as to validity, interpretation,
construction, effect, and in all other respects by the internal laws of the
State of Illinois. Each of the Underwriters, the Company and the Selling
Shareholder: (a) agrees that any legal suit, action or proceeding arising out of
or relating to this Agreement and/or the transactions contemplated hereby shall
be instituted exclusively in the Illinois Circuit Court for the Eighteenth
Judicial Circuit, Du Page County, Illinois or in the United States District
Court for the Northern District of Illinois, (b) waives any objection which it
may have or hereafter to the venue of any such suit, action or proceeding, and
(c) irrevocably consents to the jurisdiction of the Illinois Circuit Court for
the Eighteenth Judicial Circuit, DuPage County, Illinois and the United States
District Court for the Northern District of Illinois
Maxim Group LLC
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in any such suit, action or proceeding. Each of the Underwriters, the Company
and the Selling Shareholder further agrees to accept and acknowledge service of
any and all process which may be served in any such suit, action or proceeding
in the Illinois Circuit Court for the Eighteenth Judicial Circuit, DuPage
County, Illinois or in the United States District Court for the Northern
District of Illinois and agrees that service of process upon the Company mailed
by certified mail to the Company's address or delivered by Federal Express via
overnight delivery shall be deemed in every respect effective service of process
upon the Company, in any such suit, action or proceeding, and service of process
upon the Underwriters mailed by certified mail to the Underwriters' address or
delivered by Federal Express via overnight delivery shall be deemed in every
respect effective service process upon the Underwriter, in any such suit, action
or proceeding. THE COMPANY (ON BEHALF OF ITSELF AND, TO THE FULLEST EXTENT
PERMITTED BY LAW, ON BEHALF OF ITS RESPECTIVE EQUITY HOLDERS AND CREDITORS)
HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM
BASED UPON, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE REGISTRATION STATEMENT AND THE
PROSPECTUS.
15. Entire Agreement. This Agreement, together with the schedule and
exhibits attached hereto and as the same may be amended from time to time in
accordance with the terms hereof, contains the entire agreement among the
parties hereto relating to the subject matter hereof and there are no other or
further agreements outstanding not specifically mentioned herein.
16. Severability. If any term or provision of this Agreement or the
performance thereof shall be invalid or unenforceable to any extent, such
invalidity or unenforceability shall not affect or render invalid or
unenforceable any other provision of this Agreement and this Agreement shall be
valid and enforced to the fullest extent permitted by law.
17. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument. Delivery of
a signed counterpart of this Agreement by facsimile transmission shall
constitute valid and sufficient delivery thereof.
18. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
19. Time is of the Essence. Time shall be of the essence of this
Agreement. As used herein, the term "business day" shall mean any day when the
Commission's office in Washington, D.C. is open for business.
Maxim Group LLC
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If the foregoing correctly sets forth your understanding, please so
indicate in the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement among us.
Very truly yours,
UNITED FINANCIAL MORTGAGE CORP.
By: ________________________________
Name: Xxxxx X. Xxxxxxxx
Title: President and Chief
Executive Officer
THE XXXXXX XXXXXXXX TRUST, UNDER TRUST
AGREEMENT DATED SEPTEMBER 22, 1995
By: ________________________________
Name: Xxxxxx Xxxxxxxx
Title: Trustee
Accepted as of the date first above written
MAXIM GROUP LLC,
For itself and as representative of any other Underwriter named on
Schedule I attached hereto
By: _______________________________________
Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
[Signature Page to Underwriting Agreement]
SCHEDULE I
UNDERWRITER TOTAL NUMBER OF FIRM SHARES NUMBER OF ADDITIONAL SHARES TO BE
TO BE PURCHASED PURCHASED IF OPTION IS FULLY EXERCISED
Maxim Group LLC
TOTAL 1,667,000 250,050
EXHIBIT A
Subsidiaries of the Company
1. Portland Mortgage Company, an Oregon corporation.
EXHIBIT B
Persons and Entities Executing "Lock-Up" Agreements
The Xxxxxx Xxxxxxxx Trust
Xxxxxx Xxxxxxxx
Xxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxx
Xxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxx
Xxxxxxxxx X. Xxxxxxx
Xxxx X. Xxxxx (outside director)
Xxxxx X. Xxxxxx (outside director)
Xxxxxx X. Xxxx (outside director)
Xxxxxx X. Xxxxxx (outside director)
ANNEX I
Form of Lock-Up Agreement
_____________, 2003
Maxim Group LLC
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: United Mortgage Financial Corp. Lock-Up Agreement
Ladies and Gentlemen:
This letter agreement (this "AGREEMENT") relates to the proposed public
offering (the "OFFERING") by United Financial Mortgage Corp., an Illinois
corporation (the "COMPANY"), of its Common Stock, no par value per share (the
"STOCK").
In order to induce Maxim Group LLC ("MAXIM") to underwrite the
Offering, the undersigned hereby agrees that, without the prior written consent
of Maxim, which consent shall not be unreasonably withheld, during the period
from the date hereof until __________ months from the date of the final
prospectus for the Offering (the "LOCK-UP PERIOD"), the undersigned: (a) will
not, directly or indirectly, offer, sell, agree to offer or sell, solicit offers
to purchase, grant any call option or purchase any put option with respect to,
pledge, borrow or otherwise dispose of any Relevant Security (as defined below),
and (b) will not establish or increase any "put equivalent position" or
liquidate or decrease any "call equivalent position" with respect to any
Relevant Security (in each case within the meaning of Section 16 of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder), or otherwise enter into any swap, derivative or other
transaction or arrangement that transfers to another, in whole or in part, any
economic consequence of ownership of a Relevant Security, whether or not such
transaction is to be settled by delivery of Relevant Securities, other
securities, cash or other consideration; provided, however, that the undersigned
shall, during the Lock-Up Period, be entitled to (a) surrender shares of any
Relevant Security as consideration paid to exercise any or all of the
undersigned's options to purchase shares of the Company's common stock granted
by the Company, and (b) transfer or dispose of shares solely for estate planning
purposes. As used herein "RELEVANT SECURITY" means any common stock or other
security of the Company or any subsidiary thereof that is convertible into, or
exercisable or exchangeable for common stock or equity securities or that holds
the right to acquire any common stock or equity securities of the Company or any
subsidiary or any other such Relevant Security, except for such rights as may
have been fully satisfied or waived prior to the effectiveness of the
Registration Statement.
The undersigned hereby authorizes the Company during the Lock-Up Period
to cause any transfer agent for the Relevant Securities to decline to transfer,
and to note stop transfer restrictions on the stock register and other records
relating to, Relevant Securities for which the undersigned is the record holder
and, in the case of Relevant Securities for which the undersigned is the
beneficial but not the record holder, agrees during the Lock-Up Period to
cause the record holder to cause the relevant transfer agent to decline to
transfer, and to note stop transfer restrictions on the stock register and other
records relating to, such Relevant Securities.
The undersigned hereby further agrees that, without the prior written
consent of Maxim, which consent shall not be unreasonably withheld, during the
Lock-Up Period the undersigned will not: (x) file or participate in the filing
with the Securities and Exchange Commission of any registration statement, or
circulate or participate in the circulation of any preliminary or final
prospectus or other disclosure document with respect to any proposed offering or
sale of a Relevant Security and (y) exercise any rights the undersigned may have
to require registration with the Securities and Exchange Commission of any
proposed offering or sale of a Relevant Security.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Agreement and that this Agreement
constitutes the legal, valid and binding obligation of the undersigned,
enforceable in accordance with its terms. Upon request, the undersigned will
execute any additional documents necessary in connection with enforcement
hereof. Any obligations of the undersigned shall be binding upon the successors
and assigns of the undersigned from the date first above written.
It is understood that if the Company notifies the Underwriters that it
does not intend to proceed with the Offering or if the Underwriting Agreement,
dated December ___, 2003 between the Company, the Xxxxxx Xxxxxxxx Trust and
Maxim shall terminate or be terminated prior to payment for and delivery of the
stock contemplated thereby, the undersigned will be released from his or her
obligation under this Agreement.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Illinois, without regard to the conflicts of laws
principles thereof. Delivery of a signed copy of this letter by facsimile
transmission shall be effective as delivery of the original hereof.
Very truly yours,
By: _____________________________
Print Name: _______________________
