1
EXHIBIT 1.1
UNDERWRITING AGREEMENT
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200,000 SHARES
HEARTLAND WISCONSIN CORP.
COMMON STOCK
MANAGING PLACEMENT AGENT AGREEMENT
March , 1998
X.X. Xxxx & Company, Inc.
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Gentlemen:
Heartland Wisconsin Corp., a Wisconsin corporation ("Company"), hereby
confirms its agreement with you, as Managing Placement Agent, as follows:
SECTION 1. Description of the Offering. The Company proposes to offer for
sale and sell to the public 200,000 shares of its common stock, par value $0.01
per share ("Common Stock"), at a price anticipated to be in the range of $5.00
to $6.50 per share ("Offering"). The minimum purchase per investor is 100 shares
of Common Stock ($500), unless otherwise agreed to in writing by the Company.
The Company may refuse to sell Common Stock to any person at any time. The
Common Stock may be offered for sale until (i) the entire Offering is sold or
March 31,1999, whichever first occurs; provided, however, that the Offering
may be terminated at any time at the discretion of the Company.
All funds received from subscribers for Common Stock will be held in escrow
by Grafton State Bank, Grafton, Wisconsin ("Escrow Agent"), pursuant to an
agreement among you, the Company and the Escrow Agent ("Escrow Agreement").
There is no minimum aggregate amount required to be sold in the Offering; all
funds received from accepted subscribers will become immediately available to
the Company for the purposes described in the Prospectus (as hereinafter
defined) relating to the Offering under the caption "Use of Proceeds." Pending
disbursement under the terms of the Escrow Agreement, subscription proceeds will
be deposited in a segregated account and invested in short-term United States
government securities, securities guaranteed by the United States government,
certificates of deposit or time or demand deposits in commercial banks located
in the United States.
The Company will determine, in its sole discretion, to accept or reject
subscriptions for Common Stock within five days following receipt thereof. Funds
of an investor whose subscription is rejected will be promptly returned directly
to such person by the Escrow Agent, without interest or deduction, pursuant to
the terms of the Escrow Agreement.
The Company, the Common Stock and the Offering are more fully described in
the Registration Statement and Prospectus (as hereinafter defined). All terms
used in this Agreement, unless specifically defined herein, shall have the
meanings set forth in such Registration Statement and Prospectus.
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March , 1998
Page 2
SECTION 2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with you, that:
(a) The Company is duly organized and validly existing as a corporation in
good standing under the laws of the State of Wisconsin. The Company has the full
power and authority and all necessary authorizations, approvals, orders,
licenses, certificates and permits of and from all governmental and regulatory
officials and bodies required to own its properties and conduct its business as
described in the Prospectus (as herein defined); the Company is duly qualified
to do business under the laws of (and is in good standing as such in) each
jurisdiction in which it owns or leases property, has an office, or in which
business is conducted and such qualification is required, except where the
failure to so qualify would not have a material adverse effect on the business,
assets or financial condition of the Company, 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.
(b) The Company does not own or control, directly or indirectly, any
corporation, association, partnership or other entity other than as identified
in the Registration Statement (as herein defined).
(c) The execution, delivery and performance by the Company of this
Agreement has been duly authorized by all necessary action and will not (i)
violate any provision of the articles of incorporation or bylaws of the Company
(in each case as amended at the time of this Agreement), (ii) result in the
breach, or be in contravention, of any provision of any agreement, franchise,
license, indenture, mortgage, deed of trust or other instrument to which the
Company is a party or by which the Company or its property may be bound or
affected, or any order, law, statute, rule or regulation applicable to the
Company of any court or regulatory body, administrative agency or other
governmental body having jurisdiction over the Company or any of its property,
or any order of any court or governmental agency or authority entered in any
proceeding to which the Company was or is now a party or by which it is bound or
(iii) result in the creation of any lien, charge or encumbrance upon any
property of the Company. No consent, approval, authorization or other order of
any court, regulatory body, administrative agency or other governmental body is
required for the execution and delivery of this Agreement by the Company, or the
consummation by the Company of the transactions contemplated hereby, other than
under the Securities Act,, the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the Securities and Exchange Commission
("Commission") thereunder (collectively, the "Exchange Act"), state securities
laws and regulations (collectively, the "Blue Sky Laws") applicable to the
public offering of the Common Stock as described in the Registration Statement
and the Prospectus (as hereinafter defined), and/or the rules of the National
Association of Securities Dealers, Inc. ("NASD"). This Agreement has been duly
executed and delivered by the Company and is a valid and binding agreement of
the Company, enforceable in accordance with its terms, except insofar as rights
to indemnity or contribution may be limited by applicable law and subject to
bankruptcy, insolvency or similar laws generally affecting the rights of
creditors and equitable principles affecting the right to obtain specific
enforcement or similar equitable relief.
(d) A registration statement on Form SB-2 (Registration File No. 333- )
with respect to the Common Stock has been carefully prepared by the Company in
conformity with the requirements of the Securities Act and the rules and
regulations ("Rules and Regulations") of the Commission thereunder, and has been
filed with the Commission; the Company has so prepared and has filed or proposes
to file prior to the effective date of such registration statement or subsequent
to such effective date pursuant to Rule 430A under the Rules and Regulations, an
amendment or amendments to such registration statement. There have been
delivered to you and your counsel two signed copies of such registration
statement, as initially filed with the Commission and each amendment thereto,
together with two copies of each exhibit filed therewith, and eight conformed
copies of such registration statement, as initially filed with the Commission
and each amendment thereto (but without exhibits) and of each related
preliminary prospectus ("Preliminary Prospectus") and of the proposed final form
of prospectus. As used in this Agreement, the term "Registration Statement"
means such registration statement, including exhibits, financial statements and
schedules and documents incorporated therein by reference, as finally amended
and revised at the time such registration statement becomes effective, including
the information, if any, deemed to be a part thereof pursuant to Rule 430A of
the Rules and Regulations, and the term "Prospectus" means the related
prospectus in
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X.X. Xxxx & Company, Inc.
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the form first filed on behalf of the Company with the Commission pursuant to
Rule 424(b) under the Securities Act. Any reference herein to any Registration
Statement, Preliminary Prospectus or the Prospectus shall be deemed to refer to
and include the documents and information, if any, incorporated by reference
therein. Any reference to any amendment or supplement to any Registration
Statement, Preliminary Prospectus or Prospectus shall be deemed to refer to and
include any documents filed after such date under the Exchange Act and
incorporated therein by reference.
(e) Neither the Commission nor any state securities or "blue sky"
authorities has issued any order preventing or suspending the use of any
Preliminary Prospectus, and each Preliminary Prospectus has conformed fully in
all material respects with the requirements of the Securities Act, the Rules and
Regulations and the Blue Sky Laws and, as of its date, has not included any
untrue statement of a material fact or omitted to state a fact required to be
stated therein or necessary to make the statements therein not misleading; when
the Registration Statement becomes effective, and at all times subsequent
thereto up to each Closing Date (as defined herein), the Registration Statement
and the Prospectus, and any amendments or supplements thereto, will contain all
statements that are required to be stated therein in accordance with the
Securities Act, the Rules and Regulations and the Blue Sky Laws and will in all
material respects conform to the requirements of the Securities Act, the Rules
and Regulations and the Blue Sky Laws, and neither the Registration Statement
nor the Prospectus, nor any amendment or supplement thereto, will include any
untrue statement of a material fact or omit to state a fact required to be
stated therein or necessary to make the statements therein not misleading;
provided, however, that the Company makes no representation or warranty as to
information contained in or omitted from any Preliminary Prospectus, the
Registration Statement, the Prospectus, or any such amendment or supplement, in
reliance upon and in conformity with written information furnished to the
Company by you specifically for inclusion therein.
(f) There are no contracts or other documents, transactions or
relationships of or by and between the Company or any of the respective officers
or directors of the Company required to be described in the Registration
Statement or filed as exhibits to the Registration Statement by the Securities
Act or the Rules and Regulations which have not been described or filed as
required or incorporated by reference as permitted by the Securities Act and the
Rules and Regulations.
(g) The Company has authorized capital stock as set forth in the
Prospectus. All outstanding shares of capital stock of the Company have been
duly authorized, validly and legally issued and are fully paid and
nonassessable, except to the extent of liability, if any, imposed under Section
180.0622(2) of the Wisconsin Business Corporation Law for employee wages for a
period not exceeding six months in the case of any employee; such shares have
not been issued in violation of or subject to any preemptive rights provided for
by law or by the Company's articles of incorporation or bylaws. The Common Stock
conforms in all material respects to all statements with respect thereto
contained in the Prospectus, and such statements conform to the provisions set
forth in the articles of incorporation and bylaws of the Company.
(h) The shares of Common Stock sold in the Offering, upon receipt of full
payment therefor and delivery by the Company, will be duly authorized, validly
and legally issued, fully paid and nonassessable, except to the extent of
liability, if any, imposed under Section 180.0622(2) of the Wisconsin Business
Corporation Law for employee wages for a period not exceeding six months in the
case of any employee, and will not have been issued in violation of or subject
to any preemptive rights provided for by law or by the Company's articles of
incorporation or bylaws or be subject to any lien, claim, encumbrance, security
interest, preemptive rights or any other claim of any third party.
(i) Except as described the Prospectus, there is not pending, or, to the
knowledge of the Company, threatened, any action, suit, proceeding, inquiry or
investigation to which the Company is a party, or to which the property of the
Company is subject, before or brought by any court, governmental agency or body
or arbitration tribunal, which, if determined adversely to the Company, would
result in any material adverse change in the business, financial position, net
worth, results of operations or prospects of the Company, or materially and
adversely affect its property or assets.
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(j) The financial statements and the related notes included in the
Registration Statement, in any Preliminary Prospectus or in the Prospectus
present fairly the financial position, results of operations and and cash flows
of the Company at the dates and for the periods indicated and have been prepared
in accordance with generally accepted accounting principles, except as otherwise
stated therein. Coopers & Xxxxxxx, LLP, who have audited certain financial
statements as set forth in their report included in the Registration Statement
and Prospectus and each Preliminary Prospectus, are independent accountants as
required by the Securities Act and the Rules and Regulations.
(k) The Company is not in violation of its articles of incorporation and
bylaws, or in default or breach under any court or administrative order or
decree, or in default with respect to any provision of any lease, loan
agreement, franchise, license, permit, agreement or other contractual obligation
to which the Company is a party or by which the Company or any of its property
is bound, and there does not exist any state of facts which constitutes an event
of default or breach under such documents or which, upon notice or lapse of time
or both, would constitute such an event of default or breach except those, if
any, described in the Prospectus or such defaults or breaches which,
individually or in the aggregate, are not, and with notice or lapse of time, or
both, would not become, material to the Company. The Company is not in violation
or breach of any law, order, rule, regulation, writ, injunction or decree of any
governmental authority or instrumentality or any court, domestic or foreign,
which violation would have a materially-adverse effect on its business as
described in the Prospectus.
(l) Neither Company nor any of its affiliates, nor any director or officer
of the foregoing, have taken and will not take, directly or indirectly, any
action designed to or which has constituted or which might reasonably be
expected to cause or result, under the Exchange Act or otherwise, in (i) a
violation of Rule 10b-6 under the Exchange Act or (ii) the manipulation of the
price of the Common Stock facilitate the sale or resale of such securities.
(m) The Company has good and marketable title to all the property and
assets reflected as owned by it in the Prospectus, subject to no lien, mortgage,
pledge, charge or encumbrance of any kind or nature whatsoever, except those, if
any, reflected in the Prospectus, or which are not material to the Company and
do not materially affect the value of such property and do not materially
interfere with the use made or proposed to be made of such property; all
properties held or used by the Company under leases, licenses, franchises or
other agreements are held by it under valid, subsisting and enforceable leases,
licenses, franchises or other agreements (subject to bankruptcy, reorganization,
moratorium or similar laws affecting creditors' rights generally).
(n) Since its inception, the Company has not sustained any material loss or
interference with its business or property from fire, flood, hurricane, accident
or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree; and subsequent to the
respective dates as of which information is given in the Registration Statement
and Prospectus, the Company has not incurred any material liabilities or
obligations, direct or contingent, or entered into any material transactions,
not in the ordinary course of business, and there has not been any material
change in the capital stock or long-term debt of the Company, or any material
adverse change, or any development involving a prospective material adverse
change, in the business, financial position, net worth, results of operations or
prospects of the Company, except in each case as described in or contemplated by
the Prospectus.
(o) The Company has filed all necessary federal, state and foreign income
and franchise tax returns and has paid all taxes shown as due thereon, and has
no knowledge of any tax deficiency which has been asserted or threatened against
the Company which would materially adversely affect its business, operations or
property.
(p) The Company keeps accurate books and records and maintains internal
accounting controls which provide reasonable assurance that (i) transactions are
executed in accordance with management's authorization, (ii) transactions are
recorded as necessary to permit preparation of its financial statements and to
maintain accountability for its assets, (iii) access to its assets is permitted
only in accordance with management's authorization and (iv) the reported
accountability for its assets is compared with existing assets at reasonable
intervals.
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(q) There are no holders of securities of the Company having rights to
registration thereof under the Securities Act or preferential rights to purchase
Common Stock or any other securities of the Company, except as disclosed in the
Registration Statement and the Prospectus.
(r) All documents delivered or to be delivered by the Company or its
representatives in connection with the issuance and sale of the Common Stock
were on the dates on which they were delivered or will be on the dates on which
they are to be delivered, in all material respects, true, complete and correct.
(s) The Company owns, or possesses the requisite licenses or other rights
to use, all trademarks, service marks, service names and trade names necessary
to conduct its business as described in or contemplated by the Prospectus; there
is no claim or action by any person pertaining to (or proceeding pending or
threatened which challenges) the rights of the Company with respect to any
trademarks, service marks, service names or trade names used in the conduct of
its business as described in or contemplated by the Prospectus; the products,
services and processes of the Company have not infringed and do not infringe
upon proprietary rights held or asserted by third parties which infringement, if
resolved adversely to the Company, could materially affect its earnings, assets,
affairs, business prospects or condition (financial and other).
(t) The Company has not distributed and will not distribute prior to the
final Closing Date (as hereinafter defined), any offering material in connection
with the offer and sale of the Common Stock other than as permitted by the
Securities Act.
(u) The Company has not (i) had any material dealings within the twelve
months prior to the date of this Agreement with any member of the NASD, or any
person related to or associated with such member, other than discussions and
meetings relating to the Offering, except as disclosed in writing to you prior
to the date hereof; (ii) entered into a financial or management consulting
agreement except as contemplated hereunder; or (iii) engaged any intermediary
between you and the Company, and/or any of the affiliates of the Company, in
connection with the Offering, and no person has been or will be compensated in
any manner for such service.
(v) The Company and each of its directors, executive officers and 10%
shareholders shall have agreed in writing that, from the date hereof through the
final Closing Date (as hereinafter defined), and for a period of 120 days
thereafter, they will not, without your prior written consent, sell, offer or
contract to sell, or grant any option to purchase, or otherwise dispose of,
directly or indirectly, any shares of Common Stock (or any securities
convertible into or exchangeable for any shares of Common Stock) except pursuant
to this Agreement.
Any certificate signed by any officer of the Company and delivered to you
or to your counsel shall be deemed a representation and warranty of the Company
to you as to the matters covered thereby and any certificate delivered by the
Company to its counsel for purposes of enabling such counsel to render any
opinion referred to in this Agreement will also be furnished to you and to your
counsel and shall be deemed to be additional representations and warranties to
you by the Company.
SECTION 3. Representations and Warranties of the Managing Placement Agent.
You hereby represent and warrant to, and agree with, the Company as follows:
(a) You are a corporation duly organized, validly existing under the laws
of the State of Wisconsin, with all requisite power and authority to enter into
this Agreement and to carry out your obligations hereunder.
(b) This Agreement (i) has been duly authorized, executed and delivered by
you, (ii) constitutes your legal, valid and binding obligation, and (iii)
subject to applicable bankruptcy, insolvency and other laws affecting the
enforceability of creditors' rights generally, is enforceable as to you in
accordance with its terms, specific performance hereof being limited by general
principles of equity and the enforceability of the indemnification provisions
hereof.
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(c) The execution, delivery and performance of this Agreement by you and
the consummation by you of the transactions contemplated hereby and by the
Prospectus will not conflict with or result in a breach or violation by you of
any of the terms or provisions of, or constitute a default in any material
respect under, (i) any indenture, mortgage, deed of trust, loan agreement, lease
or other agreement or instrument to which you are a party or to which you or
your property are subject, (ii) your articles of incorporation or bylaws or
(iii) any statute, judgment, decree, order, rule or regulation applicable to you
of any court or governmental agency or body having jurisdiction over you, your
affiliates or your property.
(d) You are, and at all times through the final Closing Date (as herein
defined) shall remain, duly registered pursuant to the provisions of the
Exchange Act as a broker-dealer; you are, and at all times through the final
Closing Date shall remain, a member in good standing of the NASD; you will not
reallow discounts or pay commissions or other compensation for participation in
the distribution of the Offering to any broker-dealer which is not a member of
the NASD, including foreign broker-dealers registered under the Exchange Act;
you shall act as an independent contractor, and nothing herein shall constitute
you an employee of the Company; you shall not make sales of Common Stock
discretionary accounts.
(e) In connection with the offer, offer for sale and sale of Common Stock,
you (and your representatives and agents) shall conform to and comply with (i)
the provisions of the Conduct Rules of the NASD, (ii) applicable provisions of
federal law, including without limitation the Securities Act, the Rules and
Regulations and the Exchange Act, and (iii) the Blue Sky Laws applicable to the
Offering, relating to, among other things, the period during which and
conditions under which the Common Stock may be offered, offered for sale and
sold; you shall not distribute the Prospectus or otherwise commence the Offering
without prior written confirmation from the Company or its counsel that the
Offering may be commenced under applicable securities laws, rules and
regulations.
(f) Pursuant to your appointment made in Section 4 hereof, you will use
your best efforts to procure subscribers for Common Stock will conduct the
Offering in compliance with the provisions of the Securities Act, the Rules and
Regulations, the Exchange Act, applicable Blue Sky Laws and the rules and
regulations of the NASD; accordingly, as of each Closing Date (as herein
defined), you will have:
(1) not made any untrue statement of a material fact and not
omitted to state a material fact required to be stated or necessary to
make any statement made not misleading, to the extent, if any, that
representations are made by you concerning the Offering or matters set
forth in the Prospectus other than those set forth in the Prospectus;
(2) prior to any sale of any Common Stock, reasonably believed
that an investment in the Common Stock was suitable for each
subscriber;
(3) promptly distributed any amendment or supplement to the
Prospectus provided to you pursuant to Section 5(b) of this Agreement
to persons who had previously received a Prospectus from you and who
you believed continued to be interested in Common Stock and have
included such amendment or supplement in all deliveries of the
Prospectus made after receipt of any such amendment or supplement;
(4) only used sales materials other than the Prospectus which
have been approved for use in the Offering by the Company, and
refrained from providing any such materials to any offeree unless
accompanied or preceded by the Prospectus;
(5) prior to the sale of any Common Stock, reasonably believed
that each subscriber met the investor standards and other requirements
set forth in the Prospectus and the Blue Sky Letters (as hereinafter
defined) and that an investment in the Common Stock was suitable for
such subscriber; you will have prepared and maintained, for your
benefit and the benefit of the Company, file memoranda and other
appropriate records substantiating the foregoing and shall
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X.X. Xxxx & Company, Inc.
March , 1998
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retain such records for the period required under Exchange Act Rule
17a-4 or the laws of any state in which you offer the Common Stock for
sale, whichever is longer; and
(6) not made any representations on behalf of the Company other
than those contained in the Prospectus, nor shall you have acted as an
agent of the Company, or for the Company in any other capacity, except
as expressly set forth herein.
SECTION 4. Purchase Sale and Delivery of Common Stock. On the basis of the
covenants, representations, and warranties herein contained and subject to the
terms and conditions herein set forth:
(a) The Company hereby engages you as its exclusive agent to solicit
subscriptions for the Common Stock in accordance with the terms of the
Registration Statement, the Prospectus and this Agreement, and you agree to use
your best efforts to procure such subscriptions. You may, however, discharge
your responsibilities under this Agreement by acting as a Managing Placement
Agent and forming a group of securities dealers ("Selected Placement Agents"),
including you, to procure subscribers for the Common Stock. Any agreement
between you and a securities dealer pursuant to which such securities dealer
becomes a Selected Placement Agent shall require such dealer to represent and
warrant that it will conduct the Offering in the manner set forth herein. The
allocation of Common Stock among you and the Selected Placement Agents shall be
made by you.
(b) Subject to the terms and conditions set forth herein, in consideration
of your execution of this Agreement and performance of your obligations
hereunder, the Company agrees that, at each Closing (as defined herein), you
shall receive (i) selling commissions in an amount equal to 8% of the aggregate
purchase price of the Common Stock sold by you (or any Selected Placement Agent)
and (ii) a nonaccountable expense allowance equal to 2% of the aggregate
purchase price of the Common Stock sold by you (or any Selected Placement
Agent). The aggregate commissions and expense allowance payable in connection
with the sale of Common Stock will be disbursed to you, as provided herein and
in Escrow Agreement; thereupon, you shall pay to each of the other Selected
Placement Agents, if any, in such amount (which shall not exceed commissions and
expense allowance in the amounts of 8% and 2%, respectively, of the aggregate
purchase price of the Common Stock sold by such Agent), at such times and upon
such terms and conditions as shall have been agreed upon between you and such
Selected Placement Agent, that portion of the aggregate commissions to which
such Selected Placement Agent is entitled.
(c) As additional consideration for your services rendered pursuant to this
Agreement, on the final Closing Date (as hereinafter defined), the Company will
sell to you or your designees, at a price of $0.01 per warrant ("Warrant
Price"), warrants ("Underwriter's Warrants") to purchase shares of Common Stock,
under the following terms and consitions:
(1) The aggregate number of shares of Common Stock subject to
Underwriter's Warrants will be equal to 10% of the shares of
Common Stock sold by you (or any Selected Placement Agent)
pursuant to this Agreement.
(2) The Underwriter's Warrants may not be sold, hypothecated,
exercised, assigned or transferred for a period of one year after
the final Closing Date, except to partners and/or officers of X.X.
Xxxx & Company, Inc.
(3) Underwriter's Warrants shall be exercisable during the
4-year period commencing on the first anniversary of the final
Closing Date ("Warrant Exercise Term"), at any time and from time
to time, in whole or in part, during the said Warrant Exercise
Term, and shall grant to the holder the right to purchase one
share of Common Stock for each Underwriter's Warrant at a price
per share equal to 120% of the initial public offering price of
the Common Stock.
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(4) The Underwriter's Warrants shall contain such other term
and conditions as are satisfactory, in form and substance to you
and your counsel, including without limitation, adjustment and
exercise provisions.
(5) The Company agrees and undertakes, upon the expiration of
a 12-month period after the final Closing Date, and at any time
during the 4-year period thereafter, one time only, to register
under the Securities Act all or any part of the Underwriter's
Warrants and/or the shares issuable upon the exercise thereof
("Underlying Shares"), upon the written request of holders of a
majority of such Warrants and Underlying Shares, at the Company's
sole cost and expense, including "blue sky" fees for counsel and
"blue sky" filing fees to qualify the Underwriter's Warrants and
Underlying Shares for sale in those jurisdictions requested by
you, at the time determined by you.
(6) The Company agrees and undertakes, during the four-year
period described in subsection 4(c)(3), above, that if the Company
shall seek to register any of its securities under the Securities
Act, each holder of the Underwriter's Warrants shall be notified
and shall be entitled to elect to have included in such proposed
registration, without cost or expense, any or all of his
Underwriter's Warrants or Underlying Shares ("Piggy-Back Rights").
In the event of such a proposed registration, the Company shall
furnish the holders of Underwriter's Warrants with no less than 30
days written notice prior to the proposed filing of a registration
statement. Such notice shall continue to be given by the Company
to such Warrantholders for each proposed registration by the
Company until such time as all Underwriter's Warrants or
Underlying Shares have been registered. Warrantholders shall
exercise Piggy-Back Rights by giving written notice within 20 days
of the receipt of the Company's notice of intention to file a
registration statement.
(d) The Company hereby grants to you a right of first refusal for a
period of five years after the final Closing Date to act as (i) managing
underwriter or offering agent for any public or private offerings of securities
by the Company or any of its subsidiaries and (ii) the Company's agent for any
merger involving the Company or any of its subsidiaries, the acquisition by the
Company or any of its subsidiaries of any entity or the assets thereof and the
acquisition of the Company or any of its subsidiaries by another entity,
provided that a third-party underwriter or agent is engaged in connection with
any transaction described in clause (i) or (ii) of this Section 6(p) and you
agree to provide such services on substantially the same terms as are available
from another qualified firm, as evidenced by bona fide firm offer provided to
you by the Company. The foregoing right shall continue in effect during the
entire 5-year period, despite the exercise of, or the refusal to exercise, the
right during the period.
(e) Each subscriber for Common Stock must (i) complete and execute a
Subscription Agreement (in the form included as Exhibit A to the Prospectus) and
any other documents which may be required by you or the Company in connection
with such subscription (collectively, "Subscription Documents") and (ii) tender
payment in full for the Common Stock subscribed for ("Subscription Payment");
checks representing Subscription Payments should be made payable to "Grafton
State Bank, Escrow Agent"; you shall deliver Subscription Payments received by
you to the Escrow Agent, at 000 Xxxxx Xxxx, Xxxxxxx, Xxxxxxxxx 00000, by 12:00,
noon, on the business day following such receipt by you, together with a
schedule setting forth the amount of each such Subscription Payment and the
name, mailing address and state of residence of the subscriber. Concurrently
with your delivery of each Subscription Payment to the Escrow Agent, you shall
forward to the Company executed originals of all related Subscription Documents,
retaining copies of all such Subscription Documents for your records.
(f) Within five days following receipt by it of executed Subscription
Documents, the Company shall determine to accept or reject each subscription and
shall notify you and the Escrow Agent orally (to be confirmed in writing). If
the Company elects to reject a subscription, the related Subscription Payment
shall, upon receipt by the Escrow Agent of oral notice (to be confirmed in
writing) from the Company of such rejection, promptly be returned directly to
the rejected subscriber by the Escrow Agent, without interest thereon or
deduction therefrom.
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X.X. Xxxx & Company, Inc.
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(g) Subject to the terms hereof and of the Escrow Agreement, the first
disbursement of subscription proceeds (including disbursement of amounts due to
you hereunder) shall take place not less than 5 days nor more than 15 days
following the date upon which cleared funds representing payment in full for at
least 1,000 shares of Common Stock (or such lesser amount as may be agreed to
in writing by the parties hereto, in their discretion) have been received by
the Escrow Agent under the terms of the Escrow Agreement; such initial
disbursement is referred to herein as the "Initial Closing," and the
date thereof is referred to as the "Initial Closing Date." Following the
Initial Closing, subscription proceeds shall be disbursed from time to time as
agreed among you, the Company and the Escrow Agent; each such further
disbursement of subscription proceeds is referred to herein as an "Additional
Closing," and the date thereof as an "Additional Closing Date." The Initial
Closing and Additional Closings are sometimes referred to herein as a "Closing"
or "Closings"; and the Initial Closing Date and Additional Closing Dates are
sometimes referred to herein as a "Closing Date" or "Closing Dates."
(h) Each Closing shall take place at the offices of the Escrow Agent,
in Grafton, Wisconsin, or, at your option, at such other place as you may agree
upon in writing with the Company.
(g) After the final Closing Date, you will not be considered to have
any continuing or future duty or obligation of any kind to the Company.
SECTION 5. Covenants of the Company. The Company covenants and agrees
that:
(a) The Company will use its best efforts to cause the Registration
Statement to become effective at the earliest possible time and will advise you
promptly upon notification from the Commission of effectiveness. The Company
will advise you 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 of the suspension of
qualification of the Common Stock for sale in any jurisdiction or the initiation
or threatening of any proceedings for that purpose, and will also advise you
promptly of any request of the Commission for amendment or supplement to the
Registration Statement (either before or after it becomes effective), to any
Preliminary Prospectus or to the Prospectus, or for additional information, and
will not file or make any amendment or supplement to the Registration Statement
(either before or after it becomes effective), to any Preliminary Prospectus or
the Prospectus of which you have not been furnished with a copy prior to such
filing or to which you reasonably object; and the Company will file promptly and
will furnish to you at or prior to 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 the Exchange Act subsequent to the date
of the Prospectus, and for so long as the delivery of a prospectus is required
in connection with the offer or sale of the Common Stock. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort to obtain
the withdrawal of such order at the earliest possible time. The Company will
file the Prospectus pursuant to Rule 424(b) under the Securities Act, if
required, not later than the Commission's close of business on the second
business day following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule 430A of the Commission.
(b) If at any time when a prospectus relating to the Common Stock is
required to be delivered under the Securities Act, any event occurs as a result
of which the Prospectus, including any amendments or supplements, would include
an untrue statement of a material fact, or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, or if
it is necessary at any time to amend the Prospectus, including any amendments or
supplements, to comply with the Securities Act or the Rules and Regulations, the
Company will notify you and request you to suspend (and to advise the other
Selected Placement Agents, if any, to suspend) solicitation of offers to
purchase Common Stock; and the Company will promptly prepare and file with the
Commission an amendment or supplement which will correct such statement or
omission or an amendment which will effect such compliance; and, in case any
Selected Placement Agent (including you) is required to deliver a Prospectus
nine months or more after the effective date of the Registration Statement, the
Company upon request will prepare promptly and deliver to you such prospectus or
prospectuses as may be necessary to permit compliance with the requirements of
Section 10(a)(3) of the Securities Act and applicable provisions of the Blue Sky
Laws.
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Page 10
(c) The Company will not, prior to the final Closing Date, incur any
material liability or obligation, direct or contingent, or enter into any
material transaction other than in the ordinary course of business, except as
disclosed prior thereto in the Prospectus.
(d) The Company shall promptly prepare and file with the Commission
such reports as may be required to be filed under the Securities Act, the Rules
and Regulations, the Exchange Act or the Blue Sky Laws.
(e) Not later than 3 months after the end of the period referred to
below, the Company will make generally available to you and to the Company's
security holders an earnings statement (which need not be audited) covering a
period of at least 12 months beginning with its first fiscal quarter occurring
after the effective date of the Registration Statement, which will satisfy the
provisions of the last paragraph of Section 11(a) of the Securities Act and Rule
158 promulgated thereunder.
(f) The Company shall comply in all respects with the undertakings
given by it in connection with the qualification or registration of the Common
Stock under the Securities Act or the Blue Sky Laws.
(g) During such period as a prospectus is required by law to be
delivered in connection with sales by any Selected Placement Agent, the Company
will furnish to you at its expense, copies of the Registration Statement, the
Prospectus, any Preliminary Prospectus and all amendments and supplements to any
such documents in such quantities as you may reasonably request, for the
purposes contemplated by the Securities Act and the Rules and Regulations.
(h) The Company shall promptly apply for and take such steps as may
reasonably be necessary, to obtain and maintain the quotation of its Common
Stock by the National Daily Quotation Service ("Pink Sheets") and on the NASD
OTC Bulletin Board.
(i) During the period of 3 years following the date of this Agreement,
as soon as practicable after the end of each fiscal year, the Company will
furnish to you two copies, and to each of the other Selected Placement Agents
one copy, of the Annual Report of the Company containing a balance sheet as of
the close of such fiscal year and corresponding statements of income, members'
equity and cash flows for the fiscal year then ended, such financial statements
to be under the report of independent public accountants. During such period,
the Company will also furnish to you, if applicable, one copy of (i) each report
filed by the Company with the Commission, or with any exchange or quotation
source pursuant to the requirements of, or any agreement with, such exchange or
quotation source, as soon as practicable after the filing thereof and (ii) each
report of the Company mailed to its shareholders, as soon as available.
(j) The Company will apply the net proceeds from the sale of the Common
Stock to be sold by it hereunder for the purposes set forth in the Prospectus.
(k) The Company will not make any offer, sale, transfer, issuance or
other disposition of any of its securities within 120 days following the final
Closing Date, and will obtain the undertaking of each executive officer (as
defined under the Securities Act), director and holder of 10% or more of the
aggregate equity ownership of the Company immediately prior to such date not to
make any such offer, sale or other disposition within such period, otherwise
than hereunder or with your written consent or pursuant to bona fide gifts,
provided, in the last case, that each donee agrees in writing with you to be
bound by the same restrictions on the offer, sale and disposition of securities
as are expressed in this Section 5(k).
(l) The Company shall at all times reserve and keep available such
number of authorized shares of Common Stock as are sufficient to permit the
exercise of all Underwriter's Warrants; all shares of Common Stock issued upon
the exercise of Underwriter's Warrants, upon receipt of full payment therefor
and delivery to the purchaser, will be duly authorized, validly and legally
issued, fully paid and nonassessable, except to the extent of liability, if any,
imposed under Section 180.0622(2) of the Wisconsin Business Corporation Law for
employee wages
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X.X. Xxxx & Company, Inc.
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Page 11
for a period not exceeding six months in the case of any employee, and such
Common Stock will not have been issued in violation of or subject to any
preemptive rights provided for by law or by the Company's corporate charter or
bylaws or be subject to any lien, claim, encumbrance, security interest,
preemptive rights or any other claim of any third party.
(m) Prior to the final Closing Date, the Company will not issue,
directly or indirectly, without your prior written consent, a press release or
other communication or hold any press conference with respect to the Company,
its activities or the Offering.
(n) The Company will, promptly upon your request, prepare and file with
the Commission any amendments or supplements to the Registration Statement or
Prospectus, and take any other action, which, in your opinion or the opinion of
your counsel, may be reasonably necessary or advisable in connection with the
distribution of the Common Stock, and will use its best efforts to cause the
same to become effective as promptly as practicable.
SECTION 6. Covenants of the Managing Placement Agent. You will use your
best efforts to procure subscribers for Common Stock and will conduct the
Offering in compliance with the provisions of the Securities Act, the Rules and
Regulations, the Exchange Act, applicable Blue Sky Laws and the rules and
regulations of the NASD; accordingly, as of each Closing Date (as herein
defined), you will have (i) not made any untrue statement of a material fact and
not omitted to state a material fact required to be stated or necessary to make
any statement made not misleading, to the extent any representations are made by
you concerning the Offering or matters set forth in the Prospectus other than
those which are set forth in the Prospectus, and (ii) prior to any sale of
Common Stock, reasonably believed that an investment in the Common Stock was
suitable for the subscriber.
SECTION 7. State Qualifications. The Company further represents and
warrants to, and agrees with, you as follows:
(a) The Company will take all necessary action to either qualify or
register the Common Stock for sale or exempt such securities from such
qualification or registration in such states as you and the Company shall agree
upon in writing.
(b) The Company or its counsel will provide you or your counsel with
copies, at the time they are filed, of all correspondence, applications, forms,
and other documents filed with each jurisdiction where the Common Stock is to be
registered or qualified or offered in an exempt transaction.
(c) Upon receipt of notification by the Company of the qualification,
registration, or exemption of the Common Stock by an applicable jurisdiction,
the Company or its counsel will promptly notify you or your counsel in writing
of such action, which writing shall summarize the conditions and other
requirements imposed by such jurisdiction in granting such qualification,
registration or exemption, including offeree qualification or suitability and
broker-dealer and agent registration requirements applicable to the conduct of
the Offering (collectively, the "Blue Sky Letters"); you shall not offer or sell
the Common Stock in any jurisdiction until receipt of such Blue Sky Letters from
the Company or its counsel.
(d) In each jurisdiction where the Common Stock has been registered or
qualified or are offered or sold in an exempt transaction as provided above, the
Company will make and file such statements, documents, materials, and reports as
are or may be required to be made or filed.
(e) The Company will promptly provide to you for delivery to all
offerees and purchasers of Common Stock any additional information, documents or
instruments which you, the Company and/or your respective counsel deem necessary
to comply with the rules, regulations, and judicial and administrative
interpretations respecting compliance with such exemptions or qualifications and
registrations in those jurisdictions where the Common Stock is to be offered or
sold.
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X.X. Xxxx & Company, Inc.
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SECTION 8. Payment of Expenses.
(a) Whether or not the transactions contemplated hereunder are
consummated or this Agreement becomes effective or is terminated for
any reason, except as set forth below (and in addition to the nonaccountable
expense allowance provided for in Section 4(b) of this Agreement), the Company
will pay or cause to be paid all costs and expenses incurred in connection with
the Offering, including without limitation (i) the Commission's registration
fee, (ii) the expenses of printing and distributing this Agreement, the
Selected Dealer Agreements, the Registration Statement, each Preliminary
Prospectus, the Prospectus (and any amendments or supplements thereto) and the
Blue Sky Memorandum (and any supplements thereto), (iii) fees and expenses of
accountants and counsel for the Company, (iv) expenses of qualification of the
Common Stock under state "blue sky" and securities laws, including the fees and
disbursements of counsel to the Managing Placement Agent in connection
therewith, (v) filing fees paid or incurred by the Managing Placement Agent in
connection with filings with the NASD, (vi) all travel, lodging and reasonable
living expenses incurred by the Company and the Selected Placement Agent in
connection with marketing, dealer and other meetings and all expenses for
advertising, publicity and selling or promotional materials used in connection
therewith and (vii) the costs and charges of its transfer agent and registrar.
(b) Notwithstanding any other provision hereof to the contrary,
whether or not this Agreement is terminated pursuant to Section 12 hereof or
otherwise, the Company will pay or reimburse the Managing Placement Agent for
the actual itemized out-of-pocket expenses incurred by it in connection with
investigating, preparing to market and marketing of the Common Stock,
including fees and expenses of its counsel (in accordance with the provisions
of the NASD Corporate Financing Rule); provided, however, that, without the
consent of the Company, such reimbursement for legal fees shall not exceed in
the aggregate $25,000, and reimbursement for other out-of-pocket expenses
shall not exceed in the aggregate $5,000.
SECTION 9. Conditions of the Obligations of the Managing Placement
Agent. Your obligations hereunder shall be subject to the condition that all of
the representations and warranties of the Company herein as of the date hereof
and as of each Closing Date are true and correct in all material respects and to
the accuracy of the statements of the officers of the Company made pursuant
hereto, to the performance by the Company of its obligations hereunder, and to
the following conditions:
(a) The Registration Statement shall have become effective not later
than 1 P.M., Milwaukee, Wisconsin time, on the business day following the date
hereof, unless otherwise effective prior hereto pursuant to Rule 430A of the
Rules and Regulations or otherwise. The Prospectus shall have been filed with
the Commission pursuant to Rule 424(b) of the Rules and Regulations, if
required, within the applicable time period prescribed for such filing by the
Rules and Regulations and in accordance with Section 5(a) of this Agreement.
Prior to each Closing Date, no stop order suspending the effectiveness of the
Registration Statement shall have been instituted or shall be pending or, to the
knowledge of the Company or you, shall be contemplated by the Commission or any
"blue sky" authority, and any request of the Commission or any Blue Sky
authority of any jurisdiction for additional information (to be included in the
Registration Statement or Prospectus or otherwise) shall have been complied with
to your reasonable satisfaction.
(b) The Common Stock shall have been qualified or registered for sale
under the Blue Sky Laws of such states as shall have been agreed upon between
you and the Company, pursuant to and as provided in Section 7 of this Agreement.
(c) The legality and sufficiency of the authorization, issuance and
sale of the Common Stock pursuant to the Registration Statement, the validity
and form of the certificates representing the Common Stock, the execution and
delivery of this Agreement, and all proceedings and other legal matters incident
thereto, and the form of the Registration Statement (except financial
statements, if any, and other financial data included in such Registration
Statement) shall have been approved by your counsel.
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X.X. Xxxx & Company, Inc.
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Page 13
(d) You shall not have advised the Company that the Registration
Statement or Prospectus, or any amendment or supplement thereto, contains an
untrue statement of fact, or omits to state a fact which is material and is
required to be stated therein or necessary to make the statements therein not
misleading, unless, in the opinion of your counsel, any such untrue statement or
omission is not material.
(e) Since the dates as of which information is given in the
Registration Statement:
(1) the Company shall not have sustained any material loss or
interference with its business from any labor dispute, fire,
explosion, flood or other calamity (whether or not insured), or
from any court or governmental action, order or decree; and
(2) there shall not have been any change in the equity ownership,
short-term debt or long-term debt of the Company or a change, or a
development involving a prospective change, in or affecting 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, management,
financial position, members' equity or results of operations of
the Company, whether or not arising from transactions in the
ordinary course of business, in each case other than as set forth
in or contemplated by the Registration Statement and Prospectus,
the effect of which on the Company, in any such case described in
clause (1) or (2) of this Section 9(e), is, in your judgment
(exercising your sole discretion), so material and adverse as to
make it impracticable or inadvisable to proceed with the
distribution of the Offering or the delivery of the Common Stock
as contemplated by the Registration Statement and the Prospectus.
(f) There shall have been furnished to you on the Initial Closing Date
and the final Closing Date the written opinion of Xxxxxx X. Xxxxxxxxxx, Esq.,
counsel to the Company, addressed to you and dated as of such Closing Date, to
the effect that, as of each Closing which has then occurred:
(1) the Company is duly organized and validly existing as a
corporation in good standing under the laws of the State of
Wisconsin and possesses full power and authority to own its
property and conduct its business as described in the Prospectus;
(2) the Company is duly qualified to do business under the laws of
(and is in good standing as such in) each jurisdiction in which it
owns or leases property, has an office, or in which business is
conducted and such qualification is required, except where the
failure to so qualify would not have a material adverse effect on
the conduct of its business, its assets or its financial
condition;
(3) the Registration Statement has become effective under the
Securities Act and, to the best of the knowledge of such counsel,
no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceeding for that purpose has
been instituted or is pending before, or threatened by, the
Commission or any "blue sky" or securities authority; such counsel
has no reason to believe that either the Registration Statement or
the Prospectus, or any document incorporated by reference therein,
contains any untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary to make
the statements therein not misleading (except for the financial
statements and other financial data included therein, as to which
such counsel need express no opinion); to the best knowledge of
such counsel, all descriptions in the Registration Statement and
the Prospectus of statutes, regulations and governmental
proceedings are accurate and fairly present the information
disclosed in all material respects, and such counsel does not know
of any legal, governmental or regulatory proceedings, pending or
threatened, required to be described in the Prospectus, nor of
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X.X. Xxxx & Company, Inc.
March , 1998
Page 14
any contracts or documents of a character required to be described
in or filed as exhibits to the Registration Statement, which are
not so described or filed;
(4) the Company has full power and authority to enter into and
perform this Agreement; this Agreement, and the performance of the
obligations of the Company hereunder, have been duly authorized by
all necessary action and this Agreement has been duly executed and
delivered by and on behalf of the Company, and is a legal, valid
and binding agreement of the Company, enforceable in accordance
with its terms, except that rights to indemnity or contribution
may be limited by applicable law and enforceability of the
agreement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors'
rights generally; and no approval, authorization or consent of any
court, board, agency or instrumentality of the United States or of
any state or other jurisdiction is necessary in connection with
the execution and delivery of this Agreement, or in connection
with the issue or sale of the Common Stock by the Company pursuant
to this Agreement (other than under the Securities Act, applicable
Blue Sky Laws and the rules of the NASD) or the consummation by
the Company of any transaction contemplated by this Agreement;
(5) the shares of Common Stock to be sold in the Offering have
been duly authorized and, when issued and delivered by the
Company, against full payment therefor, will be legally and
validly issued, fully paid and nonassessable, except to the extent
of liability, if any, imposed under Section 180.0622(2) of the
Wisconsin Business Corporation Law for employee wages for a period
not exceeding six months in the case of any employee; to the best
knowledge of such counsel, such securities will not have been
issued subject to any lien, claim, encumbrance, security interest
or any other claim of any third party, except as described in the
Prospectus; and the Common Stock conforms as to legal matters in
all material respects to the description thereof set forth
contained in the Prospectus;
(6) to the best knowledge of such counsel, the execution and
performance of this Agreement will not contravene any of the
provisions of, or result in a default under, any agreement,
franchise, license, indenture, mortgage, deed of trust or other
instrument to which the Company is a party, or by which the
Company or its property is bound; or violate any of the provisions
of the articles of incorporation or bylaws of the Company (in each
case, as amended at the date of such opinion), or to the best
knowledge of such counsel, violate any statute, order, rule or
regulation of any regulatory or governmental body having
jurisdiction over the Company;
(7) to the best knowledge of such counsel, except as described in
the Prospectus, there is not pending or threatened any action,
suit, proceeding, inquiry or investigation to which the Company is
a party, or to which the property of the Company is subject,
before or brought by any court, governmental agency or body or
arbitration tribunal, which, if determined adversely to the
Company, would result in any material adverse change in the
business, financial position, net worth, results of operations or
prospects of the Company, or materially and adversely affect its
properties or assets;
(8) to the best knowledge of such counsel, the Company owns or
possesses the requisite licenses or other rights to use, all
trademarks, service marks, service names and trade names necessary
to conduct its business as described in or contemplated by the
Prospectus; to the best knowledge of such counsel, there is no
claim or action by any person pertaining to (or proceeding pending
or threatened which challenges) the rights of the Company with
respect to any trademarks, service marks, service names or trade
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X.X. Xxxx & Company, Inc.
March , 1998
Page 15
names used in the conduct of its business as described in or
contemplated by the Prospectus; to the best knowledge of such
counsel, the products, services and processes of the Company have
not infringed and do not infringe upon proprietary rights held or
asserted by third parties which infringement, if resolved
adversely to the Company, could materially affect its earnings,
assets, affairs, business prospects or condition (financial and
other);
(9) to the best knowledge of such counsel, the Company has good
and marketable title to all the property and assets reflected as
owned by it in the Prospectus, subject to no lien, mortgage,
pledge, charge or encumbrance of any kind or nature whatsoever
except those, if any, reflected in the Prospectus or which are not
material to the Company and do not materially affect the value of
such property and do not materially interfere with the use made or
proposed to be made of such property; to the best knowledge of
such counsel, all property held or used by the Company under
leases, licenses, franchises or other agreements are held by it
under valid, subsisting and enforceable leases, licenses,
franchises or other agreements, subject to bankruptcy, insolvency
or similar laws generally affecting the rights of creditors and
equitable principles affecting the right to obtain specific
enforcement or similar equitable relief;
(10) to the best knowledge of such counsel, there are no holders
of securities of the Company having rights to the registration of
such securities, and there are no options, warrants or other
rights to acquire any equity interest in the Company, or any
security convertible such equity interest, except as disclosed in
the Prospectus;
(11) the statements in the Registration Statement and Prospectus,
insofar as they are descriptions of specific contracts, agreements
or other documents, and the statements appearing in the Prospectus
under the caption "Description of Securities," insofar as they
refer to statements of law or legal conclusions, are accurate and
present fairly the information required to be shown;
(12) to the best knowledge of such counsel, the Company is not in
violation of its articles of incorporation or bylaws, or other
organizational or charter documents or in default (nor has an
event occurred which, with notice, lapse of time or both, would
constitute such a default) in the performance of any obligation,
agreement or condition contained in any bond, indenture, mortgage,
deed of trust, note, bank loan or credit agreement or any other
agreement or instrument to which the Company is a party or by
which the Company or any of its property may be bound or affected,
and to the best knowledge of such counsel, the Company is not in
violation of any franchise, license, permit, judgment, decree,
order, statute, rule or regulation, where such violation or
default could have a material adverse effect on the respective
business, property or operations of the Company;
(13) to the best knowledge of such counsel, there are no legal,
governmental or regulatory proceedings, pending or threatened,
required to be described in the Prospectus, which are not so
described;
(g) There shall have been furnished to you on the Initial Closing Date
and the final Closing Date the written opinion of the law firm of Xxxxxxx &
Philipp, special securities counsel to the Company, addressed to you and dated
as of such Closing Date, to the effect that, as of each Closing which has then
occurred:
(1) the Registration Statement and Prospectus, and each amendment
or supplement thereto (except for the financial statements and
other financial data therein, as to which
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X.X. Xxxx & Company, Inc.
March , 1998
Page 16
such counsel need express no opinion), as of their respective
effective or issue dates, comply as to form in all material
respects with the requirements of the Securities Act and the Rules
and Regulations and any required filing of the Prospectus and any
supplements 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 Rules and Regulations; and
(2) to the best knowledge of such counsel, there are no contracts
or other documents required to be summarized or described in the
Registration Statement or to be filed as exhibits thereto which
are not so summarized, described or filed, nor does such counsel
know of any regulations required to be described or referred to in
the Registration Statement or Prospectus which are not described
or referred to in the Registration Statement or Prospectus.
(h) If you shall so request in writing, you shall have received, on the
Initial Closing Date, a survey prepared by Xxxxxxx & Philipp, addressed to you
and dated as of such Closing Date, relating to "blue sky" laws of such
jurisdictions upon which you and the Company agree in writing ("Blue Sky
Survey"); the Blue Sky Survey will advise that the appropriate "blue sky"
action, if any, was taken in each of such jurisdictions so as to permit such
offers and sales as indicated in such Survey; the Blue Sky Survey may be based
upon an examination of the statutes and regulations, if any, of such
jurisdictions as reported in standard compilations and upon interpretive advice
obtained from representatives of certain securities commissions.
(i) If you so request in writing, there shall have been furnished to
you, on each Closing Date an opinion of Xxxxxxx & Philipp, addressed to you and
dated as of each such Closing Date, with respect to the Common Stock, the
Registration Statement and the Prospectus, and other related matters as you may
reasonably require, and the Company shall have furnished to such counsel such
documents and shall have exhibited to them such papers and records as they
request for the purpose of enabling them to pass upon such matters.
(j) There shall have been furnished to you, on the Initial Closing Date
and the final Closing Date, a certificate of the principal executive officer and
the principal financial officer of the Company, dated as of such Closing Date,
to the effect that:
(1) the representations and warranties of the Company which are
set forth in Section 2 hereof are true and correct as of the date
of this Agreement and as of each Closing Date, as if again made on
and as of such Closing Date, 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 such date;
(2) to the best of their knowledge, the Commission has not issued
an order preventing or suspending the use of the Prospectus or any
Preliminary Prospectus filed as part of the Registration Statement
or any amendment thereto, no stop order suspending the
effectiveness of the Registration Statement or enjoining the use
of the Prospectus has been issued, and no proceedings for that
purpose have been instituted or are pending or contemplated under
the Securities Act;
(3) each of the respective signers of the certificate has
carefully examined the Registration Statement and the Prospectus
and, in his opinion and to the best of his knowledge, information
and belief, the Registration Statement and the Prospectus and any
amendments or supplements thereto contain all statements required
to be stated therein, and neither the Registration Statement nor
the Prospectus nor any amendment or supplement thereto includes
any untrue statement of 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 effective
date of the Registration Statement, there has occurred
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X.X. Xxxx & Company, Inc.
March , 1998
Page 17
no event required to be set forth in an amended or supplemented
prospectus which has not been so set forth: and
(4) since the effective date of the Registration Statement, there
has not been any material adverse change or, to their knowledge, a
development 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 said Registration
Statement theretofore amended including the proposed amendment
thereto delivered to you prior to or contemporaneously with the
execution of this Agreement or (but only if you expressly consent
thereto in writing) delivered to you thereafter; 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 material transaction; since such
date and except as so disclosed there has not been any material
change in the equity ownership of the Company or its short-term
debt or long-term debt; 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 their
knowledge, threatened against the Company; and, since such date
and except as so disclosed, the Company has not sustained a
material loss or interference with its business from any labor
dispute, fire, explosion, flood or other calamity (whether or not
insured) or from any court or governmental action, order or
decree.
The delivery of the certificate provided for in this Section 9(k) shall
be and constitute a representation and warranty of the Company as to the facts
required in the immediately foregoing clauses (1), (2), (3) and (4) of this
Section 9(j) to be set forth in said certificate.
(k) There shall have been furnished to you, on or before the initial
Closing Date, written agreements signed by the Company, its directors, its
executive officers and each holder of 10% or more of its equity securities to
the effect that such persons will not make any offer, sale or other disposition
of any equity interest in the Company for a period of 120 days after the final
Closing Date, except with the prior written consent of the Managing Placement
Agent or pursuant to bona fide gifts, provided, in the last case, that each
donee agrees in writing with you to be bound by the same restrictions on the
offer, sale or disposition of equity interests in the Company as are set forth
in the agreements described in this Section 9(k).
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are reasonably satisfactory
to you and your counsel. The Company shall promptly furnish you with such
manually signed or conformed copies of such opinions, certificates, letters and
other documents as you may reasonably request from time to time. With respect to
any Closing, by written instrument delivered to the Company, you may from time
to time, in your sole discretion, waive any of the requirements imposed upon the
Company pursuant to this Section, including without limitation the requirement
that any opinion, certificate, survey or other document be delivered to you at
any Closing or as of any Closing Date; any such waiver by you with respect to a
Closing shall not in any way be construed as such waiver with respect to any
other Closing. If any condition to your obligations hereunder to be satisfied
prior to or a Closing Date is not so satisfied, this Agreement at your election
will terminate upon notification to the Company without liability on the part of
any Selected Placement Agent (including you) or the Company, except for the
expenses or fees to be paid or reimbursed by the Company pursuant to Sections 4
and 8 hereof and except to the extent provided in Section 10 hereof.
SECTION 10. Indemnification.
(a) The Company agrees to indemnify and hold harmless you, each of your
officers, directors, employees and agents, and each person, if any, who controls
you within the meaning of the Securities Act or the Exchange Act against any
losses, claims, damages or liabilities, joint or several, to which you or each
such officer, director, employee, agent or controlling person may become subject
under the Securities Act, the Exchange Act, Blue Sky
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X.X. Xxxx & Company, Inc.
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Page 18
Laws or other federal or state laws or regulations, at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
the written consent of the Company), 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
or incorporated 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 specifically
for that purpose or based upon written information furnished by the Company and
filed in any state or other jurisdiction in order to qualify any or all of the
Common Stock under the securities laws thereof (any such document, application
or information being hereinafter referred to as a "Blue Sky 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; the Company agrees to reimburse you and each
such other indemnified person for any legal or other expenses incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable in
any such case to the extent that:
(1) any such loss, claim, damage or liability 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 written information furnished to the
Company by you specifically for use therein (but in no event shall
the assistance in the drafting of all or any portion of the
Registration Statement, any Preliminary Prospectus, the
Prospectus, such amendment or supplement or such other document of
the type referred to in the preceding paragraph by you or your
counsel constitute such information); or
(2) if such statement or omission was contained or made in a
Preliminary Prospectus and corrected in the Prospectus and (i) any
such loss, claim, damage or liability suffered or incurred by you
(or any person who controls you) resulted from an action, claim or
suit by any person who purchased Common Stock from you in the
Offering, and (ii) you failed to deliver or provide a copy of the
Prospectus to such person at or prior to the confirmation of the
sale of such Common Stock 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 to you
as required by this Agreement.
The indemnification obligations of the Company as provided above (i)
extend upon the same terms and conditions to, and shall inure to the benefit of,
each Selected Placement Agent and each of its respective officers, directors and
each person, if any, who controls such Selected Placement Agent within the
meaning of the Securities Act or the Exchange Act and (ii) are in addition to
any liabilities the Company may otherwise have under other agreements, under
common law or otherwise.
(b) You will indemnify and hold harmless the Company, each of the
directors, officers, employees and agents of the Company, and each person, if
any, who controls the Company within the meaning of the Securities Act or the
Exchange Act, against any losses, claims, damages or liabilities to which the
Company or any such director, officer, employee, agent or controlling person may
become subject under the Securities Act, the Exchange Act, Blue Sky Laws or
other federal or state laws or regulations, at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with
your written consent, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are 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 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 the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, or in any Blue Sky Application, in reliance
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X.X. Xxxx & Company, Inc.
March , 1998
Page 19
upon and in conformity with any written information furnished to the Company by
you specifically for use therein (but in no event shall the assistance in the
drafting of all or any portion of the Registration Statement, any Preliminary
Prospectus, the Prospectus, such amendment or supplement or such other document
of the type referred above by you or your counsel constitute such information).
You agree to reimburse the Company and each such other indemnified person for
any legal or other expenses incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action.
Your indemnification obligations as provided above (i) extend upon the
same terms and conditions to, and shall inure to the benefit of, the Company and
each of its respective officers, directors and each person, if any, who controls
the Company within the meaning of the Securities Act or the Exchange Act and
(ii) are in addition to any liabilities which you may otherwise have under other
agreements, under common law or otherwise.
(c) Promptly after receipt by an indemnified party under this Section
10 of notice of the commencement of any action, such indemnified party will, if
a claim in respect thereof is to be made against an indemnifying party under
this Section 10, notify the indemnifying party in writing of the commencement
thereof, but the omission to so notify the indemnifying party will not relieve
an indemnifying party from any liability which it or he may have to any
indemnified party otherwise than under this Section 10. 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, to 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 it or he
and/or other indemnified parties which 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. Upon receipt of notice from the indemnifying party
to such indemnified party of its election to assume the defense of such action
and upon approval by the indemnified party of counsel to the indemnifying party,
the indemnifying party will not be liable to such indemnified party under this
Section 10 for any legal expenses subsequently incurred by such indemnified
party as a result of or in connection with the defense of such action, unless:
(1) the indemnified party shall have employed such counsel in
connection with the assumption of legal defenses in accordance
with the proviso to the next preceding sentence (it being
understood, however, that the indemnifying party shall not be
liable for the expenses of more than one separate counsel, in the
event that you and one or more of your directors, officers or
controlling persons are the indemnified parties);
(2) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of
commencement of the action; or
(3) the indemnifying party has authorized the employment of
counsel at the expense of the indemnifying party.
(d) In order to provide for just and equitable contribution under the
Securities Act or the Exchange Act in any case in which (1) any person who would
be entitled to indemnification pursuant to this Section 10 if enforceable
according to its terms makes a claim for indemnification pursuant to this
Section 10, but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that the express provisions of
this Section 10 provide for indemnification in such case, or (2) contribution
under the Securities Act or the Exchange Act may otherwise be required, you
shall contribute to the aggregate losses, claims, damages or liabilities
incurred (which shall, for all purposes of this Agreement, include, but not be
limited to, all costs of defense and investigation and all attorneys' fees) in
either such case (after
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X.X. Xxxx & Company, Inc.
March , 1998
Page 20
contribution from others) an amount equal to the product determined by
multiplying the total amount of such losses, claims, damages or liabilities by a
fraction, the numerator of which equals the fees paid to you under Section 4
plus the amount paid to you under Section 8, and the denominator of which is
equal to the aggregate proceeds of the sale of Common Stock in the Offering
(before deduction of commissions or expenses), and the Company shall responsible
for the balance of such losses, claims, damages or liabilities; provided, that
with respect to the rescission of the sale of any Common Stock, your liability
shall not exceed the compensation earned by you under this Agreement with
respect to the rescinded sale. If the foregoing allocation is not permitted by
law, there shall be considered, in determining the amount of contribution to
which the respective parties are entitled, the relative benefits received by
each party from the sale of Common Stock (taking into account the portion of the
proceeds of the Offering realized by each), the parties' relative knowledge and
access to information concerning the matter with respect to which the claim was
asserted, the opportunity to correct and prevent any statement or omission, and
any other equitable considerations appropriate in the circumstances. The Company
and you agree that it would not be equitable if the amount of such contribution
were determined by pro rata or pro capita allocation. Neither you nor any person
controlling you shall be obligated to make contribution hereunder which in the
aggregate exceeds the total purchase price of Common Stock sold to subscribers
procured by you, less the aggregate amount of any damages which you and your
controlling persons have otherwise been required to pay in respect of the same
or any substantially similar claim. No person guilty of a fraudulent
misrepresentation (within the meaning of Section 11 of the Securities Act) shall
be entitled to contribution from any person who is not guilty of such fraudulent
misrepresentation. The foregoing contribution agreement shall in no way affect
the contribution liabilities of any persons having liability under Section 11 of
the Securities Act other than those identified in this Section 10 as being
entitled to indemnification. Any of the officers, directors or controlling
persons of a Selected Placement Agent (including you) and any officers,
directors or controlling persons of the Company shall be entitled to
contribution to the same extent as you or the Company.
SECTION 11. Effective Date. This Agreement shall become effective
immediately upon execution as to Sections 4, 8 and 10 and, as to all other
provisions, at 9 A.M., Milwaukee, Wisconsin time, on the day following the date
upon which the Registration Statement becomes effective, unless such a day is a
Saturday, Sunday or holiday (in which event this Agreement shall become
effective at such hour on the business day next succeeding such Saturday, Sunday
or holiday); notwithstanding the foregoing, 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 and the Company
(which notice may be oral, to be confirmed promptly in writing).
SECTION 12. Termination. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof:
(a) This Agreement may be terminated by the Company by notice to you or
by you by notice to the Company at any time prior to the time this Agreement
shall become effective as to all its provisions, and any such termination shall
be without liability on the part of the Company or you (except for the fees or
expenses to be paid or reimbursed by the Company pursuant to Sections 4 and 8
hereof or paid by the Company pursuant to Section 10 hereof).
(b) This Agreement may also be terminated by you prior to the final
Closing Date if, in your judgment and discretion, the offer, offer for sale,
sale and delivery of the Common Stock is rendered impracticable or inadvisable
because:
(1) additional material governmental restrictions or limitations,
not in force on the date hereof, shall have been imposed upon
trading in securities generally or minimum or maximum prices shall
have been generally established on the New York Stock Exchange,
the American Stock Exchange or over-the-counter, or trading in
securities generally shall have been suspended or limited on
either such exchange or over-the-counter or a general banking
moratorium shall have been established by federal or New York
authorities;
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X.X. Xxxx & Company, Inc.
March , 1998
Page 21
(2) an outbreak or escalation of hostilities 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 as, in your judgment, to have a
material adverse effect on the general securities market or make
it impractical or inadvisable to proceed with the Offering;
(3) any event shall have occurred or shall exist which makes
untrue or incorrect in any material respect any statement or
information contained in the Registration Statement or which is
not reflected in the Registration Statement but should be
reflected therein in order to make the statements or information
contained therein not misleading in any material respect;
(4) the Company shall have sustained a material loss, whether or
not insured, by reason of fire, earthquake, flood, accident or
other calamity or from any labor dispute or court or governmental
action or decree;
(5) the passage by the Congress of the United States or any state
legislative body of any act or measure, or the adoption or any
proposed adoption of any orders, rules, legislation or regulations
by any governmental body, any authoritative accounting institute
or board or any governmental executive which is reasonably
believed likely by the representative to have a material impact on
the business, financial condition or financial statements of the
Company, taken as a whole, or the market for the Common Stock; or
(6) any material adverse change having occurred since the
respective dates as of which information is given in the
Registration Statement and the Prospectus in the condition
(financial or otherwise) of the Company, taken as a whole, or in
the earnings, affairs or business prospects of the Company, taken
as a whole, whether or not arising in the ordinary course of
business.
Any termination pursuant to this Section 12(b) shall be without
liability on the part of any Selected Placement Agent (including you) to the
Company, or on the part of the Company to any Selected Placement Agent
(including you), except for expenses or fees to be paid or reimbursed by the
Company pursuant to Section 4 and 8 hereof and except as to indemnification as
provided in Section 10 hereof.
SECTION 13. Parties.
(a) This Agreement shall inure to the benefit of and be binding upon
you, the Company, and the respective successors and assigns of each.
(b) No purchaser of Common Stock from you shall be construed as a
successor or assign by reason merely of such purchase.
(c) 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 and counsel referred to in this Agreement, any legal or
equitable right, remedy or claim under or in respect to this Agreement or any
provision herein contained.
SECTION 14. Representations and Indemnities to Survive Delivery.
(a) All representations, warranties, covenants and agreements of the
Company and the Managing Placement Agent contained herein or in certificates of
officers delivered pursuant hereto, and the indemnity agreement contained in
Section 10 hereof, shall survive the delivery and execution of this Agreement
and the final Closing Date
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X.X. Xxxx & Company, Inc.
March , 1998
Page 22
and shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of you or any person controlling you, any
Selected Placement Agent or any controlling person thereof, the Company or any
of its officers, directors, or controlling persons.
(b) The indemnification provisions of Section 10 hereof are in addition
to any and all remedies or rights which either of the parties hereto may have,
including the right to xxx and recover damages for any breach of any
representation, warranty or covenant made or given by either of the parties
hereto to any other party.
SECTION 15. Notices. All communications hereunder will be in writing
and will be mailed, delivered, telegraphed or telecopied and confirmed as
follows:
If to the Managing Placement Agent: X.X. Xxxx & Company, Inc.
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
If to the Company: Heartland Wisconsin Corp.
0000 Xxxxx 00xx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
SECTION 16. Integration. This Agreement constitutes the entire
agreement among the parties hereto with respect to the subject matters hereof
and supersedes all prior agreements and understandings among the parties both
written and oral.
SECTION 17. Partial Unenforceability. If any Section, paragraph 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, paragraph or provision hereof.
SECTION 18. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Wisconsin.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return the enclosed duplicate hereof, whereupon it
will become a binding agreement between us in accordance with its terms.
Very truly yours,
Tomorrow's Morning, Inc.
By:________________________________________
Xxxxx X. Xxxxxxx, President
Accepted and agreed to as of the day and year first above written.
X.X. Xxxx & Company, Inc.
By:________________________________
Xxxxxx X. Xxxx, President
