EXHIBIT 1.1
2,500,000 Shares
ASTA FUNDING, INC.
Common Stock
UNDERWRITING AGREEMENT
June ____, 2003
Xxxx Xxxx & Co., Inc.
Xxxxx Xxxxxx & Co., Inc.
c/o Ryan, Xxxx & Co., Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Asta Funding, Inc., a Delaware corporation (the "Company"), proposes to
issue and sell to Xxxx Xxxx & Co., Inc. ("Xxxx Xxxx") and Xxxxx Xxxxxx & Co.,
Inc. (collectively, the "Underwriters" which terms shall also include any
underwriter substituted as hereinafter provided in Section 9 hereof), an
aggregate of 2,100,000 shares (the "Company Shares") of the Common Stock, par
value $.01 per share (the "Common Stock"), of the Company. In addition, certain
stockholders of the Company named in Schedule A hereto (the "Selling
Stockholders"), propose to sell to the Underwriters an additional 400,000 shares
of Common Stock (the "Selling Stockholder Shares"). Certain of the Selling
Stockholders are entities in which Xxxx Xxxxx and/or Xxxxxx Xxxxx have a
significant beneficial interest but do not control (each a "Beneficiary" and
collectively, the "Beneficiaries"). The Company Shares and the Selling
Stockholder Shares are herein called the "Firm Shares." In addition, for the
sole purpose of covering over-allotments in connection with the sale of the Firm
Shares, the Company proposes to issue and sell to the Underwriters, at the
Underwriters' option, up to an additional 375,000 shares of Common Stock (the
"Option Shares") as set forth herein. The term "Shares" as used herein, unless
otherwise indicated, shall mean the Firm Shares and the Option Shares, which are
more fully described in the Registration Statement and the Prospectus referred
to below.
SECTION 1. Representations, Warranties and Agreements of the Company.
The Company represents and warrants to, and agrees with, each of the
Underwriters as of the date hereof, and as of the First Closing Date (as defined
in Section 4(a) below) and the Option Closing Date (as defined in Section 4(b)
below), if any, as follows:
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement, and an amendment or amendments
thereto, on Form S-1 (File No. 333-105755) including any related preliminary
prospectus (the "Preliminary Prospectus") for the registration of the Shares
under the Securities Act of 1933, as amended (the "Securities Act"), which
registration statement and amendment or amendments thereto have been prepared by
the Company in conformity with the requirements of the Securities Act and the
rules and regulations (the "Rules and Regulations") of the Commission under the
Securities Act. Copies of such registration statement and each of the amendments
thereto have been delivered by the Company to the Underwriters. As used in this
Agreement, "Effective Time" means the date and the time as of which such
registration statement, or the most recent post-effective amendment thereto, if
any, was declared effective by the Commission; "Effective Date" means the date
of the Effective Time; "Preliminary Prospectus" means each prospectus included
in such registration statement, or amendments thereof, before it became
effective under the Securities Act and any prospectus filed with the Commission
by the Company with the consent of the Underwriters pursuant to Rule 424 of the
Rules and Regulations; "Registration Statement" means such registration
statement, as amended at the Effective Time, including all information contained
in the Final Prospectus filed with the Commission pursuant to Rule 424(b) of the
Rules and Regulations and deemed to be a part of the Registration Statement as
of the Effective Time pursuant to Rule 430A of the Rules and Regulations; "Final
Prospectus" means the final prospectus in the form first used to confirm sales
of Shares, and "Prospectus" means collectively the "Preliminary Prospectus" and
the "Final Prospectus." If the Company has filed an abbreviated registration
statement to register additional shares of Common Stock pursuant to Rule 462(b)
under the Securities Act (the "Rule 462(b) Registration Statement"), then any
reference herein to the term "Registration Statement" shall be deemed to include
such Rule 462(b) Registration Statement. Neither the Commission nor any state
regulatory authority has issued any order preventing or suspending the use of
any Preliminary Prospectus or the Registration Statement or any part of any
thereof and no proceedings for a stop order suspending the effectiveness of the
Registration Statement or any of the Company's securities have been instituted
or are pending, or to the Company's knowledge, threatened.
(b) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the Commission, as
the case may be, conform in all material respects to the requirements of the
Securities Act and the Rules and Regulations and do not and will not, as of the
applicable effective date (as to the Registration Statement and any amendment
thereto) and as of the applicable filing date (as to the Prospectus and any
amendment or supplement thereto) contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading.
(c) The Company (i) has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware, (ii)
is duly qualified to do business and is in good standing as foreign corporation
in each jurisdiction in which its ownership or lease of property or conduct of
business requires such qualification and (iii) has all power and authority
necessary to own or hold its properties and to conduct the business in which it
is engaged, except to the extent that the failure to be so authorized or be in
good standing would not have a material adverse effect on the condition,
financial or otherwise, or in the earnings, business affairs or business
prospectus of the Company and its subsidiaries, considered as one enterprise (a
"Material Adverse Effect"). The Company has no subsidiaries which would
constitute a "significant subsidiary" as defined in Rule 1-02 of Regulation S-X
other than [____________________________] (each a Subsidiary and collectively,
the "Subsidiaries").
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(d) Each of the Subsidiaries has been duly incorporated and is validly
existing under the laws of the jurisdiction of its incorporation or organization
and each of the Subsidiaries has the respective power and authority and foreign
qualifications necessary to own, lease and operate its respective properties and
to conduct its businesses, except where the failure to have such authority or
qualifications would not have a Material Adverse Effect; all of the issued and
outstanding capital stock and/or membership interests of each Subsidiary have
been duly authorized and validly issued, is fully paid and non-assessable and is
owned by the Company, directly or through a subsidiary, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equity; and
none of such shares or membership interests was issued in violation of the
preemptive rights of any member, stockholder or warrant holder of any such
Subsidiary.
(e) The Company has a duly authorized, issued and outstanding
capitalization as set forth in the Prospectus, under "Capitalization" and
"Description of Capital Stock" and will have the adjusted capitalization set
forth therein on the Closing Date and the Option Closing Date, if any, based
upon the assumptions set forth therein, and the Company is not a party to or
bound by any instrument, agreement or other arrangement providing for it to
issue any capital stock, rights, warrants, options or other securities, except
for this Agreement and as described in the Prospectus. The Shares and all other
securities issued or issuable by the Company conform or, when issued and paid
for, will conform to all statements with respect thereto contained in the
Registration Statement and the Prospectus. All issued and outstanding securities
of the Company have been duly authorized and validly issued and are fully paid
and nonassessable and the holders thereof have no rights of rescission with
respect thereto, and are not subject to personal liability by reason of being
such holders; and none of such securities were issued in violation of the
preemptive rights of any holders of any security of the Company or similar
contractual rights granted by the Company. The Shares are not and will not be
subject to any preemptive or other similar rights of any stockholder, have been
duly authorized and, when issued, paid for and delivered in accordance with the
terms hereof, will be validly issued, fully paid and nonassessable and will
conform to the description thereof contained in the Prospectus; the holders
thereof will not be subject to any liability solely by reason of being such
holders; all corporate action required to be taken for the authorization, issue
and sale of the Shares has been duly and validly taken; and the certificates
representing the Shares will be in due and proper form. Upon the issuance and
delivery pursuant to the terms hereof of the Shares to be sold by the Company or
the Selling Stockholders hereunder, the Underwriters will acquire good and
marketable title to such Shares free and clear of any lien, charge, claim,
encumbrance, pledge, security interest, defect or other restriction or equity of
any kind whatsoever.
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(f) This Agreement has been duly authorized, 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 similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law), and except insofar as
the indemnification and contribution provisions hereof may be limited by
considerations of public policy.
(g) The Company has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement.
(h) The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries is bound or to which any of the property or assets of the
Company or any of its Subsidiaries is subject, nor will such actions result in
any violation of the provisions of (i) the certificate of incorporation (or
other equivalent organizational document) or by-laws (or other equivalent
organizational document) of the Company or any of its Subsidiaries or (ii) any
statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any of its Subsidiaries or any of
its respective properties or assets. Except for the registration of the Shares
under the Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and applicable state or foreign
securities laws or by the National Association of Securities Dealers, Inc. (the
"NASD") in connection with the purchase and distribution of the Shares by the
Underwriters, no consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body is required for
the execution, delivery and performance of this Agreement by the Company and the
consummation of the transactions contemplated hereby.
(i) Except as set forth in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting such
person the right (other than rights which have been waived or satisfied) to
require the Company to file a registration statement under the Securities Act
with respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the securities
registered pursuant to the Registration Statement or in any securities being
registered pursuant to any other registration statement filed by the Company
under the Securities Act.
(j) Except as set forth in the Prospectus, the Company has not sold or
issued any securities during the six-month period preceding the date of the
Preliminary Prospectus, including any sales pursuant to Rule 144A under, or
Regulations D or S of, the Securities Act other than securities issued pursuant
to employee benefit plans, stock option plans or other employee compensation
plans or pursuant to outstanding options, rights or warrants.
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(k) The Company has caused each officer, director and holder of shares
of Common Stock and securities exchangeable or exercisable for or convertible
into shares of Common Stock of the Company, to execute legally binding and
enforceable agreements in the form of Exhibit A hereto (such executed agreements
being referred to as the "Lock-Up Agreements").
(l) Neither the Company nor any of its Subsidiaries has sustained,
since the date of the latest audited financial statements included in the
Prospectus, any material loss or interference with its respective businesses
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth or contemplated in the Prospectus; and,
since such date, there has not been any material change in the capital stock or
long-term debt of the Company on a consolidated basis or any material adverse
change, or any development involving a prospective material adverse change, in
or affecting the general affairs, management, consolidated financial position,
stockholders' equity, results of operations, business or prospects of the
Company and its Subsidiaries taken as a whole, otherwise than as set forth or
contemplated in the Prospectus.
(m) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement or included in
the Prospectus present fairly the financial condition and results of operations
of the Company on a consolidated basis, at the dates and for the periods
indicated, and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved. The other financial information and data filed as part of the
Registration Statement or included in the Prospectus is fairly presented and
prepared on a basis consistent with such financial statements and the books and
records of the Company.
(n) Xxxxxx, LLP, who have certified the financial statements of the
Company, whose report is contained in the Prospectus and who have delivered the
initial letter referred to in Section 8(f) hereof, are independent public
accountants as required by the Securities Act and the Rules and Regulations.
(o) Each of the Company and its Subsidiaries has good and marketable
title in fee simple to, or valid and enforceable leasehold estates in, all items
of real and personal property owned or leased by it, in each case free and clear
of all liens, charges, claims, encumbrances, pledges, security interests,
defects or other restrictions or equities of any kind whatsoever, except such as
are described in the Prospectus.
(p) The Company and/or its Subsidiaries carries, or is covered by,
insurance in such amounts and covering such risks as is adequate for the conduct
of its respective businesses and the value of its respective properties and as
is customary for companies engaged in similar businesses in similar industries.
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(q) The Company owns or possesses adequate rights to use all patents,
patent applications, trademarks, service marks, trade names, trademark
registrations, service xxxx registrations, copyrights and licenses necessary for
the conduct of its business (the "Intellectual Property") and has no reason to
believe that the conduct of its business will conflict with, and has not
received any notice of any claim of conflict with, any such rights of others, in
each case except as could not reasonably be expected to have a Material Adverse
Effect. The Company has taken reasonable security measures to protect the
secrecy, confidentiality and value of its Intellectual Property and other
proprietary information in all respects.
(r) Except as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its Subsidiaries
is a party or of which any property or assets of the Company or any of its
Subsidiaries is the subject which, if determined adversely to the Company or any
of its Subsidiaries would reasonably be expected to have a Material Adverse
Effect; and, to the best of the Company's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by others.
(s) There are no contracts or other documents which are required to be
described in the Prospectus or filed as exhibits to the Registration Statement
by the Securities Act or by the Rules and Regulations which have not been
described in the Prospectus or filed as exhibits to the Registration Statement.
(t) No relationship, direct or indirect, exists between or among the
Company or any of its Subsidiaries on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company on the other hand, which is
required to be described in the Prospectus which is not so described.
(u) No labor disturbance by the employees of the Company or any of its
Subsidiaries exists or, to the knowledge of the Company, is imminent.
(v) The Company is in compliance with all presently applicable
provisions of the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder ("ERISA"); no
"reportable event" (as defined in ERISA) has occurred with respect to any
"pension plan" (as defined in ERISA) for which the Company would have any
material liability; the Company has not incurred and does not expect to incur
liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Internal
Revenue Code of 1986, as amended, including the regulations and published
interpretations thereunder (the "Code"); and each "pension plan" for which the
Company would have any liability 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 would cause the loss of such qualification.
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(w) The Company and each of its Subsidiaries has filed all federal,
state and local income and franchise tax returns required to be filed through
the date hereof, has paid all taxes due thereon and has established adequate
reserves for such taxes which are not yet due and payable, and does not have any
tax deficiency or claims outstanding, proposed or assessed against it.
(x) Since the date as of which information is given in the Prospectus
through the date hereof, and except as may otherwise be disclosed in the
Prospectus, neither the Company nor any of its Subsidiaries has (i) issued or
granted any securities, (ii) incurred any material liability or obligation,
direct or contingent, other than liabilities and obligations which were incurred
in the ordinary course of business, (iii) entered into any transaction not in
the ordinary course of business or (iv) declared or paid any dividend on its
capital stock.
(y) The Company (i) makes and keeps accurate books and records and (ii)
maintains internal accounting controls which provide reasonable assurance that
(A) transactions are executed in accordance with management's authorization, (B)
transactions are recorded as necessary to permit preparation of its financial
statements and to maintain accountability for its assets, (C) access to its
assets is permitted only in accordance with management's authorization and (D)
the reported accountability for its assets is compared with existing assets at
reasonable intervals.
(z) Neither the Company nor any of its Subsidiaries (i) is in violation
of its certificate of incorporation (or other equivalent organizational
document) or by-laws (or other equivalent organizational document), (ii) is in
default, and no event has occurred which, with notice or lapse of time or both,
would constitute such a default, in the due performance or observance of any
term, covenant or condition contained in any indenture, mortgage, deed of trust,
loan agreement, lease or other agreement or instrument to which it is a party or
by which it is bound or to which any of its properties or assets is subject,
except for such defaults that would not result in a Material Adverse Effect or
(iii) is in violation in any respect of any law, ordinance, governmental rule,
regulation or court decree to which it or its property or assets may be subject
or has not failed to obtain any license, permit, certificate, franchise or other
governmental authorization or permit necessary to the ownership of its property
or to the conduct of its business, except for such violations that would not
result in a Material Adverse Effect.
(aa) The minute books of each of the Company and its Subsidiaries have
been made available to the Underwriters and contain a complete summary of all
meetings and actions of the directors, stockholders, members and managers (as
the case may be) of the Company and its Subsidiaries since the time of its
incorporation or organization, and reflect all transactions referred to in such
minutes accurately in all material respects.
(bb) Neither the Company nor any director, officer, agent, employee or
other person associated with or acting on behalf of the Company, has used any
corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expense relating to political activity; made any direct or indirect
unlawful payment to any foreign or domestic government official or employee from
corporate funds; violated or is in violation of any provision of the Foreign
Corrupt Practices Act of 1977; or made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment.
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(cc) The Company and its Subsidiaries are in compliance in all material
respects with all applicable federal, state and local laws and regulations
applicable to them, including, without limitation, the Fair Debt Collection
Practices Act, the Truth-In-Lending Act, the Fair Credit Billing Act, the Equal
Credit Opportunity Act, the Fair Credit Reporting Act, the Electronic Funds
Transfer Act, the Xxxxx-Xxxxx-Xxxxxx Act, and comparable statutes in states
where consumers reside and/or where credit grantors are located, and the
respective rules and regulations thereunder, the failure to comply with which
would have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries is a party to any agreement or memorandum of understanding with, or
a party to any commitment letter or similar undertaking to, or is subject to any
order or directive by, or is a recipient of any extraordinary supervisory letter
from, or has adopted any board resolutions at the request of any of regulatory
authority which restricts materially the conduct of its business, nor has the
Company or any of its Subsidiaries been advised by any of the regulatory
authorities that it is contemplating issuing or requesting (or considering the
appropriateness of issuing or requesting) any of the foregoing.
(dd) The Company is not and, after giving effect to the offer and sale
of the Shares, will not be an "investment company" or an entity "controlled" by
an "investment company" as such terms are defined in the Investment Company Act
of 1940, as amended.
(ee) The Common Stock to be offered hereby has been authorized for
listing on the Nasdaq National Market.
(ff) None of the Company or its Subsidiaries nor their members,
managers officers, directors, stockholders (as the case may be), nor any of
their respective affiliates (within the meaning of the Rules and Regulations)
has taken or will take, directly or indirectly, any action designed to cause or
result in, or which has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation, under the Exchange Act or
otherwise, of the price of the Common Stock to facilitate the sale or the resale
of the Common Stock hereby.
(gg) The Company and its Subsidiaries possess such permits, licenses,
approvals, consents and other authorizations (collectively, "Governmental
Licenses") issued by the appropriate federal, state, local or foreign regulatory
agencies or bodies necessary to conduct the business now operated by them,
except for such Governmental Licenses the absence of which would not cause a
Material Adverse Effect; the Company and its Subsidiaries are in compliance with
the terms and conditions of all such Governmental Licenses, except where the
failure so to comply would not, singly or in the aggregate, have a Material
Adverse Effect; all of the Governmental Licenses are valid and in full force and
effect, except when the invalidity of such Governmental Licenses or the failure
to such Governmental Licenses to be in full force and effect would not have a
Material Adverse Effect; and neither the Company nor any of its Subsidiaries has
received any notice of proceedings relating to the revocation or modification of
any such Governmental Licenses which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would result in a Material
Adverse Effect.
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(hh) The Company has not distributed, nor will it distribute prior to
the First Closing Date any offering material in connection with the offering and
sale of the Shares other than the Prospectus, the Registration Statement or any
other materials permitted by the Securities Act, if any.
(ii) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency is necessary or required for the performance by the Company
of its obligations hereunder, in connection with the offering, issuance or sale
of the Shares hereunder or the consummation of the transactions contemplated by
this Agreement, except such as have been already obtained or as may be required
under the Securities Act, the Rules and Regulations or state securities laws.
(jj) Except as described in the Prospectus under "Underwriting," there
are no claims, payments, issuances, arrangement or understandings, whether oral
or written, for services in the nature of a finder's or origination fee with
respect to the sale of the Shares hereunder or any other arrangements,
agreements, understandings, payments or issuance with respect to the Company or
any of its officers, directors, stockholders, partners, employees or affiliates
that may affect the Underwriter's compensation, as determined by the NASD.
Any certificate signed by any officer of the Company delivered to
Underwriters or to counsel for the Underwriters shall be deemed a representation
and warranty by the Company to each Underwriter as to the matters covered
thereby on the date of such certificate and, unless subsequently amended or
supplemented.
Section 2. Representations and Warranties of the Selling Stockholders.
Each Selling Stockholder represents and warrants, for such Selling Stockholder
only and not for any other Selling Stockholder, to, and agrees with, each of the
Underwriters as of the date hereof, and as of the First Closing Date as follows:
(a) Such Selling Stockholder has full right, power and authority to
enter into this Agreement, the Power of Attorney (the "Power of Attorney") and
the Custody Agreement (the "Custody Agreement") hereinafter referred to and at
the date hereof such Selling Stockholder has, and at the time of delivery of the
Selling Stockholder Shares to the Underwriters hereunder such Selling
Stockholder will have, full right, power and authority to sell and deliver the
Selling Stockholder Shares to be sold by such Selling Stockholder to the
Underwriters, and at the date hereof such Selling Stockholder is, and at the
time of delivery of Selling Stockholder Shares to the Underwriters such Selling
Stockholder will be, the record and beneficial owner of and has, and will have,
marketable title to such shares free and clear of any claims, liens,
encumbrances or security interests and has duly endorsed such Selling
Stockholder Shares in blank, and, assuming that each Underwriter acquires its
interest in the Selling Stockholder Shares it has purchased from such Selling
Stockholder without notice of any adverse claim (within the meaning of Section
8-105 of the New Jersey Uniform Commercial Code ("UCC")), each Underwriter that
has purchased such Selling Stockholder Shares delivered on the Closing Date to
The Depository Trust Company or other securities intermediary by making payment
therefor as provided herein, and that has had such Selling Stockholder Shares
credited to the securities account or accounts of such Underwriters maintained
with The Depository Trust Company or such other securities intermediary will
have acquired a security entitlement (within the meaning of Section 8-102(a)(17)
of the UCC) to such Selling Stockholder Shares purchased by such Underwriter,
and no action based on an adverse claim (within the meaning of Section 8-105 of
the UCC) may be asserted against such Underwriter with respect to such Selling
Stockholder Shares.
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(b) The performance of this Agreement, the Power of Attorney and the
Custody Agreement, and the consummation of the transactions herein and therein
contemplated, will not conflict with or result in a breach of, or default under,
any agreement, indenture or other instrument to which such Selling Stockholder
is a party or by which such Selling Stockholder is bound, or any law, rule,
administrative regulation or court decree. This Agreement, the Power of Attorney
and the Custody Agreement have been validly authorized, executed and delivered
by such Selling Stockholder and each constitutes the valid and binding agreement
of such Selling Stockholder.
(c) With respect to those Selling Shareholders who are not individuals,
each such Selling Shareholder has been duly organized and is validly existing as
a limited liability company in good standing under the laws of the jurisdiction
of its organization, and the performance of this Agreement, the Power of
Attorney and the Custody Agreement, and the consummation of the transactions
herein and therein contemplated, will not conflict with or result in a breach of
each such Selling Stockholder's Certificate of Formation or Limited Liability
Company Operating Agreement,
(d) When the Registration Statement becomes effective, and at all times
subsequent thereto, the Registration Statement and Prospectus and any amendments
thereof and supplements thereto will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading.
(e) Such Selling Stockholder has not taken or will not take, directly
or indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation, under the Exchange Act or otherwise, of the price
of the Common Stock to facilitate the sale or resale of the Common Stock hereby.
(f) Certificates in negotiable form representing all of the Selling
Stockholder Shares to be sold by such Selling Stockholder have been placed in
custody under a Custody Agreement, in the form heretofore furnished to you, duly
executed and delivered by such Selling Stockholder to the Company, as custodian
(the "Custodian"), and such Selling Stockholder has duly executed and delivered
a Power of Attorney, in the form heretofore furnished to you, appointing,
_____________ as such Selling Stockholder's attorney-in-fact (the
"Attorney-in-Fact") with authority to execute and deliver this Agreement on
behalf of such Selling Stockholder, to authorize the delivery of the Selling
Stockholder Shares to be sold by such Selling Stockholder hereunder and
otherwise to act on behalf of such Selling Stockholder in connection with the
transactions contemplated by this Agreement and the Custody Agreement.
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(g) The Selling Stockholder Shares held in custody for such Selling
Stockholder under the Custody Agreement are subject to the interests of the
Underwriters hereunder, and the arrangements made by such Selling Stockholder
for such custody, as well as the appointment by such Selling Stockholder of the
Attorney-in-Fact, are, to that extent, irrevocable. Each Selling Stockholder
specifically agrees that the obligations of the Selling Stockholders hereunder
shall not be terminated by operation of law, whether by the death or incapacity
of any individual Selling Stockholder or by the occurrence of any other event.
If any individual Selling Stockholder should die or become incapacitated, or if
any other such event should occur, before the delivery of the Selling
Stockholder Shares hereunder, certificates representing the Selling Stockholder
Shares shall be delivered by or on behalf of such Selling Stockholder in
accordance with the terms and conditions of this Agreement and of the Custody
Agreement, and the actions taken by the Attorney-in-Fact pursuant to the Power
of Attorney shall be as valid as if such death, incapacity or other event had
not occurred, whether or not the Custodian or the Attorney-in-Fact shall have
received notice of such death, incapacity or other event.
Any certificate signed by a Selling Stockholder and delivered to the
Underwriters or counsel for the Underwriters in connection with the offering of
the Shares shall be deemed a representation and warranty by such Selling
Stockholder, as to matters covered thereby, to each Underwriter.
SECTION 3. Purchase of the Shares by the Underwriters.
(a) On the basis of the representations and warranties contained in,
and subject to the terms and conditions of, this Agreement, (i) the Company
agrees to issue and sell to the Underwriters and each such Underwriter agrees,
severally and not jointly, to buy from the Company at the price per Share set
forth on Schedule B, at the place and time hereinafter specified, the respective
number of Firm Shares set forth opposite the names of the Underwriters in
Schedule B attached hereto plus any additional Shares which such Underwriters
may become obligated to purchase pursuant to the provisions of Section 9 hereof,
and (ii) each Selling Stockholder agrees, severally and not jointly, to sell to
the Underwriters, and the Underwriters, severally and not jointly, agree to
purchase from each Selling Stockholder at the price per Share set forth on
Schedule B, that number of Selling Stockholder Shares set forth in Schedule A
opposite the name of such Selling Stockholder. Each Underwriter shall purchase
that number of Selling Stockholder Shares which bears the same proportion to the
total number of Selling Stockholder Shares as the number of Firm Shares set
forth opposite the name of such Underwriter in Schedule B hereto bears to the
total number of Firm Shares to be sold by the Company, in accordance with the
preceding sentence.
11
(b) In addition, subject to the terms and conditions of this Agreement,
and upon the basis of the representations, warranties and agreements herein
contained, the Company hereby grants an option to the Underwriters to purchase
all or any part of the Option Shares at the same price per Share as the
Underwriters shall pay for the Firm Shares being sold pursuant to the provisions
of subsection (a) of this Section 3. This option may be exercised within 30 days
after the effective date of the Registration Statement upon notice by the
Underwriters to the Company advising as to the amount of Option Shares as to
which the option is being exercised, the names and denominations in which the
certificates for such Option Shares are to be registered and the time and date
when such certificates are to be delivered. The number of Option Shares to be
purchased by each Underwriter, if any, shall bear the same percentage to the
total number of Option Shares being purchased by the Underwriters pursuant to
this subsection (b) as the number of Firm Shares such Underwriter is purchasing
bears to the total number of the Firm Shares being purchased pursuant to
subsection (a) of this Section 3, as adjusted, in each case, by the Underwriters
in such manner as the Underwriters may deem appropriate. The option granted
hereunder may be exercised only to cover over-allotments in the sale by the
Underwriters of Firm Shares referred to in subsection (a) above. In the event
the Company declares or pays a dividend or distribution on its Common Stock,
whether in the form of cash, shares of Common Stock or any other consideration,
following the First Closing Date and prior to the Option Closing Date, such
dividend or distribution shall also be paid on the Option Shares on the Option
Closing Date.
SECTION 4. Delivery and Payment.
(a) Delivery of the Firm Shares against payment therefor shall take
place at the offices of Xxxx Xxxx (or at such other place as may be designated
by agreement between the Underwriters and the Company) at 10:00 a.m. New York
time, on the third full business day after the Effective Date, or at such other
time not earlier than three nor more than ten full business days thereafter as
the Underwriters and the Company shall determine. Such time and date of payment
and delivery for the Firm Shares being herein called the "First Closing Date."
(b) In addition, in the event the Underwriters exercise the option to
purchase from the Company all or any portion of the Option Shares pursuant to
the provisions of Section 3(b), then delivery of the Option Shares against
payment therefor shall take place at the offices of Xxxx Xxxx (or at such other
place as may be designated by agreement between the Underwriters and the
Company) at such time and date as shall be determined by the Underwriters but
shall not be earlier than four nor later than ten full business days after the
exercise of said option, nor in any event prior to the First Closing Date. Such
time and date is referred to herein as the "Option Closing Date."
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(c) The Company will make the certificates for the securities
comprising the Shares to be purchased by the Underwriters hereunder available to
you for checking at least two full business days prior to the First Closing Date
or the Option Closing Date, as the case may be (which are collectively referred
to herein as the "Closing Dates"). The certificates shall be in such names and
denominations as the Underwriters may request, at least two full business days
prior to the applicable Closing Date. Time shall be of the essence and delivery
at the time and place specified in this Agreement is a further condition to the
obligations of each Underwriter.
(d) Payment for the Shares shall be made to or upon the order of the
Company by certified or bank cashier's checks payable in New York Clearing House
funds at the time and date of delivery of such Shares as required by the
provisions of subsections (a) and (b) above or by wire transfer in immediately
available funds to a bank account designated by the Company at least two
business days prior to the First Closing Date or the Option Closing Date, as the
case may be, against receipt of the definitive certificates in negotiable form
for such Shares by the Underwriters for the respective accounts of the
Underwriters registered in such names and in such denominations as the
Underwriters may request.
SECTION 5. Offering of Shares by the Underwriters. It is understood
that the Underwriters propose to make a public offering of the Shares at the
price and upon the other terms set forth in the Prospectus. The Underwriters
may, at their own expense, enter into one or more agreements, in their sole
discretion, as they deem advisable, with one or more broker-dealers who shall
act as dealers in connection with such public offering. The Underwriters may
from time to time change the public offering price after the closing of the
public offering and increase or decrease the concessions and discounts to
dealers as they may determine.
SECTION 6. Further Agreements of the Company. The Company agrees:
(a) To prepare the Final Prospectus in a form approved by the
Underwriters and to file such Final Prospectus pursuant to Rule 424(b) under the
Securities Act not later than the Commission's close of business on the second
business day following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule 430A(a)(3) under the
Securities Act; to make no further amendment or any supplement to the
Registration Statement or to the Final Prospectus except as permitted herein; to
advise the Underwriters and the Selling Stockholders, promptly after it receives
notice thereof, of the time when any amendment to the Registration Statement has
been filed or becomes effective or any supplement to the Final Prospectus or any
amended Final Prospectus has been filed and to furnish the Underwriters and the
Selling Stockholders with copies thereof; to advise the Underwriters and the
Selling Stockholders, promptly after it receives notice thereof, of the issuance
by the Commission of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus or the Final Prospectus, of the suspension of
the qualification of the Shares for offering or sale in any jurisdiction, of the
initiation or threatening of any proceeding for any such purpose, or of any
request by the Commission for the amending or supplementing of the Registration
Statement or the Final Prospectus or for additional information; and, in the
event of the issuance of any stop order or of any order preventing or suspending
the use of any Preliminary Prospectus or the Final Prospectus or suspending any
such qualification, to use promptly its best efforts to obtain its withdrawal;
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(b) To furnish promptly to the Underwriters and to counsel for the
Underwriters a signed copy of the Registration Statement as originally filed
with the Commission, and each amendment thereto filed with the Commission,
including all consents and exhibits filed therewith;
(c) To deliver promptly to the Underwriters such number of the
following documents as each Underwriter shall reasonably request: (i) conformed
copies of the Registration Statement as originally filed with the Commission and
each amendment thereto (in each case excluding exhibits) and (ii) each
Preliminary Prospectus, the Final Prospectus and any amended or supplemented
Final Prospectus; and, if the delivery of a prospectus is required at any time
after the Effective Time in connection with the offering or sale of the Shares
or any other securities relating thereto and if at such time any events shall
have occurred as a result of which the Final Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made when such Final
Prospectus is delivered, not misleading, or, if for any other reason it shall be
necessary to amend or supplement the Final Prospectus in order to comply with
the Securities Act, to notify the Underwriters and, upon its request, to prepare
and furnish without charge to the Underwriters and to any dealer in securities
as many copies as the Underwriters may from time to time reasonably request of
an amended or supplemented Final Prospectus which will correct such statement or
omission or effect such compliance;
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the reasonable judgment of the Company or the Underwriters, be
required by the Securities Act or requested by the Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any Prospectus
pursuant to Rule 424 of the Rules and Regulations, to furnish a copy thereof to
the Underwriters and counsel for the Underwriters and obtain the consent of the
Underwriters to the filing, which consent shall not be unreasonably delayed or
withheld;
(f) As soon as practicable after the Effective Date, to make generally
available to the Company's security holders and to deliver to the Underwriters
an earnings statement of the Company (which need not be audited) complying with
Section 1l(a) of the Securities Act and the Rules and Regulations (including, at
the option of the Company, Rule 158);
(g) Upon the request of the Underwriters, for a period of five (5)
years following the Effective Date, to furnish to the Underwriters copies of all
materials furnished by the Company to its stockholders generally and all public
reports and all reports and financial statements furnished by the Company to the
principal national securities exchange or market upon which the Common Stock may
be listed pursuant to requirements of or agreements with such exchange or market
or to the Commission pursuant to the Exchange Act or any rule or regulation of
the Commission thereunder;
14
(h) Promptly from time to time to take such action as the Underwriters
may reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as the Underwriters may request and to
comply with such laws so as to permit the continuance of sales and dealings
therein in such jurisdictions for as long as may be necessary to complete the
distribution of the Shares; provided that in connection therewith, the Company
shall not be required to qualify as a foreign corporation, to submit to general
taxation or to file a general consent to service of process in any jurisdiction;
(i) For a period of 180 days from the date of the Prospectus, not to,
directly or indirectly, (1) offer for sale, sell, pledge or otherwise dispose of
(or enter into any transaction or device which is designed to, or could be
expected to, result in the disposition by any person at any time in the future
of) any shares of Common Stock or securities convertible into or exchangeable
for Common Stock (other than (x) the Shares, or (y) shares of Common Stock
issued pursuant to employee benefit plans, stock option plans or other employee
compensation plans existing on the date hereof or pursuant to currently
outstanding options, warrants or rights or upon conversion of shares of Common
Stock), or substantially similar securities, or sell or grant options, rights or
warrants with respect to any shares of Common Stock or securities convertible
into or exchangeable for Common Stock or substantially similar securities (other
than the grant of options pursuant to benefit plans existing on the date
hereof), or (2) enter into any swap or other derivatives transaction that
transfers to another, in whole or in part, any of the economic benefits or risks
of ownership of such shares of Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or other securities, in cash or otherwise, in each case without the prior
written consent of Xxxx, Xxxx;
(j) To take such steps as shall be necessary to ensure that the Company
shall not become an "investment company" or an entity "controlled" by an
"investment company" as defined in the Investment Company Act of 1940, as
amended, and the rules and regulations of the Commission thereunder;
(k) During the period of 180 days from the date of the Prospectus, to
obtain an executed letter in the form of Exhibit A hereto from each new officer
and director who has not previously executed such a letter;
(l) The Company will apply the net proceeds received by it from the
sale of the Shares for the purposes set forth under "Use of Proceeds" in the
Prospectus;
15
(m) Prior to the First Closing Date, the Company will make all filings
required to list the Shares on the Nasdaq National Market and will effect and
maintain such listing for at least five years from the date of this Agreement;
(n) The Company will maintain a Transfer Agent for its Common Stock;
(o) The Company shall timely file all such reports, forms or other
documents as may be required from time to time, under the Securities Act, the
Exchange Act, and the Rules and Regulations, and all such reports, forms and
documents filed will comply as to form and substance with the applicable
requirements under the Securities Act, the Exchange Act, and the Rules and
Regulations; and
(p) Until the completion of the distribution of the Shares, and for 25
days thereafter, the Company shall not without the prior written consent of the
Underwriters and counsel for the Underwriters, issue, directly or indirectly,
any press release or other communication or hold any press conference with
respect to the Company or its activities or the offering contemplated hereby.
SECTION 7. Expenses.
(a) The Company agrees to pay: (i) all of the Underwriters' expenses
and fees, including the expenses and fees of counsel to the Underwriters, (ii)
the costs incident to the sale and delivery of the Shares and any taxes payable
in that connection; (iii) the costs incident to the preparation, printing and
filing under the Securities Act of the Registration Statement and any amendments
and exhibits thereto; (iv) the costs of distributing the Registration Statement
as originally filed and each amendment thereto and any post-effective amendments
thereof (including, in each case, exhibits), any Preliminary Prospectus, the
Final Prospectus and any amendment or supplement to the Final Prospectus, all as
provided in this Agreement; (v) the costs of reproducing and distributing this
Agreement and any other related documents in connection with the offering,
purchase, sale and delivery of the Shares; (vi) the filing fees and expenses
incident to securing the review by the NASD of the terms of sale of the Shares
(including related fees and expenses of counsel to the Underwriters, which
obligation shall be in addition to the obligation referred to in subparagraph
(i) above); (vii) any applicable listing or other fees; (viii) the fees and
expenses of preparing and distributing a Blue Sky Memorandum (including related
fees and expenses of counsel to the Underwriters, which obligation shall be in
addition to the obligation referred to in subparagraph (i) above); (ix) costs
and expenses related to "Tombstone" advertisements; (x) the costs and expenses
related to the production of five bound volumes of the completed Registration
Statement for each of the Underwriters; and (xi) the costs and expenses relating
to investor presentations on any "road show" undertaken in connection with the
marketing of the offering of the Shares including, without limitation, expenses
associated with the production of road show slides and graphics, printing and
advertising fees and expenses, fees and expenses of any consultants engaged in
connection with the road show presentations, travel and lodging expenses of the
Underwriters and officers of the Company and any such consultants, and all other
costs and expenses incident to the performance of the obligations of the Company
under this Agreement, including all accounting and counsel fees and expenses
incurred by the Company in connection with the offering of the Shares hereunder,
subject to the limitations set forth in the engagement letter between the
Underwriters and the Company dated June 2, 2003 (the "Engagement Letter"). The
fees and expenses referred to in subparagraph (i) above shall not exceed
$150,000 in the aggregate and the fees and expenses referred to in subparagraphs
(vi) and (viii) above shall not exceed $15,000 in the aggregate, each payable in
accordance with the Engagement Letter.
16
(b) No person is entitled either directly or indirectly to compensation
from the Company, from the Underwriters or from any other person for services as
a finder in connection with the proposed offering, and the Company agrees to
indemnify and hold harmless the Underwriters, against any losses, claims,
damages or liabilities, joint or several (which shall, for all purposes of this
Agreement, include, but not be limited to, all costs of defense and
investigation and all attorneys' fees), to which the Underwriters may become
subject insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon the claim of any person (other
than an employee of the party claiming indemnity) or entity that he or it is
entitled to a finder's fee in connection with the proposed offering by reason of
such person's or entity's influence or prior contact with the Company.
SECTION 8. Conditions of Underwriter's Obligations. The obligations of
the Underwriters to purchase and pay for the Shares which they have respectively
agreed to purchase hereunder on the respective Closing Dates are subject (x) to
the accuracy when made and as of the Closing Dates, of the representations and
warranties of the Company and, in the case of the First Closing Date only, the
Selling Stockholders contained herein, (y) to the performance by the Company
and, in the case of the First Closing Date only, each of the Selling
Stockholders of their respective obligations hereunder and (z) to each of the
following additional terms and conditions:
(a) The Final Prospectus shall have been timely filed with the
Commission in accordance with Section 6(a); no stop order suspending the
effectiveness of the 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 any request of the Commission for inclusion of
additional information in the Registration Statement or the Prospectus or
otherwise shall have been complied with.
(b) The Underwriters shall not have discovered and disclosed to the
Company on or prior to either of the Closing Dates that the Registration
Statement or the Final Prospectus or any amendment or supplement thereto
contains an untrue statement of a material fact or omits to state a material
fact which is required to be stated therein or is necessary to make the
statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Shares, the Registration
Statement and the Prospectus, and all other legal matters relating to this
Agreement and the transactions contemplated hereby shall be reasonably
satisfactory to counsel for the Underwriters, and the Company shall have
furnished to such counsel all documents and information that they may reasonably
request to enable them to pass upon such matters.
17
(d) Xxxxxxxxxx Xxxxxxx, P.C. shall have furnished to the Underwriters
its written opinion, as counsel to the Company, addressed to the Underwriters
and dated the First Closing Date, in substantially the form attached hereto as
Exhibit B.
(e) All corporate proceedings and other legal matters relating to this
Agreement, the Registration Statement, the Prospectus and other related matters
shall be reasonably satisfactory to or approved by Pitney, Xxxxxx, Xxxx & Xxxxx,
LLP, counsel to the Underwriters, and you shall have received from such counsel
a signed opinion, dated as of the First Closing Date, together with copies
thereof for each of the other Underwriters, in form and substance satisfactory
to the Underwriters. The Company and its Subsidiaries shall have furnished to
counsel for the Underwriters such documents as it may reasonably request for the
purpose of enabling it to render such opinion.
(f) At the time of execution of this Agreement, the Underwriters shall
have received from Xxxxxx, LLP a letter, in form and substance satisfactory to
the Underwriters, addressed to the Underwriters and dated the date hereof (i)
confirming that they are independent public accountants within the meaning of
the Securities Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of Regulation S-X
of the Commission and (ii) stating, as of the date hereof (or, with respect to
matters involving changes or developments since the respective dates as of which
specified financial information is given in the Prospectus, as of a date not
more than five days prior to the date hereof), the conclusions and findings of
such firm with respect to the financial information and other matters ordinarily
covered by accountants' "comfort letters" to underwriters in connection with
registered public offerings.
(g) With respect to the letters of Xxxxxx, LLP referred to in the
preceding paragraph and delivered to the Underwriters concurrently with the
execution of this Agreement (each, an "initial letter"), the Company shall have
furnished to the Underwriters a letter (the "bring-down letter") of such
accountants, addressed to the Underwriters and dated the First Closing Date (i)
confirming that they are independent public accountants within the meaning of
the Securities Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of Regulation S-X
of the Commission, (ii) stating, as of the date of the bring-down letter (or,
with respect to matters involving changes or developments since the respective
dates as of which specified financial information is given in the Prospectus, as
of a date not more than five days prior to the date of the bring-down letter),
the conclusions and findings of such firm with respect to the financial
information and other matters covered by the initial letter and (iii) confirming
the conclusions and findings set forth in the initial letter.
18
(h) The Company shall have furnished to the Underwriters a certificate,
dated the First Closing Date, of its Chief Executive Officer and its Chief
Financial Officer stating that:
(i) The representations, warranties and agreements of the
Company in Section 1 are true and correct as of the First Closing Date
the Company has complied with all its agreements contained herein; and
the conditions set forth in this Section 8 have been fulfilled; and
(ii) They have carefully examined the Registration Statement
and the Prospectus and, in their opinion (A) as of the Effective Date,
the Registration Statement and the Prospectus did not include any
untrue statement of a material fact and did not omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and (B) since the Effective Date no
event has occurred which should have been set forth in a supplement or
amendment to the Registration Statement or the Prospectus which was not
so set forth therein.
(i) The Company shall have not sustained since the date of the latest
audited financial statements included in the Prospectus (i) any loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus or (ii) since such date there shall not have been
any change in the capital stock or long-term debt of the Company and its
subsidiaries on a consolidated basis or any adverse change, or any development
involving a prospective adverse change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of operations of
the Company, otherwise than as set forth or contemplated in the Prospectus, the
effect of which, in any such case described in clause (i) or (ii), is, in the
judgment of the Underwriters, so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Shares being delivered on the respective Closing Date on the terms and in
the manner contemplated in the Prospectus.
(j) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange, the
Nasdaq National Market or in the over-the-counter market, or trading in any
securities of the Company on any exchange or in the over-the-counter market,
shall have been suspended or minimum prices shall have been established on any
such exchange or such market by the Commission, by such exchange or by any other
regulatory body or governmental authority having jurisdiction, (ii) a banking
moratorium shall have been declared by Federal or state authorities, (iii) the
United States shall have become engaged in hostilities, there shall have been an
escalation in hostilities or acts of terrorism involving the United States or
there shall have been a declaration of a national emergency or war by the United
States or (iv) there shall have occurred such a material adverse change in
general economic, political or financial conditions (or the effect of
international conditions on the financial markets in the United States shall be
such) as to make it, in the judgment of the Underwriters, impracticable or
inadvisable to proceed with the public offering or delivery of the Shares being
delivered on the respective Closing Date on the terms and in the manner
contemplated in the Prospectus.
19
(k) The Shares shall be listed on the Nasdaq National Market.
(l) Prior to the First Closing Date, the Underwriters shall have
received the Lock-Up Agreements.
(m) No action shall have been taken by the Commission or the NASD, the
effect of which would make it improper, at any time prior to the respective
Closing Date, for members of the NASD to execute transactions (as principal or
agent) in the Shares and no proceedings for the taking of such action shall have
been instituted or shall be pending, or, to the knowledge of the Underwriters or
the Company, shall be contemplated by the Commission or the NASD. The Company
represents that at the date hereof it has no knowledge that any such action is
in fact contemplated by the Commission or the NASD. The Company shall have
advised the Underwriters of any NASD affiliation of any of its officers,
directors, stockholders or their affiliates.
(n) On or before the First Closing Date, there shall have been
delivered to the Underwriters all of the Lock-up Agreements, in form and
substance satisfactory to Pitney, Xxxxxx, Xxxx & Xxxxx, LLP, counsel to the
Underwriters.
(o) On the First Closing Date there shall have been furnished to the
Underwriters the opinion of _______________, counsel for the Selling
Stockholders, dated such Closing Date and in form and substance satisfactory to
counsel to the Underwriters, to the effect that:
(i) this Agreement has been validly authorized, executed and
delivered by or on behalf of each of the Selling Stockholders;
(ii) a Power of Attorney and the Custody Agreement have been
validly authorized, executed and delivered by each of the Selling Stockholders;
(iii) with respect to those Selling Shareholders who are not
individuals, each such Selling Shareholder has been duly organized and is
validly existing as a limited liability company in good standing under the laws
of the jurisdiction of its organization and the performance of this Agreement,
the Power of Attorney, and the Custody Agreement, and the consummation of the
transactions herein and therein contemplated, will not conflict with or result
in a breach of each of such Selling Shareholder's Certificate of Formation or
Limited Liability Company Operating Agreement; and
(iv) if shares of Common Stock are sold by a Selling
Stockholder on such Closing Date, marketable title to the shares sold by such
Selling Stockholder hereunder, free and clear of any liens, claims, encumbrances
and security interests whatsoever (other than those as may have been created by
the Underwriters), has been transferred to, and is vested in, the Underwriter
who has purchased such shares hereunder.
20
(p) On the First Closing Date there shall have been furnished to you a
certificate, dated such Closing Date and addressed to you, signed by or on
behalf of the Selling Stockholders, to the effect that the representations and
warranties of the Selling Stockholders in this Agreement are correct on and as
of the date of this Agreement and on and as of such Closing Date, as if made on
and as of such Closing Date, and that the Selling Stockholders have complied
with all the agreements and satisfied all the conditions on their part to be
performed or satisfied at or prior to such Closing Date.
(q) Upon exercise of the option provided for in Section 3(b) hereof,
the obligations of the Underwriters to purchase and pay for the Option Shares
referred to therein will be subject (as of the date hereof and as of the Option
Closing Date) to the following additional conditions:
(i) The Registration Statement shall remain effective at the
Option Closing Date, and no stop order suspending the effectiveness thereof
shall have been issued and no proceedings for that purpose shall have been
instituted or shall be pending, or, to the knowledge of the Underwriters or the
Company, shall be contemplated by the Commission, and any reasonable request on
the part of the Commission for additional information shall have been complied
with to the satisfaction of counsel to the Underwriters.
(ii) At the Option Closing Date, Xxxxxxxxxx Xxxxxxx, P.C.
shall have furnished to the Underwriters its written opinion as counsel to the
Company addressed to the Underwriters, which opinion shall be dated the Option
Closing Date and shall be substantially the same in scope and substance as the
opinion furnished to the Underwriters at the First Closing Date pursuant to
Section 8(d) hereof, except that such opinion, where appropriate, shall cover
the Option Shares.
(iii) At the Option Closing Date there shall have been
delivered to you a letter in form and substance satisfactory to you from Xxxxxx,
LLP dated the Option Closing Date and addressed to the Underwriters confirming
the information in their letter referred to in Section 8(f) hereof and stating
that nothing has come to their attention during the period from the ending date
of their review referred to in said letters to a date not more than five
business days prior to the Option Closing Date, which would require any change
in said letter if it were required to be dated the Option Closing Date.
(iv) At the Option Closing Date, the Company shall have
furnished to the Underwriters a certificate, dated the Option Closing Date, of
its Chief Executive Officer and the Chief Financial Officer, in form and
substance satisfactory to counsel for the Underwriters substantially the same in
scope and substance as the certificates furnished to you at the First Closing
Date pursuant to Section 8(h) hereof.
(v) All proceedings taken at or prior to the Option Closing
Date in connection with the sale and issuance of the Option Shares shall be
satisfactory in form and substance to the Underwriters and Pitney, Xxxxxx, Xxxx
& Xxxxx, LLP, counsel to the Underwriters, the Underwriters and their counsel
shall have been furnished with all such documents, certificates, and opinions as
are reasonably requested in connection with this transaction in order to
evidence the accuracy and completeness of any of the representations, warranties
or statements of the Company or the Selling Stockholders or its compliance with
any of the covenants or conditions herein.
21
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance satisfactory to counsel
for the Underwriters.
SECTION 9. Substitution of Underwriters. If any of the Underwriters
shall for any reason not permitted hereunder cancel their obligations to
purchase the Firm Shares hereunder, or shall fail to take up and pay for the
number of Firm Shares set forth opposite their respective names in Schedule B
hereto upon tender of such Firm Shares in accordance with the terms hereof,
then:
(a) If the aggregate number of Firm Shares which such Underwriter or
Underwriters agreed but failed to purchase does not exceed 10% of the total
number of Firm Shares, the other Underwriters shall be obligated severally, in
proportion to their respective commitments hereunder, to purchase the Firm
Shares which such defaulting Underwriter or Underwriters agreed but failed to
purchase.
(b) If any Underwriter or Underwriters so default and the agreed number
of Firm Shares with respect to which such default or defaults occurs is more
than 10% of the total number of Firm Shares, the remaining Underwriters shall
have the right to take up and pay for (in such proportion as may be agreed upon
among them) the Firm Shares which the defaulting Underwriter or Underwriters
agreed but failed to purchase. If such remaining Underwriters do not, at the
First Closing Date, take up and pay for the Firm Shares which the defaulting
Underwriter or Underwriters agreed but failed to purchase, the time for delivery
of the Firm Shares shall be extended to the next business day to allow the
remaining Underwriters the privilege of substituting within twenty-four hours
(including nonbusiness hours) another underwriter or underwriters reasonably
satisfactory to the Company. If no such underwriter or underwriters shall have
been substituted as aforesaid, within such twenty-four hour period, the time of
delivery of the Firm Shares may, at the option of the Company, be again extended
to the next following business day, if necessary, to allow the Company the
privilege of finding within twenty-four hours (including nonbusiness hours)
another underwriter or underwriters to purchase the Firm Shares which the
defaulting Underwriter or Underwriters agreed but failed to purchase. If it
shall be arranged for the remaining Underwriters or substituted Underwriters to
take up the Firm Shares of the defaulting Underwriter or Underwriters as
provided in this Section 9, (i) the Company or the other Underwriters shall have
the right to postpone the time of delivery for a period of not more than seven
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 or
arrangements, and the Company agrees promptly to file any amendments to the
Registration Statement or supplements to the Prospectus which may thereby be
made necessary, and (ii) the respective numbers of Firm Shares to be purchased
by the remaining Underwriters or substituted Underwriters shall be taken as the
basis of the underwriting obligation for all purposes of this Agreement.
22
If a default by one or more Underwriters shall occur and the remaining
Underwriters shall not take up and pay for all the Firm Shares agreed to be
purchased by the defaulting Underwriters or substitute another underwriter or
underwriters as aforesaid, and the Company shall not find or shall not elect to
seek another underwriter or underwriters for such Firm Shares as aforesaid, then
this Agreement shall terminate.
If, following exercise of the option provided in Section 3(b) hereof,
any Underwriter or Underwriters shall for any reason not permitted hereunder
cancel their obligations to purchase Option Shares at the Option Closing Date,
or shall fail to take up and pay for the number of Option Shares, which they
become obligated to purchase at the Option Closing Date upon tender of such
Option Shares in accordance with the terms hereof, then the remaining
Underwriters or substituted Underwriters may take up and pay for the Option
Shares of the defaulting Underwriters in the manner provided in this Section
9(b). If the remaining Underwriters or substituted Underwriters shall not take
up and pay for all such Option Shares, the Underwriters shall be entitled to
purchase the number of Option Shares for which there is no default or, at their
election, the option shall terminate, and the exercise thereof shall be of no
effect.
As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 9. In the event of
termination, there shall be no liability on the part of any nondefaulting
Underwriter to the Company, provided that the provisions of this Section 9 shall
not in any event affect the liability of any defaulting Underwriter to the
Company arising out of such default.
SECTION 10. Indemnification and Contribution.
(a) Each of the Company, the Selling Stockholders, and the
Beneficiaries agrees, jointly and severally, to indemnify and hold harmless each
Underwriter, its officers and employees, each of its directors, its affiliates,
as defined in Rule 405 under the Securities Act, and each person, if any, who
controls any Underwriter within the meaning of the Securities Act, from and
against any loss, claim, damage or liability, joint or several, or any action in
respect thereof (including, but not limited to, any loss, claim, damage,
liability or action relating to purchases and sales of Shares), to which such
Underwriter, director, officer, employee, affiliate or controlling person may
become subject, under the Securities Act or any applicable federal or state law,
or otherwise, insofar as such loss, claim, damage, liability or action arises
out of, or is based upon, (i) any untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Prospectus, the Registration
Statement or the Final Prospectus or in any amendment or supplement thereto,
(ii) the omission or alleged omission to state in any Preliminary Prospectus,
the Registration Statement or the Final Prospectus, or in any amendment or
supplement thereto, or in any Blue Sky application, any material fact required
to be stated therein or necessary to make the statements therein not misleading
(iii) any breach of any representation, warranty, covenant or agreement of the
Company contained in this Agreement, or (iv) any act or failure to act or any
alleged act or failure to act by such Underwriter in connection with, or
relating in any manner to, the Shares or the offering contemplated hereby, and
which is included as part of or referred to in any loss, claim, damage,
liability or action arising out of or based upon matters covered by clause (i),
(ii) or (iii) above (provided that the Company or the Selling Stockholders shall
not be liable under this clause (iv) to the extent that it is determined in a
final, non-appealable judgment by a court of competent jurisdiction that such
loss, claim, damage, liability or action resulted directly from any such acts or
failures to act undertaken or omitted to be taken by such Underwriter through
its gross negligence or willful misconduct), and shall reimburse such
Underwriter and each such director, officer, employee, affiliate or controlling
person promptly upon demand for any legal or other expenses reasonably incurred
by such Underwriter, director, officer, employee, affiliate or controlling
person in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that the Company or the Selling Stockholders shall
not be liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement or the Final Prospectus, or in any such
amendment or supplement, solely in reliance upon and in conformity with written
information concerning such Underwriter furnished to the Company by or on behalf
of such Underwriter specifically for inclusion therein, and provided further
that as to any Preliminary Prospectus, this indemnity agreement shall not inure
to the benefit of such Underwriter, its directors, officers, affiliates or
employees, or any person controlling the Underwriter, on account of any loss,
claim, damage, liability or action arising solely from the sale of the Shares to
any person by such Underwriter if such Underwriter failed to send or give a copy
of the Final Prospectus, as the same may be amended or supplemented, to that
person within the time required by the Securities Act, and the untrue statement
or alleged untrue statement of any material fact or omission or alleged omission
to state a material fact in such Preliminary Prospectus was corrected in the
Final Prospectus, unless such failure resulted from non-compliance by the
Company with Section 6(c). The foregoing indemnity agreement is in addition to
any liability which the Company, the Selling Stockholders, or the Beneficiaries
may otherwise have to such Underwriter or to any officer, director, affiliate,
employee or controlling person of such Underwriter.
23
In the event that an Underwriter is required or requested to appear as
a witness in any action brought by or on behalf of or against the Company, the
Selling Stockholders, or the Beneficiaries in which such Underwriter is not
named as a defendant, each of Company, the Selling Stockholders, and the
Beneficiaries agrees, jointly and severally, to promptly reimburse such
Underwriter on a monthly basis for all expenses incurred by it in connection
with such Underwriter's appearing and preparing to appear as such a witness,
including, without limitation, the reasonable fees and disbursements of its
legal counsel. In addition to any reimbursed fees, expenses or costs hereunder,
such Underwriter shall also receive from the Company and/or Selling Stockholders
cash compensation of $2,000 per person, per day, plus reasonable out-of-pocket
expenses and costs should the Underwriter be required to provide testimony in
any formal or informal proceeding regarding the Company.
(b) Each Underwriter, severally, but not jointly, shall indemnify and
hold harmless the Company, its officers and employees, each of its directors,
its affiliates, and each person, if any, who controls the Company within the
meaning of the Securities Act, and each Selling Stockholder, the Beneficiaries,
and each person, if any, who controls any Selling Stockholder within the meaning
of the Securities Act, from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof, to which the Company or any
such Selling Stockholder, Beneficiary, director, officer or controlling person
may become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained (A) in
any Preliminary Prospectus, the Registration Statement or the Final Prospectus
or in any amendment or supplement thereto, or (B) in any Blue Sky Application or
(ii) the omission or alleged omission to state in any Preliminary Prospectus,
the Registration Statement, the Final Prospectus, or in any amendment or
supplement thereto, or in any Blue Sky Application, any material fact required
to be stated therein or necessary to make the statements therein not misleading,
but in each case only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information concerning such Underwriter furnished to the
Company by or on behalf of such Underwriter specifically for inclusion therein,
and shall reimburse the Company and any such Selling Stockholder, Beneficiary,
director, officer, affiliate or controlling person for any legal or other
expenses reasonably incurred by the Company or any such Selling Stockholder,
Beneficiary, director, officer or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred.
(c) Each Selling Stockholder agrees, and each Beneficiary agrees (but
only with respect to those Selling Stockholders which are beneficially owned or
controlled by each Beneficiary) severally but not jointly, to indemnify and hold
harmless each Underwriter, its officers and employees, each of its directors,
its affiliates, as defined in Rule 405 under the Securities Act, and each
person, if any, who controls any Underwriter within the meaning of the
Securities Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof (including, but not limited to, any
loss, claim, damage, liability or action relating to purchases and sales of
Shares), to which such Underwriter, director, officer, employee, affiliate or
controlling person may become subject, under the Securities Act or any
applicable federal or state law, or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon any breach of any
representation, warranty, covenant or agreement of such Selling Stockholder
contained in this Agreement. The foregoing indemnity agreement is in addition to
any liability which the Selling Stockholders or Beneficiaries may otherwise have
to such Underwriter or to any officer, director, affiliate, employee or
controlling person of such Underwriter.
24
(d) Promptly after receipt by an indemnified party under this Section
10 of notice of any intention or threat to commence an action, suit or
proceeding or notice of the commencement of any action, suit or proceeding, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 10, promptly notify the indemnifying party
in writing of the claim or the commencement of that action; provided, however,
that the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 10 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 10.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 10 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
any indemnified party shall have the right to employ separate counsel in any
such action and to 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 thereof has been specifically authorized by the indemnifying party in
writing, (ii) such 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 and in the
reasonable judgment of such counsel it is advisable for such indemnified party
to employ separate counsel or (iii) the indemnifying party has failed to assume
the defense of such action and employ counsel reasonably satisfactory to the
indemnified party, in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified party.
Each indemnified party shall have the right to choose in its sole discretion its
counsel in connection with the defense of any action, suit or proceeding whether
or not the fees and expenses of such counsel are being paid by the indemnifying
parties. No indemnifying party shall (i) without the prior written consent of
the indemnified parties (which consent shall not be unreasonably withheld),
settle or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise, consent or judgment includes an
unconditional release of each indemnified party from all liability arising out
of such claim, action, suit or proceeding, or (ii) be liable for any settlement
of any such action effected without its written consent (which consent shall not
be unreasonably withheld), but if settled with the consent of the indemnifying
party or if there be a final judgment of the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless any indemnified party
from and against any loss or liability by reason of such settlement or judgment.
25
(e) If the indemnification provided for in this Section 10 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 10(a), 10(b) or 10(c) in respect of any loss, claim, damage
or liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company, the Selling Stockholders, and the Beneficiaries, on one
hand, and the Underwriters, on the other hand, from the offering of the Shares
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company, the Selling Stockholders, and the Beneficiaries, on one hand, and
the Underwriters, on the other hand, with respect to the statements or omissions
which resulted in such loss, claim, damage or liability, or action in respect
thereof, as well as any other relevant equitable considerations. The relative
benefits received by the Company, the Selling Stockholders, and the
Beneficiaries, on one hand, and the Underwriters, on the other hand, with
respect to such offering shall be deemed to be in the same proportion as the
total net proceeds (before deducting expenses) from the offering of the Shares
purchased under this Agreement received by the Company and the Selling
Stockholders, and the total underwriting discounts and commissions received by
the Underwriters with respect to the Shares purchased under this Agreement bear
to the total gross proceeds from the offering of the Shares under this
Agreement, in each case as described on the cover page of the Prospectus. The
relative fault shall be determined by reference to whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company or the
Underwriters, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Stockholders, the Beneficiaries, and the Underwriters
agree that it would not be just and equitable if contributions pursuant to this
Section were to be determined by pro rata allocation or by any other method of
allocation which does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified party as a
result of the loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section shall be deemed to include, for purposes of
this Section 10(e), any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 10(e), the Company, the
Selling Stockholders, and the Beneficiaries agree that the Underwriters shall
not be required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by it and distributed to the public
was offered to the public exceeds the amount of any damages which such
Underwriter has otherwise paid or become liable to pay by reason of any untrue
or alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 9(e) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
26
(f) If multiple claims are brought with respect to at least one of
which indemnification is permitted under applicable law and provided for under
this Agreement, the indemnifying party agrees that any judgment award shall be
conclusively deemed to be based on claims as to which indemnification is
permitted and provided for, except to the extent the judgment award expressly
states that it, or any portion thereof, is based solely on a claim as to which
indemnification is not available.
SECTION 11. Termination.
(a) The obligations of the Underwriters hereunder may be terminated by
the Underwriters by notice given to and received by the Company prior to
delivery of and payment for the Shares if, prior to the First Closing Date or
the Option Closing Date, any of the events described in Sections 8(i) or 8(j),
shall have occurred or if the Underwriters shall decline to purchase the Shares
for any reason permitted under this Agreement.
(b) Termination of this Agreement under this Section 11 or Section 8
after the Shares have been purchased by the Underwriters hereunder shall be
applicable only to the Option Shares. Termination of this Agreement shall be
without liability of any party to any other party other than as provided in
Sections 7, 10 and 13 hereof. Notwithstanding any such termination, the
provisions of Sections 7, 10 and 13 hereof shall remain in effect.
SECTION 12. Default by the Company. If the Company or any Selling
Stockholder shall fail at the Closing Date or at any Option Closing Date, as
applicable, to sell and deliver the number of Shares which it is obligated to
sell hereunder on such date, then this Agreement shall terminate (or, if such
default shall occur with respect to any Option Shares to be purchased on an
Option Closing Date, the Underwriters may at the Underwriters' option, by notice
from the Underwriters to the Company, terminate the Underwriters' obligation to
purchase Option Shares from the Company on such date) without any liability on
the part of any non-defaulting party other than pursuant to Section 7, Section
10, Section 11 and Section 13 hereof. No action taken pursuant to this Section
shall relieve the Company or any Selling Stockholders from liability, if any, in
respect of such default.
SECTION 13. Reimbursement of Underwriter's Expenses. If the Company
shall fail to tender the Shares for delivery to the Underwriters by reason of
any failure, refusal or inability on the part of the Company to perform any
agreement on its part to be performed, or because any other condition of the
Underwriters' obligations hereunder required to be fulfilled by the Company is
not fulfilled, the Company will reimburse the Underwriters for all reasonable
out-of-pocket expenses (including reasonable fees and disbursements of counsel
including those necessary to collect such expenses) incurred by the Underwriters
in connection with this Agreement and the proposed purchase of the Shares (less
the amounts paid to the Underwriters through such date as set forth in Section
7(a)), and upon demand, the Company shall pay the full amount thereof to the
Underwriters. If this Agreement is terminated pursuant to Section 11 by reason
of the default of the Underwriters, the Company shall not be obligated to
reimburse the Underwriters on account of those expenses.
27
SECTION 14. Notices, Etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail, telex
or facsimile transmission to Xxxx Xxxx & Co., Inc., 000 Xxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxxx Rock (Fax: 000-000-0000) and to Xxxxx
Xxxxxx & Co., Inc., 000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000,
Attention: Xxxxx Xxxxxx (Fax: 000-000-0000), with a copy to Xxxxxx X. Xxxxx,
Esq., Pitney, Xxxxxx, Xxxx & Xxxxx, LLP, 000 Xxxxxx Xxxxx, Xxxxxxx Xxxx, Xxx
Xxxxxx 00000 (Fax: 000-000-0000), (b) if to the Company, shall be delivered or
sent by mail, telex or facsimile transmission to the address of the Company set
forth in the Registration Statement, Attention: Xxxxxxxx Xxxxxx, with a copy to
Xxxxxx X. Xxxxxxxx, Esq., Xxxxxxxxxx Xxxxxxx, P.C., 00 Xxxxxxxxxx Xxxxxx,
Xxxxxxxx, Xxx Xxxxxx 00000-0000 (Fax: 000-000-0000), (c) if to a Selling
Stockholder, shall be delivered or sent by mail, telex or facsimile transmission
to the address of such Selling Stockholder set forth in the Registration
Statement, (d) if to a Beneficiary, to the Beneficiary's attention at the
address of the Company set forth in the Registration Statement. Any such
statements, requests, notices or agreements shall take effect at the time of
receipt thereof.
SECTION 15. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Underwriters, the Company,
the Selling Stockholders and their respective assigns and successors. This
Agreement and the terms and provisions hereof are for the sole benefit of only
those persons, except that (A) the representations, warranties, indemnities and
agreements of the Company and the Selling Stockholders contained in this
Agreement shall also be deemed to be for the benefit of directors, officers and
employees of any Underwriter, and the person or persons, if any, who control any
Underwriter within the meaning of Section 15 of the Securities Act and (B) the
indemnity agreement of the Underwriters contained in Section 10(b) of this
Agreement shall be deemed to be for the benefit of directors, officers and
employees of the Company, and any person controlling the Company within the
meaning of Section 15 of the Securities Act. Nothing in this Agreement is
intended or shall be construed to give any person, other than the persons
referred to in this Section 15 any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.
SECTION 16. Survival. The respective indemnities, representations,
warranties and agreements of the Company, the Underwriters and the Selling
Stockholders contained in this Agreement or made by or on behalf on them,
respectively, pursuant to this Agreement, shall survive the delivery of and
payment for the Shares and shall remain in full force and effect, regardless of
any investigation made by or on behalf of any of them or any one controlling any
of them.
28
SECTION 17. Definition of the Terms "Business Day" and "Subsidiary".
For purposes of this Agreement, (a) "business day" means each Monday, Tuesday,
Wednesday, Thursday or Friday which is not a day on which banking institutions
in New York are generally authorized or obligated by law or executive order to
close and (b) "subsidiary" has the meaning set forth in Rule 405 of the Rules
and Regulations.
SECTION 18. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of New York.
SECTION 19. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
SECTION 20. 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.
SECTION 21. Entire Agreement; Modification. This Agreement (together
with Engagement Letter) contains the entire understanding between the parties
hereto with respect to the subject matter hereof and may not be modified or
amended except by a writing duly signed by the party against whom enforcement of
the modification or amendment is sought.
If the foregoing correctly sets forth the agreement among the Company
and the Underwriters, please indicate your acceptance in the space provided for
that purpose below.
Very truly yours,
ASTA FUNDING, INC.
By:
--------------------------------------
Name:
Title:
Underwriters:
XXXX XXXX & CO., INC.
By:
--------------------------------------
Name:
Title:
29
XXXXX XXXXXX & CO., INC.
By:
--------------------------------------
Name:
Title:
GMS FAMILY INVESTORS LLC
By:
--------------------------------------
Name:
Title:
XXXXX FAMILY INVESTORS LLC
By:
--------------------------------------
Name:
Title:
------------------------------------------
XXXX XXXXX
------------------------------------------
XXXXXX XXXXX
------------------------------------------
XXXXXXXX XXXXXX
30
SCHEDULE A
----------
Selling Stockholder Number of Shares
------------------- ----------------
GMS Family Investors LLC 300,000
Xxxxx Family Investors LLC 50,000
Xxxxxxxx Xxxxxx 50,000
SCHEDULE B
----------
Name of Underwriter Number of Firm Shares Price Per Share
------------------- --------------------- ---------------
Xxxx, Xxxx & Co., Inc.
Xxxxx Xxxxxx & Co., Inc.,
EXHIBIT A
---------
Lock-up Agreement
Xxxx, Xxxx & Co., L.L.C.
Xxxxx Xxxxxx & Co., Inc.,
c/o Ryan, Xxxx & Co., Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
RE: Asta Funding, Inc.
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain shares
of Common Stock ("Common Stock") of Asta Funding, Inc. (the "Company"). The
Company proposes to carry out a public offering of Common Stock for which you
will act as underwriter (the "Offering"). The undersigned recognizes that the
Offering will be of benefit to the undersigned and will benefit the Company by,
among other things, raising additional capital for its operations. The
undersigned acknowledges that you are relying on the representations and
agreements of the undersigned contained in this letter in carrying out the
Offering and in entering into underwriting agreements with the Company with
respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that
the undersigned will not offer to sell, contract to sell, or otherwise sell,
dispose of, loan, pledge or grant any rights with respect to (collectively, a
"Disposition") any shares of Common Stock, any options or warrants to purchase
any shares of Common Stock or any securities convertible into or exchangeable
for shares of Common Stock (collectively, "Securities") now owned or hereafter
acquired directly by such person or with respect to which such person has or
hereafter acquires the power of disposition, otherwise than (i) as a bona fide
gift or gifts, provided the donee or donees thereof agree in writing to be bound
by this restriction, (ii) for grants of employee stock options pursuant to the
terms of a plan in effect on the date hereof, issuances of Common Stock pursuant
to the exercise of such options or the exercise of any other employee stock
options outstanding on the date hereof, or (iii) with the prior written consent
of the Underwriter, for a period commencing on the date hereof and continuing to
a date 180 days after the offering has been closed (the "Lock-up Period"). The
foregoing restriction has been expressly agreed to preclude the holder of the
Securities from engaging in any hedging or other transaction which is designed
to or reasonably expected to lead to or result in a Disposition of Securities
during the Lock-up Period, even if such Securities would be disposed of by
someone other than such holder. Such prohibiting hedging or other transactions
would include, without limitation, any short sale (whether or not against the
box) or any purchase, sale or grant of any right (including, without limitation,
any put or call option) with respect to any Securities or with respect to any
security (other than a broad-based market basket or index) that included,
relates to or derives any significant part of its value from Securities. The
undersigned also agrees and consents to the entry of stop transfer instructions
with the Company's transfer agent and registrar against the transfer of shares
of Common Stock or Securities held by the undersigned except in compliance with
the foregoing restrictions.
This agreement is irrevocable and will be binding on the undersigned
and the respective successors, heirs, personal representatives, and assigns of
the undersigned. This letter agreement shall terminate and be no further force
and effect upon a decision by the Underwriter or the Company not to proceed with
the Offering.
Dated: _______________________
-----------------------------------
[Printed Name of Holder]
By:
--------------------------------
[Signature]
-----------------------------------
Printed Name of Person Signing
2
EXHIBIT B
---------
