Exhibit 1
FORSYTH CAPITAL MORTGAGE CORP.
Shares of Common Stock
UNDERWRITING AGREEMENT
_________, 2002
ADVEST, INC.
FLAGSTONE SECURITIES, LLC
As Representatives of the Several
Underwriters Named in Schedule I Hereto
c/o Advest, Inc.
Xxx Xxxxxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Forsyth Capital Mortgage Corp. (the "Company"), a Maryland corporation,
hereby confirms its agreement with you and the several underwriters listed on
Schedule I hereto (the "Underwriters"), on whose behalf you have been duly
authorized to act as their representatives (the "Representatives"), as follows:
1. Introduction. Upon the terms and conditions set forth in this
Underwriting Agreement (this "Agreement"), the Company agrees to issue and sell
to the Underwriters, who are acting severally and not jointly, (i) [5,000,000]
shares (the "Firm Shares") of common stock, par value $.01 per share ("Common
Stock"), of the Company in the respective numbers of shares set forth opposite
the names of the Underwriters in Schedule I hereto and (ii) up to an additional
750,000 shares of Common Stock (the "Option Shares"), at the Underwriters'
option, to cover over-allotments, if any, in proportion to the amounts set forth
opposite their respective names in Schedule I hereto. The term "Shares" as used
herein, unless indicated otherwise, shall mean the Firm Shares and the Option
Shares.
2. Representations and Warranties. The Company represents and warrants
to, and agrees with, each of the Underwriters as follows:
(a) The Company has filed with the Securities and Exchange
Commission (the Commission"), a registration statement on Form S-11 (No.
333-85172) and a related preliminary prospectus for the registration of the
Shares under the Securities Act of 1933, as amended (the "Securities Act"), and
the rules and regulations thereunder (the "Securities Act Regulations"). The
Company has prepared and filed such amendments thereto, if any, and such amended
preliminary prospectuses, if any, as may have been required prior to the date
hereof, and will file such additional amendments thereto and such amended
prospectuses as may hereafter be required. The registration statement has been
declared effective under the Securities Act by the Commission. The registration
statement as amended at the time it became effective
(including all information deemed (whether by incorporation by reference or
otherwise) to be a part of the registration statement at the time it became
effective pursuant to Rule 430A(b) of the Securities Act Regulations) is
hereinafter called the "Registration Statement," except that, if the Company
files a post-effective amendment to such registration statement which becomes
effective prior to the Closing Time (as defined below), "Registration Statement"
shall refer to such registration statement as so amended. Any registration
statement filed pursuant to Rule 462(b) of the Securities Act Regulations is
hereinafter called the "Rule 462(b) Registration Statement," and after such
filing the term "Registration Statement" shall include the 462(b) Registration
Statement. Each prospectus included in the Registration Statement, or amendments
thereof or supplements thereto, before it became effective under the Securities
Act and any prospectus filed with the Commission by the Company with the consent
of the Underwriters pursuant to Rule 424(a) of the Securities Act Regulations is
hereinafter called the "Preliminary Prospectus." The term "Prospectus" means the
final prospectus with respect to the Shares, as first filed with the Commission
pursuant to paragraph (1) or (4) of Rule 424(b) of the Securities Act
Regulations, and any amendments thereof or supplements thereto. The Commission
has not issued any order preventing or suspending the use of any Preliminary
Prospectus.
(b) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Maryland with
the corporate power and authority necessary to conduct its business as described
in the Prospectus. The Company has no subsidiaries. The Company is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which the business conducted by it makes such qualification
necessary, except where the failure to so qualify would not have a material
adverse effect on the condition (financial or otherwise), business, prospects,
assets, properties, results of operations, or net worth of the Company
("Material Adverse Effect"); and no proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing, or seeking to revoke, limit or
curtail, such power and authority or qualification.
(c) The Shares have been duly authorized and, when issued and duly
delivered against payment therefor as contemplated by this Agreement, will be
validly issued, fully paid and non-assessable, free and clear of any pledge,
lien, encumbrance, security interest or other claim, and the issuance and sale
of the Shares by the Company is not subject to preemptive or other similar
rights arising by operation of law, under the Articles of Incorporation or
Bylaws of the Company or under any other agreement or arrangement. The rights
and limitations of the Shares are set forth in the Prospectus under the caption
"Description of Capital Stock."
(d) The Shares are registered pursuant to Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and have been
approved for listing on the American Stock Exchange, subject to official notice
of issuance.
(e) The Company is not, nor with the giving of notice or lapse of
time or both will be, in violation or breach of, or in default under, nor will
the execution or delivery of, or the performance and consummation of the
transactions contemplated by this Agreement (including the offer, sale, or
delivery of the Shares), conflict with, or result in a violation or breach of,
or constitute a default under, any provision of the Articles of Incorporation
(as amended or restated), Bylaws (as amended or restated) of the Company, or
other governing documents of the
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Company, or, except for such breaches that would not, individually or in the
aggregate, have a Material Adverse Effect, any agreement, contract, mortgage,
deed of trust, lease, loan agreement, indenture, note, bond, or other evidence
of indebtedness, or other agreement or instrument to which the Company is a
party or by which it is bound. No consent, approval, filing, authorization,
registration, qualification, or order is required for the execution, delivery,
and performance of this Agreement or the consummation of the transactions
contemplated by this Agreement, other than such that have been obtained or made,
except for the Blue Sky Laws applicable to the public offering of the Shares by
the Underwriters, and the clearance of such offering and the underwriting
arrangements evidenced hereby with the National Association of Securities
Dealers, Inc. ("NASD"). This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company and is enforceable against the Company in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally or by general principles
of equity.
(f) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus, and each Preliminary Prospectus complies
in all material respects with the requirements of the Securities Act and the
Securities Act Regulations. As of the effective date of the Registration
Statement, and at all times subsequent thereto up to the Closing Date or any
Option Closing Date (as defined below), the Registration Statement and the
Prospectus, and any amendments or supplements thereto, contained or will contain
all material statements that are required to be stated therein in accordance
with the Securities Act and the Securities Act Regulations and conformed or will
conform in all material respects to the requirements of the Securities Act and
the Securities Act Regulations, and neither the Registration Statement nor the
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 a material
fact required to be stated therein or necessary to make the statements therein
not misleading; provided, however, that no representation or warranty is made as
to information contained in the Registration Statement, the Prospectus or any
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Underwriters
specifically for inclusion therein.
(g) The Preliminary Prospectus was and the Prospectus delivered to
the Underwriters for use in connection with this offering will be identical to
the versions of the Preliminary Prospectus and Prospectus created to be
transmitted to the Commission for filing via the Electronic Data Gathering
Analysis and Retrieval System ("XXXXX"), except to the extent permitted by
Regulation S-T.
(h) The form of certificate used to evidence the Common Stock
complies in all material respects with all applicable statutory requirements,
with any applicable requirements of the Articles of Incorporation and Bylaws of
the Company and the requirements of the American Stock Exchange.
(i) Xxxxx Xxxx PLLC, which has audited, reviewed, and expressed its
opinion with respect to certain of the financial statements and schedules filed
with the Commission as a part of the Registration Statement and included or to
be included, as the case may be, in the Prospectus and in the Registration
Statement, and whose report is included in the
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Prospectus and the Registration Statement, are independent accountants as
required by the Securities Act and the Securities Act Regulations.
(j) The financial statements and schedules and the related notes
thereto included or to be included, as the case may be, in the Registration
Statement, the Preliminary Prospectus, and the Prospectus present fairly the
financial position of the entities purported to be shown thereby as of the
respective dates of such financial statements and schedules, and the results of
operations and changes in equity and in cash flows of the entities purported to
be shown thereby for the respective periods covered thereby, all in conformity
with generally accepted accounting principles consistently applied throughout
the periods involved, except as may be disclosed in the Prospectus. All
adjustments necessary for a fair presentation of the results of such periods
have been made. No other financial statements or supporting schedules are
required to be included in the Registration Statement. The Company had an
outstanding capitalization as set forth under the heading "Capitalization" in
the Prospectus as of the date indicated therein and there has been no material
change therein since such date except as disclosed in the Prospectus. The
outstanding shares of capital stock of the Company have been duly authorized,
validly issued and are fully paid and non-assessable and have been issued and
sold in compliance with all applicable federal and state securities laws.
(k) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles as
applied in the United States and to maintain asset accountability; (iii) access
to assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(l) There is no litigation or governmental proceeding, action, or
investigation pending or, to the knowledge of the Company, threatened, to which
the Company or, other than as contemplated in the Prospectus, any officer or
director is or may be a party or to which the Company or its assets is or may be
subject, which is required to be disclosed in the Registration Statement or the
Prospectus by the Securities Act or the Securities Act Regulations and is not so
disclosed, or which questions the validity of this Agreement or any action taken
or to be taken pursuant hereto.
(m) The Company has good and marketable title in fee simple to all
assets reflected as owned by the Company in the Prospectus (or elsewhere in the
Registration Statement), in each case clear of all liens, mortgages, pledges,
charges, or encumbrances of any kind or nature except those, if any, reflected
in the financial statements described above (or elsewhere in the Registration
Statement) or that would not materially affect the use or value thereof.
(n) The Company has not taken or will take, directly or indirectly,
any action designed to cause or result in, or which has constituted or which
might reasonably be expected to constitute, stabilization or manipulation, under
the Exchange Act or otherwise, of the price of the Shares.
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(o) Except as reflected in or contemplated by the Registration
Statement, since the respective dates as of which information is given in the
Registration Statement and prior to the Closing Date and Option Closing Date (as
such terms are hereinafter defined):
(i) the Company has not or will not have incurred any material
liabilities or obligations, direct or contingent, or entered into any material
transaction not in the ordinary course of business without the prior consent of
the Representatives;
(ii) the Company has not or will not have paid or declared any
dividend or other distribution with respect to its capital stock and the Company
has not or will not be delinquent in the payment of principal or interest on any
outstanding debt obligations; and
(iii) there has not been and will not be any change in the
capital stock or any material change in the indebtedness of the Company (except
as may result from the closing of the transactions contemplated by this
Agreement), or any adverse change in the condition (financial or otherwise), or
any development involving a prospective adverse change in its business
(resulting from litigation or otherwise), prospects, properties, condition
(financial or otherwise), net worth, or results of operations of the Company.
(p) There is no contract or other document, transaction, or
relationship required to be described in the Registration Statement, or to be
filed as an exhibit to the Registration Statement, by the Securities Act or by
the Securities Act Regulations that has not been described or filed as required.
(q) Except as disclosed in the 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 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.
(r) There are no persons with registration or other similar rights
to have any equity or debt securities, including securities which are
convertible into or exchangeable for equity securities, registered pursuant to
the Registration Statement or otherwise registered by the Company under the
Securities Act.
(s) The Company has filed all necessary federal and all state, local
and foreign income and franchise tax returns and paid all taxes shown as due
thereon; and no tax deficiency has been asserted or threatened against the
Company.
(t) The Company has not, directly or indirectly, at any time:
(i) made any unlawful contribution to any candidate for
political office, or failed to disclose any contribution in violation of law; or
(ii) made any payment to any federal, state, local, or foreign
government officer or official, or other person charged with similar public or
quasi-public duties,
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other than payments required or permitted by the laws of the United States or
any jurisdiction thereof or applicable foreign jurisdictions.
(u) The Company owns or possesses adequate rights to use all
patents, patent applications, trademarks, service marks, trade names, trademark
registrations, servicemark registrations, copyrights, and licenses necessary for
the conduct of the business of the Company, and the Company has not received
notice of conflict with the asserted rights of others in respect thereof which
has not been resolved.
(v) The Company has in place and effective such policies of
insurance, with limits of liability in such amounts, as are normal and prudent
in the ordinary scope of business similar to that of the Company.
(w) The Company has and holds, and at the Closing Date or Option
Closing Date will have and hold, and is operating in material compliance with,
and has fulfilled and performed all of its material obligations with respect to,
material permits, certificates, franchises, grants, easements, consents,
licenses, approvals, charters, registrations, authorizations, and orders
(collectively, "Permits") necessary to conduct the business now conducted by it
or contemplated by the Prospectus, and all of such Permits are in full force and
effect; and there is no pending proceeding, and the Company has not received
notice of any threatened proceeding, relating to the revocation or modification
of any such Permits. The Company is not (by virtue of any action, omission to
act, contract to which it is a party or by which it is bound, or any occurrence
or state of facts whatsoever) in violation of any applicable federal, state,
municipal, or local statutes, laws, ordinances, rules, regulations and/or orders
issued pursuant to foreign, federal, state, municipal, or local statutes, laws,
ordinances, rules, or regulations heretofore or currently in effect, except for
such violations that would not, individually or in the aggregate, have a
Material Adverse Effect.
(x) All material contracts, agreements, and arrangements to which
the Company is a party are in full force and effect, and the Company is not in
violation of, or in default in the performance, observance or fulfillment of,
any obligation, agreement, covenant or condition contained therein, which
violation or default would, singularly or in the aggregate, have a Material
Adverse Effect. The Company has no reason to believe that any other party to
such contracts, agreements or arrangements will not or cannot perform in any
material respect its duties or obligations under such contract, agreement or
arrangement.
(y) The provisions of any employee pension benefit plan ("Pension
Plan") as defined in Section 3(2) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), in which the Company is a participating employer
are in substantial compliance with ERISA, and the Company is not in violation of
ERISA. The Company, or the plan sponsor thereof, as the case may be, has duly
and timely filed the reports required to be filed by ERISA in connection with
the maintenance of any Pension Plans in which the Company is a participating
employer, and no facts, including any "reportable event" as defined by ERISA and
the regulations thereunder, exist in connection with any Pension Plan in which
the Company is a participating employer which might constitute grounds for the
termination of such plan by the Pension Benefit Guaranty Corporation or for the
appointment by the appropriate U.S. District Court of a trustee to administer
any such plan. The provisions of any employee benefit welfare
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plan, as defined in Section 3(1) of ERISA, in which the Company is a
participating employer, are in substantial compliance with ERISA, and the
Company, or the plan sponsor thereof, as the case may be, has duly and timely
filed the reports required to be filed by ERISA in connection with the
maintenance of any such plans.
(z) After giving effect to the offering and sale of the Shares and
the application of the proceeds thereof as described in the Prospectus, the
Company will not be an investment company, unit investment trust or face-amount
certificate company under Section 8 of the Investment Company Act of 1940, as
amended, or subject to regulation under such Act.
(aa) Neither the Company nor any of its Affiliates (i) is required
to register as a "broker" or "dealer" in accordance with the provisions of the
Exchange Act, or the rules and regulations thereunder (the "Exchange Act
Regulations"), or (ii) directly, or indirectly through one or more
intermediaries, controls or has any other association with (within the meaning
of Article I of the By-laws of the NASD) any member firm of the NASD.
(bb) No material labor dispute exists with the Company's employees,
and no such labor dispute is threatened.
(cc) The Company has been organized in conformity with the
requirements for qualification as a real estate investment trust under the
Internal Revenue Code of 1986, as amended (the "Code"), and the Company's
proposed method of operation will enable it to meet the requirements for
qualification and taxation as a real estate investment trust under the Code.
Any certificate signed by any director or officer of the Company and
delivered to the Representatives or to counsel for the Underwriters shall be
deemed a representation and warranty of the Company to the Underwriters as to
the matters covered thereby.
Any certificate delivered by the Company to its counsel for purposes of
enabling such counsel to render an opinion pursuant to Section 8 will also be
furnished to the Representatives and counsel for the Underwriters and shall be
deemed to be additional representations and warranties to the Underwriters by
the Company as to the matters covered thereby.
3. Purchase Sale and Delivery to Underwriters; Closing. On the basis of
the representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Company agrees to issue and sell to the
Underwriters, and each of the Underwriters agrees, severally and not jointly, to
purchase from the Company, the number of Firm Shares set forth opposite the name
of such Underwriter in Schedule I at a purchase price of $___ per Firm Share or
$___ per Firm Share sold through the Directed Share Program.
Payment of the purchase price for, and delivery of, the Firm Shares
shall be made at the offices of Hunton & Xxxxxxxx, 000 Xxxx Xxxx Xxxxxx,
Xxxxxxxx, XX 00000, or at such other place as shall be agreed upon by the
Representatives and the Company, at 9:00 A.M. Eastern Time, on the fourth
business day (unless postponed in accordance with the provisions of Section 14)
following the date of this Agreement, or such other time not later than ten (10)
business days after such date as shall be agreed upon by the Representatives and
the Company (such time and date of payment and delivery being herein called the
"Closing Date").
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Payment for the Firm Shares shall be made to the Company by wire
transfer of immediately available funds, against delivery to the Underwriters of
the Firm Shares to be purchased by them. The Firm Shares shall be issued in the
form of one or more fully registered global securities (the "Global Securities")
in book-entry form in such denominations and registered in the name of the
nominee of The Depository Company Trust (the "DTC") or in such names as the
Representatives may request in writing at least two business days before the
Closing Date. The Global Securities representing the Firm Shares shall be made
available for examination by the Representatives and counsel to the Underwriters
not later than 9:30 A.M. Eastern Time on the last business day prior to the
Closing Date.
In addition, on the basis of the representations, warranties and
agreements contained herein, but subject to the terms and conditions set forth
herein, the Company hereby grants to the Underwriters an option to purchase,
severally and not jointly, from the Company the Option Shares in the same
proportion as the number of Firm Shares set forth opposite their names on
Schedule I bears to the total number of Firm Shares, at the same purchase price
per share to be paid for the Firm Shares, for use solely in covering any
over-allotments made by the Underwriters in the sale and distribution of the
Firm Shares. The option granted hereunder may be exercised at any time (but not
more than once) within thirty (30) days after the date of this Agreement, upon
notice by the Representatives to the Company which sets forth the number of
Option Shares as to which the Underwriters are exercising the option, and the
time and place at which the certificate representing the Option Shares will be
delivered. Such time of delivery may not be earlier than the Closing Date and
herein is called the "Option Closing Date." The Option Closing Date shall be
determined by the Representatives, but if at any time other than the Closing
Date, shall not be earlier than three nor later than five full business days
after delivery of such notice to exercise. Certificates for the Option Shares
will be made available for inspection at least 24 hours prior to the Option
Closing Date at the offices of DTC, or its designated custodian, or at such
other location as specified by the Representatives. The manner of payment for
delivery of the Option Shares shall be the same as for the Firm Shares as
specified in this Section 3.
It is understood that approximately 150,000 shares of the Firm Shares
("Directed Shares") initially will be reserved by the Underwriters for offer and
sale to directors and persons having relationships with the directors ("Directed
Share Participants") upon the terms and conditions set forth in the Prospectus
and in accordance with the rules and regulations of the National Association of
Securities Dealers, Inc. (the "Directed Share Program"). Under no circumstances
will the Representatives or any Underwriter be liable to the Company or to any
Directed Share Participant for any action taken or omitted to be taken in good
faith in connection with such Directed Share Program. To the extent that any
Directed Shares are not affirmatively reconfirmed for purchase by any Directed
Share Participant on or immediately after the date of this Agreement, such
Directed Shares may be offered to the public as part of the public offering
contemplated herein.
4. Information Provided by the Underwriters. The Representatives, on
behalf of the Underwriters, and the Company agree that the information set forth
in the _____ and _____ paragraphs of the section in the Prospectus entitled
"Underwriting" was the only written information furnished to the Company by and
on behalf of any Underwriter expressly for use in connection with the
preparation of the Registration Statement.
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5. Offering by the Underwriters. The Company is advised by the
Representatives that the Underwriters propose to make a public offering of the
Shares, on the terms and conditions set forth in the Registration Statement from
time to time as and when the Underwriters deem advisable after the Registration
Statement becomes effective.
6. Agreements of the Company. The Company covenants and agrees with
each of the Underwriters that:
(a) If any information shall have been omitted from the Registration
Statement in reliance upon Rule 430A, the Company, at the earliest possible
time, will furnish the Representatives with copies of the Prospectus to be filed
by the Company with the Commission to comply with Rule 424(b) and Rule 430A
under the Securities Act, and will file such Prospectus with the Commission in
compliance with such Rules. Upon compliance with such Rules, the Company will so
advise the Representatives promptly. The Company will advise the Representatives
and counsel to the Underwriters promptly of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement or of
the institution of any proceedings for that purpose, or of any notification
received by the Company of the suspension of qualification of the Shares for
sale in any jurisdiction or the initiation or threatening of any proceedings for
that purpose, or of any notification received by the Company of the suspension
of qualification of the Shares for sale in any jurisdiction or the initiation or
threatening of any proceedings for that purpose. The Company also will advise
the Representatives and counsel to the Underwriters promptly of any request of
the Commission for amendment or supplement of the Registration Statement, of any
Preliminary Prospectus, or of the Prospectus, or for additional information, and
the Company will not file any amendment or supplement to the Registration
Statement (either before or after it becomes effective), to any Preliminary
Prospectus, or to the Prospectus (including a prospectus filed pursuant to Rule
424(b)) if the Representatives have not been furnished with copies in a
reasonable period of time prior to such filing or if the Representatives
reasonably object to such filing.
(b) For the period during which a Prospectus relating to the Shares
is required to be delivered under the Securities Act, the Company shall comply
with all requirements imposed on it by the Securities Act, as now and hereafter
amended, and by the Securities Act Regulations, as from time to time in force,
so far as is necessary to permit the continuance of sales or dealings in the
Shares as contemplated by the provisions hereof and the Prospectus. If any event
occurs as a result of which the Prospectus, including any subsequent amendment
or supplement, would include an untrue statement of a material fact, or would
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, or if it becomes necessary at any time to amend the
Prospectus, including any amendment or supplement thereto, to comply with the
Securities Act, the Company promptly will advise the Representatives and counsel
to the Underwriters thereof and the Company will promptly prepare and file with
the Commission an amendment or supplement that will correct such statement or
omission or an amendment that will effect such compliance; and, if any
Underwriter is required to deliver a prospectus nine (9) months or more after
the effective date of the Registration Statement, the Company, upon request of
the Representatives but at the expense of such Underwriter, will prepare
promptly such prospectus or prospectuses as may be necessary to permit
compliance with the requirements of Section 10(a)(3) of the Securities Act.
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(c) The Company will not, prior to the Option Closing Date or thirty
(30) days after the date of this Agreement, whichever occurs first, without the
prior consent of the Representatives, incur any material liability or
obligation, direct or contingent, or enter into any material transaction, other
than in the ordinary course of business, or any transaction with a related party
which is required to be disclosed in the Prospectus pursuant to Item 404 of
Regulation S-K under the Securities Act, except as contemplated by the
Prospectus.
(d) The Company will make generally available to its stockholders
and the Representatives an earnings statement of the Company as soon as
practicable, but in no event later than fifteen (15) months after the end of the
Company's current fiscal quarter, covering a period of twelve (12) consecutive
calendar months beginning after the effective date of the Registration
Statement, but beginning not later than four (4) months after such effective
date, which will satisfy the provisions of the last subsection of Section 11(a)
of the Securities Act and Rule 158 promulgated thereunder.
(e) During such period as a prospectus is required by law to be
delivered in connection with sales by an underwriter or dealer, the Company will
furnish to the Representatives, at the expense of the Company, copies of the
Registration Statement, the Prospectus, any Preliminary Prospectus, and all
amendments and supplements to any such documents, in each case as soon as
available and in such quantities as the Representatives may reasonably request,
for the purposes contemplated by the Securities Act.
(f) The Company will, if necessary, use its best efforts to take or
cause to be taken in cooperation with the Representatives and counsel to the
Underwriters all actions required in qualifying or registering the Shares for
sale under the Blue Sky Laws of such jurisdictions as the Representatives may
reasonably designate, provided the Company shall not be required to qualify
generally as a foreign corporation or as a dealer in securities or to consent
generally to service of process under the law of any such state (except with
respect to the offering and sale of the Shares), and will continue such
qualifications or registrations in effect so long as reasonably requested by the
Representatives to effect the distribution of the Shares (including, without
limitation, compliance with all undertakings given pursuant to such
qualifications or registrations). In each jurisdiction where any of the Shares
shall have been qualified as provided above, the Company will file such reports
and statements as may be required to continue such qualification for a period of
not less than one (1) year following the date of this Agreement.
(g) The Company will furnish to its stockholders annual reports
containing financial statements audited by independent public accountants in the
manner and to the extent required by the Exchange Act. During the period ending
three (3) years after the date of this Agreement, (i) as soon as practicable
after the end of the fiscal year, the Company will furnish to each of the
Representatives two copies of the annual report of the Company containing the
audited consolidated balance sheet of the Company as of the close of such fiscal
year and corresponding audited consolidated statements of earnings,
stockholders' equity and cash flows for the year then ended, and (ii) the
Company will file promptly and will furnish to each of the Representatives at or
before the filing thereof copies of all reports and any definitive proxy or
information statements required to be filed by the Company with the Commission
pursuant to
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Section 13, 14, or 15 of the Exchange Act. During such three-year period, the
Company also will furnish to the Representatives one copy of the following:
(i) as soon as practicable after the filing thereof, each
other report, statement, or other document filed by the Company with the
Commission;
(ii) as soon as practicable after the filing thereof, all
reports, statements, other documents and financial statements furnished by the
Company to the American Stock Exchange pursuant to requirements of or agreements
with the American Stock Exchange; and
(iii) as soon as available, each report, statement, or other
document of the Company mailed to its stockholders.
(h) The Company will use its best efforts to satisfy or cause to be
satisfied the conditions to the obligations of the Underwriters set forth in
Section 8 hereof.
(i) The Company shall deliver the requisite notice of issuance to
the American Stock Exchange and shall take all necessary or appropriate action
within its power to maintain the authorization for trading of the Shares on the
American Stock Exchange.
(j) The Company shall, if necessary, comply in all respects with the
undertakings given by the Company in connection with the qualification or
registration of the Shares for offering and sale under the Blue Sky Laws.
(k) The Company shall apply the proceeds from its sale of the Shares
in the manner and for the purposes specified under the heading "Use of Proceeds"
in the Prospectus. The Company shall file, and will furnish or cause to be
furnished to the Underwriters and counsel to the Underwriters copies of all
reports as may be required in accordance with Rule 463 under the Securities Act.
(l) Except for the sale of Shares pursuant to this Agreement and as
otherwise described in the Prospectus, the Company shall not, directly or
indirectly, offer, sell, contract to sell, issue, distribute, grant any option,
right, or warrant to purchase or otherwise dispose of any shares of Common
Stock, in the open market or otherwise, for a period of one hundred eighty (180)
days after the later of the effective date of the Registration Statement or the
date of this Agreement, without the express prior written consent of the
Representatives.
(m) The Company (i) will comply with all applicable securities and
other applicable laws, rules and regulations, including without limitation, the
rules and regulations of the NASD, in each jurisdiction in which the Directed
Shares are offered in connection with the Directed Share Program and (ii) will
pay all reasonable fees and disbursements of counsel incurred by the
Underwriters in connection with the Directed Share Program and any stamp duties,
similar taxes or duties or other taxes, if any, incurred by the Underwriters in
connection with the Directed Share Program.
7. Payment of Expenses and Fees
11
Whether or not the transactions contemplated hereunder are consummated,
or if this Agreement is terminated for any reason, the Company will pay or cause
to be paid the costs, fees and expenses incurred in connection with the offering
of the Shares as follows:
(a) All costs, fees and expenses incurred in connection with the
performance of the obligations of the Company hereunder, including all fees and
expenses of the Company's accountants and counsel, all costs and expenses
incurred in connection with the preparation, printing, filing, and distribution
(including delivery and shipping costs) of the Registration Statement, each
Preliminary Prospectus, and the Prospectus (including all amendments and
exhibits thereto and the financial statements therein), and agreements and
supplements provided for herein, this Agreement and other underwriting
documents, including various Underwriters' letters, and the Preliminary and
Supplemental Blue Sky Memoranda;
(b) All filing and registration fees and expenses, including the
legal fees and disbursements of counsel, incurred in connection with registering
all or any part of the Shares for offer and sale under the Blue Sky Laws;
(c) All fees and expenses of the Company's registrar and transfer
agent; all transfer taxes, if any, and all other fees and expenses incurred in
connection with the sale and delivery of the Shares to the Underwriters;
(d) The filing fees of the NASD and applicable fees charged by the
American Stock Exchange for inclusion of the Shares for quotation on the
American Stock Exchange; and
(e) All other costs and expenses incident to the performance of the
Company's obligations hereunder which are not otherwise provided for in this
Section 7.
8. Conditions to the Obligations of the Underwriters. The obligations
of the Underwriters under this Agreement shall be subject to the accuracy of the
representations and warranties on the part of the Company set forth herein as of
the Closing Date, and if applicable, as of the Option Closing Date, to the
performance by the Company of its obligations hereunder, and to the following
additional conditions, except to the extent expressly waived in writing by the
Representatives:
(a) The Registration Statement and all post-effective amendments
thereto shall have been declared effective by the Commission no later than 5:30
p.m. Eastern Time, on the date of this Agreement, or such later time as shall
have been consented to by the Representatives, but in any event not later than
5:30 p.m. Eastern Time on the third full business day following the date hereof;
if the Company omitted information from the Registration Statement at the time
it became effective in reliance on Rule 430A under the Securities Act, the
Prospectus shall have been filed with the Commission in compliance with Rule
424(b) and Rule 430A under the Securities Act; no stop order suspending the
effectiveness of the Registration Statement or any amendment or supplement
thereto shall have been issued; no proceeding for the issuance of such an order
shall have been initiated or shall be pending or, to the knowledge of the
Company or the Representatives, threatened or contemplated by the Commission;
and any request of the Commission for additional information (to be included in
the Registration
12
Statement or the Prospectus or otherwise) shall have been disclosed to the
Representatives and complied with to the Representatives' satisfaction.
(b) The Shares shall have been qualified or registered for sale, or
subject to an available exemption from such qualification or registration, under
the Blue Sky Laws of such jurisdictions as shall have been reasonably specified
by the Representatives and the offering contemplated by this Agreement shall
have been cleared by the NASD.
(c) Since the dates as of which information is given in the
Registration Statement:
(i) There shall not have been any material adverse change, or
any development involving a prospective material adverse change, in the ability
of the Company to conduct its business (whether by reason of any court,
legislative, other governmental action, order, decree, or otherwise), or in the
general affairs, condition (financial and otherwise), business, prospects,
properties, management, financial position or earnings, results of operations,
or net worth of the Company, whether or not arising from transactions in the
ordinary course of business; and
(ii) The Company shall not have sustained any loss or
interference from any labor dispute, strike, fire, flood, windstorm, accident,
or other calamity (whether or not insured) or from any court or governmental
action, order, or decree; the effect of which on the Company, in any such case
described in clause (c)(i) or (ii) above, is in the reasonable opinion of the
Representatives so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the Shares on
the terms and in the manner contemplated in the Registration Statement and the
Prospectus.
(d) There shall have been furnished to the Representatives on the
Closing Date and the Option Closing Date:
(i) An opinion of Xxxxxx & Bird LLP, counsel to the Company,
dated as of the Closing Date and any Option Closing Date, in form and substance
substantially in the form attached hereto as Exhibit A; and
(ii) The opinion, dated the Closing Date and the Option Closing
Date, of Hunton & Xxxxxxxx, counsel to the Underwriters, as to such matters as
the Representatives shall reasonably request.
In rendering the opinion specified in clauses (d)(i) and (ii) above,
counsel may rely upon an opinion or opinions, each dated the Closing Date or the
Option Closing Date as the case may be, of other counsel retained by them or the
Company as to laws of any jurisdiction other than the United States, provided
that (A) such reliance is expressly authorized by each opinion so relied upon
and a copy of each such opinion is delivered to the Representatives, and (B)
counsel shall state in its opinion that it believes that it and the Underwriters
are justified in relying thereon. Insofar as the above-referenced opinions
involve factual matters, such counsel may rely, to the extent such counsel deems
proper, upon certificates of officers of the Company and certificates of public
officials.
13
(e) At the time this Agreement is executed and also on the Closing
Date and the Option Closing Date, as the case may be, there shall be delivered
to the Representatives a letter from Xxxxx Xxxx PLLC, the Company's independent
accountants, the first letter to be dated the date of this Agreement, the second
letter to be dated the Closing Date, and the third letter to be dated the Option
Closing Date, if any, which shall be in form and substance reasonably
satisfactory to the Representatives and shall contain information as of a date
within five days of the date of such letter. There shall not have been any
change set forth in any letter referred to in this subsection (e) that makes it
impracticable or inadvisable in the judgment of the Representatives to proceed
with the public offering or purchase of the Shares as contemplated hereby.
(f) On the Closing Date and on the Option Closing Date, a
certificate signed by the Chairman of the Board, the President, a Vice Chairman
of the Board or any Executive or Senior Vice President and the principal
financial officer or principal accounting officer of the Company, dated the
Closing Date or the Option Closing Date, as the case may be, to the effect that
the signers of such certificate have carefully examined the Registration
Statement and this Agreement and that:
(i) The representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of the Closing
Date or the Option Closing Date, as the case may be, with the same effect as if
made on the Closing Date or the Option Closing Date, as the case may be, and the
Company have complied in all material respects with all the agreements and
satisfied in all material respects all the conditions on its part to be
performed or satisfied at or prior to the Closing Date or the Option Closing
Date, as the case may be;
(ii) The Commission has not issued an order preventing or
suspending the use of the Prospectus or any Preliminary Prospectus or any
amendment thereto; no stop order suspending the effectiveness of the
Registration Statement has been issued; and, to the knowledge of the respective
signatories, no proceeding for that purpose has been instituted or is pending or
contemplated under the Securities Act;
(iii) Each of the respective signatories of the certificate has
carefully examined the Registration Statement, the Prospectus, and any
amendments or supplements thereto, and such documents contain all material
statements and information required to be made therein, and neither the
Registration Statement nor any amendment or supplement thereto includes any
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
and, since the date on which the Registration Statement was initially filed, no
event has occurred that was required to be set forth in an amended or
supplemented prospectus or in an amendment to the Registration Statement that
has not been so set forth; provided, however, that no representation need be
made as to information contained in the Registration Statement or any amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Underwriter through the
Representatives specifically for inclusion therein; and
(iv) Since the date on which the Registration Statement was
initially filed with the Commission, there has not been any material adverse
change or a development
14
involving a prospective material adverse change in the business, properties,
financial condition, or earnings of the Company, whether or not arising from
transactions in the ordinary course of business, except as disclosed in the
Registration Statement as heretofore amended or (but only if the Representatives
expressly consent thereto in writing) as disclosed in an amendment or supplement
thereto filed with the Commission and delivered to the Representatives after the
execution of this Agreement; since such date and except as so disclosed or in
the ordinary course of business, the Company has not incurred any liability or
obligation, direct or indirect, or entered into any transaction that is material
to the Company not contemplated in the Prospectus; since such date and except as
so disclosed there has not been any change in the outstanding capital stock of
the Company, or any change that is material to the Company in the short-term
debt or long-term debt of the Company; since such date and except as so
disclosed, the Company has not incurred any material contingent obligations, and
no material litigation is pending or, to the Company's knowledge, threatened
against the Company; and, since such date and except as so disclosed, the
Company has not sustained any material loss or interference from any strike,
fire, flood, windstorm, accident or other calamity (whether or not insured) or
from any court or governmental action, order, or decree.
(g) Prior to the Closing Date and any Option Closing Date, the
Company shall have furnished to the Representatives such further information,
certificates and documents as the Representatives may reasonably request in
connection with the offering of the Shares.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Underwriters by notice from the Representatives to the Company at any
time without liability on the part of any Underwriter, including the
Representatives, or the Company, except for expenses to be paid by the Company
pursuant to Section 7 hereof or reimbursed by the Company pursuant to Section 9
and except to the extent provided in Section 11.
9. Reimbursement of Underwriters' Expenses. If the sale of the Shares
to the Underwriters on the Closing Date is not consummated because the offering
is terminated or indefinitely suspended by the Company or by the Representatives
for any reason permitted by this Agreement, other than the Underwriters'
inability to legally act as Underwriter, the Company will reimburse the
Underwriters for up to $80,000 of the Underwriters' reasonable out-of-pocket
expenses, including fees and disbursements of their counsel, that shall have
been incurred by the Underwriters in connection with the proposed purchase and
sale of the Shares. Any such termination or suspension shall be without
liability of any party to the other except that the provisions of this Section
9, and Sections 7 and 11 shall remain effective and shall apply.
10. Maintain Effectiveness of Registration Statement. The Company will
use its best efforts to prevent the issuance of any stop order or other such
order suspending the effectiveness of the Registration Statement and, if such
stop order is issued, to obtain the lifting thereof as soon as possible.
11. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses, claims,
damages, expenses, liabilities, or actions in
15
respect thereof ("Claims"), joint or several, to which such Underwriter or each
such controlling person may become subject under the Securities Act, the
Exchange Act, the Securities Act Regulations, the Exchange Act Regulations, Blue
Sky Laws or other federal or state statutory laws or regulations, at common law
or otherwise (including payments made in settlement of any litigation, if such
settlement is effected with the written consent of the Company, which consent
shall not be unreasonably withheld), insofar as such Claims arise out of or are
based upon the inaccuracy or breach of any representation, warranty, or covenant
of the Company contained in this Agreement, any untrue statement or alleged
untrue statement of any material fact contained in the Registration Statement,
any Preliminary Prospectus, the Prospectus, or any amendment or supplement
thereto, or in any application filed under any Blue Sky Law or other document
executed by the Company for that purpose or based upon written information
furnished by the Company and filed in any state or other jurisdiction to qualify
or register any or all of the Shares under the securities laws thereof (any such
document, application, or information being hereinafter called a "Blue Sky
Application"), or arise out of or are based upon the omission or alleged
omission to state in any of the foregoing a material fact required to be stated
therein or necessary to make the statements therein not misleading. The Company
agrees to reimburse each Underwriter and each such controlling person promptly
for any legal fees or other expenses incurred by such Underwriter or any such
controlling person in connection with investigating or defending any such Claim
or appearing as a third-party witness in connection with any such Claim;
provided, however, that the Company will not be liable in any such case to the
extent that:
(i) Any such Claim arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto or in any Blue Sky Application in reliance upon
and in conformity with the written information furnished by or on behalf of the
Underwriters to the Company expressly for use therein as set forth in Section 4
of this Agreement; or
(ii) Such statement or omission was contained or made in any
Preliminary Prospectus and corrected in the Prospectus and (1) any such Claim
suffered or incurred by any Underwriter (or any person who controls such
Underwriter) resulted from an action, claim, or suit by any person who purchased
Shares that are the subject thereof from such Underwriter in the offering of the
Shares, and (2) such Underwriter failed to deliver a copy of the Prospectus (as
then amended if the Company shall have amended the Prospectus) to such person at
or prior to the confirmation of the sale of such Shares in any case where such
delivery is required by the Securities Act, unless such failure was due to
failure by the Company to provide copies of the Prospectus (as so amended) to
the Underwriter as required by this Agreement.
(b) Each Underwriter severally, but not jointly, agrees to indemnify
and hold harmless the Company, each of its directors and officers who sign the
Registration Statement, and each person who controls the Company within the
meaning of the Securities Act, against any Claim to which the Company, or any
such director, officer, or controlling person may become subject under the
Securities Act, the Exchange Act, the Securities Act Regulations, Exchange Act
Regulations, Blue Sky Laws, or other federal or state statutory laws or
regulations, at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Underwriter and the Representatives, which consent shall not be
16
unreasonably withheld), insofar as such Claim arises out of or is based upon any
untrue or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or in any Blue Sky Application, or arises out
of or is 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 the Registration Statement, any Preliminary Prospectus, the Prospectus,
or any amendment or supplement thereto, or in any Blue Sky Application, in
reliance upon and in conformity with the written information furnished by or on
behalf of such Underwriter to the Company as set forth in Section 4 of this
Agreement.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) of this Section 11 of notice of the commencement of any action in respect
of a Claim, such indemnified party will, if a Claim in respect thereof is to be
made against an indemnifying party under such subsection, notify the
indemnifying party in writing of the commencement thereof. In case any such
action is brought against any indemnified party, and such indemnified party
notifies an indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate in and, to the extent that it may wish,
jointly with all other indemnifying parties, similarly notified, assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to the
indemnified party and/or other indemnified parties that are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf of
such indemnified party or parties.
(d) Upon receipt of notice from the indemnifying party to such
indemnified party of the indemnifying party's election to assume the defense of
such action and upon approval by the indemnified party of counsel selected by
the indemnifying party, the indemnifying party will not be liable to such
indemnified party under subsection (a) or (b) of this Section 11 for any legal
fees or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof, unless:
(i) the indemnified party shall have employed separate counsel in
connection with the assumption of legal defenses in accordance with the proviso
to the last sentence of subsection (c) of this Section 11 (it being understood,
however, that the indemnified party shall not be liable for the legal fees and
expenses of more than one separate counsel (plus local counsel), approved by the
Representatives if one or more of the Underwriters or their controlling persons
are the indemnified parties); or
(ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after the indemnified party's notice to the
indemnifying party of commencement of the action.
17
(e) If the indemnification provided for in this Section 11 is
unavailable to an indemnified party or is insufficient to hold harmless an
indemnified party under subsection (a) or (b) of this Section 11 in respect of
any Claim referred to therein, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall, subject, to the limitations
hereinafter set forth, contribute to the amount paid or payable by such
indemnified party as a result of such Claim:
(i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other hand from the offering of the Shares; or
(ii) if the allocation provided by clause (e)(i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (e)(i) above, but also the
relative fault of the Company on the one hand and the Underwriters on the other
hand in connection with the statements or omissions that resulted in such Claim,
as well as any other relevant equitable considerations.
The respective relative benefits received by the Company on the one
hand and the Underwriters on the other hand shall be deemed to be in such
proportion that the Underwriters are responsible for that portion of a Claim
represented by the percentage that the amount of the underwriting discounts and
commissions bears to the public offering price of the Shares, and the Company
(including the Company's directors, officers, and controlling persons) is
responsible for the remaining portion of such Claim.
The relative fault of the Company on the one hand and the Underwriters
on the other hand 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 on the one hand or the Underwriters on the other hand
and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such untrue statement or omission. The amount
paid or payable by a party as a result of the Claims referred to above shall be
deemed to include, subject to the limitations set forth in subsections (c) and
(d) of this Section 11, any legal or other fees or expenses reasonably incurred
by such party in connection with investigating or defending any action or claim.
(f) The Company and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 11 were determined by pro
rata or per capita allocation or by any other method or allocation that does not
take into account the equitable considerations referred to in subsection (e) of
this Section 11. Notwithstanding the other provisions of this Section 11, no
Underwriter shall be required to contribute any amount in excess of the
underwriting discounts and commissions applicable to the Shares purchased by
such Underwriter. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligation to contribute pursuant to this
Section 11 are several in proportion to their respective underwriting
commitments and not joint.
18
(g) The Company agrees to indemnify and hold harmless each Underwriter
and its affiliates and each person, if any, who controls each Underwriter and
its affiliates within the meaning of either the Securities Act or the Exchange
Act, from and against any and all Claims to which the Company, or any such
director, officer, or controlling person may become subject under the Securities
Act, the Exchange Act, the Securities Act Regulations, Exchange Act Regulations,
Blue Sky Laws, or other federal or state statutory laws or regulations, at
common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of such Underwriter and the
Representatives, which consent shall not be unreasonably withheld), insofar as
such Claim (i) is caused by any untrue statement or alleged untrue statement of
a material fact contained in any material prepared by or with the consent of the
Company for distribution to participants in connection with the Directed Share
Program, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; (ii) results from the failure of any participant to pay
for and accept delivery of Directed Shares that the participant has agreed to
purchase; or (iii) relates to, or arises out of or in connection with, the
Directed Share Program.
(h) The obligations of the Company and the Underwriters under this
Section 11 shall be in addition to any liability that the Company or the
Underwriters may otherwise have.
12. Default of Underwriters. It shall be a condition to this Agreement and
to the obligations of the Company to sell and deliver the Shares hereunder, and
to the obligations of each Underwriter to purchase the Shares in the manner
described herein, that, except as hereinafter provided in this Section 12, each
of the Underwriters (except a defaulting Underwriter) shall purchase and pay for
all the Shares agreed to be purchased by such Underwriter hereunder upon tender
to the Representatives of all such Shares in accordance with the terms hereof.
If any Underwriter or Underwriters default in its or their obligations to
purchase Shares hereunder on either the Closing Date or the Option Closing Date
and the aggregate number of Shares that such defaulting Underwriter or
Underwriters agreed but failed to purchase does not exceed ten percent (10%) of
the number of Shares the Underwriters are obligated to purchase on such Closing
Date, the Representatives may make arrangements for the purchase of such Shares
by other persons, including any of the Underwriters, but if no such arrangements
are made by such Closing Date or Option Closing Date, the nondefaulting
Underwriters shall be obligated severally, in proportion to their respective
commitments hereunder, to purchase the Shares such defaulting Underwriters
agreed but failed to purchase on such Closing Date or Option Closing Date. If
any Underwriter or Underwriters so default and the number of Shares with respect
to which such default or defaults occur is greater than the above percentage and
arrangements satisfactory to the Representatives for the purchase of such Shares
by other person are not made within thirty-six (36) hours after such default,
this Agreement will terminate without liability on the part of any nondefaulting
Underwriter or the Company, except to the extent provided in Section 11.
If Shares to which a default relates are to be purchased by the
nondefaulting Underwriters or by another party or parties, the Representatives
or the Company shall have the right to postpone the Closing Date or Option
Closing Date, as the case may be, for not more than seven (7) business days in
order that the necessary changes, if any, in the Registration Statement,
Prospectus, and any other documents, as well as any other arrangements, may be
effected. As used in this Agreement, the term "Underwriter" includes any person
substituted for an
19
Underwriter under this Section 12. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
13. Effective Date. This Agreement shall become effective immediately on
the date hereof.
14. Termination. Without limiting the right to terminate this Agreement
pursuant to any other provision hereof, this Agreement may be terminated by the
Representatives prior to the Closing Date and the option from the Company
referred to in Section 3, if exercised, may be canceled by the Representatives
at any time prior to the Option Closing Date, if:
(a) The Company shall have failed, refused, or been unable, at the
Closing Date or Option Closing Date, as the case may be, to perform any
agreement on its part to be performed hereunder;
(b) Any other condition to the obligations of the Underwriters
hereunder is not fulfilled as of the Closing Date or Option Closing Date, as the
case may be;
(c) Minimum or maximum prices shall have been generally established on
any national securities exchange, or trading in securities generally shall have
suspended on any national securities exchange or on The Nasdaq Stock Market, or
a general banking moratorium shall have been established by federal or New York
State authorities; or
(d) There shall have occurred any outbreak or escalation of major
hostilities, declaration by the United States of a national emergency or war, or
other national or international calamity or crisis the effect of which on the
general financial market is such as to make it, in the Representatives'
reasonable judgment, impracticable or inadvisable to proceed with completion of
the sale and payment for the Shares as provided in this Agreement.
Any termination pursuant to this Section 14 shall be without liability on
the part of any Underwriter to the Company or on the part of the Company to any
Underwriter (except for expenses to be paid by the Company pursuant to Section 7
or reimbursed by the Company pursuant to Section 9 and except as to
indemnification and contribution to the extent provided in Section 11).
15. Representations and Indemnities to Survive Delivery. The respective
indemnity and contribution agreements of the Company and the Underwriters, and
the representations, warranties, covenants, other statements of the Company and
of their directors and officers set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation made by or
on behalf of any Underwriter, the Company, or any of its or their partners,
officers, directors, or any controlling person, as the case may be, and will
survive delivery of and payment for the Shares sold hereunder. The respective
indemnity and contribution agreements of the Company and the Underwriters, the
provisions of Section 7(a) and Section 9 of this Agreement, and the
representations and warranties of the Company will survive the termination or
cancellation of this Agreement.
16. Notices. All communications hereunder shall be in writing and, if sent
to the Representatives, will be mailed, delivered, or telecopied (with receipt
confirmed) to The Representatives, c/o Advest, Inc., at Xxx Xxxxxxxxxxx Xxxxx,
00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
20
10020, Attention: Xxxxxxx X. Xxxxxxxx, Director (Fax No. (000) 000-0000) with a
copy to Xxxxx X. Xxxxxx, Hunton & Xxxxxxxx, 000 Xxxx Xxxx Xxxxxx, Xxxxxxxx,
Xxxxxxxx 00000 (Fax No. (000) 000-0000); and if sent to the Company will be
mailed, delivered, or telecopied (with receipt confirmed) to Forsyth Capital
Mortgage Corp., 0000 Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxx-Xxxxx, Xxxxx Xxxxxxxx
00000, Attention: Xxxxxxx X. Xxxxx, Chairman of the Board and Chief Executive
Officer (Fax No. (000) 000-0000) with a copy to Xxxx X. Xxxxxxx, Xxxxxx & Bird
LLP, 0000 Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx Xxxxxxxx 00000 (Fax No.
(000) 000-0000).
17. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors or assigns, and
to the benefit of the directors and officers (and their personal
representatives) and controlling persons referred to in Section 11, and no other
person shall acquire or have any right or obligation hereunder. The terms
"successors or assigns," as used in this Agreement, shall not include any
purchaser of the Shares from any Underwriter merely by reason of such purchase.
18. Partial Unenforceability. If any section, subsection, clause, or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, such determination shall not affect the validity or
enforceability of any other section, subsection, clause, or provision hereof.
19. Applicable Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
20. Entire Agreement. This Agreement embodies the entire agreement
among the parties hereto with respect to the transactions contemplated herein,
and there have not been and are no agreements among the parties with respect to
such transactions other than as set forth or provided for herein.
21. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
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If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed counterparts hereof,
whereupon this Agreement will become a binding agreement among the Company and
the Underwriters, including the Representatives, in accordance with its terms.
Very truly yours,
FORSYTH CAPITAL MORTGAGE CORP.
By: ________________________________________________
Title: ________________________________________________
ADVEST, INC.
FLAGSTONE SECURITIES, LLC
As representatives of the several Underwriters listed in
Schedule I.
BY: ADVEST, INC
By: ________________________________________________
Title: ________________________________________________
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FORSYTH CAPITAL MORTGAGE CORP.
SCHEDULE I
Number of
Firm Shares to
Name of Underwriter be Purchased
------------------- ------------
Advest, Inc. ................................................ ____________
Flagstone Securities, LLC ................................... ____________
TOTAL ....................................................... ____________
EXHIBIT A
The opinion of counsel to the Company to be delivered pursuant to Section
8(d)(i) of the Underwriting Agreement shall be substantially to the effect that:
1. The Company has been duly incorporated and is validly existing and
in good standing under the laws of the State of Maryland, with requisite
corporate power and authority to conduct its business as described in the
Registration Statement and Prospectus.
2. The Company is qualified to do business as a foreign corporation
under the corporation laws of the State of North Carolina.
3. The Company has the corporate power and authority necessary to
execute, deliver, and perform the Underwriting Agreement. The Underwriting
Agreement has been duly authorized, executed and delivered by the Company, and
constitutes a legal, valid, and binding obligation of the Company and is
enforceable against the Company in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally or by general principles of equity and
except as to those provisions relating to indemnity or contribution for
liabilities arising under the Securities Act and the rules and regulations
promulgated thereunder.
4. The issuance and sale of the Shares has been duly authorized and,
when issued and delivered against payment therefor as contemplated by the
Underwriting Agreement, the Shares will be validly issued, fully paid and
non-assessable, and the Underwriters will acquire good and marketable title to
the Shares, free and clear of any pledge, lien, encumbrance, security interest,
or other claim created by the Company.
5. After giving effect to the offering and sale of the Shares and the
application of the proceeds thereof as described in the Prospectus, the Company
will not be an "investment company" or an entity "controlled" by an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended.
6. The statements set forth in the Registration Statement and
Prospectus under the captions "Federal Income Tax Consequences of Our Status as
a REIT" and "Description of Capital Stock," insofar as such information
constitutes matters of law or legal conclusions, are correct in all material
respects and fairly summarizes the information set forth therein.
7. The Company has authorized capitalization as set forth in the
Prospectus; the outstanding shares of capital stock of the Company have been
duly and validly authorized and issued and are fully paid and non-assessable;
except as disclosed in the Prospectus, to such counsel's knowledge, there are no
outstanding (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 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
obligation, or any such warrants, rights or options.
8. The Registration Statement has become effective under the
Securities Act and, to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued under the Securities
Act and no proceedings therefor have been initiated or threatened by the
Commission.
9. The Registration Statement and the Prospectus and any amendment or
supplement thereto made by the Company prior to the Closing Date or any Option
Closing Date (other than the financial statements and financial and statistical
data included therein, as to which no opinion need be rendered), when it or they
became effective or were filed with the Commission, as the case may be, and in
each case at the Closing Date or any Option Closing Date, complied as to form in
all material respects with the requirements of the Securities Act and the
Securities Act Regulations. Such counsel has participated in conferences with
officers and other representatives of the Company, representatives of the
Representatives and representatives of the independent certified public
accountants of the Company, at which conferences the contents of the
Registration Statement and the Prospectus and related matters were discussed
and, although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Prospectus (except as specified
in the foregoing opinion), on the basis of the foregoing, no facts have come to
the attention of such counsel which lead such counsel to believe that: (1) the
Registration Statement (other than the financial statements and financial and
statistical data included therein, as to which no opinion need be rendered), at
the time it became effective, contained any untrue statement of a material fact
or omitted to state a material fact necessary in order to make the statements
contained therein, not misleading, or (2) the Prospectus (other than the
financial statements and financial and statistical data included therein, as to
which no opinion need be rendered), as of its date and at the Closing Date or
any Option Closing Date, contained any untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
contained therein, in the light of the circumstances under which they were made,
not misleading.
10. To the knowledge of such counsel, other than as contemplated in the
Prospectus, there is no pending or threatened action, suit or proceeding by or
before any court or governmental agency, authority or body or any arbitrator
involving the Company or its property which would affect the consummation of the
transactions contemplated in the Underwriting Agreement or the issuance of the
Shares.
11. Such counsel knows of no contracts, indentures, mortgages, loan
agreements, notes, leases or other instruments of a character required to be
described in
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the Registration Statement or to be filed as exhibits thereto other than those
described therein or filed as exhibits thereto.
12. To such counsel's knowledge, the Company is not in violation of the
articles of incorporation or the bylaws of the Company, is not in breach of, or
in default under (nor has any event occurred which with notice, lapse of time,
or both would constitute a breach of, or default under), any contract,
indenture, mortgage, loan agreement, note, lease or other instrument filed as an
exhibit to the Registration Statement.
13. To such counsel's knowledge, the Company has all necessary
licenses, authorizations, consents and approvals and has made all necessary
filings required under any applicable law or regulation, and has obtained all
necessary authorizations, consents and approvals from other persons, required to
conduct its business, as described in the Prospectus, except for any such
license, authorization, consent, approval or filing, the failure of which to
obtain would not cause a Material Adverse Effect. To such counsel's knowledge,
the Company is not in violation of, in default under, and has not received any
notice regarding a possible violation, default or revocation of any such
material license, authorization, consent or approval or any applicable law,
regulation or decree, order or judgment applicable to the Company, except for
any such violation, default or revocation that would not cause a Material
Adverse Effect
14. No approval, authorization, consent, registration, qualification or
other order of any governmental board or body is required in connection with the
execution and delivery of the Underwriting Agreement, or the issuance and sale
of the Shares or the consummation by the Company of the other transactions
contemplated by the Underwriting Agreement, except such as have been obtained
under the Securities Act, the Exchange Act or such as may be required by the
NASD Regulation, Inc. or under the blue sky or securities laws of various states
in connection with the offering and sale of the Shares (as to which such counsel
need express no opinion).
15. Neither the issuance, sale and delivery of the Shares, nor the
execution, delivery and performance of the Underwriting Agreement nor the
consummation of the transactions contemplated thereby nor the fulfillment of the
terms thereof by the Company will conflict with or constitute a breach of, or
default under: (A) the articles of incorporation or bylaws of the Company; (B)
any contract, indenture, mortgage, loan agreement, note, lease or other
instrument filed as an exhibit to the Registration Statement; or (C) to the
knowledge of such counsel, any statute, law, rule, regulation, judgment, order
or decree applicable to the Company of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or any of its properties.
16. The issuance and sale of the Shares by the Company is not subject
to preemptive or other similar rights arising by operation of law, under the
articles of
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incorporation or bylaws of the Company, or, to the knowledge of such counsel,
under any agreement to which the Company is a party.
17. To such counsel's knowledge, there are no persons with registration
or other similar rights to have any equity or debt securities, including
securities that are convertible into or exchangeable for equity securities,
registered pursuant to the Registration Statement or otherwise registered by the
Company under the Securities Act.
18. The Shares conform in all material respects to the descriptions
thereof contained in the Registration Statement and Prospectus.
19. The form of certificate used to evidence the Shares complies in all
material respects with all applicable statutory requirements, with any
applicable requirements of the articles of incorporation and bylaws of the
Company and the requirements of the American Stock Exchange.
20. The 8-A Registration Statement complied as to form in all material
respects with the requirements of the Exchange Act; the 8-A Registration
Statement has become effective under the Exchange Act; and the Shares have been
validly registered under the Securities Act, the Exchange Act and the Securities
Act Regulations and the Exchange Act Regulations.
21. Based on the description of the Company's business in the
Prospectus, the Company is not required to be registered as a commodity pool
operator under the Commodity Exchange Act, as amended.
22. Commencing with the Company's initial taxable year ending December
31, 2002 and assuming that the elections and other procedural steps referred to
in the Officer's Certificate are completed by the Company in a timely fashion,
the Company will be organized in conformity with the requirements for
qualification and taxation as a REIT under the Code, and the Company's
contemplated method of operations will enable it to satisfy the requirements for
such qualification commencing with the Company's taxable year ending December
31, 2002.
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