_______________, 2000
eChapman .com, Inc. Xxxxxx X. Xxxxxxx, Xx.
World Trade Center - Baltimore c/o The Xxxxxxx Co.
000 Xxxx Xxxxx Xxxxxx World Trade Center - Baltimore
Suite 0000 000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000 Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
The Xxxxxxx Co.
World Trade Center - Baltimore
000 Xxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
RE: AGREEMENT TO ACT AS "QUALIFIED INDEPENDENT UNDERWRITER"
Ladies and Gentlemen:
You have advised us that xXxxxxxx.xxx, Inc., a Maryland corporation
(the "Company"), intends to engage The Xxxxxxx Co., as representative of the
several underwriters (sometimes referred to herein as the "Representative"), to
purchase 1,700,000 shares of the Common Stock (the "Firm Shares") for
distribution to the public in an initial public offering (the "Offering"),
pursuant to an Underwriting Agreement to be entered into by the Company, the
Representative, on behalf of itself and the several underwriters named therein
(the "Underwriters") and Xxxxxx X. Xxxxxxx, Xx. (the "Selling Stockholder"). The
Company and the Selling Stockholder each propose, subject to the terms and
conditions stated in the Underwriting Agreement, to sell to the Underwriters,
for the sole purpose of covering over-allotments in connection with the sale of
the Firm Shares, and at the option of the Underwriters, up to an additional
175,000 shares and 80,000 shares respectively, (collectively, the "Additional
Shares"), of Common Stock. The Firm Shares and the Additional Shares are
referred to herein collectively as the "Shares." Other capitalized terms used
but not otherwise defined herein shall have the respective meanings given to
such terms in the Underwriting Agreement.
On November 15, 1999, the Company entered into the Merger Agreements
with CHI, CCMHI and CIHI, whereby each of CHI, CCMHI and CIHI will merge with
and into a separate wholly owned subsidiary of the Company. As a result of the
Mergers, the Company will become a holding company owning 100% of the
outstanding capital stock of CHI, CCMHI and CIHI, which will own 100% of the
capital stock of their respective subsidiaries. Upon the closing and
consummation of the Mergers, references in this Agreement to the Company shall
be deemed to refer to the Company and its subsidiaries, the Xxxxxxx Entities,
after giving effect to the Mergers.
We understand that, as a member of the National Association of
Securities Dealers, Inc. ("NASD"), the Representative may participate in the
Offering only if the price at which the Common Stock is to be offered to the
public is no higher than the
xXxxxxxx.xxx, Inc.
The Xxxxxxx Co.
Xxxxxx X. Xxxxxxx, Xx.
________________, 2000
Page 2
price recommended by a "Qualified Independent Underwriter" (as such term is
defined in Rule 2720(b)(15) of the NASD Conduct Rules) and such Qualified
Independent Underwriter participates in the preparation of the registration
statement and prospectus relating to the Offering and exercises the usual
standards of due diligence with respect thereto. This Agreement describes the
terms on which Xxxxxx, Xxxxx Xxxxx, Incorporated ("FBW") agrees to serve as a
Qualified Independent Underwriter in connection with the Offering. In connection
with the services to be provided by FBW hereunder and based upon the
representations and warranties of, and subject to the performance of the
covenants by, the Company herein set forth and FBW's satisfaction with the
results of its due diligence review, FBW agrees to deliver to the Company and
the Representative, and file with the NASD, a letter (the "Letter"),
substantially in the form of Appendix A hereto, on the date the EChapman
Registration Statement is first declared effective by the Commission (the
"Effective Date") or, if the Offering is not priced on the Effective Date, on
the date of the pricing of the Offering (the "Pricing Date"), and at each
subsequent Closing Date. As a condition to the delivery of the Letter, the
EChapman Registration Statement and each amendment thereto will include any
revisions that in the reasonable judgment of FBW and its legal counsel are
required to enable FBW to deliver the Letter.
1. NASD REQUIREMENT. FBW hereby confirms its agreement to act in
connection with the Offering as a "Qualified Independent Underwriter" within the
meaning of Rule 2720 of the NASD Conduct Rules and represents that FBW satisfies
or will satisfy at the times designated in Rule 2720(b)(15) the requirements set
forth therein.
2. CONSENT. FBW hereby consents to be named in the eChapman
Registration Statement and Prospectus with respect to the Offering as having
acted as the Qualified Independent Underwriter and to the filing of this
Agreement as an exhibit to the eChapman Registration Statement. All references
to FBW in the eChapman Registration Statement or Prospectus or in any other
filing, report, document, release or other communication prepared, issued or
transmitted in connection with the Offering by the Company or the Underwriters
or any entity controlling, controlled by or under common control with, or by any
of them, shall be subject to FBW's prior consent with respect to location, form
and substance. FBW's obligation to act as a Qualified Independent Underwriter
hereunder shall terminate if the Company shall breach in any material respect
any representation, warranty or covenant hereunder and such breach shall not be
cured within ten days of written notice thereof to the Company.
3. FEES AND EXPENSES. The Company agrees to pay FBW a fee equal to 20%
of the aggregate underwriting discount for each share of Common Stock sold in
the Offering (the "Fee") for its services hereunder, which shall be payable on
each Closing Date. The Company also agrees to reimburse FBW for all reasonable
out-of-pocket expenses, including all reasonable fees and expenses of FBW's
counsel (including accrued expenses), incurred by FBW in connection with this
Agreement and the Offering. If, for whatever reason, it is determined that the
Offering shall not commence
xXxxxxxx.xxx, Inc.
The Xxxxxxx Co.
Xxxxxx X. Xxxxxxx, Xx.
________________, 2000
Page 3
or will not be consummated, FBW shall be entitled to
be paid in full for the above-mentioned expenses, including fees and expenses of
counsel, promptly following such determination, and shall continue to be
entitled to any amount payable to FBW under Section 11 hereof.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. The
Company represents and warrants to FBW that:
(a) The Company has filed with Commission the EChapman Registration
Statement and related preliminary prospectuses, as amended, for the registration
under the Securities Act of the sale of 3,533,283 shares (including the
Additional Shares) of Common Stock, which registration statement, as so amended,
has been declared effective by the Commission on the date hereof and copies of
which have heretofore been delivered to FBW. Other than a Rule 462(b)
Registration Statement, if any, which became effective upon filing, no other
document with respect to the EChapman Registration Statement has heretofore been
filed with the Commission (other than acceleration requests under Rule 461 under
the Securities Act Regulations and prospectuses filed pursuant to Rule 424(b) of
the Securities Act Regulations, each in the form heretofore delivered to FBW).
No stop order suspending the effectiveness of the EChapman Registration
Statement (including any Rule 462(b) Registration Statement) has been issued and
no proceeding for that purpose has been initiated or, to the Company's
knowledge, threatened by the Commission, and any request on the part of the
Commission for additional information has been complied with.
(b) The Company has filed with the Commission the CHI Registration
Statement for the registration under the Securities Act of the issuance of
5,709,204 CHI Shares to stockholders of CHI in the Merger of CHI with and into a
wholly-owned subsidiary of the Company, which registration statement, as so
amended, has been declared effective by the Commission and copies of which have
heretofore been delivered to FBW. No stop order suspending the effectiveness of
the CHI Registration Statement has been issued and no proceeding for that
purpose has been initiated or, to the Company's knowledge, threatened by the
Commission, and any request on the part of the Commission for additional
information has been complied with.
(c) The Company has filed with the Commission the CCMHI Registration
Statement for the registration under the Securities Act of the issuance of
7,485,640 CCMHI Shares to stockholders of CCMHI in the Merger of CCMHI with and
into a wholly-owned subsidiary of the Company, which registration statement, as
so amended, has been declared effective by the Commission and copies of which
have heretofore been delivered to FBW. No stop order suspending the
effectiveness of the CCMHI Registration Statement has been issued and no
proceeding for that purpose has been initiated or, to the Company's knowledge,
threatened by the Commission, and any request on the part of the Commission for
additional information has been complied with.
xXxxxxxx.xxx, Inc.
The Xxxxxxx Co.
Xxxxxx X. Xxxxxxx, Xx.
________________, 2000
Page 4
(d) The Company has an authorized capitalization as set forth in the
Prospectus under the caption "Capitalization"; the outstanding shares of
capital stock of the Company and each of the Xxxxxxx Entities have been duly
and validly authorized and issued and are fully paid and non-assessable; and
except as disclosed in the Prospectus, the CHI Proxy Statement/Prospectus or
the CCMHI Proxy Statement/Prospectus, as the case may be, there are no
outstanding (i) securities or obligations of the Company or such other
Xxxxxxx Entity convertible into or exchangeable for any capital stock of the
Company or such other Xxxxxxx Entity, as the case may be, (ii) warrants,
rights or options to subscribe for or purchase from the Company or such other
Xxxxxxx Entity, as the case may be, any capital stock or any convertible or
exchangeable securities or obligations, or (iii) obligations of the Company
or such other Xxxxxxx Entity, as the case may be, to issue any shares of
capital stock, any convertible or exchangeable securities or obligations, or
any such warrants, rights or options;
(e) The Company and each of the Xxxxxxx Entities has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of its respective jurisdiction of incorporation with full corporate power
and authority to own its respective properties and to conduct its respective
business as described in the EChapman Registration Statement and the Prospectus;
(f) The Company and each of the Xxxxxxx Entities is duly qualified or
licensed by each jurisdiction in which it conducts its respective business and
in which the failure, individually or in the aggregate, to be so qualified or
licensed could reasonably be expected to have a material adverse effect on the
assets, operations, business, prospects or condition (financial or otherwise) of
the Company or any such Xxxxxxx Entity, and the Company and each of the Xxxxxxx
Entities is duly qualified, and is in good standing, in each jurisdiction in
which it owns or leases real property or maintains an office and in which such
qualification is necessary, except where, individually or in the aggregate, the
failure to be so qualified and in good standing could reasonably be expected to
have a material adverse effect on the assets, operations, business, prospects or
condition (financial or otherwise) of the Company or any such Xxxxxxx Entity;
except as disclosed in the Prospectus, none of the Xxxxxxx Entities is
prohibited or restricted, directly or indirectly, from (i) paying dividends to
the Company, (ii) making any other distribution with respect to its capital
stock, (iii) repaying the Company for any loans or advances made to it by the
Company or (iv) from transferring their property or assets to the Company;
(g) The Company and each of the Xxxxxxx Entities is in compliance the
Securities Laws, and all applicable orders, decrees and judgments, including
those relating to transactions with affiliates, except where, in the aggregate,
the failure to be in compliance in therewith would not materially and adversely
affect (a) the assets, operations, business, prospects or condition (financial
or otherwise) of the Company
xXxxxxxx.xxx, Inc.
The Xxxxxxx Co.
Xxxxxx X. Xxxxxxx, Xx.
________________, 2000
Page 5
and any such Xxxxxxx Entity or (b) the ability of the Company and its
subsidiaries, subsequent to the consummation of the Mergers, to conduct their
businesses as described in the Prospectus;
(h) Neither the Company nor any of the Xxxxxxx Entities is in breach
of, or in default under, nor has any event occurred which with giving of notice,
lapse of time, or both would constitute a breach of, or default under, its
respective articles of incorporation or charter or bylaws or in the performance
or observance of any obligation, agreement, covenant or condition contained in
any license, indenture, mortgage, deed of trust, loan or credit agreement or
other agreement or instrument to which the Company or any of the Xxxxxxx
Entities is a party or by which any of them or their respective properties is
bound, except for such breaches or defaults which, individually or in the
aggregate, would not have a material adverse effect on the assets, operations,
business, prospects or condition (financial or otherwise) of the Company or any
such Xxxxxxx Entity; and the execution, delivery and performance of this
Agreement, the Underwriting Agreement and the Merger Agreements, and
consummation of the transactions contemplated hereby and thereby will not result
in the creation or imposition of any lien, charge, claim or encumbrance upon any
property or asset of the Company or any of the Xxxxxxx Entities, or conflict
with, or result in any breach of, or constitute a default under, or constitute
an event which with giving of notice, lapse of time, or both would constitute a
breach of, or default under, (i) any provision of the articles of incorporation
or charter or by-laws of the Company or any of the Xxxxxxx Entities, or (ii) any
provision of any license, indenture, mortgage, deed of trust, loan or credit
agreement or other agreement or instrument to which the Company or any of the
Xxxxxxx Entities is a party or by which any of them or their respective
properties may be bound or affected, or (iii) any federal, state, local or
foreign law, regulation or rule, including, without limitation, the Securities
Laws, or any decree, judgment or order applicable to the Company or any of the
Xxxxxxx Entities, except in the case of clauses (ii) and (iii) for such breaches
or defaults which, individually or in the aggregate, would not materially and
adversely affect (a) the assets, operations, business, prospects or condition
(financial or otherwise) of the Company or any of the Xxxxxxx Entities or (b)
the ability of the Company and its subsidiaries, subsequent to the consummation
of the Mergers, to conduct their respective businesses as described in the
Prospectus;
(i) This Agreement and the Underwriting Agreement have been duly
authorized, executed and delivered by the Company and constitute legal, valid
and binding agreements of the Company enforceable against the Company in
accordance with their respective terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, and by general principles of equity, and except to the extent
that the indemnification and contribution thereof may be limited by federal or
state securities laws and public policy considerations in respect thereof;
xXxxxxxx.xxx, Inc.
The Xxxxxxx Co.
Xxxxxx X. Xxxxxxx, Xx.
________________, 2000
Page 6
(j) No approval, authorization, consent or order of or filing with any
federal, state or local governmental or regulatory commission, board, body,
authority or agency is required in connection with the execution, delivery and
performance of this Agreement, the Underwriting Agreement and the Merger
Agreements, the consummation of the transactions contemplated hereby and
thereby, or the sale and delivery of the Shares by the Company as contemplated
hereby other than (i) such as have been obtained, or will have been obtained by
the Closing Date under the Securities Act and the Exchange Act, (ii) such
approvals as have been obtained or will have been obtained by the Closing Date
in connection with the approval of the quotation of the Shares on the Nasdaq
National Market and (iii) any necessary qualification under the securities or
blue sky laws of the various jurisdictions in which the Shares, the CHI Shares
and the CCMHI Shares are being offered;
(k) The Company and each Xxxxxxx Entity has all necessary licenses,
authorizations, consents and approvals and has made all necessary filings
required under any federal, state, local and foreign law, regulation and rule,
including, without limitation, the Securities Laws, and has obtained all
necessary authorizations, consents and approvals from other persons, required in
order to conduct their respective businesses as described in the Prospectus,
except to the extent that any failure to have any such licenses, authorizations,
consents or approvals, to make any such filings or to obtain any such
authorizations, consents or approvals would not materially and adversely affect
(a) the assets, operations, business prospects or condition (financial or
otherwise) of the Company or any of the Xxxxxxx Entities or (b) the ability of
the Company and its subsidiaries, subsequent to the consummation of the Mergers,
to conduct their respective businesses as described in the Prospectus; neither
the Company nor any of the Xxxxxxx Entities is in violation of, in default
under, or has received any notice regarding a possible violation, default or
revocation of any such license, authorization, consent or approval applicable to
the Company or any of the Xxxxxxx Entities, and no such license, authorization,
consent or approval contains a materially burdensome restriction that is not
adequately disclosed in the EChapman Registration Statement and the Prospectus;
(l) The Preliminary Prospectus and the EChapman Registration Statement
comply and the Prospectus and any further amendments or supplements thereto
will, when they have become effective or are filed with the Commission, as the
case may be, comply in all material respects with the Securities Act
Regulations; the EChapman Registration Statement did not, and any amendment
thereto will not, in each case as of the applicable effective date, contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; and the
Preliminary Prospectus does not, and the Prospectus or any amendment or
supplement thereto will not, as of the applicable filing date and at the Closing
Date, contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the
xXxxxxxx.xxx, Inc.
The Xxxxxxx Co.
Xxxxxx X. Xxxxxxx, Xx.
________________, 2000
Page 7
light of the circumstances under which they were made, not misleading; PROVIDED,
HOWEVER, that the Company makes no warranty or representation with respect to
any statement contained in the EChapman Registration Statement or the Prospectus
in reliance upon and in conformity with the information concerning the QIU and
furnished in writing by or on behalf of the QIU to the Company expressly for use
in the EChapman Registration Statement or the Prospectus (that information being
limited to that described in Section 11(e) hereof);
(m) The CHI Proxy Statement/Prospectus and the CHI Registration
Statement comply in all material respects with the requirements of the
Securities Act, the Securities Act Regulations and Proxy Rules; the CHI
Registration Statement did not, and any amendment thereto will not, in each case
as of the applicable effective date, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; and the CHI Proxy Statement/Prospectus or any
amendment or supplement thereto will not, as of the applicable filing date and
at the Closing Date contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
(n) The CCMHI Proxy Statement/Prospectus and the CCMHI Registration
Statement comply in all material respects with the requirements of the
Securities Act, the Securities Act Regulations and Proxy Rules; the CCMHI
Registration Statement did not, and any amendment thereto will not, in each case
as of the applicable effective date, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; and the CCMHI Proxy Statement/Prospectus or any
amendment or supplement thereto will not, as of the applicable filing date and
at the Closing Date, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
(o) All legal or governmental proceedings, contracts or documents of a
character required to be filed as exhibits to the EChapman Registration
Statement, the CHI Registration Statement or the CCMHI Registration Statement,
or to be summarized or described in the Prospectus, the CHI Proxy
Statement/Prospectus or the CCMHI Proxy Statement/Prospectus have been so filed,
summarized or described as required and any such summaries or descriptions
present fairly the information required to be shown;
(p) There are no actions, suits, proceedings, inquiries or
investigations pending or, to the Company's knowledge, threatened against the
Company or the Xxxxxxx Entities or any of their respective officers or directors
or to which the
xXxxxxxx.xxx, Inc.
The Xxxxxxx Co.
Xxxxxx X. Xxxxxxx, Xx.
________________, 2000
Page 8
properties, assets or rights of any such entity are subject, at
law or in equity, before or by any federal, state, local or foreign court,
governmental or regulatory commission, board, body, authority, arbitration panel
or agency which, individually or in the aggregate, could result in a judgment,
decree, award or order materially and adversely affecting (a) the assets,
operations, business prospects or condition (financial or otherwise) of the
Company or any of the Xxxxxxx Entities or (b) the ability of the Company and its
subsidiaries, subsequent to the consummation of the Mergers, to conduct their
respective businesses as described in the Prospectus;
(q) The financial statements, including the notes thereto, included in
the EChapman Registration Statement and the Prospectus present fairly the
respective consolidated financial position of the Company, CHI and CCMHI as of
the dates indicated and the consolidated results of operations and changes in
stockholders' equity and cash flows of the Company, CHI and CCMHI for the
periods specified; such financial statements have been prepared in conformity
with generally accepted accounting principles applied on a consistent basis
during the periods involved (except as indicated in the notes thereto); the
financial statement schedules included in the EChapman Registration Statement
and the amounts in the Prospectus under the captions "Prospectus Summary
Consolidated Summary Financial Data," "Capitalization," "Dilution," "Selected
Historical and Pro Forma Financial Data" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" fairly present the
information shown therein and have been compiled on a basis consistent with the
financial statements included in the EChapman Registration Statement and the
Prospectus;
(r) Xxxxxx Xxxxxxxx LLP, whose reports on the consolidated financial
statements of CHI and CCMHI are filed with the Commission as part of the
EChapman Registration Statement and Prospectus, are and were during the periods
covered by their reports independent public accountants as required by the
Securities Act and the Securities Act Regulations;
(s) Subsequent to the respective dates as of which information is given
in the EChapman Registration Statement and the Prospectus, and except as may be
otherwise stated in the EChapman Registration Statement or the Prospectus, there
has not been (i) any material adverse change, in the assets, liabilities,
capital, operations, business or condition (financial or otherwise), present or
prospective, of the Company or any of the Xxxxxxx Entities, whether or not
arising in the ordinary course of business, (ii) any transaction, which is
material to the Company or any of the Xxxxxxx Entities contemplated or entered
into by the Company or any of the Xxxxxxx Entities, (iii) any obligation,
contingent or otherwise, directly or indirectly incurred by the Company or any
of the Xxxxxxx Entities, which is material to the Company or any of the Xxxxxxx
Entities or (iv) any dividend or distribution of any kind declared, paid or made
by the Company or any of the Xxxxxxx Entities on any class of capital stock;
xXxxxxxx.xxx, Inc.
The Xxxxxxx Co.
Xxxxxx X. Xxxxxxx, Xx.
________________, 2000
Page 9
(t) The Company is not, and upon the sale of the Shares as herein
contemplated will not be, an investment company, which is required to register
under the Investment Company Act;
(u) The Shares will conform in all material respects to the description
thereof contained in the Registration Statement and the Prospectus;
(v) Except as disclosed in the Prospectus, there are no persons with
registration or other similar rights to have any equity securities registered
pursuant to the EChapman Registration Statement or otherwise registered by the
Company under the Securities Act;
(w) The Shares have been duly authorized and, when the Shares have been
issued and duly delivered against payment therefor as contemplated by this
Agreement and the Prospectus, the Shares will be validly issued, fully paid and
nonassessable, free and clear of any pledge, lien, encumbrance, security
interest, mortgage or other claim whatsoever, and the issuance and sale of the
Shares by the Company is not subject to preemptive or other similar rights
arising by operation of law, under the articles of incorporation or bylaws of
the Company, under any agreement to which the Company or any of the Xxxxxxx
Entities is a party, or otherwise;
(x) Other than any stabilization activities conducted by the
Underwriters in accordance with Rule 104 of Regulation M promulgated under the
Exchange Act, the Company has not taken, and will not take, directly or
indirectly, any action which is designed to or which has constituted or which
might reasonably be expected to cause or result in stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Shares;
(y) In connection with the Offering, the Company has not offered and
will not offer its Common Stock or any other securities convertible into or
exchangeable or exercisable for Common Stock in a manner in violation of the
Securities Act;
(z) Except as disclosed in the Prospectus, the Company has not incurred
any liability for any finder's fees or similar payments in connection with the
transactions herein contemplated;
(aa) The Company, and each of the Xxxxxxx Entities and their
predecessors have filed all necessary federal, state and foreign income and
franchise tax returns that they were required to file and have paid all taxes
shown as due thereon (including, but not limited to, all penalties, interest and
other additions thereto), except for failures to file or pay which would not,
individually or in the aggregate, have a material adverse effect on the assets,
operations, business, prospects or condition (financial or otherwise) of the
Company or any of the Xxxxxxx Entities or materially and adversely affect the
ability of the Company and its subsidiaries, subsequent to the
xXxxxxxx.xxx, Inc.
The Xxxxxxx Co.
Xxxxxx X. Xxxxxxx, Xx.
________________, 2000
Page 10
consummation of the Mergers, to conduct their respective businesses as described
in the Prospectus. All such tax returns were correct and complete in all
material respects. All tax liabilities are adequately provided for on the books
of the Company and each of the Xxxxxxx Entities, except to such extent as would
not, individually or in the aggregate, have a material adverse affect on the
assets, operations, business, prospects or condition (financial or otherwise) of
the Company and the Xxxxxxx Entities or materially and adversely affect the
ability of the Company and its subsidiaries, subsequent to the consummation of
the Mergers, to conduct their respective businesses as described in the
Prospectus. The Company, the Xxxxxxx Entities and their predecessors have made
all necessary payroll and employment tax payments and are current and up-to-date
with respect to such tax payments as of the date of this Agreement, except where
failure to make any such payment would not, individually or in the aggregate,
have a material adverse affect on the assets, operations, business, prospects or
condition (financial or otherwise) of the Company or any of the Xxxxxxx Entities
or materially and adversely affect the ability of the Company and its
subsidiaries, subsequent to the Mergers, to conduct their respective businesses
as described in the Prospectus. The Company has no knowledge of any tax
proceedings or other action pending or threatened against the Company or any of
the Xxxxxxx Entities which, individually or in the aggregate, could have a
material adverse affect on the assets, operations, business, prospects or
condition (financial or otherwise) of the Company or any of the Xxxxxxx
Entities;
(bb) The Company and each of the Xxxxxxx Entities maintain insurance
covering its respective properties, operations, personnel and businesses with
institutions it believes to be financially responsible. Such insurance insures
against such losses and risks as are adequate in accordance with customary
industry practice to protect the Company, each of the Xxxxxxx Entities and their
respective businesses. None of the Company or any of the Xxxxxxx Entities has
received notice from any insurer or agent of such insurer that substantial
capital improvements or other expenditures will have to be made in order to
continue such insurance. All such insurance is outstanding and duly in force on
the date hereof, subject only to changes made in the ordinary course of
business, consistent with past practice, which do not, either individually or in
the aggregate, materially alter the coverage thereunder or the risks covered
thereby. None of the Company, or any of the Xxxxxxx Entities has any reason to
believe that it will not be able (a) to renew its existing insurance coverage as
and when such policies expire or (b) to obtain comparable coverage from similar
institutions as may be necessary or appropriate to conduct its business as now
conducted or as presently contemplated and at a reasonable cost;
(cc) The Company and any "employee benefit plan" (as defined under
ERISA) established or maintained by the Company or its ERISA Affiliates are in
compliance in all material respects with ERISA. The Company does not have, nor
has it ever had, any "employee benefit plan" subject to Title IV of ERISA.
Neither the Company nor any of its ERISA Affiliates has incurred or expects to
incur any liability under Sections 4975 or 4980B
xXxxxxxx.xxx, Inc.
The Xxxxxxx Co.
Xxxxxx X. Xxxxxxx, Xx.
________________, 2000
Page 11
of the Code which, individually or in the aggregate, could be reasonably
expected to have a material adverse effect on the assets, operations, business,
prospects or condition (financial or otherwise) of the Company or any of the
Xxxxxxx Entities. Each "employee benefit plan" established or maintained by the
Company or any of its ERISA Affiliates that is intended to be qualified under
Section 401(a) of the Code is so qualified in all material respects and nothing
has occurred, whether by action or failure to act, which could reasonably be
expected to cause the loss of such qualification;
(dd) The computer systems of the Company and each of the Xxxxxxx
Entities and their respective subsidiaries (including all software, hardware,
workstations and related components, automated devices, embedded chips and
other date sensitive equipment) are Year 2000 Ready, other than any failure to
be Year 2900 Ready that could not reasonably have a material adverse effect
on the Company or any of the Xxxxxxx Entities. "Year 2000 Ready" means that
the computer systems: (i) are capable of recognizing, processing, managing,
representing, interpreting and manipulating correctly date-related data for
dates earlier and later than January 1, 2000, including calculating,
comparing, sorting, storing, tagging and sequencing, without resulting in or
causing logical or mathematical errors or inconsistencies in any
user-interface functionalities or otherwise, including data input and
retrieval, data storage, data fields, calculations, reports, processing or
any other input or output; (ii) have the ability to provide date recognition
for any data element without limitation (including date-related data
represented without a century designation, date-related data whose year is
represented by only two digits and date fields assigned special values);
(iii) have the ability to function automatically into and beyond the year
2000 without human intervention and without any change in operations
associated with the advent of the year 2000; (iv) have the ability to
interpret data, dates and time correctly into and beyond the year 2000; (v)
have the ability not to produce noncompliance in existing information, nor
otherwise corrupt such data into and beyond the year 2000; (vi) have the
ability to process correctly after January 1, 2000 data containing dates
before that date; and (vii) have the ability to recognize all "leap years,"
including February 29, 2000;
(ee) The form of certificate used to evidence the Common Stock complies
in all material respects with all applicable statutory requirements, with any
applicable requirements of the articles of incorporation and by-laws of the
Company, and with the requirements of the Nasdaq National Market; and
(ff) Any certificate signed by any officer of the Company delivered to
FBW or to counsel for FBW pursuant to or in connection with this Agreement shall
be deemed a representation and warranty by the Company to each of FBW and its
counsel as to the matters covered thereby.
xXxxxxxx.xxx, Inc.
The Xxxxxxx Co.
Xxxxxx X. Xxxxxxx, Xx.
________________, 2000
Page 12
5. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDER. The
Selling Stockholder represents and warrants to FBW that:
(a) The Selling Stockholder is the lawful owner of the Shares to be
sold by such Selling Stockholder pursuant to the Underwriting Agreement and has
good, valid and marketable title to the Shares to be sold by it pursuant to the
Underwriting Agreement, free and clear of all liens, encumbrances, adverse
claims, security interests, restrictions on transfer, stockholders' agreements,
voting trusts, options and other defects in title whatsoever, with full power to
deliver such Shares, and, upon the delivery of and payment for such Shares as
contemplated in the Underwriting Agreement, the Underwriters will receive good,
valid and marketable title to the Shares purchased by it from the Selling
Stockholder, free and clear of all liens, encumbrances, adverse claims, security
interests, restrictions on transfer, stockholders' agreements, voting trusts,
options and other defects in title whatsoever created by or relating to the
Selling Stockholder;
(b) The Selling Stockholder has, and will have at the time of
delivery of the Shares to be sold by him, full legal right, power, authority
and capacity, and, except as required under the Securities Act and state
securities and Blue Sky laws, all necessary consents, approvals,
authorizations, orders, registrations, filings, qualifications, licenses and
permits of and from all public, regulatory or governmental agencies and
bodies, as are required for the execution, delivery and performance of this
Agreement and the Underwriting Agreement and the consummation of the
transactions contemplated hereby and thereby, including the sale, assignment,
transfer and delivery of the Shares to be sold, assigned, transferred and
delivered by the Selling Stockholder;
(c) This Agreement and the Underwriting Agreement have been duly and
validly authorized, executed and delivered by the Selling Stockholder and
constitute the valid and binding obligation of the Selling Stockholder,
enforceable against the Selling Stockholder in accordance with their respective
terms;
(d) The execution, delivery and performance of this Agreement and the
Underwriting Agreement by or on behalf of the Selling Stockholder, the offering
and sale of the Shares being sold by the Selling Stockholder and the
consummation of the transactions contemplated hereby and thereby will not
violate, conflict with or constitute a breach of any of the terms and provisions
of, or constitute a default (or an event which with notice or lapse of time, or
both, would constitute a default) or require consent under, or result in the
creation or imposition of any lien, charge or encumbrance upon any properties or
assets of the Selling Stockholder, or result in an acceleration of any
indebtedness of the Selling Stockholder, pursuant to (i) any bond, debenture,
note, indenture, mortgage, deed of trust, contract or other agreement or
instrument to which the Selling Stockholder is a party or by which his
properties or assets are or may be bound, (iii) any statute, rule or regulation
applicable to the Selling Stockholder or any of his properties or assets or (iv)
any judgment, order or decree of any court or governmental agency or authority
having jurisdiction over the Selling
xXxxxxxx.xxx, Inc.
The Xxxxxxx Co.
Xxxxxx X. Xxxxxxx, Xx.
________________, 2000
Page 13
Stockholder or any of his properties or assets. No consent, approval,
authorization, order, registration, filing, qualification, license or permit of
or with (i) any court or any governmental agency or authority having
jurisdiction over the Selling Stockholder or any of his properties or assets or
(ii) any other person is required for (A) the execution, delivery and
performance by the Selling Stockholder of this Agreement or the Underwriting
Agreement, (B) the sale and delivery of the Shares to be sold and delivered by
the Selling Stockholder and the consummation of the transactions contemplated
hereby and by the Underwriting, except such as have been obtained under the
Securities Act and such consents, approvals, authorizations, orders,
registrations, filings, qualifications, licenses and permits as may be required
under state securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters;
(e) The Selling Stockholder has not directly or indirectly (i) taken
(other than through the actions, if any, of the Underwriters) any action
designed to, or that might reasonably be expected to, cause or result in or
which constitutes or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares or (ii) since the filing of the
Preliminary Prospectus (A) sold, bid for, purchased or paid any person any
compensation for soliciting purchases of, shares of Common Stock or (B) paid or
agreed to pay to any person any compensation for soliciting another to purchase
any other securities of the Company;
(f) The Selling Stockholder (i) does not directly or indirectly have
any preemptive right, co-sale right or right of first refusal or other similar
right to purchase any of the Shares that are to be sold by the Underwriters
pursuant to the Underwriting Agreement, and (ii) except for employee stock
outstanding options as disclosed in the Prospectus, does not directly or
indirectly own any warrants, options or similar rights to acquire, and does not
directly or indirectly have any right or arrangement to acquire, any capital
stock, rights, warrants, options or other securities from the Company;
(g) The Selling Stockholder does not directly or indirectly possess any
registration rights with respect to any securities of the Company;
(h) The information in the EChapman Registration Statement under the
caption "Principal and Selling Stockholders" which specifically relates to the
Selling Stockholder does not, and will not on the Closing Date, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
(i) If there is any change in the information referred to in Section
5(h) from the first business day after the date of this Agreement and from time
to time thereafter for such period as in the opinion of counsel for FBW a
prospectus is required by law to
xXxxxxxx.xxx, Inc.
The Xxxxxxx Co.
Xxxxxx X. Xxxxxxx, Xx.
________________, 2000
Page 14
be delivered in connection with sales by an underwriter or a dealer, the Selling
Stockholder will immediately notify you of such change; and
(j) Each certificate signed by the Selling Stockholder and delivered to
FBW or counsel for FBW pursuant to this Agreement shall be deemed to be a
representation and warranty by the Selling Stockholder to FBW as to the matters
covered thereby.
The Selling Stockholder acknowledges that FBW and, for purposes of the
opinion to be delivered to FBW pursuant to Section 9(a) hereof, counsel to the
Company will rely upon the accuracy and truth of the foregoing representations
and hereby consents to such reliance.
6. CERTAIN COVENANTS OF THE COMPANY. The Company hereby covenants and
agrees with FBW that:
(a) If the EChapman Registration Statement has not yet been declared
effective on the date of this Agreement, the Company will use its best efforts
to cause the EChapman Registration Statement and any amendments thereto to
become effective as promptly as possible, and if Rule 430A is used or the filing
of the Prospectus is otherwise required under Rule 424(b) or Rule 434, the
Company will file the Prospectus (properly completed if Rule 430A has been used)
pursuant to Rule 424(b) or Rule 434 within the prescribed time period and will
provide evidence satisfactory to you of such timely filing. If the Company
elects to rely on Rule 434, the Company will prepare and file a term sheet that
complies with the requirements of Rule 434.
The Company will notify FBW immediately (and, if requested by FBW, will
confirm such notice in writing) (i) when the EChapman Registration Statement and
any amendments thereto become effective, (ii) of any request by the Commission
for any amendment of or supplement to the EChapman Registration Statement or the
Prospectus or for any additional information, (iii) of the mailing or the
delivery to the Commission for filing of any amendment of or supplement to the
EChapman Registration Statement or the Prospectus, (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the EChapman
Registration Statement or any post-effective amendments thereto or of the
initiation, or the threatening, of any proceedings therefor, (v) of the receipt
of any comments from the Commission and (vi) of the receipt by the Company of
any notification with respect to the suspension of the qualification of the
Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for that purpose. If the Commission shall propose or enter a stop
order at any time, the Company will use its best efforts to prevent the issuance
of any such stop order and, if issued, to obtain the lifting of such order as
soon as possible. The Company will not file any amendment to the EChapman
Registration Statement or any amendment of or supplement to the Prospectus
(including the prospectus required to be filed pursuant to Rule 424(b) or Rule
434) or any amendment of or supplement to any Preliminary Prospectus that
differs from the prospectus on file at the time of the
xXxxxxxx.xxx, Inc.
The Xxxxxxx Co.
Xxxxxx X. Xxxxxxx, Xx.
________________, 2000
Page 15
effectiveness of the EChapman Registration Statement before or after the
effective date of the EChapman Registration Statement to which FBW shall
reasonably object in writing after being timely furnished in advance a copy
thereof;
(b) If at any time when a prospectus relating to the Shares is required
to be delivered under the Securities Act any event shall have occurred as a
result of which any Preliminary Prospectus as then amended or supplemented or
the Prospectus as then amended or supplemented would, in the judgment of the
Underwriters, FBW or the Company include an untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, or if it shall be necessary at any time to amend or
supplement any Preliminary Prospectus, the Prospectus or the EChapman
Registration Statement to comply with the Securities Act or the Securities Act
Regulations, the Company will notify you promptly and prepare and file with the
Commission an appropriate amendment or supplement (in form and substance
reasonably satisfactory to you) that will correct such statement or omission and
will use its best efforts to have any amendment to the Registration Statement
declared effective as soon as possible;
(c) The Company will promptly deliver to FBW two signed copies of the
EChapman Registration Statement, including exhibits and all amendments thereto,
and the Company will promptly deliver to FBW such number of copies of any
preliminary prospectus, the Prospectus, the EChapman Registration Statement, and
all amendments of and supplements to such documents, if any, as FBW may
reasonably request;
(d) The Company will make generally available (within the meaning of
Section 11(a) of the Securities Act) to its security holders and to FBW as soon
as practicable, but not later than 45 days after the end of its fiscal quarter
in which the first anniversary date of the effective date of the EChapman
Registration Statement occurs, an earnings statement (in form complying with the
provisions of Rule 158 of the Securities Act Regulations) covering a period of
at least twelve consecutive months beginning after the effective date of the
Registration Statement;
(e) Except for the sale of the Additional Shares by the Selling
Stockholder pursuant to the terms of the Underwriting Agreement, and the
issuance of the CHI Shares and the CCMHI Shares in Mergers pursuant to the CHI
Registration Statement and the CCMHI Registration Statement, respectively,
during the period of 180 days from the date hereof, the Company and the Selling
Stockholder will not, and will not permit any of its affiliates, directly or
indirectly, to issue, sell, offer or agree to sell, grant any option for the
sale of, pledge, make any short sale or maintain any short position, establish
or maintain a "put equivalent position" (within the meaning of Rule 16a1(h)
under the Exchange Act), enter into any swap, derivative transaction or other
arrangement that transfers to another, in whole or in part, any of the economic
xXxxxxxx.xxx, Inc.
The Xxxxxxx Co.
Xxxxxx X. Xxxxxxx, Xx.
________________, 2000
Page 16
consequences of ownership of the Common Stock (whether any such transaction is
to be settled by delivery of Common Stock, other securities, cash or other
consideration) or otherwise dispose of, any Common Stock (or any securities
convertible into, exercisable for or exchangeable for Common Stock) or any
interest therein or announce any intention to do any of the foregoing without
the prior written consent of the Underwriters provided that the Company may,
without such consent, (i) grant options or other awards pursuant to the
Company's employee stock option plans, (ii) issue Common Stock upon the exercise
of outstanding options or warrants to purchase shares of Common Stock, (iii)
issue Common Stock as consideration for acquisitions provided that prior to the
issuance thereof, the recipient thereof agrees in writing to be bound by the
same restrictions applicable to the Company for the remaining balance of such
180 day period, or (iv) engage in market making activities in the ordinary
course of its brokerage subsidiaries' business;
(f) During a period of three years from the effective date of the
EChapman Registration Statement, the Company will furnish or make available to
you copies of (i) all reports to its stockholders and (ii) all reports,
financial statements and proxy or information statements filed by the Company
with the Commission, the Nasdaq National Market or any national securities
exchange;
(g) The Company will apply its net proceeds from the sale of the Shares
as set forth under the caption "Use of Proceeds" in the Prospectus;
(h) The Company will use its best efforts to cause the Shares to be
listed on the Nasdaq National Market;
(i) The Company will report the use of its net proceeds from the
Offering to the extent required pursuant to Rule 463 of the Securities Act
Regulations;
(j) If the Company elects to rely upon Rule 462(b) of the Securities
Act Regulations, the Rule 462(b) Registration Statement shall have become
effective by 10:00 p.m., Baltimore time, on the date of this Agreement, no stop
order suspending the effectiveness of the EChapman Registration Statement or any
part thereof shall have been issued and no proceeding for that purpose shall
have been initiated or threatened by the Commission, and all requests for
additional information on the part of the Commission shall have been complied
with to FBW's reasonable satisfaction; and
(k) The Company, during the period when the Prospectus is required to
be delivered under the Securities Act or the Exchange Act, shall file all
documents required to be filed with the Commission pursuant to Section 13, 14,
or 15 of the Exchange Act within the time periods set forth in the Exchange Act
and the rules and regulations thereunder.
xXxxxxxx.xxx, Inc.
The Xxxxxxx Co.
Xxxxxx X. Xxxxxxx, Xx.
________________, 2000
Page 17
7. CERTAIN COVENANTS OF THE SELLING STOCKHOLDER. The Selling
Stockholder covenants and agrees with you and the Company that:
(a) The Selling Stockholder will pay or cause to be paid all transfer
taxes payable in connection with the transfer of the Additional Shares to be
sold by the Selling Stockholder to the Underwriters.
(b) The Selling Stockholder will do and perform all things to be done
and performed by the Selling Stockholder under this Agreement prior to the
Closing Date and to satisfy all conditions precedent to the delivery of the
Additional Shares to be sold by the Selling Stockholder pursuant to the
Underwriting Agreement.
8. SURVIVAL OF AGREEMENTS; REPRESENTATIONS AND WARRANTIES. The
respective indemnities of the Company, the Selling Stockholder and FBW and the
representations and warranties of the Company and the Selling Stockholder set
forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any termination or cancellation of this Agreement or any
investigation by or on behalf of the Company, the Selling Stockholder or FBW or
any controlling person thereof, and shall survive the issuance of the Shares,
and any successor or assign of FBW, the Company or the Selling Stockholder or
any controlling person of the foregoing or any legal representative of such
controlling person shall be entitled to the benefit of the respective
indemnities, agreements, warranties and representations.
9. CONDITIONS OF FBW'S OBLIGATIONS. The obligations of FBW hereunder
are subject to the accuracy of the representations and warranties on the part of
the Company and the Selling Stockholder in all material respects on the date
hereof and on the Closing Date, the performance by the Company and the Selling
Stockholder of their respective obligations hereunder in all material respects
and to the following further conditions:
(a) The Company shall furnish to FBW on the Closing Date and on the
Additional Closing Date, if any, an opinion of Xxxxxxx, Xxxxxxx and Xxxxxx, LLP,
counsel for the Company, addressed to FBW and dated as of the Closing Date or
the Additional Closing Date, as the case may be, and in a form reasonably
satisfactory to Xxxxxxxxx, Xxxxxx & Xxxxxxx L.L.P., counsel for FBW, stating
that:
(i) the Company has an authorized capitalization as
set forth in the Prospectus under the caption "Capitalization;" the
outstanding shares of capital stock of the Company have been duly and
validly authorized and issued and are fully paid and non-assessable;
except as disclosed in the Prospectus, to such counsel's knowledge,
there are no outstanding (A) securities or obligations of the Company
convertible into or exchangeable for any capital stock of the Company,
(B) warrants, rights or options to subscribe for or purchase from the
Company any such
xXxxxxxx.xxx, Inc.
The Xxxxxxx Co.
Xxxxxx X. Xxxxxxx, Xx.
________________, 2000
Page 18
capital stock or any such convertible or exchangeable securities or
obligations, or (C) obligations of the Company to issue any shares of
capital stock, any such convertible or exchangeable securities or
obligations, or any such warrants, rights or options;
(ii) the Company and each of the Xxxxxxx Entities has
been duly incorporated and is validly existing as a corporation in good
standing under the laws of its respective jurisdiction of incorporation
with full corporate power and authority to own its respective
properties and to conduct its respective business as described in the
EChapman Registration Statement and the Prospectus and to execute and
deliver this Agreement and the Underwriting Agreement;
(iii) the execution, delivery and performance of this
Agreement and the Underwriting Agreement by the Company and the
consummation by the Company of the transactions contemplated under this
Agreement or the Underwriting Agreement, as the case may be, do not and
will not (A) conflict with, or result in any breach of, or constitute a
default under, or constitute an event which with giving of notice,
lapse of time, or both would constitute a breach of or default under,
(I) any provisions of the articles of incorporation, charter or by-laws
of the Company or any of the Xxxxxxx Entities, (II) to the best of such
counsel's knowledge, any provision of any material license, indenture,
mortgage, deed of trust, loan or credit agreement or other agreement or
instrument to which the Company or any of the Xxxxxxx Entities is a
party or by which any of them or their respective properties may be
bound or affected, or (III) to the best of such counsel's knowledge,
any law or regulation, including, without limitation, the Securities
Laws, or any decree, judgment or order applicable to the Company or any
of the Xxxxxxx Entities, except in the case of clause (II) for such
conflicts, breaches or defaults which, individually or in the
aggregate, would not have a material adverse effect on the assets,
operations, business, prospects or condition (financial or otherwise)
of the Company or any of the Xxxxxxx Entities taken as a whole; or (B)
to such counsel's knowledge, result in the creation or imposition of
any lien, charge, claim or encumbrance upon any property or assets of
the Company or any of the Xxxxxxx Entities;
(iv) to such counsel's knowledge, no approval,
authorization, consent or order of or filing with any federal or state
governmental or regulatory commission, board, body, authority or agency
is required in connection with the execution, delivery and performance
of this Agreement and the Underwriting Agreement, the consummation of
the transactions contemplated hereby and thereby, the sale and delivery
of the Shares by the Company other than such as
xXxxxxxx.xxx, Inc.
The Xxxxxxx Co.
Xxxxxx X. Xxxxxxx, Xx.
________________, 2000
Page 19
have been obtained or made under the Securities Act and the Exchange
Act, and except that such counsel need express no opinion as to any
necessary qualification under the rules of the NASD or state
securities laws;
(v) the Company is not, and upon the sale of the
Shares as herein contemplated will not be an investment company
required to be registered under the Investment Company Act;
(vi) the Shares have been duly authorized and, when
the Shares have been issued by the Company and duly delivered against
payment therefor as contemplated by the Underwriting Agreement, the
Shares will be validly issued, fully paid and nonassessable, free and
clear of any pledge, lien, encumbrance, security interest, mortgage or
other claim whatsoever;
(vii) the issuance and sale of the Shares by the
Company is not subject to preemptive or other similar rights arising by
operation of law, under the articles of incorporation or by-laws of the
Company, under any agreement known to such counsel to which the Company
or any of the Xxxxxxx Entities is a party or, to the best of such
counsel's knowledge, otherwise;
(viii) the form of certificate used to evidence the
Common Stock complies in all material respects with all applicable
statutory requirements, with any applicable requirements of the
articles of incorporation and by-laws of the Company and the
requirements of the Nasdaq National Market;
(ix) the EChapman Registration Statement has become
effective under the Securities Act and no stop order suspending the
effectiveness of the EChapman Registration Statement has been issued
and, to the best of such counsel's knowledge, no proceedings with
respect thereto have been commenced or threatened;
(x) as of the Effective Date, the EChapman
Registration Statement and the Prospectus (except as to the financial
statements and other financial and statistical data contained in such
registration statements or prospectuses, as to which such counsel need
express no opinion) complied as to form in all material respects with
the requirements of the Securities Act and the Securities Act
Regulations;
(xi) the statements under the captions "Business --
Government Regulation," "Certain Transactions," "Description of Capital
xXxxxxxx.xxx, Inc.
The Xxxxxxx Co.
Xxxxxx X. Xxxxxxx, Xx.
________________, 2000
Page 20
Stock," and "Shares Eligible for Future Sale," in the EChapman
Registration Statement and the Prospectus, insofar as such statements
constitute a summary of the legal matters referred to therein,
constitute accurate summaries thereof in all material respects;
(xii) except as set forth in the Prospectus, to the
best of such counsel's knowledge, there are no legal or governmental
proceedings pending or threatened against, or involving the properties
of the Company or any of the Xxxxxxx Entities required to be disclosed
in the Prospectus; provided that for this purpose such counsel need not
regard any litigation or governmental proceedings to be "threatened"
unless the potential litigant or governmental authority has manifested
to the Company or any of the Xxxxxxx Entities, or to their management,
a present intention to initiate such proceedings;
(xiii) to such counsel's knowledge, there are no
contracts or documents of a character which are required to be filed as
exhibits to the EChapman Registration Statement or to be described or
summarized in the Prospectus which have not been so filed, summarized
or described;
(xiv) the Selling Stockholder has full legal right,
power, authority and capacity, and, except as required under the
Securities Act and state securities and Blue Sky laws, all necessary
consents, approvals, authorizations, orders, registrations, filings,
qualifications, licenses and permits of and from all public, regulatory
or governmental agencies and bodies, as are required for the execution,
delivery and performance of this Agreement and the Underwriting
Agreement and the consummation of the transactions contemplated hereby
and thereby, including the sale, assignment, transfer and delivery of
the Additional Shares to be sold, assigned, transferred and delivered
by the Selling Stockholder; and
(xv) the Underwriters (assuming they are BONA FIDE
purchasers within the meaning of the Uniform Commercial Code) have
acquired good and marketable title to the shares being sold by the
Selling Stockholder on the Additional Closing Date, free and clear of
any and all claims, liens, encumbrances and security interests.
The opinions in subparagraphs (xiv) and (xv) above shall be furnished
only on the Additional Closing Date, if any.
In addition, such counsel shall state that they have participated in
the preparation of the Prospectus and the EChapman Registration Statement and in
conferences with officers and other representatives of the Company and
representatives of the independent public accountants for the Company and with
the Underwriters and the QIU at which the contents of the Prospectus and the
EChapman Registration Statement and related matters were discussed and, although
such counsel
xXxxxxxx.xxx, Inc.
The Xxxxxxx Co.
Xxxxxx X. Xxxxxxx, Xx.
________________, 2000
Page 21
is not passing upon and does not assume responsibility for the accuracy,
completeness or fairness of the statements contained in the Prospectus and the
EChapman Registration Statement and has not made any independent investigation
or verification thereof, nothing has come to their attention during the course
of such participation that leads them to believe that at the time the EChapman
Registration Statement became effective, the Prospectus and the EChapman
Registration Statement (other than the financial statements and schedules and
other financial and statistical data and information included therein or omitted
therefrom, as to which they need express no opinion) contained an untrue
statement of a material fact or omitted to state a material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading;
(b) The legality and sufficiency of the sale of the Shares and the
validity and form of the certificates representing the Shares, all corporate
proceedings and other legal matters incident to the foregoing, and the form
of the EChapman Registration Statement and of the Prospectus (except as to
the financial statements and other financial and statistical data contained
therein), shall have been approved at or prior to the Closing Date by
Xxxxxxxxx, Xxxxxx & Xxxxxxx L.L.P., counsel for FBW;
(c) FBW shall have received, on each of the date hereof, the Closing
Date, and any later date on which Additional Shares are puchased a letter
dated the date hereof or such Closing Date, as the case may be, in form and
substance satisfactory to FBW, from Xxxxxx Xxxxxxxx LLP, independent public
accountants, confirming that they are independent public accountants within
the meaning of the Securities Act and the Securities Act Regulations and
stating that in their opinion the financial statements examined by them and
included in the EChapman Registration Statement comply in form in all
material respects with the applicable accounting requirements of the
Securities Act and the Securities Act Regulations; and containing the
information and statements of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements
and certain financial information contained in the eChapman Registration
Statement and the Prospectus;
(d) No amendment or supplement to the EChapman Registration Statement
or the Prospectus shall have been filed to which FBW has objected in writing;
(e) Prior to the completion of the Offering (i) no stop order
suspending the effectiveness of the eChapman Registration Statement or any order
preventing or suspending the use of any Preliminary Prospectus or the Prospectus
shall have been issued by the Commission, (ii) no suspension of the
qualification of the Shares for offering or sale in any jurisdiction shall have
occurred, and no proceeding for such suspension shall have been initiated or
threatened; and (iii) the EChapman Registration Statement and the Prospectus
shall not contain an untrue statement of material fact or omit to state a
material fact, individually or in the aggregate, required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(f) Prior to the completion of the Offering (i) no stop order
suspending the effectiveness of the CHI Registration Statement or the CCMHI
Registration Statement or any order preventing or suspending the use of the CHI
Proxy Statement/Prospectus or the CCMHI Proxy Statement/Prospectus shall have
been issued by the Commission, (ii) no suspension of the qualification of the
CHI Shares or the CCMHI Shares for offering or
xXxxxxxx.xxx, Inc.
The Xxxxxxx Co.
Xxxxxx X. Xxxxxxx, Xx.
________________, 2000
Page 22
sale in any jurisdiction shall have occurred, and no proceeding for such
suspension shall have been initiated or threatened; and (iii) none of the CHI
Registration Statement, the CCMHI Registration Statement, the CHI Proxy
Statement/Prospectus or the CCMHI Proxy Statement/Prospectus shall contain an
untrue statement of material fact or omit to state a material fact, individually
or in the aggregate, required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
(g) Between the time of execution of this Agreement and the Closing
Date (i) no material and unfavorable change in the assets, operations, business,
prospects or condition (financial or otherwise) of the Company or any of the
Xxxxxxx Entities, shall have occurred or become known (whether or not arising in
the ordinary course of business), and (ii) no transaction which is material and
unfavorable to the Company shall have been entered into by the Company or any of
the Xxxxxxx Entities;
(h) On the Effective Date, the Underwriting Agreement shall have been
entered into and delivered by all required parties;
(i) On or before the Closing Date, the stockholders of both CHI and
CCMHI shall have approved the Mergers by the vote required under the Maryland
General Corporation Law;
(j) On or before the Closing Date, all conditions to the Mergers, other
than the closing of the Offering, shall have been satisfied;
(k) On the Closing Date, all filings required to have been made
pursuant to Rules 424, 430A or 462(c)under the Securities Act have been made;
(l) The NASD shall not have raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements that have
not been resolved and the NASD shall have issued a letter stating that it has no
objections to the underwriting terms and arrangements;
(m) The Company shall, on the date hereof and at the Closing Date,
deliver to FBW a certificate of its president and its chief financial officer to
the effect that, to each of such officer's knowledge, the representations and
warranties of the Company set forth in this Agreement and the conditions set
forth in paragraphs (c) through (i) inclusive of this Section 9 have been met
and are true and correct as of such date;
(n) The Company shall have furnished to FBW such other documents and
certificates as to the accuracy and completeness of any statement in the
EChapman Registration Statement and the Prospectus, the representations,
warranties and statements of the Company contained herein, and the performance
by the Company
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of the covenants contained herein, and the fulfillment of any conditions
contained herein or therein, as of the Closing Date as FBW may reasonably
request; and
(o) The Company shall have performed such of its obligations under this
Agreement as are to be performed by the terms hereof at or before the Closing
Date.
SECTION 10. CONDITIONS TO THE COMPANY'S OBLIGATIONS.
The obligation of the Company hereunder shall be subject to the
conditions that (a) the EChapman Registration Statement shall have become
effective and (b) no stop order suspending the effectiveness thereof shall be
in effect and no proceedings therefor shall be pending or threatened by the
Commission. In case either of the conditions specified in this Section 10
shall not be fulfilled, this Agreement may be terminated by the Company by
giving notice to FBW. Any such termination shall be without liability of the
Company to FBW and without liability of FBW to the Company; PROVIDED,
HOWEVER, that in the event of any such termination the Company agrees to
indemnify and hold harmless FBW from all costs or expenses incident to the
performance of the obligations of the Company under this Agreement, including
all costs and expenses referred to in Section 3 hereof.
11. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless FBW and its
directors, officers and each person, if any, who controls FBW within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
from and against any and all losses, claims, damages, liabilities and
judgments (including, without limitation, any legal or other expenses
incurred in connection with investigating or defending any matter, including
any action, that could give rise to any such losses, claims, damages,
liabilities or judgments and any amount paid in settlement of, any action,
suit or proceeding commenced or any claim asserted), to which FBW may become
subject under the Securities Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise, related to, based
upon or arising out of (i) an untrue statement or alleged untrue statement of
a material fact contained in the EChapman Registration Statement, the
Prospectus, or any amendment or supplement thereto, or the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or (ii)
any breach or alleged breach by the Company of its representations,
warranties and agreements contained in this Agreement; PROVIDED, HOWEVER,
that (1) the indemnity agreements of the Company contained in this paragraph
shall not apply to any such losses, claims, damages, liabilities or expenses
if such statement or omission was made in reliance upon and in conformity
with information furnished as herein stated or otherwise furnished in writing
to the Company by or on behalf of FBW for use in the EChapman Registration
Statement or the Prospectus, or any amendment or supplement thereto and (2)
the indemnity agreement contained in this paragraph with respect to any
Preliminary Prospectus shall not inure to the benefit of FBW from whom the
person asserting any such losses, claims, damages, liablities or expenses
purchased the Shares which is the subject thereof (or to the benefit of any
person controlling FBW) if at or prior to the written confirmation of the
sale of such Shares a copy of the Prospectus (or the Prospectus as amended or
supplemented) was not sent or delivered to such person and the untrue
statement or omission of a material fact contained in such Preliminary
Prospectus was corrected in the Prospectus (or the Prospectus as amended or
supplemented) unless the failure is the result of noncompliance by the
Company with paragraph (i) of Section 4 hereof.
The Selling Stockholder agrees to indemnify and hold harmless FBW and
its directors, officers and each person, if any, who controls FBW within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as foregoing indemnity from the Company to FBW, but only with
respect to (i) any breach or alleged breach by the Selling Stockholder of the
representations and warranties contained in Section 5 of this Agreement or (ii)
information furnished in writing by or on behalf of the Selling Stockholder
expressly for use in the EChapman Registration Statement.
FBW agrees to indemnify and hold harmless the Company, its directors
and officers who signed the eChapman Registration Statement, the Selling
Stockholder, and each person, if any, who controls the Company or the Selling
Stockholder within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Company to FBW, but only with respect to (i) any breach or alleged
breach by FBW of its representations, warranties and agreements contained in
this Agreement or (ii) information relating to FBW furnished in writing by FBW
expressly for use in the EChapman Registration Statement, the Prospectus, or any
amendment or supplement thereto.
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(b) In case any action shall be commenced involving any person in
respect of which indemnity may be sought under this Section 11, such person
shall promptly notify each indemnifying party in writing and such
indemnifying party shall assume the defense thereof, including the employment
of counsel reasonably satisfactory to such indemnified party, and the payment
of all fees and expenses of such counsel, as incurred. Any indemnified party
shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the employment
of such counsel by such indemnified party shall have been specifically
authorized in writing by the indemnifying parties, (ii) the indemnifying
party shall have failed to assume the defense of such action or employ
counsel reasonably satisfactory to the indemnified party, or (iii) the named
parties to any such action (including any impleaded parties) include both the
indemnified party and the indemnifying party, and the indemnified party shall
have been advised by such counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the indemnifying party (in which case the indemnifying party
shall not have the right to assume the defense of such action on behalf of
the indemnified party). In any such case, the indemnifying party shall not,
in connection with any one action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more
than one separate firm of attorneys (in addition to any local counsel) for
all indemnified parties. Such firm shall be designated in writing by FBW, in
the case of parties indemnified pursuant to the first and second paragraphs
of Section 11(a), and by the Company, in the case of the parties indemnified
pursuant to the third paragraph of Section 11(a). The indemnifying party
shall indemnify and hold harmless the indemnified party from and against any
and all losses, claims, damages, liabilities and judgments by reason of any
settlement of any action (i) effected with its written consent or (ii)
effected without its written consent if the settlement is entered into more
than twenty business days after the indemnifying party shall have received a
request from the indemnified party for reimbursement for the fees and expense
of counsel (in any case where such fees and expenses are at the expense of
the indemnifying party) and, prior to the date of such settlement, the
indemnifying party shall have failed to comply with such reimbursement
request. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement or compromise of, or consent to
the entry of judgment with respect to, any pending or threatened action in
respect of which the indemnified party is or could have been a party and
indemnity or contribution may be or could have been sought hereunder by the
indemnified party, unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
on claims that are or could have been the subject matter of such action and
(ii) does not include a statement as to or an admission of fault, culpability
or a failure to act, by or on behalf of the indemnified party.
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(c) To the extent the indemnification provided for in Section 11(a) is
unavailable to, or insufficient to hold harmless any indemnified party under
Section 11(a), in respect of any loss, claim, damage, liability or judgment
referred to therein, then each indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities and
judgments (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, FBW and the Selling Stockholder from the
Offering or (ii) if the allocation provided by clause (i) above is not permitted
by applicable law, or if the indemnified party failed to give the notice
required under Section 11(b), in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company, FBW and the Selling Stockholder in connection
with FBW's activities under this Agreement or the statements or omissions that
resulted in such losses, claims, damages, liabilities or judgments, as well as
any other relevant equitable considerations. The relative benefits received by
the Company, FBW and the Selling Stockholder shall be deemed to be in the same
proportion as the total net proceeds from the Offering (after deducting
expenses) bear to the total fee paid to FBW pursuant to Section 3. The relative
fault of the Company, FBW and the Selling Stockholder shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, FBW or the Selling Stockholder,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company, FBW and the Selling Stockholder agree that it would not be
just and equitable if contribution pursuant to this Section 11(c) were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or judgments
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any matter, including any action that could have given rise to such
losses, claims, damages, liabilities or judgments. Notwithstanding the
provisions of this Section 11(c), FBW shall not be required to contribute any
amount in excess of the amount by which the fee paid to FBW pursuant to Section
3 exceeds the amount of any damages FBW has otherwise been required to pay by
reason of such activities under this Agreement or such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
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Each party agrees that upon the service of a summons or other
initial legal process upon it in any action instituted against it in respect
of which contribution may be sought, it will promptly give written notice of
such service to the party or parties from whom contribution may be sought,
but the omission so to notify such party or parties of any such service shall
not relieve the party from whom contribution may be sought from any obligation
it may have hereunder or otherwise.
(d) The remedies provided for in this Section 11 are not exclusive and
shall not limit any rights or remedies that may otherwise be available to any
indemnified party at law or in equity.
(e) The statements relating to FBW under the caption "Underwriting" in
the Prospectus constitute the only information furnished to the Company in
writing on behalf of FBW expressly for use in the EChapman Registration
Statement, the Prospectus or any amendment or supplement thereto, or any
preliminary prospectus.
(f) The indemnity and contribution agreements contained in this Section
11, and the covenants, representations and warranties of the Company in this
Agreement, shall remain operative and in full force and effect regardless of (i)
any investigation made by FBW or on its behalf or by or on behalf of any person
who controls FBW or (ii) any termination of this Agreement or the Offering.
(g) Notwithstanding any other provision hereof, the liability of the
Selling Stockholder under such Selling Stockholder's representations and
warranties contained in Section 5 hereof and under the indemnity, contribution
and reimbursement agreements contained in the provisions of this Section 11
hereof shall be limited to an amount equal to the public offering price of the
stock sold by such Selling Stockholder to the Underwriters.
12. SUCCESSORS AND ASSIGNS. The benefits of this Agreement shall inure
to the respective successors and assigns of the parties hereto and the
obligations and liabilities assumed in this Agreement by the parties hereto
shall be binding upon their respective successors and assigns.
13. AMENDMENTS AND WAIVERS. The provisions of this Agreement may not be
amended, modified or supplemented unless the Company, FBW and the Selling
Stockholder consent in writing to such amendment, modification or supplement.
14. NOTICE. Whenever notice is required to be given pursuant to this
Agreement, such notice shall be in writing and shall be delivered by hand or by
commercial messenger service or mailed by first class mail, postage prepaid,
addressed (a) if to FBW, at 000 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000,
Attention: Xxxxxx X. Xxxx, (b) if to the Company or the Selling Stockholder, at
the address on the first page of this Agreement, Attention: Xxxxxx X. Xxxxxxx,
Xx., or such other address as to which any party shall notify the other parties
hereto in writing.
15. GOVERNING LAW. This Agreement shall be construed (both as to
validity and performance) and enforced in accordance with and governed by the
laws of the State of Maryland applicable to agreements made and to be performed
wholly within such jurisdiction. The Company and FBW irrevocably consent to the
service of any
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complaint, summons, notice or other process relating to any such
action or proceeding by delivery thereof to it in the manner provided for in
Section 14 hereof.
16. COUNTERPARTS. This Agreement may be signed in two or more
counterparts with the same force and effect as if the signatures thereto and
hereto were upon the same instrument.
17. TERMINATION. This Agreement will terminate automatically in the
event that the Underwriting Agreement is terminated; PROVIDED,
HOWEVER, that the provisions of Section 11 hereof, shall survive the
termination of this Agreement; and PROVIDED, FURTHER, that in the
event of any such termination the Company agrees to indemnify and hold
harmless FBW from all costs or expenses incident to the performance of the
obligations of the Company under this Agreement, including all costs and
expenses referred to in Section 3 hereof.
18. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
of the parties to this Agreement and supersedes all prior written or oral and
all contemporaneous oral agreements, understandings and negotiations with
respect to the subject matter hereof and thereof.
[REMAINDER OF XXXX IS INTENTIONALLY BLANK]
If the above terms are in accordance with your understanding of our
agreement, please sign the enclosed copy of this Agreement and return such copy
to us.
Very truly yours,
XXXXXX, XXXXX XXXXX, INCORPORATED
By:------------------------------------
Its:-----------------------------------
CONFIRMED AND AGREED TO AS OF CONFIRMED AND AGREED TO AS OF
THE DATE FIRST ABOVE WRITTEN: THE DATE FIRST ABOVE WRITTEN:
x.XXXXXXX.xxx, Inc.
By:
--------------------------------- ------------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx. Xxxxxx X. Xxxxxxx, Xx., Individually
Title: President
THE XXXXXXX CO.
By:---------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: President
