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EXHIBIT 1
______________ SHARES
FLANDERS CORPORATION
COMMON STOCK
UNDERWRITING AGREEMENT
September ___, 1997
XXXXXXX XXXXX & ASSOCIATES, INC.
XXXXXX GULL XXXXXXX & XXXXXXXX INC.
as representatives of the several
underwriters (the "Representatives")
c/o Raymond Xxxxx & Associates, Inc.
000 Xxxxxxxx Xxxxxxx
Xx. Xxxxxxxxxx, XX 00000-0000
Dear Sirs:
Subject to the terms and conditions stated herein, (i) Flanders
Corporation, a North Carolina corporation (the "Company"), proposes to issue
and sell to the Underwriters named in Schedule I (the "Underwriters") an
aggregate of ___________ shares (the "Company Firm Shares") of the Company's
authorized common stock, par value $.001 per share ("Common Stock"), and (ii)
certain shareholders of the Company named in Schedule II hereto (the "Selling
Shareholders") propose to sell to the Underwriters an aggregate of ____________
additional shares of Common Stock in the respective amounts set forth opposite
their names in Schedule II hereto ("Shareholder Firm Shares") and together with
the Company Firm Shares the "Firm Shares". Furthermore, at the election of the
Underwriters and subject to the terms and conditions stated herein, the Company
and Selling Shareholders propose to sell to the Underwriters an aggregate of
960,000 additional shares of Common Stock (the "Optional Shares"). The Company
and the Selling Shareholders will each provide one-half of the Optional Shares.
The Firm Shares and the Optional Shares that the Underwriters elect to purchase
pursuant to Section 2 hereof are collectively called the "Shares." All shares
of common stock of the Company, including the Shares, are hereinafter referred
to as "Common Stock."
The Company also proposes to issue and sell to you warrants (the
"Representatives' Warrants") pursuant to the Representatives' Warrant Agreement
("Representatives' Warrant Agreement") for the purchase of an additional
400,000 shares of Common Stock. The shares of Common Stock issuable upon
exercise of the Representatives' Warrants are hereinafter referred to as the
"Representatives' Warrant Shares."
1. Representations and Warranties of the Company.
a. The Company represents and warrants to and agrees with each
Underwriter that:
(i) A registration statement on Form S-1 (File No. _____)
with respect to the Shares, including a preliminary form of
prospectus, has been prepared by the Company in conformity
with the requirements of the Securities Act of 1933, as
amended (the "Act"), and the applicable Rules and Regulations
(the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") under the Act and has been
filed with the Commission, and such amendments to such
registration statement as may have been required prior to the
date hereof have been filed with the Commission, and such
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amendments have been similarly prepared. Copies of such
registration statement and amendment or amendments and of
each related prospectus have been delivered to you. Such
registration statement, including the prospectus, Part II,
and all financial schedules and exhibits and all other
documents filed as a part thereof or incorporated by
reference and all information deemed to be a part thereof as
of such time of effectiveness, including if applicable any
subsequent prospectus filed pursuant to paragraph (b) of Rule
430(A) of the Rules and Regulations, is herein referred to as
the "Registration Statement," and the prospectus included as
part of the Registration Statement on file with the
Commission that discloses, if applicable, all the information
that was omitted from the prospectus on the effective date
pursuant to Rule 430A of the Rules and Regulations or any
subsequent Prospectus filed with the Commission pursuant to
Rule 424(b) of the Rules and Regulations by the Company with
your consent after the effective date of the Registration
Statement, is herein referred to as the "Final Prospectus."
In the event a prospectus is not filed pursuant to Rule 430A
and Rule 424(b) then, the prospectus included as part of the
Registration Statement on the date when the Registration
Statement became effective is deemed to be the Final
Prospectus. Any prospectus included in the Registration
Statement of the Company and in any amendments thereto prior
to the effective date of the Registration Statement is
referred to herein as a "Preliminary Prospectus."
(ii) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus, and each
Preliminary Prospectus, at the time of filing thereof,
conformed in all material respects to the requirements of the
Act and the Rules and Regulations; when the Registration
Statement becomes effective and at all times subsequent
thereto up to and at the Closing Date (hereinafter defined)
and any later date on which Option Shares are to be
purchased, (i) the Registration Statement and any
post-effective amendment thereto, the Final Prospectus and
amendments or supplements thereto, in all material respects
conformed and will conform to the requirements of the Act and
the Rules and Regulations, and (ii) neither the Registration
Statement nor the Final Prospectus, nor any amendment or
supplement thereto, included or will include any untrue
statement of a material fact or omitted or will omit to state
any material fact required to be stated therein or necessary
to make the statements therein in light of the circumstances
under which they were made not misleading; provided, however,
that none of the representations and warranties contained in
this subparagraph shall apply to information contained in or
omitted from the Registration Statement, the Preliminary
Prospectus or the Final Prospectus or any such amendment or
supplement in reliance upon, and in conformity with, written
information furnished to the Company by any Underwriter,
directly or through you, specifically for inclusion therein.
(iii) Each of the Company's subsidiaries and the percentage
of outstanding shares of capital stock of each of its
subsidiaries owned by the Company are listed on Schedule III
hereto. Each of the Company and its subsidiaries have been
duly incorporated and is validly existing as a corporation in
good standing under the laws of its jurisdiction or
organization, with the power and authority (corporate and
other) to own, lease and operate its properties and conduct
its business as described in the Final Prospectus and each is
duly qualified to do business as a foreign corporation in
good standing in all other jurisdictions, if any, where the
ownership or leasing of properties or the conduct of its
business requires such qualification; each of the Company and
its subsidiaries now hold, and at the Closing Date and any
later date on which Option Shares are to be purchased will
hold, all licenses, certificates, permits and approvals from
state, Federal and other regulatory authorities that are
required for the
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Company to lawfully own, lease and operate its properties and
conduct its business as described in the Final Prospectus or
that are material to the Company's business operations,
properties, assets rights, condition (financial or otherwise)
or prospects, and all such licenses, certificates, permits
and approvals are valid and in full force and effect; each of
the Company and its subsidiaries are conducting its business
in compliance with all laws, rules and regulations of each
jurisdiction in which it conducts its business; neither the
Company nor its subsidiaries are in violation of its charter
or By-laws or, is in default in the performance or observance
of any obligation, agreement, covenant or condition contained
in any bond, debenture, note or other evidence of
indebtedness or in any contract, indenture, mortgage, loan
agreement, joint venture or other agreement or instrument to
which the Company or any of its subsidiaries are a party or
by which they or any of their properties are bound or in
violation of any law, order, rule, regulation, writ,
injunction or decree of any government, governmental
instrumentality or court, domestic or foreign, which defaults
or violations, singly or in the aggregate, would have a
material adverse effect on the business, properties, assets,
rights, operations, condition (financial or otherwise) or
prospects of the Company and its subsidiaries taken as a
whole. The Company does not own or control, directly or
indirectly any corporation, association or other entity other
than its subsidiaries.
(iv) This Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement
on the part of the Company, enforceable in accordance with
its terms; the performance of this Agreement and the
consummation of the transactions herein contemplated will not
result in a breach or violation of any of the terms and
provisions of, or constitute a default under, (i) any
indenture, mortgage, deed of trust, loan agreement, bond,
debenture, note agreement or other evidence of indebtedness,
or any lease, contract or other agreement or instrument to
which the Company is a party or by which its properties or
its subsidiaries' properties are bound, (ii) the Company's
charter or By-laws, or (iii) any applicable statute, rule or
regulation, or any order of any court or governmental agency
or body having jurisdiction over the Company or its
subsidiaries or over their properties, which defaults or
violations, singly or in the aggregate, would have a material
adverse effect on the business, properties, assets, rights,
operations, condition (financial or otherwise) or prospects
of the Company and its subsidiaries taken as a whole; and no
consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation
by the Company of the transactions on its part herein
contemplated, except such as may have been obtained by the
Closing Date (as hereinafter defined) or such as may be
required under the Act or under state or other securities or
Blue Sky laws.
(v) The Company has all requisite corporate power and
authority to execute, deliver and perform under the terms and
conditions of the Representatives' Warrant Agreement. All
necessary corporate proceedings of the Company have been duly
taken to authorize the execution, delivery and performance by
the Company of the Representatives' Warrant Agreement. The
Representatives' Warrant has been duly authorized by the
Company and, when executed and delivered by the Company, will
be a legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms.
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(vi) Other than as disclosed in the Final Prospectus,
there is no pending or, to the Company's knowledge,
threatened action, suit, claim or proceeding against Company
or its subsidiaries or any of their officers or any of their
properties, assets or rights before any court or governmental
agency or body or otherwise which might result in any
material adverse change in the business, properties, assets,
rights operations, condition (financial or otherwise) or
prospects of the Company and its subsidiaries taken as a
whole, or prevent consummation of the transactions
contemplated hereby.
(vii) There are no contracts or documents of the Company or
its subsidiaries that would be required to be described in
the Final Prospectus or to be filed as exhibits to the
Registration Statement by the Act or by the Rules and
Regulations that have not been accurately described in all
material respects in the Final Prospectus or filed as
exhibits to the Registration Statement.
(viii) The authorized, issued and outstanding capital stock
of the Company is as set forth in the Final Prospectus under
the caption "Capitalization" as of the date stated therein;
all outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid
and nonassessable and were not issued in violation of any
preemptive right or other rights to purchase such shares, and
the capital stock of the Company conforms in all material
respects to the statements in relation thereto contained in
the Final Prospectus (and such statements correctly state the
substance of the instruments defining the capitalization of
the Company); and the Company Shares have been duly
authorized for issuance and sale to the Underwriters pursuant
to this Agreement and, when issued and delivered by the
Company against payment therefor in accordance with the terms
of this Agreement, will be duly and validly issued and fully
paid and nonassessable and no person has preemptive or other
rights to purchase any of the Shares. No further approval or
authorization of any stockholder, the Board of Directors or
others is required for the issuance and sale of the Company
Shares to the several Underwriters, except as may be required
under the Act or under state or other securities or Blue Sky
laws.
(ix) The Representatives' Warrant Shares are validly
authorized and reserved for issuance and, when issued, paid
for and delivered upon exercise of the Representatives'
Warrant, in accordance with the provisions of the
Representatives' Warrant, will be validly issued, fully paid
and non-assessable and will not be issued in violation of any
preemptive rights of shareholders; and the holders of the
Representatives' Warrant Shares will receive good title to
them, free and clear of all Encumbrances.
(x) The Representatives' Warrant conforms to all
statements relating thereto contained in the Registration
Statement and the Prospectus.
(xi) McGladrey & Xxxxxx, LLP, which has examined the
consolidated financial statements of the Company as of
December 31, 1996, December 31, 1995 and December 30, 1994,
and for each of years in the three-year period ended December
31, 1996, together with the related schedules and notes (the
"Audited Financial Statements") and whose report appears as
part of the Final Prospectus, are independent accountants
within the meaning of the Act and the Rules and Regulations.
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(xii) The Audited Financial Statements and the six-month
unaudited financial information forming part of the
Registration Statement or Final Prospectus (collectively, the
"Financial Statements"), fairly present the consolidated
financial position, results of operations and cash flow of
the Company at the respective dates and for the respective
periods to which they apply; and the Audited Financial
Statements and the unaudited financial information filed with
the Commission as part of the Registration Statement and
included as part of the Final Prospectus have been prepared
in accordance with generally accepted accounting principles
consistently applied throughout the periods shown.
(xiii) Subsequent to the latest date of the Financial
Statements there has not been (i) any material adverse change
in the business, properties, assets, rights, operations,
condition (financial or otherwise) or prospects of the
Company and its subsidiaries taken as a whole, (ii) any
transaction that is material to the Company and its
subsidiaries taken as a whole, except transactions in the
ordinary course of business, (iii) any obligation that is
material to the Company and its subsidiaries taken as a
whole, direct or contingent, incurred by the Company or its
subsidiaries, except obligations incurred in the ordinary
course of business, (iv) any change that is material to the
Company and its subsidiaries taken as a whole in the capital
stock or outstanding indebtedness of the Company (other than
indebtedness incurred in connection with the purchase of
property by the Company's subsidiary, Precisionaire, Inc.),
or (v) any dividend or distribution of any kind declared,
paid or made on the capital stock of the Company.
(xiv) The Company or its subsidiaries have good and
marketable title to all properties and assets described in
the Final Prospectus as owned by it, free and clear of any
liens, charges, encumbrances or restrictions other than as
set forth in the Final Prospectus, such as are not material
to the business, properties, assets, rights, operations,
condition (financial or otherwise) or prospects of the
Company and its subsidiaries taken as a whole; the agreements
to which the Company is a party described in the Final
Prospectus are valid and enforceable in accordance with their
terms by the Company, except as enforcement may be limited by
applicable bankruptcy, insolvency and other similar laws
affecting creditors' rights and rules of law governing
specific performance, injunctive relief and other equitable
remedies and, to its knowledge, the other contracting party
or parties thereto are not in breach or default under any of
such agreements, except for such breaches or defaults which
would not singly or in the aggregate, have a material adverse
effect on the business, properties, assets, rights,
operations, condition (financial or otherwise) or prospects
of the Company and its subsidiaries taken as a whole; and the
Company has valid and enforceable leases for the properties
described in the Final Prospectus as leased by it, except as
enforcement may be limited by applicable bankruptcy,
insolvency and other similar laws affecting creditors' rights
and rules of law governing specific performance, injunctive
relief and other equitable remedies.
(xv) The Company has filed all necessary federal, state
local and foreign tax returns and has paid all taxes as due,
and, to the Company's best knowledge, there is no tax
deficiency that has been or might be asserted against the
Company that would materially and adversely affect its
business, properties, assets, rights, operations, condition
(financial or otherwise) or prospects; all tax liabilities
are adequately provided for on the books of the Company.
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(xvi) The Company maintains insurance of the types and in
the amounts required by law and reasonably necessary to
operate its business including, but not limited to, insurance
covering real and personal property owned or leased by the
Company against theft, damage, destruction, acts of
vandalism, general and product liability and all other risks
customarily insured against, all of which insurance is in
full force and effect.
(xvii) The Company and each of the Subsidiaries has
generally enjoyed a satisfactory employer-employee
relationship with its employees and is in material compliance
with all federal, state, local, and foreign laws and
regulations respecting employment and employment practices,
terms and conditions of employment and wages and hours. There
are no pending investigations involving the Company or any of
the Subsidiaries by the U.S. Department of Labor, or any
other governmental agency responsible for the enforcement of
such federal, state, local, or foreign laws and regulations.
There is no unfair labor practice charge or complaint against
the Company or any of the Subsidiaries pending before the
National Labor Relations Board or any strike, picketing
boycott, dispute, slowdown or stoppage pending or to the
Company's knowledge threatened against or involving the
Company or any of the Subsidiaries or any predecessor entity,
and none has ever occurred. No representation question exists
respecting the employees of the Company or any of the
Subsidiaries, and no collective bargaining agreement or
modification thereof is currently being negotiated by the
Company or any of the Subsidiaries. No grievance or
arbitration proceedings is pending under any expired or
existing collective bargaining agreements of the Company or
any of the Subsidiaries. No labor dispute with the employees
of the Company or any of the Subsidiaries exists, or is
imminent.
(xviii) The Company is familiar with the Investment Company
Act of 1940, as amended (the "1940 Act"), and the rules and
regulations thereunder, and has in the past conducted, and
intends in the future to continue to conduct, its affairs in
such a manner as to ensure that it will not become an
"investment company" within the meaning of the 1940 Act and
such rules and regulations.
(xix) Except as disclosed in the Final Prospectus, neither
the Company nor any of the Subsidiaries maintains, sponsors
or contributes to any program or arrangement that is an
"employee pension benefit plan," an "employee welfare benefit
plan," or a "multiemployer plan" as such terms are defined in
Sections 3(2), 3(1) and 3(37), respectively, of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")
("ERISA Plans"). Neither the Company nor any of the
subsidiaries maintains or contributes, now or at any time
previously, to a defined benefit plan, as defined in Section
3(35) of ERISA. No ERISA Plan (or any trust created
thereunder) has engaged in a "prohibited transaction" within
the meaning of Section 406 of ERISA of Section 4975 of the
Code, which could subject the Company to any tax penalty on
prohibited transactions and which has not adequately been
corrected. Each ERISA Plan is in compliance with all
reporting, disclosure and other requirements of the Code and
ERISA as they relate to any such ERISA Plan. The Company has
never completely or partially withdrawn from a "multiemployer
plan."
(xx) Neither the Company nor any of its employees,
directors, stockholders, partners, or affiliates (within the
meaning of the Rules and Regulations) of any of the foregoing
has taken or will take, directly ro indirectly, any action
designed to or which has constituted or which
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might be expected to cause or result in, under the Exchange
Act, or otherwise, stabilization or manipulation of the price
of any security of the Company to facilitate the sale or
resale of the Shares or otherwise.
(xxi) Except as disclosed in the Final Prospectus, none of
the patents, patent applications, trademarks, service marks,
service names, trade names and copyrights, and none of the
licenses and rights to the foregoing presently owned or held
by the Company or any of the Subsidiaries are in dispute or,
to the Company's knowledge, are in any conflict with the
right of any other person or entity. Except as disclosed in
the Prospectus, the Company and each of the Subsidiaries (i)
owns or has the right to use, free and clear of all liens,
charges, claims, encumbrances, pledges, security interests,
or to the Company's knowledge, defects or other restrictions
or equities of any kind whatsoever, all patents, patent
applications, trademarks, service marks, service names, trade
names and copyrights, technology and licenses and rights with
respect to the foregoing, used in the conduct of its business
as now conducted or proposed with respect to the foregoing,
without, to the Company's knowledge, infringing upon or
otherwise acting adversely to the right or claimed right of
any person, corporation or other entity under or with respect
to any of the foregoing and (ii) is not obligated or under
any liability whatsoever to make any payment by way or
royalties, fees or otherwise to any owner or licensee of, or
other claimant to, any patent, patent application, trademark,
service xxxx, service names, trade name, copyright, know-how,
technology of its business or otherwise. There is no action,
suit, proceeding, inquiry, arbitration, investigation,
litigation or governmental or other proceeding, domestic or
foreign, pending or to the Company's knowledge threatened (or
circumstances that may give rise to the same) against the
Company or any of the Subsidiaries which challenges the
exclusive rights of the Company or any of the Subsidiaries
with respect to any trademarks, trade names, service marks,
service names, copyrights, patents, patent applications or
licenses or rights to the foregoing used in the conduct of
its business, or which challenge the right of the Company or
any of the Subsidiaries to use any technology presently used
or contemplated to be used in the conduct of its business.
(xxii) The Company and each of the Subsidiaries owns and has
the unrestricted right to use all trade secrets, know-how
(including all other unpatented and/or unpatentable
proprietary or confidential information, systems or
procedures), inventions, technology, designs, processes,
works of authorship, computer programs and technical data and
information (collectively herein "intellectual property")
that are material to the development, manufacture, operation
and sale of all products and services sold or proposed to be
sold by the Company or any of the Subsidiaries, without
violating any right, lien, or claim of others, including
without limitation, former employers of its employees;
provided, however, that the possibility exists that other
persons or entities, completely independently of the Company,
or its employees or agents, could have developed trade
secrets or items of technical information similar or
identical to those of the Company. Neither the Company nor
any of the Subsidiaries is aware of any such development of
similar or identical trade secrets or technical information
by others.
(xxiii) Except as disclosed in the Final Prospectus, there
are no outstanding (i) securities or obligations of the
Company convertible into or exchangeable for any capital
stock of the Company, (ii) warrants, rights or options to
subscribe for or purchase from the Company any
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such capital stock or any such convertible or exchangeable
securities or obligations, or (iii) obligations of the
Company to issue any shares of capital stock, any such
convertible or exchangeable securities or obligations, or any
such warrants, rights or options.
(xxiv) Except and to the extent described in the Prospectus,
no holders of any securities of the Company or of any
options, warrants or other convertible or exchangeable
securities of the Company have the right to include any
securities issued by the Company in the Registration
Statement or any registration statement to be filed by the
Company or to require the Company to file a registration
statement under the Act and no person or entity holds any
anti-dilution rights with respect to any securities of the
Company.
(xxv) All offers and sales of the Company's capital stock
prior to the date hereof were at all relevant times duly
registered under the Act or exempt from the registration
requirements of the Act and were duly registered or the
subject of an available exemption from the registration
requirements of the applicable state securities or blue sky
laws, and the Company has taken all actions reasonably
necessary for it to assure that such exemptions from
registration would continue to be operative during all
applicable periods of time required by law.
(xxvi) The Company has obtained for the benefit of the
Company and the Underwriters from Xxxxxx X. Xxxxx and Xxxxxx
X. Xxxxxxx a written agreement (a "Lockup Letter") that for a
period of 180 days from the date of the Prospectus, they will
not, without the prior written consent of Xxxxxxx Xxxxx &
Associates, Inc., on behalf of the Underwriters, offer,
pledge, sell, contract to sell, grant any option for the sale
of, or otherwise dispose of (or announce any offer, pledge,
sale, grant of an option to purchase or other disposition),
directly or indirectly, any shares of Common Stock or
securities convertible into, or exercisable or exchangeable
for, shares of Common Stock.
(xxvii) Neither the Company nor any of its subsidiaries, nor,
to the knowledge of the Company or any of its subsidiaries,
any director, officer, agent, employee, Affiliate or other
person associated with or acting on behalf of the Company or
any of its subsidiaries has, directly or indirectly, used any
corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to
political activity, or established or maintained any unlawful
or unrecorded funds in violation of Section 30A of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"); made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic
political parties or campaigns from corporate funds; violated
any provision of the Foreign Corrupt Practices Act of 1977,
as amended; or made any bribe, rebate, payoff, influence
payment, kickback or other payment unlawful under the laws of
the United States or any foreign jurisdiction.
(xxviii) The minute books of the Company and each of the
Subsidiaries have been made available to the Underwriters and
contain a complete summary of all meetings and actions of the
directors, stockholders, audit committee, compensation
committee and any other committee of the Board of Directors
of the Company and each of the Subsidiaries, respectively,
since the time of its incorporation, and reflects all
transactions referred to in such minutes accurately in all
material respects.
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(xxix) The Company and each of its subsidiaries makes and
keeps accurate books and records reflecting its assets and
maintains internal accounting controls that provide
reasonable assurance that (i) transactions are executed in
accordance with management's authorization, (ii) transactions
are recorded as necessary to permit preparation of the
Company's financial statements in accordance with generally
accepted accounting principles and to maintain accountability
for the assets of the Company, (iii) access to the assets of
the Company is permitted only in accordance with management's
authorization, and (iv) the recorded accountability for
assets of the Company is compared with existing assets at
reasonable intervals and appropriate action is taken with
respect to any differences.
(xxx) The Shares have been duly included for trading,
subject to notice of issuance on the Nasdaq National Market;
(xxxi) Except as disclosed in the Final Prospectus, the
Company and its subsidiaries (i) are in compliance with any
and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and
safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"),
(ii) have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to
conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits,
licenses or other approvals would not, singly or in the
aggregate, have a material adverse effect on the Company and
its subsidiaries, taken as a whole.
(xxxii) Except as disclosed in the Final Prospectus, there
are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or
approval, any related constraints on operating activities and
any potential liabilities to third parties) which would,
singly or in the aggregate, have a material adverse effect on
the Company and its subsidiaries, taken as a whole.
b. Each Selling Shareholder, severally and not jointly,
represents and warrants to, and agrees with, each Underwriter that:
(i) Such Selling Shareholder has full right, power and
authority to enter into this Agreement, the Power of Attorney
and the Custody Agreement in the forms heretofore furnished
to you (the "Power of Attorney and the Custody Agreement")
and on the date hereof such Selling Shareholder has and, at
the time of delivery of the Shareholder Firm Shares to the
Underwriters hereunder, such Selling Shareholder will have
full right, power and authority to sell and deliver the
Shareholder Firm Shares to be sold by such Selling
Shareholder to the Underwriters, and at the date hereof such
Selling Shareholder is, and at the time of delivery of the
Shareholder Firm Shares to the Underwriters such Selling
Shareholder will be, the lawful owner of and has and will
have marketable title to the Shareholder Firm Shares to be
sold by such Selling Shareholder free and clear of any
claims, liens, encumbrances or security interests. Further,
delivery of the Firm Shares to be sold by such Selling
Shareholder pursuant to this Agreement will pass title to
such shares free and clear of any security interests, claims,
liens, equities and other encumbrances.
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(ii) 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 Shareholder is a party or by which such Selling
Shareholder 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
Shareholder and each constitutes a legal, valid and binding
obligation of such Selling Shareholder enforceable against
such Selling Shareholder in accordance with its terms.
(iii) no consent, approval, authorization, order or
declaration of or from, or registration, qualification or
filing with, any court or governmental agency or body is
required for the sale of the Shares to be sold by such
Selling Shareholder or the consummation of the transactions
contemplated by this Agreement, the Power of Attorney or the
Custody Agreement, except the registration of Shares under
the Act (which, if the Registration Statement is not
effective as of the time of execution hereof, shall be
obtained as provided in this Agreement) and such as may be
required under state securities or blue sky laws in
connection with the offer, sale and distribution of such
Shares by the Underwriters.
(iv) When the Registration Statement becomes effective and at
all times subsequent thereto, the Registration Statement, any
post-effective amendment thereto and the Final Prospectuses
as amended and supplemented, did not and will not contain any
untrue statement of a material fact regarding such Selling
Shareholder or omit to state a material fact regarding such
Selling Shareholder required to be stated therein or
necessary in order to make the statements therein not
misleading, and such Selling Shareholder is, and shall be,
unaware of any untrue statement of a material fact in such
documents or the omission from such documents of any material
fact required to be stated therein or necessary to make the
statements therein not misleading.
(v) Certificates in negotiable form representing all of the
Firm Shares to be sold by such Selling Shareholder have been
placed in custody under the Power of Attorney and the Custody
Agreement duly executed and delivered by such Selling
Shareholder to and appointing ______, as custodian (the
"Custodian"), with authority to deliver and receive payment
for the Firm Shares to be sold by such Selling Shareholder
hereunder, and appointing __________ and _________________ or
either of them, as such Selling Shareholders'
attorney-in-fact (the "Attorney-in-Fact") with authority to
execute and delivery this Agreement and any other documents
necessary or desirable in connection with the transactions
contemplated hereby on behalf of such Selling Shareholder,
and otherwise to act on behalf of such Selling Shareholder
and take all actions that may be necessary or desirable in
connection with the transactions contemplated by this
Agreement, the Power of Attorney and the Custody Agreement.
(vi) The Firm Shares represented by the certificates held in
custody for such Selling Shareholder under the Power of
Attorney and the Custody Agreement are subject to the
interests of the Underwriters hereunder, and the arrangements
made by such Selling Shareholder for such custody, as well as
the appointment by such Selling Shareholder of the
Attorney-in-Fact, are, to that extent, irrevocable. Each
Selling Shareholder specifically agrees that the obligations
of the Selling Shareholders hereunder shall not be terminated
by operation
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of law, whether by the death or incapacity of any individual
Selling Shareholder or by the occurrence of any other event.
If any Selling Shareholder should die or become
incapacitated, or if any other similar event should occur
before the delivery of the Firm Shares and Option Shares
hereunder, certificates representing such Shares shall be
delivered by or on behalf of such Selling Shareholder in
accordance with the terms and conditions of this Agreement
and of the Power of Attorney and the Custody Agreement, and
the actions taken by the Attorney- in-Fact pursuant to the
Power of Attorney and the Custody Agreement 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.
2. Purchase and Sale of Shares. Subject to the terms and conditions
herein set forth, (i) the Company agrees to sell to each of the Underwriters,
and each of the Underwriters agrees, severally and not jointly, to purchase
from the Company, at a purchase price of $_______ per share, the number of the
Company Firm Shares set forth opposite the name of each Underwriter on Schedule
I, (ii) the Selling Shareholders severally and not jointly, agree to sell to the
Underwriters, and each of the Underwriters agrees, severally and not jointly,
to purchase from the Selling Shareholders, at the purchase price per share set
forth in clause (i) of this Section 2, the number of Shareholder Firm Shares
set forth opposite the names of each Underwriter on Schedule I hereto.
The Company and the Selling Shareholders hereby grant to the
Underwriters the right to purchase at their election in whole or in part up to
960,000 Optional Shares at the purchase price per share set forth in clause (i)
in the paragraph above for the sole purpose of covering over-allotments in the
sale of Firm Shares. If the option granted hereby is exercised in part, then
the respective number of Optional Shares to be purchased by each of the
Underwriters shall be determined by multiplying the total number of Optional
Shares as to which such election shall have been exercised by the Underwriters
by a fraction, the numerator of which is the maximum number of Optional Shares
such Underwriter is entitled to purchase as set forth opposite the name of such
Underwriter in Schedule I hereto and the denominator of which is the maximum
number of Optional Shares that all Underwriters are entitled to purchase
hereunder (with the resulting number to be adjusted by the Underwriters so as
to eliminate fractional shares). Any such election to purchase Optional Shares
may be exercised by written notice from the Underwriters to the Company, given
within a period of 30 calendar days after the date of this Agreement and
setting forth the aggregate number of Optional Shares to be purchased and the
date on which such Optional Shares are to be delivered, as determined by the
Underwriters but in no event earlier than the First Time of Delivery or, unless
the Underwriters and the Company otherwise agree, to furnish or cause to be
furnished to the Underwriters the certificates, letters and opinions, and to
satisfy all conditions, set forth in Section 6 hereof at the Subsequent Time of
Delivery.
After the Registration Statement becomes effective, the several
Underwriters intend to offer the Shares to the public as set forth in the
Prospectus.
3. Delivery of Shares; Closing.
a. Certificates in definitive form for the Shares to be purchased by
each Underwriter hereunder, and in such denominations and registered
in such names as Xxxxxxx Xxxxx & Associates, Inc. may request upon at
least 48 hours prior notice to the Company, shall be delivered by or
on behalf of the Company and the Selling Shareholders to the
Underwriters for the account of such Underwriter, against payment by
such Underwriter on its behalf as provided herein. Payment shall be
made (i) with respect to the purchase price for the Company Firm
Shares and any Optional Shares purchased from
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the Company, if any Optional Shares are purchased hereunder, to the
Company, by wire transfer or official bank check or checks payable to
the order of the Company, in next day available funds against delivery
of the certificates for the Company Firm Shares or Optional Shares
purchased from the Company, as the case may be, and (ii)with respect
to the purchase price for Shareholder Firm Shares to the Custodian by
wire transfer or official bank check or checks payable to the order of
the Custodian, in next day available funds against delivery of the
certificates for the Shareholder Firm Shares purchased from Selling
Shareholders. The closing of the sale and purchase of the Shares shall
be held at the offices of Xxxxxxx Xxxxx & Associates, Inc., 000
Xxxxxxxx Xxxxxxx, Xx. Xxxxxxxxxx, Xxxxxxx 00000 (the "Representative's
Office"), or at such location in Tampa, Florida as the Representatives
may designate, except that physical delivery of certificates for the
Shares shall be made at the direction of the Underwriters either at
the Representative's Office or at the office of Firstar Trust Company,
___________________ (the "Firstar Office"), or shall be made to The
Depository Trust Company ("DTC"), 00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, for the account of the Underwriters or for such other accounts
as the Underwriters shall specify to DTC. The time and date of such
delivery and payment shall be, with respect to the Firm Shares, at
10:00 a.m., Eastern time, on the third full business day after this
Agreement is executed or at such other time and date as the
Underwriters and the Company and the Attorneys-in-Fact, on behalf of
the Selling Shareholders, may agree upon in writing , and, with
respect to the Optional Shares, 10:00 a.m., Eastern time, on the date
specified by the Underwriters in the written notice given by the
Underwriters of the Underwriters' election to purchase all or part of
such Optional Shares, or at such other time and date as the
Underwriters, the Company and the Attorney-in-Fact, on behalf of the
Selling Shareholders, may agree upon in writing. Such time and date
for delivery of the Firm Shares is herein called the "First Time of
Delivery," and such time and date for delivery of any Optional Shares,
if not the First Time of Delivery, is herein called a "Subsequent Time
of Delivery," and each such time and date for delivery of any Optional
Shares, if not the First Time of Delivery, is herein called a
"Subsequent Time of Delivery," and each such time and date for
delivery is herein called a "Time of Delivery." The Company will make
certificates for the Shares available for checking and packaging at
least 24 hours prior to each Time of Delivery at the Firstar Office or
the office of DTC in New York, New York or at such other location in
New York, New York specified by the Underwriters in writing at least
48 hours prior to such Time of Delivery.
b. On the Closing Date, at the time of the delivery and payment
for the Firm Shares, the Company shall issue, sell and deliver to you,
for an aggregate purchase price of $_____, the Representatives'
Warrant, substantially in the form filed as an exhibit to the
Registration Statement. The Representatives' Warrant will be
exercisable at an initial exercise price of $_______ per Share at any
time and from time to time, in whole or in part, during a five-year
period commencing one year following the effective Date. The Company
has granted you certain registration rights with respect to the
Representatives' Warrant and the securities issuable upon exercise
thereof, as set forth in said Representatives' Warrant.
4. Covenants.
a. The Company covenants and agrees with the several
Underwriters that:
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(i) The Company will use its best efforts to cause the
Registration Statement and any amendment thereto, if not
effective at the time and date that this Agreement is
executed and delivered by the parties hereto, to become
effective. If the Registration Statement has become or
becomes effective pursuant to Rule 430A of the Rules and
Regulations, or the filing of the Final Prospectus is
otherwise required under Rule 424(b) of the Rules and
Regulations, the Company will file the Final Prospectus,
properly completed, pursuant to the applicable paragraph of
Rule 424(b) of the Rules and Regulations within the time
period prescribed and will provide evidence satisfactory to
you of such timely filing; the Company will notify you,
promptly after it shall receive notice thereof, of the time
when the Registration Statement or any post-effective
amendment to the Registration Statement has become effective
or any amendment or supplement to the Final Prospectus has
been filed.
(ii) The Company will notify you promptly of any request by
the Commission to amend or supplement the Registration
Statement or Final Prospectus or for additional information;
promptly upon your request, the Company will prepare and file
with the Commission amendments or supplements to the
Registration Statement or Final Prospectus which, in the
reasonable opinion of, Schifino & Xxxxxxxxx, P.A., counsel
for the several Underwriters, may be necessary or advisable
in connection with the distribution of Shares by the
Underwriters; the Company will fully and completely comply
with the provisions of Rule 430A of the Rules and Regulations
with respect to information omitted from the Registration
Statement in reliance upon such Rule; the Company will
promptly prepare and file with the Commission, and promptly
notify you of the filing of, any amendment or supplement to
the Registration Statement or Final Prospectus that may be
necessary to correct any statements or omissions if, at any
time a prospectus relating to the Shares is required to be
delivered under the Act, any event shall have occurred as a
result of which the Final Prospectus would include an untrue
statement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading;
in case any Underwriter is required to deliver a prospectus
within the nine-month period referred to in Section 10(a)(3)
of the Act in connection with the sale of the Shares, the
Company will prepare promptly upon request of such
Underwriters, at the expense of the Company, such amendment
or amendments to the Registration Statement and the Final
Prospectus as may be necessary to permit compliance with the
requirements of Section 10(a)(3) of the Act, and it will file
no amendment or supplement to the Registration Statement or
the Final Prospectus that shall not previously have been
submitted to you a reaonsable time prior to the proposed
filing thereof or to which you shall reasonably object in
writing, subject, however, to compliance with the Act and the
Rules and Regulations thereunder and the provisions of this
Agreement.
(iii) The Company will advise you, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance
of any stop order by the Commission suspending the
effectiveness of the Registrations Statement or of the
initiation or threat of any proceeding for that purpose; and
the Company shall promptly use its best efforts to prevent
the issuance of any stop order or to obtain its withdrawal at
the earliest possible moment if such a stop order should be
issued.
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(iv) The Company will use its best efforts to qualify the
Shares for offering and sale under the securities laws of
such jurisdictions as you may designate and to continue such
qualifications in effect for so long as may be required for
purposes of the distribution of the Shares, except that the
Company shall not be required in connection therewith or as a
condition thereof to qualify as a foreign corporation or to
execute a general consent to service of process in any
jurisdiction or to make any undertaking with respect to the
conduct of its business. In each jurisdiction in which the
shares have qualified as above provided, the Company will
make and file such statements and reports in each year as are
or may be reasonable required by the laws of such
jurisdiction.
(v) The Company will furnish to you, as soon as available,
copies of the Registration Statement (three of which will be
signed and will include all exhibits), each Preliminary
Prospectus or the Final Prospectus and any amendments or
supplements to such documents, including any prospectus
prepared to permit compliance with Section 10(a)(3) of the
Act, all in such quantities as you may from time to time
reasonably request.
(vi) The Company will make generally available to its
security holders as soon as practicable, but in any event not
later than the 45th day following the end of the fiscal
quarter first occurring after the first anniversary of the
"effective date of the Registration Statement" (as defined in
Rule 158(c) of the Rules and Regulations), an earnings
statement (which will be in reasonable detail but need not be
audited) complying with the provisions of Section 11(a) of
the Act and covering a twelve-month period beginning after
the effective date of the Registration Statement.
(vii) During a period of five years after the date hereof,
the Company will furnish to its stockholders, as soon as
practicable after the end of each respective period, annual
reports (including financial statements audited by
independent public accountants) and unaudited quarterly
reports of operations for each of the first three quarters of
the fiscal year, and will furnish to you and the other
several Underwriters hereunder, upon request, (i)
concurrently with furnishing such reports to its
stockholders, statements of operations of the Company for
each of the first three quarters in the form furnished by the
Company's stockholders; (ii) concurrently with furnishing to
its stockholders, a balance sheet of the Company as of the
end of such fiscal year, together with statements of
operations, of stockholders' equity and of cash flow of the
Company for such fiscal year, accompanied by a copy of the
certificate or report thereon of independent public
accountants; (iii) as soon as they are available, copies of
all reports (financial or other) mailed to security holders;
(iv) as soon as they are available, copies of all reports and
financial statements furnished to or filed with the
Commission, any securities exchange or the National
Association of Securities Dealers, Inc. ("NASD"); (v) every
material press release in respect of the Company or its
affairs which was released or prepared by the Company; and
(vi) any additional information of a public nature concerning
the Company or its business that you may reasonably request.
During such five-year period, if the Company shall have
active subsidiaries, the foregoing financial statements shall
be on a consolidated basis to the extent that the accounts of
the Company and its subsidiaries are consolidated, and shall
be accompanied by similar financial statements for any
significant subsidiaries that is not so consolidated.
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(viii) The Company shall not, during the 180 days following
the date on which the Shares are first released by you for
sale to the public, except with the prior written consent of
Xxxxxxx Xxxxx & Associates, Inc., offer for sale, sell,
distribute or otherwise dispose of any shares of Common
Stock, or sell or grant options, rights or warrants with
respect to any shares of Common Stock (other than the grant
of options pursuant to option plans existing on the date
hereof or the issuance Common Stock upon exercise of
outstanding options or Warrants), or any securities
convertible or exchangeable into Common Stock, except for
securities issued in connection with an acquisition.
(ix) The Company will apply the net proceeds from the sale
of the Shares being sold by it in the manner set forth under
the caption "Use of Proceeds" in the Final Prospectus.
b. The Selling Shareholders covenant and agree with the several
Underwriters that:
(i) Such Selling Shareholder will not (i) take, directly or
indirectly, prior to the termination of the underwriting
syndicate contemplated by this Agreement, any action designed
to cause or to result in, or that might reasonably be
expected to constitute, the stabilization or manipulation of
the price of any security of the Company to facilitate the
sale or resale of any of the Shares, (ii) sell, bid for,
purchase or pay anyone any compensation for soliciting
purchases of, the Shares or (iii) pay to or agree to pay any
person any compensation for soliciting another to purchase
any other securities of the Company.
(ii) In order to document the Underwriters' compliance with
the reporting and withholding provisions of the Internal
Revenue Code of 1986, as amended, with respect to the
transactions herein contemplated, each of the Selling
Shareholders agrees to deliver to the Underwriters prior to
or at the First Time of Delivery a properly completed and
executed United States Treasury Department Form W-9 (or other
applicable form or statement specified by Treasury Department
regulations in lieu thereof).
5. Expenses.
a. The Company will pay and bear all costs and expenses in connection
with (i) the preparation, printing and filing of the Registration
Statement (including financial statements and exhibits), Preliminary
Prospectuses, Final Prospectus and any amendments or supplements
thereto; (ii) the printing of this Agreement, the Blue Sky Memoranda
and any instruments related to any of the foregoing, issuance and
delivery of the Shares hereunder to the several Underwriters,
including taxes and the cost of all stock certificates representing
the Shares; fees and charges of the Transfer Agent; fees and
disbursements of counsel for the Company and Selling Shareholders;
(iii) all fees and other charges of the Company's independent public
accountants; (iv) the cost of furnishing to the several Underwriters
copies of the Registration Statement (including appropriate exhibits),
Preliminary Prospectuses, Final Prospectus and any amendments or
supplements to any of the foregoing; (v) NASD filing fees and the cost
of qualifying the Shares under the laws of the jurisdictions as you
may reasonably designate (including filing fees and fees and
disbursements of Underwriters' Counsel in connection with such Blue
Sky qualifications); (vi) the costs and expenses of the Company
relating to investor presentations on any "road show" undertaken in
connection with marketing the offering of the Shares, including,
without limitation, travel and lodging expenses of the Representatives
and officers of the Company and costs of any aircraft chartered in
connection with the road show; and (vii)
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other expenses directly incurred by the Company in connection with the
performance of its obligations hereunder.
b. If the transactions contemplated hereby are not consummated by
reason of any refusal or inability on the part of the Company or
Selling Shareholders, to perform any agreement on their respective
parts to be performed hereunder or to fulfill any condition of the
Underwriters' obligations hereunder, of if the Company shall terminate
the Agreement under Section 10(a) hereof, the Company will reimburse
the several Underwriters for all out-of-pocket expenses (including any
and all fees and disbursements of Underwriters' Counsel) up to $50,000
incurred by the Underwriters in preparing to market or marketing the
Shares.
6. Conditions of Underwriters' Obligations
The obligations of the several Underwriters to purchase and pay for
the Shares as provided herein, shall be subject to the accuracy, as of the date
hereof and the Closing Date and any later date on which Option Shares are to be
purchased, as the case may be, of the representations and warranties of the
Company and Selling Shareholders herein, to the performance by the Company of
its obligations hereunder and to the following additional conditions:
a. The Registration Statement shall have become effective; if the
filing of the Final Prospectus, or any supplement thereto, is required
pursuant to Rule 424(b) of the Rules and Regulations, the Final
Prospectus shall have been filed in the manner and within the time
period required by Rule 424(b) of the Rules and Regulations; and no
stop order suspending the effectiveness thereof shall have been issued
and no proceeding for that purpose shall have been initiated or, to
the knowledge of the Company or any Underwriter, threatened by the
Commission, and any request of the Commission for additional
information (to be included in the Registration Statement or the Final
Prospectus or otherwise) shall have been complied with to the
satisfaction of Underwriters' Counsel.
b. All corporate proceedings and other legal matters in connection
with this Agreement, the form of Registration Statement, all
Preliminary Prospectuses, the Final Prospectus, and the registration,
authorization, issue, sale and delivery of the Shares shall have been
satisfactory to Underwriters' Counsel and such counsel shall have been
furnished with such papers and information as they may reasonably have
requested to enable them to pass upon the matters referred to in this
subsection.
c. You shall have received on the Closing Date and any later date on
which Option Shares are purchased, as the case may be, the following
opinions of opinions, certificates and letters, dated the Closing Date
or such later date, addressed to the Underwriters and with reproduced
copies or signed counterparts thereof for each of the Underwriters:
(i) the opinion of Xxxxx & Xxxxxx, counsel for the Company to
the effect that:
(a) Each of the Company and its subsidiaries
have been duly incorporated and is validly existing
as a corporation in good standing under the laws of
its jurisdiction of organization;
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(b) Each of the Company and its subsidiaries have
the power and authority (corporate and other) to
own, lease and operate its properties and conduct
its business as described in the Final Prospectus
and each of the Company and its subsidiaries are
duly qualified to do business as a foreign
corporation in good standing in all jurisdictions,
if any, where the ownership or leasing of properties
or the conduct of its business requires such
qualification, except where a failure to qualify
would not have a material adverse effect upon the
condition, financial or otherwise, of the Company
and the subsidiaries taken as a whole.
(c) The authorized, issued and outstanding capital
stock of the Company is as set forth in the Final
Prospectus under the caption "Capitalization" as of
the date stated therein; and the issued and
outstanding shares of capital stock of the Company
have been duly and validly authorized and issued,
are fully-paid and nonassessable, and were not
issued in violation of any preemptive right or, to
such counsel's knowledge, other rights to purchase
such shares;
(d) The Shares are validly authorized. The Shares,
when issued, paid for and delivered in accordance
with the provisions of this Agreement, will be
validly issued, fully paid and nonassessable,
without any personal liability attaching to the
ownership thereof, and will not be issued in
violation of any preemptive rights to shareholders;
(e) The Representatives' Warrant has been duly
authorized by the Company and, when executed, issued
and delivered by the Company and paid for by you in
accordance with the provisions of this Agreement,
will be a legal, valid and binding obligation of the
Company, enforceable against the Company in
accordance with their respective terms, except as
may be limited by applicable bankruptcy, insolvency,
registration and other laws affecting the
enforceability of creditors' rights generally and
the application of equitable principles affecting
the availability of remedies in the nature of
specific enforcement.
(f) The Representatives' Warrant Shares are validly
authorized and when issued, paid for and delivered
upon exercise of the Representatives' Warrant in
accordance with the provisions of the
Representatives' Warrant, will be validly
authorized, validly issued, fully paid, and
nonassessable, with no personal liability attaching
to the ownership thereof, and will not have been
issued in violation of any preemptive rights of
shareholders, and the holders of the
Representatives' Warrant Shares will receive good
title to them, free and clear of all Encumbrances.
(g) All of the issued shares of capital stock of
each subsidiary of the Company have been duly and
validly authorized and issued, are fully paid and
nonassessable. The Company owns one hundred percent
(100%) of the issued and outstanding capital stock
of (i) Charcoal Service Corporation, a North
Carolina corporation , (ii) Air Seal Filter
Housings, Inc., a Texas corporation, (iii)
Precisionaire, Inc., a Florida corporation, (iv)
Flanders International PLC, Ltd., a Singapore
corporation, (v) 98.86% of Flanders Filters, Inc., a
North Carolina corporation and (vi) 60% of Air Seal
West, Inc., a Utah corporation. FFI owns one hundred
percent (100%) of
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Flanders Airpure West, Inc., a North Carolina
corporation, and sixty three percent (63%) of
Flanders Airpure Products Company, LLC, a North
Carolina limited liability company. Such shares are
owned free and clear of all liens, encumbrances,
equities or claims except for a lien in favor of
Nations Bank, N.A.;
(h) This Agreement has been duly authorized by all
necessary corporate action on the part of the
Company and duly executed and delivered by the
Company and, assuming due authorization, execution
and delivery by you, is a valid and binding
agreement of the Company enforceable against the
Company in accordance with its terms, except insofar
as the enforceability of indemnification and
contribution provisions may be limited by applicable
law or equitable principles, and except as
enforceability may be limited by bankruptcy,
reorganization, moratorium or similar laws affecting
the enforceability of creditors' rights generally
and rules of law governing performance, injunctive
relief and other equitable remedies;
(i) The Registration Statement has become effective
under the Act and, to counsel's knowledge, no stop
order suspending the effectiveness of the
Registration Statement has been issued and no
proceedings for that purpose have been instituted
and are pending or contemplated under the Act; any
required filing of the Final Prospectus and any
supplement thereto pursuant to Rule 424(b) of the
Rules and Regulations have been made in the manner
and within the time period required by such Rule
424(b);
(j) The Registration Statement and the Final
Prospectus, and each amendment or supplement thereto
(other than the financial statements, financial data
and supplemental schedules included therein, as to
which such counsel need express no opinion),
complies as to form in all material respects with
the requirements of the Act and the applicable Rules
and Regulations;
(k) The terms and provisions of the capital stock of
the Company conform in all material respects to the
description thereof contained in the Registration
Statement and the Final Prospectus, and the
information in the Final Prospectus under the
caption "Description of Capital Stock," and the form
of certificate evidencing the Common Stock complies
with North Carolina law;
(l) The performance of this Agreement and the
consummation of the transactions herein contemplated
will not result in a breach or violation of any of
the terms and provisions, or constitute a default
under, any indenture, mortgage, deed of trust, loan
agreement, bond, debenture, note agreement or other
evidence of indebtedness, or any lease, contract or
other agreement or instrument known to such counsel
after due inquiry to which the Company is a party or
by which its properties are bound and which breach
or violation would have a material adverse effect
upon the condition, financial or otherwise, of the
Company; the Company's Certificate of Incorporation
or By-laws; or, any statute, rule or regulation or,
to such counsel's knowledge after due inquiry, any
order, writ or decree of any court or governmental
agency or body having jurisdiction over the Company
or over any of its properties or operations;
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(m) No authorization, approval or consent of any
governmental authority or agency is necessary in
connection with the consummation of the transactions
herein contemplated except such as have been
obtained under the Act or such as may be required
under state or other securities or Blue Sky laws in
connection with the purchase and distribution of the
Shares by the Underwriters;
(n) To such counsel's knowledge after due inquiry,
there are no legal or governmental proceedings
pending or threatened of a character that are
required to be disclosed in the Registration
Statement, by the Act or the applicable Rules and
Regulations;
(o) To such counsel's knowledge after due inquiry,
the Company is not presently in breach of, or in
default under any indenture, mortgage, deed of
trust, loan agreement, bond, debenture, note
agreement or other evidence of indebtedness or any
other agreement or instrument which would have a
material adverse effect on the Company's financial
condition of which such counsel has knowledge after
due inquiry to which the Company is a party or by
which any of its properties is bound;
(p) To such counsel's knowledge after due inquiry,
except as described in the Prospectus, no person,
corporation, trust, partnership, association or
other entity has the right to include and/or
register any securities of the Company in the
Registration Statement, require the Company to file
any registration statement or, if filed, to include
any security in such registration statement;
(q) The Company is not, after receiving the proceeds
from the sale of the Company Shares, an "investment
company" within the meaning of the 1940 Act.
(r) The statements in the Prospectus under
"BUSINESS," "MANAGEMENT," "PRINCIPAL SHAREHOLDERS,"
"CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS," "DESCRIPTION OF CAPITAL STOCK," and
"SHARES ELIGIBLE FOR FUTURE SALE" have been reviewed
by such counsel, and insofar as they refer to
statements of law, descriptions of statutes,
licenses, rules or regulations or legal conclusions,
are correct in all material respects;
(s) Based upon the description of the Company's
business in the Final Prospectus, each of the
Company and its subsidiaries hold all licenses,
certificates, permits and approvals from all state,
Federal and other regulatory authorities that are
required for the Company to lawfully own, lease and
operate its properties and conduct its business as
described in the Final Prospectus, and each of the
Company and its subsidiaries are conducting its
business in compliance with all of the laws, rules
and regulations of each jurisdiction in which it
conducts its business.
(t) To the best of such counsel's knowledge, there
are no agreements, contracts or other documents
required by the Act to be described in the
Registration Statement and the Final Prospectus and
filed as exhibits to the Registration Statement
other than those described in the Registration
Statement (or required to be filed under the
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Exchange Act if upon such filing they would be
incorporated, in whole or in part, by reference
therein) and the Final Prospectus and the exhibits
which have been filed are correct copies of the
documents of which they purport to be copies.
(u) Except as described in the Final Prospectus, to
the best of such counsel's knowledge, the Company
does not (i) maintain, sponsor or contribute to any
ERISA Plans, (ii) maintain or contribute, now or at
any time previously, to a defined benefit plan, as
defined in Section 3(35) of ERISA, and (iii) has
never completely or partially withdrawn from a
"multiemployer plan."
In addition, such counsel shall state that although such counsel has
not verified the accuracy or completeness of the statements contained in the
Registration Statement or the Final Prospectus, nothing has come to the
attention of such counsel that caused such counsel to believe that, at the time
the Registration Statement became effective, the Registration Statement (except
as to financial statements, financial data and supporting schedules contained
therein, as to which such counsel need express no opinion) contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
at the Closing Date or any later date on which the Option Shares are to be
purchased, as the case may be, the Registration Statement or the Final
Prospectus (except as aforesaid) contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
In rendering such opinion, such counsel may rely (i) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance satisfactory to Underwriters' Counsel) of
other counsel acceptable to Underwriters' Counsel, familiar with the applicable
laws; (ii) as to matters of fact, to the extent they deem proper, on
certificates and written statements of responsible officers of the Company, and
certificates or other written statements of officers of departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company, provided that copies of any such statements or
certificates shall be delivered to Underwriters' Counsel if requested. The
opinion of such counsel for the Company shall state that the opinion of any
such other counsel is in form satisfactory to such counsel and that the
Representatives and they are justified in relying thereon. Such opinion shall
also state that the Underwriters' Counsel is entitled to rely thereon.
(ii) The counsel for the Selling Shareholders shall have
furnished to you their written opinion with respect to the Selling
Shareholders for whom they are acting as counsel, dated the Closing
Date, in form substance satisfactory to you, to the effect that:
(a) This Agreement has been duly executed and
delivered by each Selling Shareholder.
(b) A Power of Attorney and Custody Agreement have
been duly authorized, executed and delivered by or
on behalf of the Selling Shareholders.
(c) The performance of this Agreement, the Power of
Attorney and the Custody Agreement and the
consummation of the transactions herein contemplated
will not result in a breach or violation of any of
the terms and provisions, or constitute a
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default under, any indenture mortgage, deed of
trust, loan agreement, bond, debenture, note
agreement or other evidence of indebtedness, or any
lease, contract or other agreement or instrument
known to such counsel to which each Selling
Shareholder is a party or by which its properties
are bound or to such counsels knowledge, any order,
writ or decree of any court or governmental agency
or body having jurisdiction over each Selling
Shareholder or over any of his properties;
(d) The Underwriters are acquiring the Shareholder
Firm Shares free of any adverse claim (except for
any restrictions on transfer that may be imposed by
law pursuant to federal or state securities laws and
except for claims created by or through the
Underwriters). The Selling Shareholders have the
full right, power and authority to sell, assign,
transfer and deliver the Shareholder Firm Shares.
In rendering these opinions, such counsel may rely upon a
certificate of Selling Shareholders as to matters of fact. The
opinions rendered by such counsel may contain normal assumptions,
qualifications and limitations with respect to the matters set forth
therein.
(iii) You shall have received from Underwriters' Counsel an
opinion or opinions, dated the Closing Date, in form and
substances satisfactory to you, with respect to the
sufficiency of all such corporate proceedings and other legal
matters relating to this Agreement and the transactions
contemplated hereby as you may reasonably require, and the
Company shall have furnished to such counsel such documents
as it may have requested for the purpose of enabling it to
pass upon such matters.
(iv) At the time this Agreement is executed, the
Underwriters shall have received a letter, dated such date,
addressed to the Underwriters in form and substance
satisfactory (including the non-material nature of the
changes or decreases, if any, referred to in clause (c)
below) in all respects to the Underwriters and the
Underwriters' Counsel, from McGladrey & Xxxxxx, LLP;
(a) confirming that they are independent
certified public accountants with respect to the
Company within the meaning of the Act and the
applicable Rules and Regulations;
(b) stating that it is their opinion that the
financial statements and supporting schedules of the
Company included in the Registration Statement
comply as to form in all material respects with the
applicable accounting requirements of the Act and
the Rules and Regulations thereunder and that the
Representatives may rely upon the opinion of
McGladrey & Xxxxxx, LLP with respect to such
financial statements and supporting schedules
included in the Registration Statement;
(c) stating that, on the basis of a limited review
which included a reading of the latest available
unaudited interim financial statements of the
Company, a reading of the latest available minutes
of the stockholders and board of directors and the
various committees of the boards of directors of the
Company, consultations with officers and other
employees of the Company responsible for financial
and accounting matters and other specified
procedures and inquiries, nothing has come to their
attention which
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would lead them to believe that (i) the pro forma
financial information contained in the Registration
Statement and Prospectus does not comply as to form
in all material respects with the applicable
accounting requirements of the Act and the Rules and
Regulations or is not fairly presented in conformity
with generally accepted accounting principles
applied on a basis consistent with that of the
audited financial statements of the Company, (ii)
the unaudited financial statements and supporting
schedules of the Company included in the
Registration Statement do not comply as to form in
all material respects with the applicable accounting
requirements of the Act and the Rules and
Regulations or are not fairly presented in
conformity with generally accepted accounting
principles applied on a basis substantially
consistent with that of the audited financial
statements of the Company included in the
Registration Statement, or (iii) at a specified date
not more than five (5) days prior to the effective
date of the Registration Statement, there has been
any change in the capital stock of the Company, any
change in the long-term debt of the Company or any
decrease in the stockholders' equity of the Company
or any decrease in the net current assets or net
assets of the Company as compared with amounts shown
in the June 30, 1997 balance sheet included in the
Registration Statement other than as set forth in or
contemplated by the Registration Statement, or, if
there was any change or decrease, setting forth the
amount of such change or decrease, and (iv) during
the period from June 30, 1997 to a specified date
not more than five (5) days prior to the effective
date of the Registration Statement, there was any
decrease in net revenues or net earnings of the
Company or increase in net earnings per common share
of the Company, in each case as compared with the
corresponding period beginning June 30, 1996 other
than as set forth in or contemplated by the
Registration Statement, or, if there was any such
decrease, setting forth the amount of such decrease;
(d) setting forth, at a date not later than five (5)
days prior to the date of the Registration
Statement, the amount of liabilities of the Company
(including a breakdown of commercial paper and notes
payable to banks);
(e) stating that they have compared specific dollar
amounts, numbers of shares, percentages of revenues
and earnings, statements and other financial
information pertaining to the Company set forth in
the Prospectus in each case to the extent that such
amounts, numbers, percentages, statements and
information may be derived from the general
accounting records, including work sheets, of the
Company and excluding any questions requiring an
interpretation by legal counsel, with the results
obtained from the application of specified readings,
inquiries and other appropriate procedures (which
procedures do not constitute an examination in
accordance with generally accepted auditing
standards) set forth in the letter and found them to
be in agreement; and
(f) statements as to such other matters incident
to the transaction contemplated hereby as the
Representative may request.
(v) At the Closing Date and each Option Closing Date, if
any, the Underwriters shall have received from McGladrey &
Xxxxxx, L.L.P. a letter, dated as of the Closing Date or the
Option Closing Date, as the case may be, to the effect that
they reaffirm the statements made
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in the letter furnished pursuant to subsection (i) of this
Section hereof except that the specified date referred to
shall be a date not more than five days prior to the Closing
Date or the Option Closing Date, as the case may be, and, if
the Company has elected to rely on Rule 430A of the Rules and
Regulations, to the further effect that they have carried out
procedures as specified in clause (v) of subsection (i) of
this Section with respect to certain amounts, percentages and
financial information as specified by the Representative and
deemed to be a part of the Registration Statement pursuant to
Rule 430A(b) and have found such amounts, percentages and
financial information to be in agreement with the records
specified in such clause (v).
(vi) You shall have received on the Closing Date and on
any later date on which Option Shares are purchased, as the
case may be, a certificate of the Company, dated the Closing
Date or such later date, signed by the President and Chief
Financial Officer of the Company, to the effect that, and you
shall be satisfied that:
(a) The representations and warranties of the
Company in this Agreement are true and correct, as
if made on and as of the Closing Date or any later
date on which Option Shares are to be purchased; and
the Company has complied with all the agreements and
satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing
Date or any later date on which Option Shares are to
be purchased;
(b) To the best of their knowledge, no stop order
suspending the effectiveness of the Registration
Statement has been issued, and no proceedings for
that purpose have been instituted or are pending or
threatened under the Act;
(c) When the Registration Statement became effective
and at all times subsequent thereto up to the
delivery of such certificate, the Registration
Statement and the Final Prospectus and any
amendments or supplements thereto contained all
statements and information required to be included
therein or necessary to make the statements therein
in light of the circumstances under which they were
made, not misleading and neither the Registration
Statement nor the Final Prospectus nor any amendment
or supplement thereto included any untrue statement
of a material fact or omitted to state any material
fact required to be stated therein or necessary to
make the statement therein not misleading and, since
the effective date of the Registration Statement,
there has occurred no event required to be set forth
in an amended or supplemented Prospectus that has
not been so set forth;
(d) Subsequent to the respective dates as of which
information is given in the Registration Statement
and the Final Prospectus, and except as contemplated
in the Final Prospectus, the Company has not
incurred any direct or contingent liabilities or
obligations material to the Company not in the
ordinary course of business, or entered into any
transactions material to the Company not in the
ordinary course of business, and there has not been
any change in the capital stock or outstanding
indebtedness of the Company material to, or any
material adverse change in, the business,
properties, assets, rights, operations, condition
(financial or otherwise) or prospects of the Company
and its subsidiaries taken as a whole; and
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(e) Subsequent to the respective dates as of which
information is given in the Registration Statement
and the Final Prospectus, the Company has not
sustained any material loss of or damages to its
properties, whether or not insured.
(vii) You shall have received on the Closing Date and on any
later date on which Option Shares are purchased, as the case
may be, a certificate, dated the Closing Date or such later
date, signed by or on behalf of each Selling Shareholder, to
the effect that the representations and warranties of such
Selling Shareholder in this Agreement are materially correct
on and as of the date of this Agreement and on and as of such
date, as if made on and as of such date, and that such
Selling Shareholder complied with all of the agreements and
satisfied all the conditions on its part to be performed or
satisfied at or prior to such date.
(viii) The Company shall have furnished to you such further
certificates and documents as you shall reasonably request
(including certificates of officers of the Company) as to the
accuracy of the representations and warranties of the Company
herein, as to the performance by the Company of their
respective obligations hereunder and as to the other
conditions concurrent and precedent to the obligations of the
Underwriters hereunder.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
to Underwriters' Counsel. The Company will furnish you with such number of
conformed copies of such opinions, certificates, letters and documents as you
shall reasonably request.
d. The shares have been approved for trading upon notice of
issuance on The Nasdaq National Market.
e. The Lockup Letters shall have been delivered to the
Underwriters and the Company shall have noted the restrictions
contained in such Lockup Letters on the books and records of the
Company relating to stock transfers and on any certificates
representing shares of Common Stock held by such persons.
7. Indemnification and Contribution.
a. The Company agrees to indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint
or several, to which such Underwriter may become subject, under the
Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon: (i) any untrue statement or alleged untrue statement made by the
Company in Section 1(a) of this Agreement; (ii) any untrue statement
or alleged untrue statement of any material fact contained in (A) the
Registration Statement or any amendment thereto, any Preliminary
Prospectus, Final Prospectus or any amendment or supplement thereto,
or (B) any application or other document, or any amendment or
supplement thereto, executed by the Company or based upon written
information furnished by or on behalf of the Company filed in any
jurisdiction in order to qualify the Shares under the securities or
blue sky laws thereof or filed with the Commission or any securities
association or securities exchange (each an "Application"); or (iii)
the omission or alleged omission to state in the Registration
Statement or any amendment thereto, any Preliminary Prospectus, Final
Prospectus or any amendment or supplement thereto, or any Application,
a material fact required to be stated therein or necessary to make the
statements therein
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not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection
with investigating, defending against or appearing as a third-party
witness in connection with any such loss, claim, damage, liability or
action; provided, however, that the Company shall not be liable in any
such case to the extent that any such loss, claim, damage, liability
or action arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement or any Amendment thereto, any Preliminary
Prospectus, Final Prospectus or any amendment or supplement thereto or
any Application, in reliance upon and in conformity with written
information furnished to the Company by any Underwriter expressly for
use therein. The obligations of the Company to indemnify the
Underwriters (and any controlling person of each Underwriter) pursuant
to this Agreement is subject to the condition that, insofar as such
indemnity agreement shall not inure to the benefit of any Underwriter
from whom the person asserting such losses, liabilities, claims,
damages or expenses purchased the Shares in the Offering, if (i) such
Underwriter failed to deliver a copy of the Final Prospectus to such
person at or prior to the time delivery is required by the Act, unless
such failure was due to the failure by the Company to provide copies
of the Final Prospectus to such Underwriter; and (ii) the delivery of
such Final Prospectus to such person would have constituted a complete
defense to the losses, claims, damages, liabilities or expenses
asserted by such person. The Company will not, without the prior
written consent of each Underwriter, settle or compromise or consent
to the entry of any judgment in any pending or threatened claim,
action, suit or proceeding (or related cause of action or portion
thereof) in respect of which indemnification may be sought hereunder
(whether or not such Underwriter is a party to such claim, action,
suit or proceeding), unless such settlement, compromise or consent
includes an unconditional release of such Underwriter from all
liability that arises out of such claim, action, suit or proceeding
(or related cause of action or portion thereof).
b. Each Selling Shareholder, severally but not jointly, agrees to
indemnify and hold harmless the Company and each Underwriter against
any losses, claims, damages or liabilities, joint or several, to which
the Company or such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon: (i) any
untrue statement or alleged untrue statement made by such Selling
Shareholder in Section 1(b) of this Agreement; or (ii) any untrue
statement or alleged untrue statement of any material fact contained
in the Registration Statement or any amendment thereto, any
Preliminary Prospectus the Final Prospectus or any amendment or
supplement thereto, or any Application, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading. Each Selling Shareholder, severally, but not
jointly, agrees to reimburse each Underwriter for any legal or other
expenses reasonably incurred by such Underwriter in connection with
investigating, defending against or appearing as a third-party witness
in connection with any such loss, claim, damage, liability or action;
provided, however, that such Selling Shareholder shall be liable in
any such case only to the extent that any such loss, claim, damage,
liability or action arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in
the Registration Statement or any amendment thereto, any Preliminary
Prospectus the Final Prospectus or any amendment or supplement thereto
or any Application, in reliance upon and in conformity with written
information furnished to the Company by such Selling Shareholder
expressly for use therein. The obligations of the Selling Shareholders
to indemnify the Underwriters (or any controlling person of such
Underwriter) pursuant to this indemnity agreement is subject to the
condition that, insofar as such losses, claims, damages, liabilities
or expenses relate to any such untrue statement, alleged untrue
statement, omission or alleged omission made in a Preliminary
Prospectus that is corrected in the Final Prospectus, such indemnity
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agreement shall not inure to the benefit of any Underwriter from whom
the person asserting such losses, liabilities, claims, damages or
expenses purchased the Shares in the Offering, if (i) such Underwriter
failed to deliver a copy of the Final Prospectus to such person at or
prior to the time delivery of such Final Prospectus is required by the
Act, unless such failure was due to the failure by the Company to
provide copies of the Prospectus to such Underwriter; and (ii) the
delivery of such Final Prospectus to such person would have
constituted a complete defense to the losses, claims, damages,
liabilities or expenses asserted by such person. The Selling
Shareholders will not, without the prior written consent of each
Underwriter, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit or
proceeding (or related cause of action or portion thereof) in respect
of which indemnification may be sought hereunder (whether or not such
Underwriter is a party to such claim, action, suit or proceeding),
unless such settlement, compromise or consent includes an
unconditional release of such Underwriter from all liability arising
out of such claim, action, suit or proceeding (or related cause of
action or portion thereof). Notwithstanding the foregoing provisions
of this Section 7(b), the Underwriters shall not be entitled to
indemnity or contribution from any Selling Shareholder in excess of
the net proceeds of the offering (before deducting expenses) received
by such Selling Shareholder.
c. Each Underwriter, severally but not jointly, agrees to indemnify
and hold harmless the Company and each Selling Shareholder and their
directors and officers who sign the Registration Statement and any
person who controls the Company within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act, against any losses, claims,
damages or liabilities to which the Company or any Selling Shareholder
may become subject under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement
or any amendment thereto, any Preliminary Prospectus the Final
Prospectus, or any amendment or supplement thereto, or any
Application, or which arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by such Underwriter
expressly for use therein; and will reimburse the Company and each
Selling Shareholder and their directors and officers who sign the
Registration Statement and any person who controls the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange
Act, for any legal or other expenses reasonably incurred by the
Company or such Selling Shareholder and their directors and officers
who sign the Registration Statement and any person who controls the
Company within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, in connection with investigating or defending any
such loss, claim, damage, liability or action.
d. Promptly after receipt by an indemnified party under subsection
(a), (b) or (c) above of notice of the commencement of any action,
such indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to any indemnified party otherwise
than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not,
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except with the consent of the indemnified party, be counsel to the
indemnifying party); provided, however, that if the defendants in any
such action include both the indemnified party and the indemnifying
party and the indemnified party shall have reasonably concluded based
upon written advice of counsel that there may be one or more legal
defenses available to it or other indemnified parties that are
different from or additional to those available to the indemnifying
party, the indemnifying party shall not have the right to assume the
defense of such action on behalf of such indemnified party and such
indemnified party shall have the right to select separate counsel to
defend such action on behalf of such indemnified party, provided,
further, however, that the Company shall be liable for the fees and
expenses of only one separate firm of attorneys (in addition to local
counsel) for all indemnified parties at any time in connection with
any action, suit or proceeding or in a series of separate but
substantially similar or related actions, suits or proceedings arising
out of the same general allegations and circumstances. After such
notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof and approval by such
indemnified party of counsel appointed to defend such action, the
indemnifying party will not be liable to such indemnified party under
this Section 8 for any legal or other expenses, other than reasonable
costs of investigation, subsequently incurred by such indemnified
party in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel in accordance
with the proviso to the next preceding sentence or (ii) the
indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party. Nothing in
this Section 8(d) shall preclude an indemnified party from
participating at its own expense in the defense of any such action so
assumed by the indemnifying party.
e. If the indemnification provided for in this Section 7 is
unavailable to or insufficient to hold harmless an indemnified party
under subsection (a), (b), (c) or (d) above in respect of any losses,
claims, damages or liabilities (or actions in respect thereof)
referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of
such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Selling Shareholders on the
one hand and the Underwriters on the other from the offering of the
Shares. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law, then each
indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect
not only such relative benefits but also the relative fault of the
Company and the Selling Shareholders on the one hand and the
Underwriters on the other in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities
(or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the
Company and the Selling Shareholders on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting
expenses) received by the Company and the Selling Shareholders bear to
the total underwriting discounts and commissions received by the
Underwriters. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of
a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or the
Selling Shareholders on the one hand or the Underwriters on the other
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The
Company, the Selling Shareholders and the Underwriters agree that it
would not be just and equitable if contributions pursuant to this
subsection (e) were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the
equitable considerations referred to above in
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this subsection (e). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (e)
shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of
this subsection (e), (i) no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price
at which the Shares underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission,
(ii) no Selling Shareholder shall be required to contribute any amount
in excess of the amount by which the net proceeds received by such
Selling Shareholder from the sale of Shares exceeds the damages which
such Selling Shareholder has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged
omission, and (iii) no person guilty of fraudulent misrepresentation
(within the meaning of Section 11 (f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection
(e) to contribute are several in proportion to their respective
underwriting obligations and not joint.
f. The obligations of the Company and the Selling Shareholders under
this Section 7 shall be in addition to any liability which the Company
or such Selling Shareholders may otherwise have and shall extend, upon
the same terms and conditions, to each person, if any, who controls
any Underwriter within the meaning of the Act; and the obligations of
the Underwriters under this Section 7 shall be in addition to any
liability which the respective Underwriters may otherwise have and
shall extend, upon the same terms and conditions, to each officer and
director of the Company and any Selling Shareholder and to each
person, if any, who controls the Company or any Selling Shareholder
within the meaning of the Act.
8. Indemnity, Representations and Warranties to Survive Delivery. The
indemnity and contribution provisions contained in this Section 7 and the
representations, warranties and other statements of the Company and the Selling
Shareholders contained in this Agreement shall remain operative and in full
force and effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, any Selling Shareholder or any person controlling any Selling
Shareholder, or the Company, its officers or directors or any person
controlling the Company and (iii) acceptance of and payment for any of the
Shares.
9. Default by Underwriters. If any Underwriter or Underwriters shall fail
to take up and pay for the number of Firm Shares agreed by such Underwriter of
Underwriters to be purchased hereunder upon tender of such Firm Shares in
accordance with the terms hereof and the aggregate number of Firm Shares that
such defaulting Underwriter or Underwriters so agreed but failed to purchase
does not exceed 10% of the Firm Shares, the remaining Underwriters shall be
obligated severally in proportion to their respective commitments hereunder, to
take up and pay for the Firm Shares of such defaulting Underwriter or
Underwriters.
If any Underwriter or Underwriters so defaults and the aggregate
number of Firm Shares that such defaulting Underwriter or Underwriters agreed
but failed to take up and pay for exceeds 10% of the Firm Shares, the remaining
Underwriters shall have the right, but shall not be obligated, to take up and
pay for (in such proportions as may be agreed upon among them) the Firm Shares
that the defaulting Underwriter or Underwriters so agreed but failed to
purchase. If such remaining Underwriters do not, at the Closing Date, take up
and pay for the Firm Shares that the defaulting Underwriter or Underwriters so
agreed but failed to
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purchase, the Closing Date shall be postponed for twenty-four hours to allow
the several Underwriters to substitute within twenty-four hours (including
non-business hours) another underwriter or underwriters (which may include any
nondefaulting Underwriter) satisfactory to the Company. If no such underwriter
or underwriters shall have been substituted as aforesaid by such postponed
Closing Date, the Closing Date may, at the option of the Company, be postponed
for a further twenty-four hours, if necessary, to allow the Company to find
another underwriter or underwriters, satisfactory to you, to purchase the Firm
Shares that the defaulting Underwriter or Underwriters so agreed but failed to
purchase. If it shall be arranged for the remaining Underwriter or substituted
Underwriters to take up the Firm Shares of the defaulting Underwriter or
Underwriters as provided in this Section, (i) the Company shall have the right
to postpone the time of delivery for a period of not more than seven full
business days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Final Prospectus, or in any
other documents or arrangements, and the Company agrees promptly to file any
amendments to the Registration Statements or supplements to the Final
Prospectus that may thereby be made necessary, and (ii) the respective number
of Firm Shares to be purchased by the remaining Underwriters and substituted
underwriters shall be taken as the basis of their underwriting obligation. If
the remaining Underwriters shall not take up and pay for all such Firm Shares
so agreed to be purchased by the defaulting Underwriter or 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.
In the event of any termination of this Agreement pursuant to the
preceding paragraph of this Section, the Company shall not be liable to any
Underwriter (except as provided in Section 5 and in Section 7 hereof) nor shall
any Underwriter (other than an Underwriter who shall have failed, otherwise
than for some reason permitted under this Agreement, to purchase the number of
Firm Shares agreed by such Underwriter to be purchased hereunder, which
Underwriter shall remain liable to the Company and the other Underwriters for
damages, if any, resulting from such default) be liable to the Company (except
to the extent provided in Section 7 hereof).
The term "Underwriter" in this Agreement shall include any person
substituted for an Underwriter under this Section.
10. Effective Date of this Agreement and Termination
a. This Agreement shall become effective immediately as to Sections 5,
7, 9 and 11 and, as to all other provisions (i) if at the time of
execution of this Agreement the Registration Statement has not become
effective, at 9:00 A.M., Eastern time, on the first full business day
following the effectiveness of the Registration Statement, or (ii) if
at the time of execution of this Agreement the Registration Statement
has been declared effective, at 9:00 A.M., Eastern time, on the first
business day following the date of execution of this Agreement; but
this Agreement shall nevertheless become effective at such earlier
time after the Registration Statement becomes effective as you may
determine on and by notice to the Company or by release of any of the
Shares of sale to the public. For the purposes of this Section 10, the
Shares shall be deemed to have been so released upon the release for
publication of any newspaper advertisement relating to the Shares or
upon the release by you of telegrams (i) advising the Underwriters
that the Shares are released for public offering, or (ii) offering of
Shares for sale to securities dealers, whichever may occur first. By
giving notice as set forth in Section 11 before the time this
Agreement becomes effective, you, as the Representatives of the
several Underwriters, or the Company, may prevent this Agreement from
becoming effective without liability of any party to any
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other party, except that the Company shall remain obligated to pay
costs and expenses to the extent provided in Section 5a and 5b hereof.
b. You, as the Representatives of the several Underwriters, shall have
the right to terminate this Agreement by giving notice as hereinafter
specified at any time on or prior to the Closing Date or on or prior
to any later date on which the Option Shares are to be purchased as
the case may be (i) if the Company or Selling Shareholders shall have
failed, refused or been unable, on or prior to the Closing Date, or on
or prior to any later date on which the Option Shares are to be
purchased, as the case may be, 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, or (ii) if trading on the New York Stock Exchange shall
have been suspended, or minimum or maximum prices for trading shall
have been fixed, or maximum ranges for prices for securities shall
have been required on the New York Stock Exchange, by the New York
Stock Exchange or by order of the Commission or any other governmental
authority having jurisdiction, or if a banking moratorium shall have
been declared by federal or New York or California authorities, or
(iii) if at or prior to the Closing Date, or on or prior to any later
date on which Option Shares are to be purchased, as the case may be,
the Company shall have sustained a loss by strike, fire, flood,
accident or other calamity of such character as to interfere
materially with the conduct of the business and operations of the
Company regardless of whether or not such loss shall have been
insured, or (iv) if at or prior to the Closing Date, or on or prior to
any later date on which Option Shares are to be purchased, as the case
may be, there shall have been an outbreak or escalation of hostilities
in which the United States is involved or other national or
international calamity or any substantial change in political,
financial or economic conditions shall have occurred or shall have
accelerated to such extent, in the judgment of the Representatives, as
to have a material adverse effect on the financial markets of the
United States, or to make it impracticable or inadvisable to proceed
with completion of the sale of and payment for the Shares. Any such
termination shall be without liability or any party to any other party
except as provided in Sections 5a and 5b hereof and except that in the
event of termination solely pursuant to Section 10(b)(i) hereof, the
Company shall remain obligated to pay costs and expenses pursuant to
Section 5a and b hereof.
If you elect to prevent this Agreement from becoming effective or to
terminate this Agreement as provided in this Section 10, the Company shall be
notified promptly by you by telephone or telegram, confirmed by letter. If the
Company shall elect to prevent this Agreement from becoming effective, you
shall be notified promptly by the Company by telephone or telegram, confirmed
by letter.
11. Notices. All notices or communications hereunder, except as herein
otherwise specifically provided, shall be in writing and if sent to you shall
be mailed, delivered or telegraphed and confirmed to Xxxxxxx Xxxxx &
Associates, Inc., 000 Xxxxxxxx Xxxxxxx, X.X. Xxx 00000, Xx. Xxxxxxxxxx, XX
00000-0000, Attention: Xx. Xxxxxx Xxxxxxxx, with a copy sent to Xxxxxxx X.
Xxxxxxxx, Esq., Schifino & Xxxxxxxxx, P.A., 000 X. Xxxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxx, XX 00000; if sent to the Company shall be mailed, delivered or
telegraphed and confirmed c/o Flanders Corporation, Attention: Xx. Xxxxxx
Xxxxx, with a copy sent to Xxxxxxx X. Xxxxx, Esq. Xxxxx & Xxxxxx, 000 Xxxx
Xxxxxxxx, Xxxxx 000, Xxxx Xxxx Xxxx, XX 00000-0000.
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12. Parties. This Agreement shall inure to the benefit of and be binding
upon the several Underwriters, the Company and Selling Shareholders and their
respective successors and assigns. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person or corporation,
other than the parties hereto and their respective successors and assigns and
the controlling persons, officers and directors referred to in Section 7
hereof, any legal or equitable rights, remedy or claim in respect of this
Agreement or any provisions herein contained, this Agreement and all conditions
and provisions hereof being intended to be and being for the sole and exclusive
benefit of the parties hereto and their respective executors, administrators,
successors and assigns and said controlling persons and said officers and
directors, and for the benefit of no other person or corporation. No purchaser
of any of the shares from any Underwriter shall be construed a successor or
assign by reason merely of such purchase.
In all dealings with the Company under this Agreement, you shall act
on behalf of each of the several Underwriters, and the Company shall be
entitled to act and rely upon any statement, request, notice or agreement on
behalf of each of the several Underwriters as if the same shall have been made
or given in writing by you.
13. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Florida.
14. Counterparts. This Agreement may be signed in several counterparts,
each of which will constitute an original.
15. Information Provided by Underwriters. The information set forth in
the last paragraph on the front cover page (insofar as such information relates
to the Underwriters) and under "Underwriting" in any Preliminary Prospectus and
in the Final Prospectus constitutes the only information furnished by the
Underwriters to the Company for inclusion in any Preliminary Prospectus, the
Final Prospectus or the Registration Statement, and you on behalf of the
respective Underwriters, represent and warrant to the Company that the
statements made therein do not contain an untrue statement of a material fact
and do not fail to state any material fact required to be stated therein in
order to make such statements in light of the circumstances under which they
were made not misleading.
If the foregoing correctly sets forth the understanding among the
Company, the several Underwriters and the Selling Shareholders please so
indicate in the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement among the Company, the several
Underwriters and the Selling Shareholders.
Very truly yours,
FLANDERS CORPORATION
By: ----------------------------------
EACH OF THE SELLING SHAREHOLDERS
LISTED ON SCHEDULED II HERETO
By: ----------------------------------
Attorney-in-fact
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Accepted as of the date first above written:
Xxxxxxx Xxxxx & Associates, Inc.
Xxxxxx Gull Xxxxxxx & XxXxxxxx Inc.
on their behalf and on behalf of each of the
Several Underwriters named in Schedule I hereto.
By: Xxxxxxx Xxxxx & Associates, Inc.
By:
--------------------------------
Xxxxxx Xxxxxxxx, Vice President
SCHEDULE I
NUMBER OF NUMBER OF MAXIMUM
COMPANY SELLING TOTAL NUMBER NUMBER OF
FIRM SHARES SHAREHOLDER OF FIRM SHARES OPTIONAL
TO BE FIRM SHARES TO TO BE SHARES TO BE
UNDERWRITER PURCHASED BE PURCHASED PURCHASED PURCHASED
------------------ ----------- -------------- -------------- -------------
-------------- ------------
Total.............................. ============== ============
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SCHEDULE II
NUMBER OF
FIRM SHARES
SELLING SHAREHOLDERS TO BE SOLD
-------------------- -----------
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SCHEDULE III
SUBSIDIARIES
STATE OF
NAME INCORPORATION % OWNERSHIP
---- ------------- -----------
Charcoal Service Corporation North Carolina 100.00%
Air Seal Filter Housings, Inc. Texas 100.00%
Precisionaire, Inc. Florida 100.00%
Flanders International PLC, Ltd. Singapore 100.00%
Flanders Filters, Inc. North Carolina 98.86%
Air Seal West, Inc. 60.00%
Flanders Airpure, Inc. North Carolina 100.00%*
Flanders Airpure Products Company, LLC North Carolina 63.00%*
------
* Owned by Flanders Filters, Inc.
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Xxxxxxx Xxxxx & Associates, Inc.
000 Xxxxxxxx Xxxxxxx
X.X. Xxx 00000
Xx. Xxxxxxxxxx, XX 00000-0000
Xxxxxx Gull Xxxxxxx & XxXxxxxx Inc.
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Dear Sirs:
The undersigned understands that Xxxxxxx Xxxxx & Associates, Inc.
("Xxxxxxx Xxxxx") and Xxxxxx Gull Xxxxxxx & XxXxxxxx Inc., as Representatives
of the several Underwriters ("Representatives"), propose to enter into an
Underwriting Agreement (the "Underwriting Agreement") with Flanders
Corporation, a North Carolina corporation, (the "Company") and certain
shareholders of the Company (the "Selling Shareholders") providing for the
public offering (the "Public Offering") by the several Underwriters, including
the Representatives (the "Underwriters"), of 6,000,000 shares of the Common
Stock, par value $.001 per share, of the Company (the "Firm Shares") to be
issued and sold by the Company and up to an additional 400,000 shares of the
Common Stock, par value $.001 per share, of the Company (the "Additional
Shares") to be sold by the Selling Shareholders. The Firm Shares and the
Additional Shares are hereinafter collectively referred to as the "Shares".
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of Xxxxxxx Xxxxx on
behalf of the Underwriters, it will not, during the period commencing on the
date hereof and ending 180 days after the date of the final prospectus relating
to the Public Offering (the "Prospectus"), (1) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, or otherwise transfer
or dispose of, directly or indirectly, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock
(provided that such shares or securities are either now owned by the
undersigned or are hereafter acquired prior to or in connection with the Public
Offering), or (2) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences 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 such other
securities, in cash or otherwise. The foregoing sentence shall not apply to the
sale of any Shares to the Underwriters pursuant to the Underwriting Agreement
or to the sale of any shares of Common Stock which are subject to an existing
pledge or other security arrangement, in good faith pursuant to the terms of
such pledge or arrangement. In addition, the undersigned agrees that, without
the prior written consent of Xxxxxxx Xxxxx on behalf of the Underwriters, it
will not, during the period commencing on the date hereof and ending 180 days
after the date of the Prospectus, make any demand for or exercise any right
with respect to, the registration of any shares of Common stock or any security
convertible into or exercisable or exchangeable for Common Stock.
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
agreement between the Company, the Selling Shareholders and the Underwriters.
Very truly yours,
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