2,500,000 SHARES
XXXX GROUP, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
__________, 1999
CRUTTENDEN XXXX INCORPORATED
00000 Xxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, XX 00000
Attention: Corporate Finance Department
PENNSYLVANIA MERCHANT GROUP
Xxxx Xxxxx Xxxxxxxxx Xxxxxx
Xxxx Xxxxxxxxxxxx, XX 00000
Attn: Corporate Finance Department
X. X. XXXXXXXXXX & CO., INC.
Xxx Xxxxxx Xxxxx
00xx Xxxxx
Xxxxxx, XX 00000
AS REPRESENTATIVES OF THE UNDERWRITERS
c/o Cruttenden Xxxx Incorporated
00000 Xxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, XX 00000
Ladies and Gentlemen:
Xxxx Group, Inc., a Delaware corporation (the "Company"), proposes to
issue and sell 2,500,000 shares of the Common Stock, $.01 par value, of the
Company (the "Common Stock") to the underwriters named in SCHEDULE I hereto (the
"Underwriters") for whom you are acting as the representatives (the
"Representatives"). Such 2,500,000 shares of Common Stock are hereinafter
referred to as the "Firm Shares." The Company has agreed to grant to the
Underwriters an option (the "Option") to purchase up to an additional 375,000
shares of Common Stock (the "Option Shares") on the terms and for the purposes
set forth in Section 1(b) hereof. The Company has also agreed to sell to the
Representatives a Warrant (the "Warrant") to purchase 250,000 shares of Common
Stock (the "Warrant Shares") on the terms and for the
purposes set forth in Section 1(c) hereof. The Firm Shares, the Option
Shares and the Warrant Shares are hereinafter collectively referred to as the
"Shares."
The Company hereby confirms its agreements with each of the Underwriters
as follows:
1. AGREEMENT TO SELL AND PURCHASE.
(a) The Company hereby agrees to sell to each Underwriter, and upon
the basis of the representations, warranties and agreements of the Company
herein contained and subject to all the terms and conditions of this agreement
(this "Agreement"), each Underwriter agrees, severally and not jointly, to
purchase from the Company, at a price of $____ per share, that number of Firm
Shares (rounded up or down as determined by you in your discretion, in order to
avoid fractions of a share) obtained by multiplying the number of Firm Shares to
be sold by the Company by a fraction the numerator of which is the number of
Firm Shares set forth opposite the name of each Underwriter in SCHEDULE I hereto
(or such number of Firm Shares increased as set forth in Section 7 hereof) and
the denominator of which is the total number of Firm Shares. The difference of
$0.__ per Firm Share between the initial public offering price and the price at
which the Company will sell the Firm Shares to the Underwriter is the
"Underwriting Discount."
(b) Subject to all the terms and conditions of this Agreement, the
Company hereby grants the Option to the Underwriters to purchase, severally and
not jointly, up to 375,000 Option Shares from the Company at the same price per
share as the Underwriters shall pay for the Firm Shares. The Option may be
exercised only to cover overallotments in the sale of the Firm Shares by the
Underwriters and may be exercised in whole or in part at any time (but not more
than once) on or before the 30th day after the date of this Agreement upon
notice (the "Option Shares Notice") by the Representatives. Such notice shall
set forth (i) the aggregate number of Option Shares as to which the Underwriters
are exercising the Option, (ii) the names and denominations in which the
certificates for the Option Shares are to be registered and (iii) the time, date
and place at which such certificates will be delivered (which time and date may
be simultaneous with, but not earlier than, the Closing Date; and in such case
the term "Closing Date" shall refer to the time and date of delivery of
certificates for the Firm Shares and the Option Shares). Such time and date of
delivery, if subsequent to the Closing Date, is called the "Option Closing Date"
and shall be determined by the Representatives and shall not be earlier than
three nor later than five full business days after delivery of such notice of
exercise. If any Option Shares are to be purchased, each Underwriter agrees,
severally and not jointly, to purchase the number of Option Shares (subject to
such adjustments to eliminate fractional shares as the Representatives may
determine) that bears the same proportion to the total number of Option Shares
to be purchased as the number of Firm Shares set forth on SCHEDULE I opposite
the name of such Underwriter bears to the total number of Firm Shares. The
Representatives may cancel the Option at any time prior to its expiration by
giving written notice of such cancellation to the Company.
(c) Subject to all the terms and conditions of this Agreement, the
Company hereby sells the Warrant to the Representatives to purchase, severally
and not jointly, the Warrant Shares from the Company at a price per share equal
to 120% of the initial public offering price per
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share. The Warrant shall be allocated among the Representatives in the
amount designated by them on the Closing Date. On the Closing Date, the
Company shall issue a Warrant, in such denominations as shall be designated
by the Representatives, in the form attached hereto as EXHIBIT A.
2. DELIVERY AND PAYMENT.
(a) Delivery of the Firm Shares shall be made by the Company to the
Underwriters at the offices of Cruttenden Xxxx Incorporated, 00000 Xxx Xxxxxx
Xxxxxx, Xxxxx 000, Xxxxxx, XX 00000 (or such other place as may be agreed to by
the Company and the Representatives) at 9:00 a.m. Eastern Standard Time on
___________________, or such other time and date not later than 1:30 p.m.
Eastern Standard Time on _________________________, as the Representatives shall
designate by notice to the Company against payment of the purchase price by wire
transfer in accordance with the Company's written wire instructions (the time
and date of such closing is herein referred to as the "Closing Date").
(b) To the extent the Option is exercised, delivery of the Option
Shares by the Company to the Representatives against payment by the
Representatives to the Company (in the manner specified above) will take place
at the offices specified above for the Closing Date at the time and date (which
may be the Closing Date) specified in the Option Shares Notice.
(c) Certificates evidencing the Shares to be issued and sold by the
Company shall be in definitive form and shall be registered in such names and in
such denominations as the Representatives shall request at least two business
days prior to the Closing Date or the Option Closing Date, as the case may be,
by written notice to the Company. For the purpose of expediting the checking and
packaging of certificates for such Shares, the Company agrees to make such
certificates available for inspection at least 24 hours prior to the Closing
Date, the Option Closing Date or the Warrant Closing Date, as the case may be.
(d) The cost of original issue tax stamps, if any, in connection with
the issuance and delivery of that number of the Shares to be issued and sold by
the Company to the Underwriters shall be borne by the Company. The Company will
pay and hold harmless each Underwriter and any subsequent holder of such Shares
from any and all liabilities with respect to or resulting from any failure or
delay in paying Federal and state stamp and other transfer taxes, if any, which
may be payable or determined to be payable in connection with the original
issuance or sale to such Underwriter of such Shares.
(e) It is understood that the Representatives have been authorized,
for their own accounts and the accounts of the several Underwriters, to accept
delivery of and receipt for, and make payment of the purchase price for, the
Firm Shares and any Option Shares the Underwriters have agreed to purchase.
Cruttenden Xxxx Incorporated, individually and not as the Representatives of the
Underwriters, may (but, other than as provided in Section 7, shall not be
obligated to) make payment for any Shares to be purchased by any Underwriter
whose funds shall not have been received by the Representatives by the Closing
Date or the Option Closing Date, as the case may be, for the account of such
Underwriter, but any such payment shall not relieve such Underwriter from any of
its obligations under this Agreement.
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(f) Not later than 12:00 p.m. on the second business day following the
date the Shares are released by the Underwriters for sale to the public, the
Company shall deliver or cause to be delivered copies of the Prospectus in such
quantities and at such places as the Representatives shall request.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents,
warrants and covenants to each of the Underwriters that:
(a) The Company meets the requirements for use of Form S-1 and a
registration statement (Registration No. 333-51523) on Form S-1 relating to the
Firm Shares and Option Shares, including a Preliminary Prospectus (as defined
below) and such amendments to such registration statement as may have been
required to the date of this Agreement, has been prepared by the Company in
compliance with the provisions of the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations (collectively referred to as
the "Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") thereunder, and has been filed with the Commission. Such
registration statement, as amended, including the financial statements, exhibits
and schedules thereto, in the form in which it was declared effective by the
Commission under the Securities Act, including any information deemed to be a
part thereof at the time of effectiveness pursuant to Rule 430A or Rule 434
under the Securities Act, is called the "Registration Statement." Any
Registration Statement filed by the Company pursuant to Rule 462(b) under the
Securities Act is called the "Rule 462(b) Registration Statement," and from and
after the date and time of filing of the Rule 462(b) Registration Statement the
term "Registration Statement" shall include the Rule 462(b) Registration
Statement. The prospectus, in the form first used by the Underwriters to
confirm sales of the Shares, is called the "Prospectus." All references in this
Agreement to the Registration Statement, the Rule 462(b) Registration Statement,
the Preliminary Prospectus or the Prospectus, or any amendments or supplements
to any of the foregoing, shall include any copy thereof filed with the
Commission pursuant to its Electronic Data Gathering and Retrieval System
("XXXXX"). The term "Preliminary Prospectus" as used herein means a preliminary
prospectus as contemplated by Rule 430 or Rule 430A of the Rules and Regulations
included at any time as part of the Registration Statement. Copies of the
Registration Statement and of each related Preliminary Prospectus have been
delivered to the Underwriters. The Registration Statement and any Rule 462(b)
Registration Statement have been declared effective by the Commission under the
Securities Act. The Company has complied with all requests of the Commission
for additional or supplemental information.
(b) No stop order or orders suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement is in effect,
and no proceedings for that purpose have been commenced or are pending before or
are contemplated by the Commission or any state securities commission or other
regulatory authority. Each Preliminary Prospectus and the Prospectus when filed
complied in all material respects with all applicable provisions of the
Securities Act and the Rules and Regulations and will contain all material
information required to be included therein. Each of the Registration
Statement, the Rule 462(b) Registration Statement and any post-effective
amendment thereto, at the time it became effective and during the period ending
on the later of the Closing Date or, if applicable, the Option Closing Date,
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complied and will comply in all material respects with the Securities Act and
the Rules and Regulations and did not and will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. The
Prospectus, as amended or supplemented, as of its date and during the period
ending on such day, as in the opinion of counsel for the Underwriters, the
Prospectus is no longer required by law to be delivered in connection with sales
by an Underwriter or dealer (the "Prospectus Delivery Period"), did not and will
not contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The foregoing
representations and warranties in this Section 3(b) do not apply to any
statements or omissions made in reliance on and in conformity with information
relating to the Underwriters furnished in writing to the Company by the
Representatives specifically for inclusion in the Registration Statement or
Prospectus or any amendment or supplement thereto. The Company acknowledges
that the statements set forth in the last paragraph on the cover page of the
Prospectus and under the heading "Underwriting" in the Prospectus constitute the
only information relating to the Underwriters furnished in writing to the
Company by the Representatives specifically for inclusion in the Registration
Statement. The Company has delivered to the Representatives one complete
manually signed copy of the Registration Statement and of each consent and
certificate of experts filed as a part thereof, and conformed copies of the
Registration Statement (without exhibits), the Preliminary Prospectus and the
Prospectus, as amended or supplemented, in such quantities and at such places as
the Representatives have reasonably requested for each of the Underwriters. The
Company has not distributed and will not distribute, prior to the later of the
Option Closing Date and the completion of the Underwriters distribution of the
Shares, any offering material in connection with the offering and sale of the
Shares, other than the Preliminary Prospectus, the Prospectus or the
Registration Statement and any other material permitted under the Securities Act
and the Rules and Regulations.
(c) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus under the caption "Capitalization"
(other than for subsequent issuances, if any, pursuant to employee benefit plans
described in the Prospectus or upon exercise of outstanding options or warrants
described in the Prospectus). The Common Stock (including the Shares) conforms
in all material respects to the description thereof contained in the Prospectus.
All of the issued and outstanding shares of Common Stock have been duly
authorized and validly issued, are fully paid and nonassessable and have been
issued in compliance with federal and state securities laws. None of the
outstanding shares of Common Stock were issued in violation of any preemptive
rights, rights of first refusal or other similar rights to subscribe for or
purchase securities of the Company. There are no authorized or outstanding
options, warrants, preemptive rights, rights of first refusal or other rights to
purchase, or equity or debt securities convertible into or exchangeable or
exercisable for, any capital stock of the Company or any of its subsidiaries
other than those accurately described in the Prospectus.
(d) The Shares to be issued and sold by the Company to the
Underwriters hereunder have been duly and validly authorized and, when issued
and delivered against payment therefor as provided herein, will be duly and
validly issued, fully paid and nonassessable and will conform to the description
thereof contained in the Prospectus; the certificates evidencing the
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Shares will comply with all applicable requirements of Delaware law; and none
of the Shares will be issued or sold in violation of any preemptive rights of
shareholders of the Company.
(e) All of the outstanding shares of capital stock of the Company's
subsidiaries have been duly authorized and validly issued and are fully paid and
nonassessable, and are owned by the Company free and clear of any and all liens,
charges, encumbrances or claims.
(f) The consolidated financial statements and schedules included in
the Registration Statement or the Prospectus present fairly the financial
condition and the stockholders' equity of the Company as of the respective dates
thereof and the consolidated statements of operations and cash flows of the
Company for the respective periods covered thereby, all in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the entire period involved, except as otherwise disclosed in the
Prospectus. No other financial statements or schedules of the Company are
required by the Securities Act or the Rules and Regulations to be included in
the Registration Statement or the Prospectus. The financial data set forth in
the Prospectus under the captions "Prospectus Summary--Summary Consolidated and
Pro Forma Financial Data," "Capitalization" and "Selected Consolidated Financial
Data" fairly present the information set forth therein on a basis consistent
with that of the audited financial statements contained in the Registration
Statement. McGladrey & Xxxxxx, LLP, independent auditors (the "Accountants"),
who have reported on such financial statements and schedules, are independent
accountants with respect to the Company as required by the Securities Act and
the Rules and Regulations. The Company maintains a system of accounting
controls sufficient to provide reasonable assurances that: (i) transactions are
executed in accordance with management's general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(g) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus and prior to the Closing
Date and, if later, the Option Closing Date, except as set forth in or
contemplated by the Registration Statement and the Prospectus, (i) there has not
been and will not have been any change in the capitalization of the Company,
(ii) the Company has not and will not have paid or declared any dividends or
other distributions of any kind on any class of its capital stock, and (iii)
there has been no material adverse change, or any development that could
reasonably be expected to result in a material adverse change, in the condition,
financial or otherwise, or in the earnings, business, operations or prospects,
whether or not arising from transactions in the ordinary course of business of
the Company and its subsidiaries, considered as one entity (any such change is
herein called a "Material Adverse Change"). During the Prospectus Delivery
Period, neither the Company nor any of its subsidiaries will engage in any
action (including without limitation the execution of any letter of intent for
the consummation of any material acquisition) that will require a post-effective
amendment to the Registration Statement or an amending supplement to the
Prospectus unless prior to or contemporaneously with the consummation of such
action the Company first
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prepares and files an amendment to the Registration Statement and
supplemental Prospectus satisfying the requirements of the Act and the Rules
and Regulations thereunder.
(h) Neither the Company nor any of its subsidiaries are, and none of
them intend to conduct their business in a manner in which they would become, an
"investment company" or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company," or a company "controlled" by an
"investment company," as such terms are defined in the Investment Company Act of
1940, as amended.
(i) Except as set forth in the Registration Statement and Prospectus,
there are no legal or governmental actions, suits or proceedings pending or, to
the best of the Company's knowledge, threatened (i) against or affecting the
Company or any of its subsidiaries, (ii) which has as the subject thereof any
officer or director of, or property owned or leased by, the Company or any of
its subsidiaries or (iii) relating to environmental or discrimination matters,
where in any such case (A) there is a reasonable possibility that such action,
suit or proceeding might be determined adversely to the Company or such
subsidiary and (B) any such action, suit or proceeding, if so determined
adversely, would reasonably be expected to result in a Material Adverse Change
or adversely affect the consummation of the transactions contemplated by this
Agreement. No material labor dispute with the employees of the Company or any
of its subsidiaries exists or, to the best of the Company's knowledge, is
threatened or imminent.
(j) The Company and its subsidiaries have (i) all governmental
licenses, permits, consents, orders, approvals and other authorizations
necessary to carry on their business as contemplated in the Prospectus, (ii)
complied in all material respects with all laws, regulations and orders
applicable to them or their business and (iii) performed in all material
respects their obligations required to be performed by them thereunder.
(k) Neither the Company nor any of its subsidiaries is in default
under any contract or other instrument to which it is a party or by which any of
its property is bound or affected, except defaults which singly or in the
aggregate have not and will not result in a Material Adverse Change. To the
best knowledge of the Company, no other party under any contract or other
instrument to which it or its subsidiaries is a party is in default in any
material respect thereunder. Neither the Company nor any of its subsidiaries is
in violation of any provision of its respective articles or certificate of
incorporation or bylaws.
(l) Neither the Company nor any of its subsidiaries is aware of any
event or circumstance which, but for the giving of notice or the lapse of time
or both, would constitute an event of default under any material agreement or
instrument for borrowed money or any guarantee of any material agreement or
instrument for borrowed money to which the Company or any of its subsidiaries or
any of the respective properties or assets of the Company or its subsidiaries
are subject.
(m) The Company and its subsidiaries own or possess sufficient
trademarks, trade names, patent rights, copyrights, licenses, approvals, trade
secrets and other similar rights (collectively, "Intellectual Property Rights")
reasonably necessary to conduct their businesses as now conducted. Neither the
Company nor any of its subsidiaries has received any notice of
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infringement or conflict with asserted Intellectual Property Rights of
others, which infringement or conflict, if the subject of an unfavorable
decision, would result in a Material Adverse Change.
(n) Except as would not, individually or in the aggregate, result in a
Material Adverse Change (i) neither the Company nor any subsidiaries is in
violation of any federal, state, local or foreign law or regulation relating to
pollution or protection of human health or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata) or wildlife, including without limitation, laws and regulations relating
to emissions, discharges, releases or threatened releases of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum and petroleum products (collectively, "Materials of Environmental
Concern"), or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern (collectively, "Environmental Laws"), which violation
includes, but is not limited to, noncompliance with any permits or other
governmental authorizations required for the operation of the business of the
Company or any of its subsidiaries under applicable Environmental Laws, or
noncompliance with the terms and conditions thereof, nor has the Company or any
of its subsidiaries received any written communication, whether from a
governmental authority, citizens group, employee or otherwise, that alleges that
the Company or any of its subsidiaries is in violation of any Environmental Law;
(ii) there is no claim, action or cause of action filed with a court or
governmental authority, no investigation with respect to which the Company or
any of its subsidiaries has received written notice, and no written notice by
any person or entity alleging potential liability for investigatory costs,
cleanup costs, governmental responses costs, natural resources damages, property
damages, personal injuries, attorneys' fees or penalties arising out of, based
on or resulting from the presence, or release into the environment, of any
Material of Environmental Concern at any location owned, leased or operated by
the Company or any of its subsidiaries, now or in the past (collectively,
"Environmental Claims"), pending or, to the best of the Company's knowledge,
threatened against the Company or any of its subsidiaries or any person or
entity whose liability for any Environmental Claim the Company or any of its
subsidiaries has retained or assumed either contractually or by operation of
law; and (iii) to the best of the Company's knowledge, there are no past or
present actions, activities, circumstances, conditions, events or incidents,
including, without limitation, the release, emission, discharge, presence or
disposal of any Material of Environmental Concern, that reasonably could result
in a violation of any Environmental Law or form the basis of a potential
Environmental Claim against the Company or any of its subsidiaries against any
person or entity whose liability for any Environmental Claim the Company or any
of its subsidiaries has retained or assumed either contractually or by operation
of law.
(o) No consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body is required for the
consummation by the Company of the transactions contemplated hereby and by the
filing of the Registration Statement, except such as have been obtained or made
by the Company and are in full force and effect under the Securities Act, and
such as may be required under state securities or Blue Sky laws or the Bylaws
and rules of the National Association of Securities Dealers, Inc. (the "NASD")
in connection with the purchase and distribution by the Underwriters of the
Shares.
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(p) The Company has full corporate power and authority to enter into
this Agreement. This Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and binding agreement of the Company and
is enforceable against the Company in accordance with the terms hereof. The
performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in the creation or imposition of any lien,
charge or encumbrance upon any of the assets of the Company or its subsidiaries
pursuant to the terms or provisions of, or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, or give any
other party a right to terminate any of its obligations under, or result in the
acceleration of any obligation under, the respective articles or certificate of
incorporation or bylaws of the Company or its subsidiaries, any indenture,
mortgage, deed of trust, voting trust agreement, loan agreement, bond,
debenture, note agreement or other evidence of indebtedness, lease, contract or
other agreement or instrument to which the Company or any of its subsidiaries is
a party or by which the Company, any of its subsidiaries or any of their
properties are bound or affected, or violate or conflict with any judgment,
ruling, decree, order, statute, rule or regulation of any court or other
governmental agency or body applicable to the business or properties of the
Company or any of its subsidiaries.
(q) The Company is duly incorporated and validly existing in good
standing as a corporation under the laws of the State of Delaware, and each of
the Company's subsidiaries is duly incorporated and validly existing as a
corporation under the laws of the jurisdiction of its incorporation. Each of
the Company and its subsidiaries has full power and authority (corporate and
other) to conduct all the activities conducted by it, to own or lease all the
assets owned or leased by it and to conduct its business as described in the
Registration Statement and the Prospectus. Each of the Company and its
subsidiaries is duly qualified and in good standing as a foreign corporation in
each jurisdiction in which it owns or leases real property or transacts business
requiring such qualification and in which the failure to so qualify would result
in a Material Adverse Change. Except as disclosed in the Registration
Statement, the Company does not own, directly or indirectly, any shares of stock
or any other equity or long-term debt securities of any corporation or have any
equity interest in any firm, partnership, joint venture, association or other
entity. Complete and correct copies of the respective articles or certificate
of incorporation and bylaws of the Company and each of its subsidiaries and all
amendments thereto have been delivered to the Representatives, and no changes
therein will be made subsequent to the date hereof and prior to the Closing Date
or, if later, the Option Closing Date.
(r) The Company, or its subsidiaries, has good and marketable title to
all properties and assets described in the Prospectus as owned by it or them,
free and clear of all liens, charges, encumbrances or restrictions, except such
as are described in the Prospectus or are not material to the business of the
Company or its subsidiaries. The Company, or its subsidiaries, has valid,
subsisting and enforceable leases for the properties described in the Prospectus
as leased by it or them, with such exceptions as are not material and do not
materially interfere with the use made and proposed to be made of such
properties by the Company or its subsidiaries, and neither the Company nor any
of its subsidiaries, as applicable, is in default in any material respects of
any terms or provisions of any leases.
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(s) The Company and its subsidiaries have filed all necessary federal,
state and foreign tax returns that are required to be filed by them and have
paid all taxes shown on such returns and on all assessments received by them to
the extent such taxes have become due, other than any which the Company or its
subsidiaries is contesting in good faith. All taxes with respect to which the
Company and its subsidiaries are obligated have been paid or adequate accruals
have been set up to cover any such taxes. The Company has no knowledge of any
material tax deficiency which has been assessed or threatened against the
Company or any of its subsidiaries. The Company has made adequate charges and
accruals in the financial statements included in the Prospectus in respect of
all federal, state and foreign income and franchise taxes for all periods as to
which the tax liability of the Company has not been finally determined.
(t) The Company and its subsidiaries maintain insurance of such types
and in such amounts as are generally deemed adequate and customary for their
businesses. The Company has no reason to believe that it or any subsidiary will
not be able (i) to renew their existing insurance coverage as and when such
policies expire or (ii) to obtain comparable coverage from similar institutions
as may be necessary or appropriate to conduct their business as now conducted
and at a cost that would not result in a Material Adverse Change. Neither the
Company nor any subsidiaries has been denied any insurance coverage which it has
sought or for which it has applied.
(u) With respect to any "employee benefit plan" (as defined under the
Employee Retirement Income Security Act of 1974, as amended, and the regulations
and published interpretations thereunder (collectively, "ERISA") established or
maintained by the Company, its subsidiaries or their "ERISA Affiliates" (as
defined below)), no event has occurred and, to the best knowledge of the
Company, there exists no condition or set of circumstances, in connection with
which the Company could be subject to any liability under the terms of any such
"employee benefit plan." "ERISA Affiliate" means, with respect to the Company,
any member of any group of organizations described in Sections 414(b), (c), (m)
or (o) of the Internal Revenue Code of 1986, as amended, and the regulations and
published interpretations thereunder (the "Code") of which the Company is a
member. No "reportable event" (as defined under ERISA) has occurred or is
reasonably expected to occur with respect to any "employee benefit plan"
established or maintained by the Company or any of its ERISA Affiliates. No
"employee benefit plan" established or maintained by the Company or any of its
ERISA Affiliates, if such "employee benefit plan" were terminated, would have
any "amount of unfunded benefit liabilities" (as defined under ERISA). Neither
the Company, its subsidiaries nor any of their ERISA Affiliates has incurred or
reasonably expects to incur any liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "employee benefit plan" or
(ii) Sections 412, 4971, 4975 or 4980B of the Code. Each "employee benefit
plan" established or maintained by the Company, its subsidiaries or any of their
ERISA Affiliates that is intended to be qualified under Section 401(a) of the
Code is so qualified and nothing has occurred, whether by action or failure to
act, and to the best knowledge of the Company, there exists no condition or set
of circumstances, which would cause the loss of such qualification.
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(v) There is no document or contract of a character required to be
described in the Registration Statement or the Prospectus or to be filed as an
exhibit to the Registration Statement that is not described or filed as
required.
(w) No statement, representation, warranty or covenant made by the
Company in this Agreement or made in any certificate or document required by
this Agreement to be delivered to the Underwriters was or will be, when made,
inaccurate, untrue or incorrect in any material respect.
(x) Neither the Company nor any of its directors, officers or
controlling persons has taken, directly or indirectly, any action designed, or
which might reasonably be expected, to cause or result, under the Act or
otherwise, in, or which has constituted, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Shares or the Common Stock.
(y) No holder of securities of the Company has any right that, if
exercised, would require the Company to cause such securities to be included in
the Registration Statement.
(z) The Shares have been approved for trading, subject to notice that
the Registration Statement has been declared effective, on the Nasdaq National
Market.
(aa) Other than as contemplated by this Agreement, there is no broker,
finder or other party that is entitled to receive from the Company any brokerage
or finder's fee or other fee or commission as a result of any of the
transactions contemplated by this Agreement.
(bb) There are no business relationships or related-party transactions
involving the Company or any subsidiaries or any other person required to be
described in the Prospectus which have not been described as required.
(cc) Neither the Company nor any subsidiaries nor, to the best of the
Company's knowledge, any employee or agent of the Company or any subsidiaries,
has made any contribution or other payment to any official of, or candidate for,
any federal, state or foreign office in violation of any law or of the character
required to be disclosed in the Prospectus.
4. CERTAIN AGREEMENTS OF THE COMPANY. The Company agrees with each of the
Underwriters as follows:
(a) The Company will not, either prior to the Effective Date or
thereafter during such period as the Prospectus is required by law to be
delivered in connection with sales of the Shares by an Underwriter or dealer,
file any amendment or supplement to the Registration Statement or the
Prospectus, unless a copy thereof shall first have been submitted to the
Representatives and made available to the Underwriters within a reasonable
period of time prior to the filing thereof and the Underwriters shall not have
objected thereto in good faith.
(b) The Company will notify the Representatives promptly, and will
confirm such advice in writing, (A) of the receipt of any comments of, or
requests for additional or
11
supplemental information from, the Commission, (B) of the filing of the
Prospectus pursuant to Rule 424 or Rule 434 under the Securities Act, (C) of
the time and date that any post-effective amendment to the Registration
Statement becomes effective, (D) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose or the threat thereof, (E) of
the happening of any event during the Prospectus Delivery Period that in the
judgment of the Company makes any statement made in the Registration
Statement or the Prospectus untrue in any material respect or that requires
the making of any changes in the Registration Statement or the Prospectus in
order to make any such statements made therein, in light of the circumstances
in which they are made, not misleading and (F) of receipt by the Company or
any representatives or attorney of the Company of any other communication
from the Commission relating to the Company, the Registration Statement or
any post-effective amendment thereto, any Preliminary Prospectus or the
Prospectus. If at any time the Commission shall issue any 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 moment. If the Company has omitted any information from the
Registration Statement pursuant to Rule 430A of the Rules and Regulations,
the Company will use its best efforts to comply with the provisions of and
make all requisite filings with the Commission pursuant to Rules 424(b), 430A
and 434, as applicable, and will notify the Representatives promptly of all
such filings.
(c) The Company will furnish to the Representatives, without charge,
copies of the executed signature pages of the Registration Statement and of any
post-effective amendment thereto, including financial statements and schedules,
and all exhibits thereto, and such number of conformed copies of the
Registration Statement, with or without exhibits, and any supplement or
amendment thereto, as the Representatives shall reasonably request.
(d) The Company will comply with all the provisions of any
undertakings contained in the Registration Statement.
(e) Prior to the Effective Date, and thereafter during the Prospectus
Delivery Period, the Company will deliver to the Representatives, without
charge, as many copies of the Preliminary Prospectus and the Prospectus or any
amendment or supplement thereto as the Representatives may reasonably request.
The Company consents to the use of the Preliminary Prospectus and the
Prospectus, or any amendment or supplement thereto, by the Underwriters and by
all dealers to whom the Shares may be sold, both in connection with the initial
offering or sale of the Shares and for any period of time thereafter during the
Prospectus Delivery Period. If during such period of time any event shall
occur, as a result of which the Preliminary Prospectus or the Prospectus, as
then amended or supplemented, would include an untrue statement of a material
fact or omit to state a material fact necessary in order to make any statement
therein, in the light of the circumstances under which it was made, not
misleading, or it is necessary to supplement or amend the Preliminary Prospectus
or the Prospectus to comply with law, the Company will forthwith prepare and
duly file with the Commission an appropriate supplement or amendment thereto,
and will deliver to the Representatives, without charge, such number of copies
thereof as the Representatives may reasonably request.
12
(f) The Company shall cooperate with the Representatives and counsel
for the Underwriters to qualify or register the Shares for sale under (or obtain
exemptions from the application of) state securities or blue sky laws and
Canadian provincial securities laws of those jurisdictions designated by the
Representatives, shall comply with such laws and shall continue such
qualifications, registrations and exemptions in effect so long as required for
the distribution of the Shares. The Company shall not be required to qualify as
a foreign corporation or to take any action that would subject it to general
service of process in any such jurisdiction where it is not presently qualified
or where it would be subject to taxation as a foreign corporation. The Company
will advise the Representatives promptly of the suspension of the qualification
or registration of (or any such exemption relating to) the Shares for offering,
sale or trading in any jurisdiction or any initiation or threat of any
proceeding for any such purpose, and in the event of the issuance of any order
suspending such qualification, registration or exemption, the Company shall use
its best efforts to obtain the withdrawal thereof at the earliest possible
moment.
(g) During the period of five years commencing on the Effective Date,
the Company will furnish to the Representatives and make available to the
Underwriters, upon request, copies of such financial statements and other
periodic and special reports as the Company may from time to time distribute
generally to the holders of any class of its capital stock, and will furnish to
the Representatives and make available to the Underwriters, upon request, a copy
of each annual or other report it shall be required to file with the Commission.
(h) The Company will make generally available to holders of its
securities as soon as may be practicable but in no event later than the last day
of the fifteenth full calendar month following the calendar quarter in which the
Effective Date falls, an earnings statement (which need not be audited but shall
be in reasonable detail) for a period of 12 months ended commencing after the
Effective Date, and satisfying the provisions of Section 11(a) of the Securities
Act.
(i) Whether or not the transactions contemplated by this Agreement are
consummated or this Agreement is terminated, the Company will pay, or reimburse
if paid by the Underwriters, all costs and expenses incident to the performance
of the obligations of the Company under this Agreement, including but not
limited to costs and expenses of or relating to (A) the preparation, printing
and filing of the Registration Statement and exhibits thereto, each Preliminary
Prospectus, the Prospectus and any amendment or supplement to the Registration
Statement or the Prospectus, (B) the preparation and delivery of certificates
representing the Shares, (C) the printing of this Agreement and any and all
ancillary underwriting documents, (D) furnishing (including costs of shipping
and distributing) such copies of the Registration Statement, the Prospectus and
any Preliminary Prospectus, and all amendments and supplements thereto, as may
be requested for use in connection with the offering and sale of the Shares by
the Underwriters or by dealers to whom Shares may be sold, (E) all fees and
expenses associated with filing to list and listing Shares on the Nasdaq
National Market, (F) the filing fees incident to the NASD's review and approval
of the Underwriters participation in the offering and the distribution of the
Shares, (G) the registration or qualification of the Shares for offer and sale
under the securities or Blue Sky laws of each state and the provincial
securities laws of Canada, (H) the fees and disbursements of counsel for the
Underwriters in connection with state Blue Sky
13
and NASD filings (to a maximum of $12,500), (I) the fees and expenses of the
Company's counsel, accountants and other advisors, (J) the transfer agent for
the Shares, (K) all necessary issue and transfer and other stamp taxes in
connection with the issuance and sale of the Shares to the Underwriters, and
(L) any and all travel, lodging and informational meeting expenses for
Company personnel associated with the IPO and the selling process.
(j) The Company further agrees that, in addition to the costs and
expenses payable pursuant to subsection (i) of this Section 4, it will pay to
the Underwriters on the Closing Date by certified or bank cashiers check or,
at the election of the Underwriters, by deduction from the proceeds of the
offering contemplated herein a non-accountable expense allowance equal to one
and one-half percent (1.5%) of the aggregate price to the public of the Firm
Shares, none of which has been paid to date. In the event the Underwriters
elect to exercise the over-allotment option described in Section 1(b) hereof,
the Company agrees to pay to the Underwriters on the Option Closing Date (by
certified or bank cashiers check or, at the Representative's election, by
deduction from the proceeds of the offering) a non-accountable expense
allowance equal to one and one-half percent (1.5%) of the aggregate price to
the public of the Option Shares.
(k) If Cruttenden Xxxx is ready, willing and able to effectuate the
offering of the Common Stock as described in the Prospectus, but the Company
elects not to reasonably proceed, the Company will reimburse Cruttenden Xxxx for
up to $100,000 of its out-of pocket expenses, including up to $75,000 of the
fees and expenses of its counsel.
(l) The Company will not at any time, directly or indirectly, take any
action designed, or which might reasonably be expected, to cause or result in,
or which will constitute, stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of any of the Shares.
(m) The Company will apply the net proceeds from the offering and sale
of the Shares to be sold by the Company in the manner set forth in the
Prospectus under "Use of Proceeds."
(n) During the period of 180 days commencing at the Closing Date, the
Company will not, without the Representatives' prior written consent, grant
options or warrants to purchase shares of Common Stock at a price less than the
fair market value price or issue any securities convertible into shares of
Common Stock at a conversion price less than the fair market value price or
grant any stock purchase rights at a price less than such price designated in
the Company's stock purchase plan as in effect as of the date of this Agreement,
other than as may occur under the terms of the Company's employee and director
stock option and stock purchase plans as described in the Prospectus.
(o) The Company will not, and will cause each of its existing record
and beneficial holders of Common Stock to enter into agreements with the
Underwriters to the effect that they will not for a period of 180 days after the
Effective Date, without the prior written consent of Cruttenden Xxxx
Incorporated, sell, contract to sell or otherwise dispose of any shares of
Common Stock or rights to acquire such shares (other than sales by the Company
pursuant to employee and director stock option and stock purchase plans or other
employee incentive
14
compensation arrangements or in connection with the acquisition by the
Company or its subsidiaries of technologies, product lines or businesses);
provided that the recipients of shares in connection with a bona fide
acquisition describe above agree in writing that they will not sell, contract
to sell or otherwise dispose of any such shares of Common Stock for a period
of 180 days after the Effective Date.
(p) The Company will use all reasonable efforts to comply with, or
cause to be complied with, the conditions precedent to the several obligations
of the Underwriters in Section 5 hereof.
(q) The Company shall register the Common Stock under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and shall use its best
efforts to maintain such registration for so long as such registration shall be
required.
5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The obligations of
the several Underwriters to purchase and pay for the Shares as provided herein
on the Closing Date and, with respect to the Option Shares, the Option Closing
Date, shall be subject to the accuracy of the representations and warranties on
the part of the Company set forth in Section 3 hereof as of the date hereof and
as of the Closing Date as though then made and, with respect to the Option
Shares, as of the Option Closing Date as though then made, to the timely
performance by the Company of its covenants and other obligations hereunder, and
to each of the following additional conditions:
(a) Notification that the Registration Statement has become effective
shall be received by the Representatives not later than 10:00 a.m., Charlotte,
North Carolina time, on the first full business day after the Effective Date or
at such later date and time as shall be consented to in writing by the
Representatives and all filings required by Rule 424, Rule 430A and Rule 434 of
the Rules and Regulations shall have been made.
(b) (i) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall be
pending or threatened by the Commission, (ii) no order suspending the
effectiveness of the Registration Statement or the qualification or registration
of the Shares under the securities or Blue Sky laws of any jurisdiction shall be
in effect and no proceeding for such purpose shall be pending before or
threatened or contemplated by the Commission or the authorities of any such
jurisdiction, (iii) any request for additional information on the part of the
staff of the Commission or any such authorities shall have been complied with to
the satisfaction of the staff of the Commission or such authorities and (iv)
after the date hereof no amendment or supplement to the Registration Statement
or the Prospectus shall have been filed unless a copy thereof was first
submitted to the Representatives and made available to the Underwriters and the
Underwriters did not object thereto in good faith, and the Representatives shall
have received certificates, dated the Closing Date and, with respect to the
Option Shares, the Option Closing Date and signed by the Chief Executive Officer
or the Chairman of the Board of Directors of the Company and the Chief Financial
Officer of the Company (who may, as to proceedings threatened, rely upon the
best of their information and belief), to the effect of clauses (i), (ii) and
(iii) hereof.
15
The NASD shall have raised no objection to the fairness and
reasonableness of the underwriting terms and arrangements.
(c) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, (i) there shall not have been a
Material Adverse Change, and there shall have been no material transaction,
contract or agreement entered into by the Company or any of its subsidiaries
other than in the ordinary course of business, in each case other than as set
forth in or contemplated by the Registration Statement and the Prospectus, and
(ii) the Company shall not have sustained any material loss or interference with
its business or properties from fire, explosion, flood or other casualty,
whether or not covered by insurance, or from any labor dispute or any court or
legislative or other governmental action, order or decree, which is not set
forth in the Registration Statement and the Prospectus, if in the
Representatives' judgment any such development is so material as to make it
impracticable or inadvisable to consummate the sale and delivery of the Shares
by the Underwriters at the public offering price.
(d) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there shall have been no litigation
or other proceeding instituted or threatened against the Company, its
subsidiaries or any of the Company's officers or directors in their capacities
as such, before or by any Federal, state or local court, commission, regulatory
body, administrative agency or other governmental body, domestic or foreign, in
which litigation or proceeding an unfavorable ruling, decision or finding could
result in a Material Adverse Change.
(e) Each of the representations and warranties of the Company
contained herein shall be true and correct in all material respects at the
Closing Date and, with respect to the Option Shares, at the Option Closing Date,
as if made at the Closing Date and, with respect to the Option Shares, at the
Option Closing Date, and all covenants and agreements herein contained to be
performed on the part of the Company and all conditions herein contained to be
fulfilled or complied with by the Company at or prior to the Closing Date and,
with respect to the Option Shares, at or prior to the Option Closing Date, shall
have been duly performed, fulfilled or complied with in all material respects.
(f) The Representatives shall have received an opinion, dated the
Closing Date and, with respect to the Option Shares, the Option Closing Date,
and satisfactory in form and substance to the Representatives' counsel, from
Xxxxxxxxxxx Xxxxx & Xxxxxxxx, LLP, counsel to the Company, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation under the laws of the State of Delaware.
(ii) The Company has corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under this Agreement.
(iii) The authorized, issued and outstanding capital stock of the
Company (including the Common Stock) conform to the descriptions thereof set
forth in the Prospectus.
16
All of the outstanding shares of Common Stock have been duly authorized and
validly issued, are fully paid and nonassessable and, to the best of such
counsel's knowledge, have been issued in compliance with the registration and
qualification requirements of federal and state securities laws. The form of
certificate used to evidence the Common Stock is in due and proper form and
complies with all applicable requirements of the charter and by-laws of the
Company and the General Corporation Law of the State of Delaware.
(iv) This Agreement has been duly authorized, executed and
delivered by, and is a valid and binding agreement of, the Company, enforceable
in accordance with its terms, except as rights to indemnification thereunder may
be limited by applicable law and except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally or by general
equitable principles.
(v) The Shares to be purchased by the Underwriters from the
Company have been duly authorized for issuance and sale pursuant to this
Agreement and, when issued and delivered by the Company pursuant to this
Agreement against payment and receipt by the Company of the consideration set
forth therein, will be validly issued, fully paid and nonassessable.
(vi) The Registration Statement and the Rule 462(b) Registration
Statement, if any, has been declared effective by the Commission under the
Securities Act. To such counsel's knowledge, no stop order suspending the
effectiveness of either of the Registration Statement or the Rule 462(b)
Registration Statement, if any, has been issued under the Securities Act and no
proceedings for such purpose have been instituted or are pending or are
contemplated or threatened by the Commission. Any required filing of the
Prospectus and any supplement thereto pursuant to Rule 424(b) under the
Securities Act has been made in the manner and within the time period required
by such Rule 424(b).
(vii) The Registration Statement, including any 424(b)
Registration Statement, the Prospectus and each amendment or supplement to the
Registration Statement and the Prospectus, as of their respective effective or
issue dates (other than the financial statements and supporting schedules and
other financial data included therein or in exhibits to or excluded from the
Registration Statement, as to which no opinion need be rendered) comply as to
form in all material respects with the applicable requirements of the Securities
Act.
(viii) The Shares have been approved for listing on the Nasdaq
National Market.
(ix) The statements (i) in the Prospectus under the captions
"Risk Factors--Shares Eligible for Future Sale," "Risk Factors--Possible
Issuance of Preferred Stock; Anti-Takeover Provisions," "Management--Limitation
of Liability and Indemnification of Officers and Directors," "Description of
Capital Stock," "Shares Eligible for Future Sale," and (ii) in Item 14 and Item
15 of the Registration Statement, insofar as such statements constitute matters
of law, summaries of legal matters, the Company's charter or by-law provisions,
documents or legal proceedings, or legal conclusions, has been reviewed by such
counsel and fairly present and summarize, in all material respects, the matters
referred to therein.
17
(x) The description of the Company's stock option, stock bonus
and other stock plans or arrangements set forth in the Prospectus is accurate.
(xi) To the knowledge of such counsel without any independent
investigation, there are no legal or governmental actions, suits or proceedings
pending or threatened which are required to be disclosed in the Registration
Statement, other than those disclosed therein.
(xii) To the knowledge of such counsel, there are no indentures,
mortgages, loans or credit agreements, notes, contracts, franchises, leases or
other instruments to which the Company or any of its subsidiaries is a party or
by which it or any of them may be bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject (each, an "Existing
Instrument"), required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto other than those described or
referred to therein or filed or incorporated by reference as exhibits thereto;
and the descriptions thereof and references thereto are correct in all material
respects.
(xiii) No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental authority or
agency, is required for the Company's execution, delivery and performance of
this Agreement and consummation of the transactions contemplated thereby and by
the Prospectus, except as required under the Securities Act, applicable state
securities or Blue Sky laws and from the NASD.
(xiv) The execution and delivery of this Agreement by the
Company and the performance by the Company of its obligations thereunder
(other than performance by the Company of its obligations under the
indemnification section of this Agreement, as to which no opinion need be
rendered) (i) have been duly authorized by all necessary corporate action on
the part of the Company; (ii) will not result in any violation of the
provisions of the charter or by-laws of the Company or any subsidiary; (iii)
will not constitute a breach of, or default under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or assets
of the Company pursuant to any material Existing Instrument; or (iv) to the
knowledge of such counsel, will not result in any violation of any law,
administrative regulation or administrative or court decree applicable to the
Company or any subsidiary.
(xv) The Company is not, and after receipt of payment for the
Shares will not be, an "investment company" within the meaning of the Investment
Company Act.
(xvi) To the knowledge of such counsel, there are no persons with
registration or other similar rights to have any equity or debt securities
registered for sale under the Registration Statement or included in the offering
contemplated by this Agreement, except for such rights as have been duly waived.
(xvii) To the knowledge of such counsel, based upon a certificate
of an appropriate officer of the Company as to matters of fact, neither the
Company nor any subsidiary is in violation of its charter or by-laws or any law,
administrative regulation or administrative or court decree applicable to the
Company or is in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any material Existing Instrument,
18
except in each such case for such violations or defaults as would not,
individually or in the aggregate, result in a Material Adverse Change.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company,
representatives of the independent public or certified public accountants for
the Company, representatives of the Underwriters and with counsel for the
Underwriters at which the contents of the Registration Statement and the
Prospectus, and any supplements or amendments thereto, and related matters were
discussed and, based on such counsel's participation in the above mentioned
conferences, review of the documents described above, their understanding of
applicable law and the experience they have gained in their practice under the
Act, such counsel shall advise the Underwriters that although such counsel
cannot guarantee the accuracy, completeness or fairness of any of the statements
contained in the Registration Statement or the Prospectus, in connection with
such counsel's representation, investigation, and due inquiry of the Company in
the preparation of the Registration Statement and Prospectus, nothing has come
to such counsel's attention which causes them to believe that the Registration
Statement or Prospectus (except as to the financial statements, schedules and
other financial and statistical information contained therein, as to which such
counsel expresses no comment), as of the effective date of the Registration
Statement, contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the General
Corporation Law of the State of Delaware or the federal law of the United
States, to the extent they deem proper and specified in such opinion, upon the
opinion (which shall be dated the Closing Date or the Option Closing Date, as
the case may be, shall be satisfactory in form and substance to the
Underwriters, shall expressly state that the Underwriters may rely on such
opinion as if it were addressed to them and shall be furnished to the
Representatives) of other counsel of good standing whom they believe to be
reliable and who are satisfactory to counsel for the Underwriters; PROVIDED,
HOWEVER, that such counsel shall further state that they believe that they and
the Underwriters are justified in relying upon such opinion of other counsel,
and (B) as to matters of fact, to the extent they deem proper, on certificates
of responsible officers of the Company and public officials.
(g) The Representatives shall have received an opinion, dated the
Closing Date and, with respect to the Option Shares, the Option Closing Date,
and satisfactory in form and substance to the Representatives' counsel, from
Xxxxxxx X. Xxxxxxx and Associates, counsel to the Company, to the effect that:
(i) Each significant subsidiary (as defined in Rule 405 under
the Securities Act) has been duly incorporated and is validly existing as a
corporation under the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus.
19
(ii) All of the issued and outstanding capital stock of each
such significant subsidiary has been duly authorized and validly issued, is
fully paid and nonassessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance or, to the best knowledge of such counsel, any pending or threatened
claim.
(iii) The description of the Company's stock option, stock bonus
and other stock plans or arrangements set forth in the Prospectus is accurate.
(iv) No stockholder of the Company or any other person has any
preemptive right, right of first refusal or other similar right to subscribe for
or purchase securities of the Company arising (i) by operation of the charter or
by-laws of the Company or the General Corporation Law of the State of Delaware
or (ii) to the best knowledge of such counsel, otherwise.
(v) To the knowledge of such counsel, there are no legal or
governmental actions, suits or proceedings pending or threatened which are
required to be disclosed in the Registration Statement, other than those
disclosed therein.
(vi) To the knowledge of such counsel, there are no persons with
registration or other similar rights to have any equity or debt securities
registered for sale under the Registration Statement or included in the offering
contemplated by this Agreement, except for such rights as have been duly waived.
(vii) To the knowledge of such counsel, based upon a certificate
of an appropriate officer of the Company as to matters of fact, neither the
Company nor any subsidiary is in violation of its charter or by-laws or any law,
administrative regulation or administrative or court decree applicable to the
Company or is in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any material Existing Instrument,
except in each such case for such violations or defaults as would not,
individually or in the aggregate, result in a Material Adverse Change.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the General
Corporation Law of the State of Delaware or the federal law of the United
States, to the extent they deem proper and specified in such opinion, upon the
opinion (which shall be dated the Closing Date or the Option Closing Date, as
the case may be, shall be satisfactory in form and substance to the
Underwriters, shall expressly state that the Underwriters may rely on such
opinion as if it were addressed to them and shall be furnished to the
Representatives) of other counsel of good standing whom they believe to be
reliable and who are satisfactory to counsel for the Underwriters; PROVIDED,
HOWEVER, that such counsel shall further state that they believe that they and
the Underwriters are justified in relying upon such opinion of other counsel,
and (B) as to matters of fact, to the extent they deem proper, on certificates
of responsible officers of the Company and public officials.
(h) The Representatives shall have received an opinion, dated the
Closing Date and, with respect to the Option Shares, the Option Closing Date,
from Xxxxxx, Xxxxxxx & Xxxxxx,
20
L.L.P., as the Underwriters' counsel, with respect to the Registration
Statement, the Prospectus and this Agreement, which opinion shall be
satisfactory in all respects to the Representatives, and the Company shall
have furnished to such counsel such documents as they request for the purpose
of enabling them to pass upon such matters.
(i) On the date hereof, the Representatives shall have received from
McGladrey & Xxxxxx, LLP a letter dated the date hereof addressed to the
Underwriters, in form and substance satisfactory to the Representatives,
containing statements and information of the type ordinarily included in
accountant's "comfort letters" to underwriters, delivered according to Statement
of Auditing Standards No. 72 (or any successor bulletin), with respect to the
audited and unaudited financial statements and certain financial information
contained in the Registration Statement and the Prospectus (and the
Representatives shall have received additional conformed copies of such
accountants' letter for each of the several Underwriters).
(j) The Representatives shall have received, concurrently with the
execution and delivery of this Agreement and at the Closing Date with respect to
the Firm Shares and, with respect to the Option Shares, the Option Closing Date,
a certificate, dated the date of its delivery, signed by each of the Chief
Executive Officer and the Chief Financial Officer of the Company, and in form
and substance satisfactory to the Representatives, to the effect that:
(i) The Registration Statement has become effective, and no
order suspending the effectiveness of the Registration Statement has been issued
and to the best knowledge of the respective signers no proceeding for that
purpose has been initiated or is threatened by the Commission;
(ii) Each signer of such certificate has carefully examined the
Registration Statement and the Prospectus and (A) as of the date of such
certificate, such documents are true and correct in all material respects and do
not omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not untrue or misleading and (B) in the
case of the certificate delivered at the Closing Date and, with respect to the
Option Shares, the Option Closing Date, since the Effective Date no event has
occurred as a result of which it is necessary to amend or supplement the
Prospectus in order to make the statements therein not untrue or misleading in
any material respect;
(iii) Each of the representations and warranties of the Company
contained in this Agreement were, when originally made, and are, at the time
such certificate is delivered, true and correct in all material respects; and
(iv) Each of the covenants required herein to be performed by
the Company on or prior to the delivery of such certificate has been duly,
timely and fully performed and each condition herein required to be complied
with by the Company on or prior to the date of such certificate has been duly,
timely and fully complied with in all material respects.
(k) The Shares shall be qualified for sale (or exempt from such
qualification) in such states as the Representatives may reasonably request, and
any such necessary qualification shall
21
be in effect and not subject to any stop order or other proceeding on the
Closing Date and the Option Closing Date.
(l) Prior to the Closing Date, the Shares shall have been duly
authorized for trading on the Nasdaq National Market.
(m) The Company shall have furnished to the Representatives such
certificates, in addition to those specifically mentioned herein, as the
Representatives may have reasonably requested as to the accuracy and
completeness at the Closing Date and, with respect to the Option Shares, the
Option Closing Date of any statement in the Registration Statement or the
Prospectus as to the accuracy at the Closing Date and, with respect to the
Option Shares, the Option Closing Date of the representations and warranties of
the Company herein, as to the performance by the Company of its obligations
hereunder, or as to the fulfillment of the conditions concurrent and precedent
to the Underwriters' obligations hereunder.
(n) On the date hereof, the Company shall have furnished to the
Representatives an agreement in the form of EXHIBIT B hereto from each existing
stockholder and beneficial owner of Common Stock (as defined and determined
according to Rule 13d-3 under the Exchange Act, except that a one hundred eighty
day period shall be used rather than the sixty day period set forth therein),
and such agreements shall be in full force and effect on each of the Closing
Date and the Option Closing Date.
(o) On or before each of the Closing Date and the Option Closing Date,
the Representatives and counsel for the Underwriters shall have received such
information, documents and opinions as they may reasonably require for the
purposes of enabling them to pass upon the issuance and sale of the Shares as
contemplated herein, or in order to evidence the accuracy of any of the
representations and warranties, or the satisfaction of any of the conditions or
agreements, herein contained.
If any condition specified in this Section 5 is not satisfied when and as
required to be satisfied, this Agreement may be terminated by the
Representatives by notice to the Company at any time on or prior to the Closing
Date and, with respect to the Option Shares, at any time prior to the Option
Closing Date. Any such termination shall be without liability on the part of
any party to any other party, except that the provisions of Sections 4(i), 4(j),
6 and 7 shall at all times be effective and shall survive such termination.
6. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter, its officers and employees, and each person, if any, who controls
any Underwriter within the meaning of the Securities Act and the Exchange Act
against any loss, claim, damage, liability or expense to which such Underwriter
or such controlling person may become subject, under the Securities Act, the
Exchange Act or other federal or state statutory law or regulation, or 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 loss,
claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based (i) upon
22
any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement, or any amendment thereto, including any
information deemed to be a part thereof pursuant to Rule 430A or Rule 434
under the Securities Act, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the
statements therein not misleading; or (ii) upon any untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus or the Prospectus (or any amendment or supplement thereto) if used
within the Prospectus Delivery Period and as amended or supplemented, or the
omission or alleged omission therefrom of a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; or (iii) in whole or in part upon any
inaccuracy in the representations and warranties of the Company contained
herein; or (iv) in whole or in part upon any failure of the Company to
perform its obligations hereunder or under law (including the fees and
disbursements of counsel) as such expenses are reasonably incurred by such
Underwriter or such controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; PROVIDED, HOWEVER, that the foregoing indemnity
agreement shall not apply to any loss, claim, damage, liability or expense to
the extent, but only to the extent, arising out of or based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the
Company by the Representatives expressly for use in the Registration
Statement, any Preliminary Prospectus or the Prospectus (or any amendment or
supplement thereto); and provided, further, that with respect to any
Preliminary Prospectus, the foregoing indemnity agreement shall not inure to
the benefit of any Underwriter from whom the person asserting any loss,
claim, damage, liability or expense purchased Shares, or any person
controlling such Underwriter, if copies of the Prospectus were timely
delivered to the Underwriter pursuant to this Agreement and a copy of the
Prospectus (as then amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) was not sent or given by or
on behalf of such Underwriter to such person, if required by law so to have
been delivered, at or prior to the written confirmation of the sale of the
Shares to such person, and if the Prospectus (as so amended or supplemented)
would have cured the defect giving rise to such loss, claim, damage,
liability or expense. The indemnity agreement set forth in this Section 6(a)
shall be in addition to any liabilities that the Company may otherwise have.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement and each person, if any, who controls the
Company within the meaning of the Securities Act or the Exchange Act, against
any loss, claim, damage, liability or expense to which the Company, or any such
director, officer or controlling person may become subject, under the Securities
Act, the Exchange Act, or other federal or state statutory law or regulation, or
at common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of such Underwriter), insofar as
such loss, claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based upon any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or arises out of or is based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not
23
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), in reliance upon and in
conformity with written information furnished to the Company by the
Representatives expressly for use therein; and to reimburse the Company, or
any such director, officer or controlling person for any legal and other
expense as such expenses are reasonably incurred by the Company, or any such
director, officer or controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action. The Company hereby acknowledges that the only
information that the Underwritershave furnished to the Company expressly for
use in the Registration Statement, any Preliminary Prospectus or the
Prospectus (or any amendment or supplement thereto) are the statements set
forth (A) as the last paragraph on the outside front cover page of the
Prospectus, (B) as the last paragraph on the inside front cover page of the
Prospectus concerning stabilization by the Underwriters and (C) in the table
in the first paragraph and as the second, seventh and eighth paragraphs under
the caption "Underwriting" in the Prospectus; and the Underwriters confirm
that such statements are correct. The indemnity agreement set forth in this
Section 6(b) shall be in addition to any liabilities that each Underwriter
may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 6 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 6, notify the indemnifying party in writing of the
commencement thereof, but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party for
contribution or otherwise than under the indemnity agreement contained in this
Section 6 or to the extent it is not prejudiced as a proximate result of such
failure. In case any such action is brought against any indemnified party and
such indemnified party seeks or intends to seek indemnity from an indemnifying
party, the indemnifying party will be entitled to participate in, and, to the
extent that it shall elect, jointly with all other indemnifying parties
similarly notified, by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, 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 a conflict may arise
between the positions of the indemnifying party and the indemnified party in
conducting the defense of any such action or that there may be legal defenses
available to it 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 such indemnifying party's election so to
assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party
under this Section 6 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that the
indemnifying party
24
shall not be liable for the expenses of more than one separate counsel
(together with local counsel), approved by the indemnifying party (Cruttenden
Xxxx Incorporated in the case of Section 6(b) and Section 6(e)), representing
the indemnified parties who are parties to such action) or (ii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action, in each of which cases the fees
and expenses of counsel shall be at the expense of the indemnifying party.
(d) The indemnifying party under this Section 6 shall not be liable
for any settlement of any proceeding effected without its written consent,
provided that such consent shall not be unreasonably withheld; but, if settled
with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party against any loss,
claim, damage, liability or expense by reason of such settlement or judgment.
No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement, compromise or consent to the entry of
judgment in any pending or threatened action, suit or proceeding in respect of
which any indemnified party is or could have been a party and indemnity was or
could have been sought hereunder by such indemnified party, unless such
settlement, compromise or consent includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such action, suit or proceeding.
(e) If the indemnification provided for in Section 6 is for any reason
held to be unavailable to or otherwise insufficient to hold harmless an
indemnified party in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount paid or payable by such indemnified party, as incurred, as
a result of any losses, claims, damages, liabilities or expenses referred to
therein (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and the Underwriters, on the
other hand, from the offering of the Shares pursuant to this Agreement or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company, on the one hand, and the Underwriters, on the other hand, in
connection with the statements or omissions or inaccuracies in the
representations and warranties herein which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Company, on the one hand,
and the Underwriters, on the other hand, in connection with the offering of the
Shares pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Shares pursuant
to this Agreement (before deducting expenses) received by the Company, and the
total underwriting discount received by the Underwriters, in each case as set
forth on the front cover page of the Prospectus bear to the aggregate initial
public offering price of the Shares as set forth on such cover. The relative
fault of the Company, on the one hand, and the Underwriters, on the other hand,
shall be determined by reference to, among other things, whether any such untrue
or alleged untrue statement of a material fact or omission or alleged omission
to state a material fact or any such inaccurate or alleged inaccurate
representation or warranty relates to information supplied by the Company, on
the one hand, or the Underwriters, on the other hand, and the
25
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 6(c), any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim. The provisions set forth in Section 6(c) with
respect to notice of commencement of any action shall apply if a claim for
contribution is to be made under this Section 6(e); PROVIDED, HOWEVER, that no
additional notice shall be required with respect to any action for which notice
has been given under Section 6(c) for purposes of indemnification.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 6 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 6.
Notwithstanding the provisions of this Section 6, no Underwriter shall be
required to contribute any amount in excess of the underwriting commissions
received by such Underwriter in connection with the Shares underwritten by it
and distributed to the public. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 6 are several, and not joint, in proportion to their respective
underwriting commitments as set forth opposite their names in SCHEDULE I.
(h) The obligations of the Company under this Section 6 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Securities Act; and the obligations of the
Underwriters under this Section 6 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company and to each
person, if any, who controls the Company within the meaning of the Securities
Act.
7. DEFAULT OF UNDERWRITERS.
If any Underwriter defaults in its obligation to purchase Shares
hereunder and if the total number of Shares that such defaulting Underwriter
agreed but failed to purchase is ten percent or less of the total number of
Shares to be sold hereunder, the non-defaulting Underwriters shall be obligated
severally and not jointly to purchase (in the respective proportions which the
number of Shares set forth opposite the name of each non-defaulting Underwriter
in Schedule I hereto bears to the total number of Shares set forth opposite the
names of all the non-defaulting Underwriters or in such other proportions as the
Representatives may specify), the Shares that such defaulting Underwriter or
Underwriters agreed but failed to purchase. If any Underwriter so defaults and
the total number of Shares with respect to which such default or defaults occur
is more than ten percent of the total number of Shares to be sold hereunder, and
arrangements satisfactory to the
26
other Underwriters and the Company for the purchase of such Shares by other
persons (who may include the non-defaulting Underwriters) are not made within
36 hours after such default, this Agreement, insofar as it relates to the
sale of the Shares, will terminate without liability on the part of the
non-defaulting Underwriters or the Company except for (i) the provisions of
Section 6 hereof, and (ii) the expenses to be paid or reimbursed by the
Company pursuant to Section 4(i) hereof. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 7. In any such case, the Representatives shall have the right to
postpone the Closing Date or the Option Closing Date, as the case may be, but
in no event longer then seven (7) days, in order that the required changes,
if any, in the Registration Statement and Prospectus or in any other
documents or agreements may be made. Nothing herein shall relieve a
defaulting Underwriter from liability for its default hereunder.
8. SURVIVAL CLAUSE.
The respective representations, warranties, agreements, covenants,
indemnities and other statements of the Company and its officers and the
Underwriters set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement shall remain in full force and effect,
regardless of (i) any investigation made by or on behalf of the Company, any of
its officers or directors, or any Underwriter or any controlling person of an
Underwriter, (ii) any termination of this Agreement and (iii) delivery of and
payment for the Shares.
9. TERMINATION.
(a) The Underwriters' obligations under this Agreement may be
terminated at any time on or prior to the Closing Date (or, with respect to the
Option Shares, on or prior to the Option Closing Date), by notice to the Company
from the Representatives, without liability on the part of the Underwriters to
the Company, if, prior to delivery and payment for the Shares (or the Option
Shares, as the case may be), in the Representatives' sole judgment:
(i) there shall have occurred any Materially Adverse Change; or
the Company shall have sustained a loss by strike, fire, flood, earthquake,
accident or other calamity of such character as in the judgment of the
Representatives may interfere materially with the conduct of the business and
operations of the Company regardless of whether or not such loss shall have been
insured;
(ii) the Company shall have failed or been unable to comply with
any of the terms or provisions of this Agreement to be performed by it within
the respective times herein provided for, unless compliance therewith or
performance thereof shall have been expressly waived by the Representative in
writing;
(iii) trading in any of the equity securities of the Company
shall have been suspended by the Commission, by an exchange that lists the
Shares or by the Nasdaq National Market;
(iv) trading in securities generally on the New York Stock
Exchange, the Nasdaq National Market or in the over-the-counter market shall
have been suspended or limited
27
or minimum or maximum prices shall have been generally established on such
exchange or market, or additional material governmental restrictions, not in
force on the date of this Agreement, shall have been imposed upon trading in
securities generally by such exchanges or markets or by order of the
Commission or any court or other governmental authority;
(v) a general banking moratorium shall have been declared by
either Federal, New York, Delaware or North Carolina state authorities; or
(vi) any outbreak or material escalation of hostilities or
declaration by the United States of a national emergency or war or other
calamity or crisis shall have occurred the effect of any of which is such as to
make it, in the Representatives' sole, reasonable judgment, impracticable or
inadvisable to market the Shares on the terms and in the manner contemplated by
the Prospectus.
(b) Any termination of this Agreement pursuant to this Section 9 shall
be without liability of any character (including, but not limited to, loss of
anticipated profits or consequential damages) on the part of any party thereto,
except that the Company shall remain obligated to pay the costs and expenses
provided in Section 4(i) hereof and the Company and the Underwriters shall
remain obligated under Section 6 hereof.
10. MISCELLANEOUS.
(a) Notice given pursuant to any of the provisions of this Agreement
shall be in writing and, unless otherwise specified, shall be mailed, delivered
or telecopied
(i) if to the Company:
Xxxx Group, Inc.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Attention: President
with a copy to:
Xxxxxxxxxxx Xxxxx & Xxxxxxxx LLP
00 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
(ii) if to the Underwriters:
Cruttenden Xxxx Incorporated
00000 Xxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, XX 00000
Attention: Corporate Finance Department
28
PENNSYLVANIA MERCHANT GROUP
Xxxx Xxxxx Xxxxxxxxx Xxxxxx
Xxxx Xxxxxxxxxxxx, XX 00000
Attn: Corporate Finance Department
X. X. XXXXXXXXXX & CO., INC.
Xxx Xxxxxx Xxxxx
00xx Xxxxx
Xxxxxx, XX 00000
with a copy to:
Xxxxxx, Xxxxxxx & Xxxxxx, L.L.P.
1600 Atlanta Financial Center
0000 Xxxxxxxxx Xxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxx X. Xxxxxx III, Esq.
(b) This Agreement has been and is made solely for the benefit of the
Underwriters and the Company and of the controlling persons, directors and
officers referred to in Section 6 hereof, and their respective successors and
assigns, and no other person shall acquire or have any right under or by virtue
of this Agreement. The term "successors and assigns" as used in this Agreement
shall not include a purchaser, as such purchaser, of Shares from the
Underwriters.
(c) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware.
(d) This Agreement may be signed in two or more counterparts with the
same effect as if the signatures thereto and hereto were upon the same
instrument.
(e) In case any provision in this Agreement shall be invalid, illegal
or unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
(f) The Company and the Underwriters each hereby irrevocably waive, to
the extent permissible under applicable law, any right they may have to a trial
by jury in respect of any claim based upon or arising out of this Agreement or
the transactions contemplated hereby.
29
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the Underwriters.
Very truly yours,
XXXX GROUP, INC.
By:________________________________
Xxxxxxx X. Dirk, Chairman and
Chief Executive Officer
Confirmed as of the date first above mentioned:
CRUTTENDEN XXXX INCORPORATED
PENNSYLVANIA MERCHANT GROUP
X. X. XXXXXXXXXX & CO., INC.
(for themselves and as Representatives of the Underwriters named in Schedule I
hereto)
By: Cruttenden Xxxx Incorporated
By:_______________________________
30
SCHEDULE I
No. of Shares
Underwriters to be Purchased
------------ ---------------
Cruttenden Xxxx Incorporated
Pennsylvania Merchant Group
X. X. Xxxxxxxxxx & Co., Inc.
TOTAL 2,500,000
31
EXHIBIT A
FORM OF WARRANT
32
EXHIBIT B
FORM OF LOCK-UP AGREEMENT
33
