EXHIBIT A
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ INC.
1,129,099 Common Shares*
UNDERWRITING AGREEMENT
Philadelphia, Pennsylvania
______________, 1997
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ INC.
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇▇, INC.
As Representatives of the Several
Underwriters Named in Schedule I
Hereto
c/o Janney ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc., a Virginia corporation (the "Company"), proposes
to sell to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc. and ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇▇, Inc. (the
"Representatives") and the several other underwriters named in Schedule I hereto
(collectively, with the Representatives, the "Underwriters") 1,000,000 shares of
the Company's $0.02 par value common stock ("Common Shares"); and the selling
shareholders of the Company named in Table 1 of Schedule II hereto
(collectively, the "Selling Shareholders") propose to sell severally to the
Underwriters an aggregate of 129,099 Common Shares. Such Common Shares to be
sold to the Underwriters by the Company and the Selling Shareholders are
referred to collectively herein as the "Firm Shares." The respective amounts of
the Firm Shares to be purchased by the several Underwriters are set forth
opposite their names in Schedule I hereto. The respective amounts of the Firm
Shares to be sold by Selling Shareholders are set forth opposite their names in
Table 1 of Schedule II hereto. The Firm Shares shall be offered to the public at
a public offering price of $______ per Firm Share (the "Offering Price").
In addition, in order to cover over-allotments in the sale of the Firm
Shares, the Underwriters may purchase for the Underwriters' own accounts,
ratably in proportion to the amounts set forth opposite their respective names
in Schedule I hereto, up to 19,364 additional Common Shares from the Selling
Shareholders and up to 150,000 additional Common Shares from the Company. Such
169,364 additional Common Shares are referred to collectively herein as the
"Optional Shares." If any Optional Shares are purchased: (i) all the Optional
Shares of the Selling Shareholders shall be
--------
* Plus an over-allotment option to purchase up to 169,364 additional
shares.
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purchased before any Optional Shares of the Company may be purchased; (ii) all
Optional Shares of the Selling Shareholders listed in Table 2 of Schedule II
hereto shall be purchased on a pro rata basis in proportion to the amount set
forth opposite to their names; and (iii) the Optional Shares shall be purchased
for offering to the public at the Offering Price and in accordance with the
terms and conditions set forth herein. The Firm Shares and the Optional Shares
are referred to collectively herein as the "Shares."
The Company and the Selling Shareholders, intending to be legally
bound, hereby confirm their agreement with the Underwriters as follows:
1. Representations and Warranties.
(a) Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the several Underwriters that (all
references to the Company herein shall be deemed to include reference to the
Company and each of the Company's subsidiaries set forth on Schedule III hereto
(the "Subsidiaries") collectively or taken as a whole, unless the context
clearly indicates otherwise):
(i) the Company has prepared, in conformity with
the requirements of the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations (the "Regulations") of the Securities and Exchange
Commission (the "SEC") under the Act in effect at all applicable times, and has
filed with the SEC a registration statement on Form S-1 (File No. 333-30439) and
one or more amendments thereto for the purpose of registering the Shares (or a
portion of the Shares if a "Rule 462(b) Registration Statement," as defined
below, has been or is to be filed) under the Act. The Company similarly may have
prepared or may prepare an additional registration statement on Form S-1 with
respect to a portion of the Shares pursuant to Rule 462(b) of the Regulations,
and if so prepared or if to be so prepared, such additional registration
statement has been or will be filed pursuant to Rule 462(b) of the Regulations.
The term "Rule 462(b) Registration Statement" means such additional registration
statement, if any, filed pursuant to Rule 462(b) of the Regulations, including,
without limitation, all exhibits thereto, the contents of the earlier
registration statement incorporated therein by reference, and any price-related
information included therein, but omitted from the earlier registration
statement in reliance on Rule 430A of the Regulations. Copies of all such
registration statements (or the form thereof in the case of a Rule 462(b)
Registration Statement that has not yet been filed) and any amendments thereto,
and all forms of the related prospectus contained therein, have been delivered
to the Representatives. Each prospectus included in any such registration
statement before it became effective under the Act and any prospectus filed with
the SEC pursuant to Rule 424(a) of the Regulations is hereinafter called a
"Preliminary Prospectus." The various parts of the first registration statement
referenced in this Section 1(a)(i), including all exhibits thereto and the
information contained in the form of final prospectus filed with the SEC
pursuant to Rule 424(b) of the Regulations in accordance with Section 5(a)(ii)
of this Agreement and deemed by virtue of Rule 430A(b) of the Regulations to be
part of the registration statement at the time it was declared effective, each
as amended at the time the registration statement became effective, as well as
the information contained in the Rule 462(b) Registration Statement, if any,
deemed to be a part of the registration statement pursuant to General
Instruction V of Form S-1, are hereinafter collectively called the "Primary
Registration Statement." The term "Registration
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Statements" means both the Primary Registration Statement and the Rule 462(b)
Registration Statement collectively. The term "Term Sheet" means the term sheet,
if any, containing the information required Pursuant to Rule 434(b) or (c), as
applicable, of the Regulations, and filed Pursuant to Rule 424(b)(7) of the
Regulations. The term "Prospectus" means the Prospectus relating to the Shares
included in the Registration Statement at the time it became effective
(including, if the Company omitted information from the Primary Registration
Statement pursuant to Rule 430A(a) of the Regulations, the information deemed to
be a part of the Primary Registration Statement at the time it became effective
pursuant to Rule 430A(b) of the Regulations); provided, however, that, if with
the consent of the Representatives, the Company provides a Term Sheet prior to
the time any confirmation is sent or given for purposes of Section 2(10)(a) of
the Act, the term "Prospectus" shall mean the "prospectus subject to completion"
(as defined in Rule 434(g) of the Regulations) last provided to the Underwriters
by the Company and circulated by the Underwriters to all prospective purchasers
of the Shares, plus and including the information contained in the Term Sheet.
Notwithstanding the foregoing, if any revised Prospectus shall be provided to
the Underwriters by the Company for use in connection with the offering of the
Shares that differs from the Prospectus referred to in the immediately preceding
sentence (whether or not such revised Prospectus is required to be filed with
the SEC pursuant to Rule 424(b) of the Regulations), the term "Prospectus" shall
refer to such revised Prospectus from and after the time it is first provided to
the Underwriters for such use. If, with the consent of the Representatives, the
Company shall have provided to the Underwriters a Term Sheet prior to the time
any confirmation is sent or given for purposes of Section 2(10)(a) of the Act,
the Prospectus and the Term Sheet together will not be materially different from
the prospectus in the Registration Statements;
(ii) the Primary Registration Statement has
become effective under the Act and the SEC has not issued any stop order
suspending the effectiveness of the Registration Statements or preventing or
suspending the use of any Preliminary Prospectus, nor has the SEC instituted or
threatened to institute proceedings with respect to such an order. No stop order
suspending the sale of the Shares in any jurisdiction designated by the
Representatives as provided for in Section 5(a)(x) hereof has been issued, and
no proceedings for that purpose have been instituted or threatened. The Company
has complied in all material respects with all requests of the SEC, or requests
of which the Company has been advised of any state or foreign securities
commission in a state designated by the Representatives as provided for in
Section 5(a)(x) hereof, for additional information to be included in the
Registration Statements, any Preliminary Prospectus or the Prospectus. Each
Preliminary Prospectus conformed to all the requirements of the Act and the
Regulations as of its date in all material respects and did not as of its date
contain any untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
the foregoing shall not apply to statements in, or omissions from, any
Preliminary Prospectus in reliance upon and in conformity with information
regarding the Underwriters supplied to the Company in writing by or on behalf of
any Underwriter through the Representatives expressly for use therein. The
Primary Registration Statement, on the date on which it was declared effective
by the SEC (the "Effective Date") and when any post-effective amendment thereof
shall become effective, the Rule 462(b) Registration Statement when filed with
the SEC, and the Prospectus, at the time it is filed with the SEC and on the
Closing Date (as defined in Section 3 hereof) and any 0ption Closing Date (as
defined in Section 4(b) hereof), conformed and will conform in all material
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respects to all the requirements of the Act and the Regulations, and did not and
will not, on any of such dates, include any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, except that this representation and
warranty does not apply to statements in or omissions from the Primary
Registration Statement (including the information contained in the Rule 462(b)
Registration Statement after it is filed with the SEC) or the Prospectus made in
reliance upon and in conformity with information regarding the Underwriters
furnished to the Company in writing by or on behalf of any Underwriter through
the Representatives expressly for use therein;
(iii) the Company is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Virginia, with all necessary corporate power and authority, and all required
licenses, permits, clearances, certifications, registrations, approvals,
consents and franchises, to own or lease and operate its properties and to
conduct its business as described in the Prospectus, and to execute, deliver and
perform this Agreement. Each of the Subsidiaries has been duly organized and is
validly existing as a corporation or partnership, as applicable, in good
standing under the laws of the jurisdiction of its organization (which
jurisdiction is set forth in Schedule III hereto), with all necessary corporate
power and authority, and all required licenses, permits, clearances,
certifications, registrations, approvals, consents and franchises, to own or
lease and operate its properties and to conduct its business as described in the
Prospectus. The Company and each of the Subsidiaries is duly qualified to do
business as a foreign corporation or partnership, as applicable, and is in good
standing, in all jurisdictions in which such qualification is required, except
where the failure to so qualify would not have a material adverse effect on the
general affairs, properties, condition (financial or otherwise), results of
operations, stockholders' equity, business or prospects of the Company and the
Subsidiaries taken as a whole (a "Material Adverse Effect"). No proceeding has
been instituted in any jurisdiction revoking, limiting or curtailing, or seeking
to revoke, limit or curtail the Company's or any Subsidiary's corporate power
and authority or qualification or ability to own or lease and operate its
properties and to conduct its business as described in the Prospectus;
(iv) the outstanding shares of capital stock or
other evidence of ownership of the respective Subsidiaries have been duly
authorized and validly issued, are fully paid and non-assessable and, except for
the securities owned by third parties as described specifically below in this
Section 1(a)(iv), are owned by the Company free and clear of all liens,
encumbrances and security interests. Except for the common stock of or other
ownership interests in the Subsidiaries owned by the Company, as of the Closing
Date there will be no shares of capital stock of or other ownership interests in
any Subsidiary outstanding, and no options, warrants or other rights to
purchase, agreements or other obligations to issue, or other rights to convert
any obligations into, shares of capital stock or ownership interests in any
Subsidiary or securities convertible into or exchangeable for capital stock of,
or other ownership interests in, any Subsidiary are, or as of the Closing Date
will be, outstanding. The Company owns no stock or other interest whatsoever,
whether equity or debt, in any corporation, partnership or other entity other
than the Subsidiaries;
(v) this Agreement has been duly authorized,
executed and delivered by the Company and constitutes its legal, valid and
binding obligation, enforceable against the Company in accordance with its
terms, except as enforcement may be limited by bankruptcy,
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insolvency or other similar laws affecting the enforcement of creditors, rights
generally and subject to applicability of general principles of equity and
except, as to this Agreement, as rights to indemnity and contribution may be
limited by federal and state securities laws or principles of public policy;
(vi) the execution, delivery and performance of
this Agreement and the transactions contemplated herein do not and will not,
with or without the giving of notice or the lapse of time, or both, (A) conflict
with any term or provision of the Company's Articles of Incorporation or Bylaws;
(B) result in a breach of, constitute a default under, result in the termination
or modification of, result in the creation or imposition of any lien, security
interest, charge or encumbrance upon any of the assets of the Company or its
Subsidiaries under, or require any payment by the Company or its Subsidiaries or
impose any liability on the Company or its Subsidiaries pursuant to, any
contract, indenture, mortgage, deed of trust, commitment or other agreement or
instrument to which the Company or its Subsidiaries is a party or by which any
of their assets are bound or affected; (C) assuming compliance with Blue Sky
laws and regulations applicable to the offer and sale of the Shares, violate any
applicable law, rule, regulation, judgment, order or decree of any government or
governmental agency, instrumentality or court, domestic or foreign, having
jurisdiction over the Company or its Subsidiaries or any of their respective
properties or businesses; or (D) result in a breach, termination or lapse of the
Company or its Subsidiaries' corporate power and authority to own or lease and
operate their respective assets and properties and conduct their respective
businesses as described in the Prospectus;
(vii) at the date or dates indicated in the
Prospectus, the Company had the duly authorized and outstanding capitalization
set forth in the Prospectus under the caption "Capitalization" and will have, as
of the issuance of the Firm Shares on the Closing Date, the pro forma adjusted
capitalization set forth therein. The description of the Company's
capitalization in the Prospectus conforms in all material respects with the
instruments defining the same. On the Effective Date, the Closing Date and any
Option Closing Date (as defined in Section 4(b) hereto), there will be no
options or warrants for the purchase of, other outstanding rights to purchase,
agreements or obligations to issue or agreements or other rights to convert or
exchange any obligation or security into, capital stock of the Company or
securities convertible into or exchangeable for capital stock of the Company,
except as expressly described in the Prospectus. The information in the
Prospectus insofar as it relates to all outstanding options and other rights to
acquire securities of the Company as of the Effective Date and immediately prior
to the Closing Date and any Option Closing Date is true and correct in all
material respects;
(viii) the currently outstanding shares of the
Company's capital stock, including the Shares to be purchased by the
Underwriters from the Selling Shareholders, have been duly authorized and are
validly issued, fully paid and non-assessable, and none of such outstanding
shares of the Company's capital stock has been issued in violation of any
preemptive rights of any security holder of the Company. No preemptive rights or
other rights to subscribe for or purchase exist with respect to the sale of the
Shares by the Company. The holders of the outstanding shares of the Company's
capital stock are not subject to personal liability solely by reason of being
such holders. All previous offers and sales of the outstanding shares of the
Company's capital stock, whether described in the Registration Statement or
otherwise, were made in conformity with
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applicable federal and state securities laws. The authorized capital stock of
the Company, including, without limitation, the outstanding Common Shares, the
Shares being issued, and the outstanding options to purchase shares of Common
Shares conform in all material respects with the descriptions thereof in the
Prospectus, and such descriptions conform in all material respects with the
instruments defining the same.
(ix) when the Shares have been duly delivered
against payment therefor as contemplated by this Agreement, the Shares will be
validly issued, fully paid and non-assessable. The certificates representing the
Shares are in proper legal form under, and conform in all respects to the
requirements of, the Virginia Stock Corporation Act, as amended (the "VSCA").
Neither the filing of the Registration Statement nor the offering or sale of
Shares as contemplated by this Agreement gives any security holder of the
Company any rights for or relating to the registration of any Common Shares or
any other capital stock of the Company or any rights to convert or have redeemed
or otherwise receive anything of value with respect to any other security of the
Company;
(x) no consent, approval, authorization, order,
registration, license, permit of, or filing or registration with, any court,
government, governmental agency, instrumentality or other regulatory body or
official is required for the valid and legal execution, delivery and performance
by the Company of this Agreement and the consummation of the transactions
contemplated hereby and described in the Prospectus, except such as may be
required for the registration of the Shares under the Act, the Regulations and
for compliance with the applicable state securities or Blue Sky laws or the
Bylaws, rules and other pronouncements of the National Association of Securities
Dealers, Inc. (the "NASD");
(xi) the Common Shares are registered pursuant to
Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the Common Shares (including the Shares) are included for quotation
on the Nasdaq Stock Market's National Market System and neither the Company, any
Selling Shareholder nor, to the knowledge of the Company, any other person has
taken any action designed to cause, or likely to result in, the termination of
the registration of the Common Shares under the Exchange Act or the termination
of the inclusion thereof in the Nasdaq Stock Market's National Market System.
Neither the Company nor any Selling Shareholder has received any notification
that the SEC or the Nasdaq Stock Market's National Market System is
contemplating terminating such registration or inclusion. On the Effective Date,
the Closing Date and any Option Closing Date, the Shares shall be included for
quotation on the Nasdaq Stock Market's National Market System. The Company has
complied in all material respects with the applicable provisions of the Exchange
Act during the period it was subject to such requirements;
(xii) the statements in the Registration
Statements and Prospectus, insofar as they are descriptions or summaries of or
references to contracts, agreements or other documents, are accurate in all
material respects and present or summarize fairly, in all material respects, the
information required to be disclosed under the Act and/or the Regulations, and
there are no contracts, agreements or other documents, instruments or
transactions of any character required to be described or referred to in the
Registration Statements or Prospectus or to be filed as exhibits to the
Registration Statements that have not been so described, referred to or filed,
as required;
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(xiii) the consolidated financial statements of the
Company (including the notes thereto) filed as part of any Preliminary
Prospectus, the Prospectus and the Registration Statements present fairly, in
all material respects, the financial position of the Company and the
Subsidiaries as of the respective dates thereof, and the results of operations
and cash flows of the Company and the Subsidiaries for the periods indicated
therein, all in conformity with generally accepted accounting principles
consistently applied throughout the periods involved. The supporting notes and
schedules included in the Registration Statements fairly state in all material
respects the information required to be stated therein in relation to the
financial statements taken as a whole. The selected and summary financial and
statistical information in the Prospectus including, but not limited to, that
under the captions "Summary Consolidated Financial Information," "Selected
Consolidated Financial Data," "Recent Developments," and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
presents fairly the information shown therein and has been compiled on a basis
consistent with that of the audited financial statements included in the
Registration Statements. The unaudited financial statements included in the
Registration Statements comply as to form in all material respects with the
applicable accounting requirements of Regulation S-X under the Act and the pro
forma adjustments, if any, have been properly applied to the historical amounts
in the compilation of those statements. No financial statements or schedules or
other information other than that which appears in the Prospectus is required to
be included in the Registration Statement;
(xiv) since the respective dates as of which
information is given in the Registration Statements and the Prospectus, except
as otherwise stated therein, there has not been (A) any material adverse change
(including, whether or not insured against, any material loss or damage to any
material assets), or development involving a prospective material adverse
change, in the general affairs, properties, assets, management, condition
(financial or otherwise), results of operations, stockholders' equity, business
or prospects of the Company and the Subsidiaries taken as a whole; (B) any
material adverse change, loss, reduction, termination or non-renewal of any
contract to which the Company or any Subsidiary is a party; (C) any transaction
entered into by the Company or any Subsidiary not in the ordinary course of its
business that is material to the Company or any Subsidiary, (D) any dividend or
distribution of any kind declared, paid or made by the Company on its capital
stock, (E) any liabilities or obligations, direct or indirect, incurred by the
Company or any Subsidiary that are material to the Company on a consolidated
basis; (F) any change in the capitalization or stock ownership of the Company or
any Subsidiary; or (G) any change in the indebtedness of the Company or any
subsidiary that is material to the Company on a consolidated basis. Neither the
Company nor any Subsidiary has any contingent liabilities or obligations that
are material to the Company that are not expressly disclosed in the Prospectus;
(xv) the Company has not distributed, and will
not distribute, any offering material in connection with the offering and sale
of the Shares other than the Registration Statements, a Preliminary Prospectus,
the Prospectus and other material, if any, permitted by the Act and the
Regulations. Neither the Company nor any of its officers, directors or
affiliates has taken, nor shall the Company or such persons take, any action
designed to, or that might be reasonably expected to, cause or result in
stabilization or manipulation of the price of the Shares;
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(xvi) the Company and each Subsidiary has filed
with the appropriate federal, state and local governmental agencies, and all
foreign countries and political subdivisions thereof, all tax returns that are
required to be filed or has duly obtained extensions of time for the filing
thereof and has paid all taxes shown on such returns or otherwise due and all
material assessments received by them to the extent that the same have become
due. Neither the Company nor any Subsidiary has executed or filed with any
taxing authority, foreign or domestic, any agreement extending the period for
assessment or collection of any income or other tax and neither is a party to
any pending action or proceeding by any foreign or domestic governmental agency
for the assessment or collection of taxes, and no claims for assessment or
collection of taxes have been asserted against the Company or any Subsidiary
that might have a Material Adverse Effect;
(xvii) KPMG Peat Marwick, which has given its
reports on certain financial statements included as part of the Registration
Statements, is a firm of independent certified public accountants as required by
the Act and the Regulations with respect to the Company;
(xviii) neither the Company nor any Subsidiary is in
violation of, or in default under, any of the terms or provisions of (A) its
Articles or Certificate of Incorporation or Bylaws or similar governing
instruments, or (B) any indenture, mortgage, deed of trust, contract, commitment
or other agreement or instrument to which it is a party or by which it or any of
its properties is bound or affected, (C) any law, rule, regulation, judgment,
order or decree of any government or governmental agency, instrumentality or
court, domestic or foreign, having jurisdiction over it or any of its properties
or business, or (D) any license, permit, certification, registration, approval,
consent or franchise referred to in Section l(a)(iii) hereof, except with
respect to clause (B), (C) or (D) above, where any such violation or default
would not have a Material Adverse Effect.
(xix) except as expressly disclosed in the
Prospectus, there are no claims, actions, suits, protests, proceedings,
arbitrations, investigations or inquiries pending before, or to the Company's
knowledge threatened or contemplated by, any governmental agency,
instrumentality, court or tribunal, domestic or foreign, or before any private
arbitration tribunal to which the Company, any Subsidiary or any franchisee is
or may be made a party or otherwise affecting the Company that could reasonably
be expected to affect the validity of any of the outstanding Common Shares, or
that, if determined adversely to the Company or any Subsidiary, would, in any
case or in the aggregate, result in any Material Adverse Effect, nor is the
Company aware of any reasonable basis for any such claim, action, suit, protest,
proceeding, arbitration, investigation or inquiry. Except as expressly disclosed
in the Prospectus, there are no outstanding orders, judgments or decrees of any
court, governmental agency, instrumentality or other tribunal enjoining the
Company from, or requiring the Company to take or refrain from taking, any
action, or to which the Company or any Subsidiary, their properties, assets or
businesses are bound or subject;
(xx) the Company and each Subsidiary owns, or
possesses adequate rights to use, all patents, patent applications, trademarks,
trademark registrations, applications for trademark registration, trade names,
service marks, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential
technology, information, systems, design methodologies and devices or procedures
developed or derived from or for the businesses of the Company or the
Subsidiary), trade secrets, confidential
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information, processes and formulations and other proprietary information
necessary for, used in, or proposed to be used in, the conduct of its business
as described in the Prospectus (collectively, the "Intellectual Property").
Neither Company nor any Subsidiary owns any rights in or to any patents. Neither
the Company nor any Subsidiary has infringed, is infringing and, except as
expressly and specifically disclosed in the Prospectus, has received any notice
of conflict with, the asserted rights of others with respect to the Intellectual
Property that, individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse Effect,
and the Company knows of no reasonable basis therefor. To the knowledge of the
Company, no other parties, including but not limited to current or former
franchisees or directors or officers of the Company have infringed upon or are
in conflict with the Intellectual Property. Neither the Company nor any
Subsidiary is a party to, or bound by, any agreement pursuant to which
royalties, honorariums or fees are payable by the Company or such Subsidiary to
any person by reason of the ownership or use of any Intellectual Property that
is material to the business of the Company on a consolidated basis;
(xxi) the Company and each Subsidiary has good and
marketable title to all property described in the Prospectus as being owned by
it, free and clear of all liens, security interests, charges or encumbrances and
the like, except such as are expressly described or referred to in the
Prospectus or such as would not have a Material Adverse Effect. The Company,
each Subsidiary, and to the knowledge of the Company, each franchisee has
adequately insured its property against loss or damage by fire or other casualty
and maintains, in amounts reasonably believed by it to be adequate, and
insurance against such other risks as management of the Company deems
appropriate. All real and personal property leased by the Company, any
Subsidiary, or to the knowledge of the Company, any franchisee, as described or
referred to in the Prospectus, is held by the Company or the Subsidiary under
valid leases. The executive offices and the other facilities of the Company, the
Subsidiaries and to the knowledge of the Company, the franchisees (the
"Premises"), and all operations presently or formerly conducted thereon by the
Company, the Subsidiaries and the franchisees, are now and, since the Company,
the Subsidiaries or the franchisees began to use such Premises, always have been
and, to the knowledge of the Company, prior to when the Company, the
Subsidiaries and the franchisees began to use such Premises, always had been, in
compliance with all federal, state and local statutes, ordinances, regulations,
rules, standards and requirements of common law concerning or relating to
industrial hygiene and the protection of health and the environment
(collectively, "the Environmental Laws"), except to the extent that any failure
to be in such compliance would not have a Material Adverse Effect. There are no
conditions on, about, beneath or arising from the Premises or at any other
location that might give rise to liability, the imposition of a statutory lien
or require a "Response," "Removal" or "Remedial Action," as defined herein,
under any of the Environmental Laws, and that would have a Material Adverse
Effect. Except as expressly disclosed in the Prospectus, or where such items
will not result in any Material Adverse Effect, (A) neither the Company, any
Subsidiary, or to the knowledge of the Company, any franchisee has received
notice or has knowledge of any claim, demand, investigation, regulatory action,
suit or other action instituted or threatened against the Company or any
Subsidiary or any portion of the Premises relating to any of the Environmental
Laws and (B) neither the Company, any Subsidiary, or to the knowledge of the
Company, any franchisee has received any notice of material violation, citation,
complaint, order, directive, request for information or response thereto, notice
letter, demand letter or compliance schedule to or from any governmental or
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regulatory agency arising out of or in connection with "hazardous substances"
(as defined by applicable Environmental Laws) on, about, beneath, arising from
or generated at the Premises or at any other location. As used in this
subsection, the terms "Response," "Removal" and "Remedial Action " shall have
the respective meanings assigned to such terms under Sections 101(23) - 101(25)
of the Comprehensive Environmental Response, Compensation and Liability Act, as
amended by the Superfund Amendments and Reauthorization Act, 42 U.S.C.
9601(23)-9601(25);
(xxii) the Company maintains a system of internal
accounting controls sufficient to provide reasonable assurances that: (A)
transactions are executed in accordance with management's general or specific
authorization; (B) transactions are recorded as necessary in order to permit
preparation of financial statements in accordance with generally accepted
accounting principles and to maintain accountability for assets; (C) access to
assets is permitted only in accordance with management's general or specific
authorization; and (D) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences;
(xxiii) no unregistered securities of the Company
have been sold by the Company or on behalf of the Company by any person or
persons controlling, controlled by, or under common control with the Company
within the three years prior to the date hereof, except as expressly disclosed
in the Registration Statements and any such sales of unregistered securities by
the Company were completed in compliance with the applicable provisions of the
state and federal securities or bluesky laws;
(xxiv) neither the Company nor any Subsidiary had
or currently has any employee benefit plan, profit sharing plan, employee
pension benefit plan or employee welfare benefit plan or deferred compensation
arrangements ("Plans") that are subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended, or the rules and regulations
thereunder ("ERISA") and that are not in compliance with ERISA in all material
respects, and, to the extent required by the Internal Revenue Code of 1986, as
amended (the "Code"), in compliance with the Code in all material respects. The
Company has not had any employee pension benefit plan that is subject to Part 3
of Subtitle 8 of Title I of ERISA or any defined benefit plan or multi-employer
plan. Neither the Company nor any Subsidiary has maintained retired life and
retired health insurance plans that are employee welfare benefit plans providing
for continuing benefit or coverage for any employee or any beneficiary of any
employee after such employee's termination of employment, except as required by
Section 4980B of the Code. No fiduciary or other party in interest with respect
to any of the Plans has caused any of such Plans to engage in a prohibited
transaction as defined in Section 406 of ERISA. As used in this subsection, the
terms "defined benefit plan," "employee benefit plan," "employee pension benefit
plan," "employee welfare benefit plan," "fiduciary" and "multiemployer plan"
shall have the respective meanings assigned to such terms in Section 3 of ERISA;
(xxv) no labor dispute exists with any employees
of the Company or any Subsidiary, and to the Company's knowledge, no such labor
dispute is threatened. The Company has no knowledge of any existing or
threatened labor disturbance by the employees of any of its principal suppliers,
contractors or customers that would have a Material Adverse Effect. None of
-10-
the employees of the Company or any Subsidiary is covered by a collective
bargaining agreement and no union organizing activity exists with respect to any
of such employees;
(xxvi) the Company has not incurred any liability
for any finder's fees or similar payments in connection with the transactions
contemplated herein other than as disclosed in the Prospectus;
(xxvii) the Company is familiar with the Investment
Company Act of 1940, as amended (the "1940 Act"), and the rules and regulations
thereunder, and has in the past conducted, and the Company intends to conduct,
its affairs in such a manner as to ensure that it will not be an "investment
company" within the meaning of the 1940 Act and the rules and regulations
thereunder;
(xxviii) no statement, representation, warranty or
covenant made by the Company in this Agreement or in any certificate or document
required by this Agreement to be delivered to the Representatives is, was when
made, or as of the Closing Date or any Option Closing Date will be, inaccurate,
untrue or incorrect in any material respect. No transaction has occurred or is
proposed between or among the Company (or any Subsidiary) and any of its (or any
of its Subsidiaries) officers, directors or stockholders or any affiliate of any
such officer, director or stockholder that is required to be described in and is
not described in the Registration Statements and the Prospectus;
(xxix) neither the Company or any Subsidiary nor
any officer, director, employee, agent or other person acting on behalf of the
Company or any Subsidiary has, directly or indirectly, given or agreed to give
any money, property or similar benefit or consideration to any customer or
supplier (including any employee or agent of any customer or supplier) or
official or employee of any agency or instrumentality of any government (foreign
or domestic) or political party or candidate for office (foreign or domestic) or
any other person who was, is or in the future may be in a position to affect the
general affairs, properties, condition (financial or otherwise), results of
operations, stockholders' equity, business or prospects of the Company or any
actual or proposed business transaction of the Company that (A) could subject
the Company to any liability (including, but not limited to, the payment of
monetary damages) or penalty in any civil, criminal or governmental action or
proceeding that would have a Material Adverse Effect, or (B) violates any law,
rule or regulation to which the Company or any Subsidiary is subject, which
violation if proven would have a Material Adverse Effect;
(xxx) each person listed on Schedule IV hereto
has executed an agreement in a form reasonably satisfactory to the
Representatives that such person will not, for the period specified in such
agreement (the "Lock-up Period"), offer to sell, contract to sell, or otherwise
sell, dispose of, loan, pledge or grant any rights with respect to
(collectively, a "Disposition") any Common Shares, any options or warrants to
purchase any Common Shares or any securities convertible into or exchangeable
for Common Shares (collectively, "Securities") now owned or hereafter acquired
directly by such person or with respect to which such person has or hereafter
acquires the power of disposition, otherwise then as specified in such agreement
or with the prior written consent of the Representatives; provided, however,
that the forgoing language shall not
-11-
prohibit the purchase of Common Stock from the Company pursuant to the exercise
of stock options. The Company has provided to counsel for the Underwriters a
complete and accurate list of all securityholders of the Company and the number
and type of securities held by each securityholder. The Company has provided to
counsel for the Underwriters true, accurate and complete copies of all of the
agreements pursuant to which its officers, directors and shareholders have
agreed to such or similar restrictions (the "Lock-Up Agreements");
(xxxi) each contract or other instrument (however
characterized or described) to which the Company or any Subsidiary is a party or
by which any of their respective properties or businesses is bound or affected
and which is material to the conduct of the respective businesses of the Company
and the Subsidiary has been duly and validly executed by the Company or its
Subsidiary, as applicable, and, to the knowledge of the Company, by the other
parties thereto. Each such contract or other instrument is in full force and
effect and is enforceable against the parties thereto in accordance with its
terms and neither the Company nor any Subsidiary is, and to the knowledge of the
Company, no other party is, in default thereunder, and no event has occurred
that, with the lapse of time or the giving of notice, or both, would constitute
a default under any such contract or other instrument. All necessary consents
under such contracts or other instruments to the disclosure in the Prospectus
with respect thereto have been obtained; and
(xxxii) the Company is in compliance with the
applicable requirements of the Federal Trade Commission rules governing
franchising, including 16 C.F.R. ss.436, and the applicable provisions of
federal and state laws or regulations governing the activities of a franchiser
and the tax preparation business. The Company's Franchise Offering Circular
complies with the applicable requirements of state law governing the activities
of franchisers and complies as to form with the requirements of the North
American Securities Administrators Association's Uniform Franchise Offering
Circular.
Any certificate signed by any officer of the Company in such capacity
and delivered to the Representatives or to counsel for the Underwriters pursuant
to this Agreement shall be deemed a representation and warranty by the Company
to the several Underwriters as to the matters covered thereby.
(b) Representations and Warranties of the Selling
Shareholders. Each of the Selling Shareholders represents and warrants to, and
agrees with, the several Underwriters that:
(i) such Selling Shareholder has duly executed
and delivered a Custody Agreement and Power of Attorney (the "Custody
Agreement"), in the form heretofore delivered to the Representatives, appointing
either ▇▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ as such Selling Shareholder's
attorneys-in-fact (the "Attorneys-in-Fact"), and appointing ▇▇▇▇▇ ▇▇▇▇▇▇ as
custodian (the "Custodian"). The Attorneys-in-Fact are authorized to execute,
deliver and perform the Custody Agreement and this Agreement on behalf of such
Selling Shareholder, including, without limitation, the authority to determine
the purchase price to be paid to each Selling Shareholder by the Underwriters as
set forth in Section 2 of this Agreement. Certificates in negotiable form
representing the Shares to be sold by each Selling Shareholder hereunder have
been deposited with the Custody Agreement with the Custodian. Certificates in
negotiable form representing the Shares
-12-
to be sold by each Selling Shareholder hereunder have been deposited with the
Custodian pursuant to the Custody Agreement for the purpose of delivery pursuant
to this Agreement. Such Selling Shareholder agrees that the Shares represented
by the certificates on deposit with the Custodian are subject to the interests
of the Underwriters hereunder, that the arrangements made for such custody and
the appointment of the Attorneys-in-Fact are to that extent irrevocable, and
that the obligations of such Selling Shareholder hereunder shall not be
terminated, except as provided in this Agreement, by any act of such Selling
Shareholder, by operation of law or otherwise, whether by the dissolution,
reorganization, death or incapacity of such Selling Shareholder or the
occurrence of any other event. If any such dissolution, reorganization, death,
incapacity or other such event should occur before the delivery of the Shares to
be sold by the affected Selling Shareholder hereunder, and certificates for such
Shares shall be delivered by the Custodian in accordance with the terms and
conditions of this Agreement, as if such dissolution, reorganization, death,
incapacity, or other event had not occurred, regardless of whether or not the
Custodian or Attorneys-in-Fact shall have received notice thereof;
(ii) such Selling Shareholder has all requisite
right, power and authority to enter into this Agreement, the Power of Attorney
and the Custody Agreement, and to sell, transfer and deliver the Shares to be
sold by such Selling Shareholder hereunder, and this Agreement, the Power of
Attorney and the Custody Agreement have been duly authorized, executed and
delivered by such Selling Shareholder and constitute the legal, valid and
binding obligations of such Selling Shareholder enforceable in accordance with
their respective terms;
(iii) the execution, delivery and performance, and
the consummation of the transactions contemplated hereby and by the Prospectus,
the Power of Attorney and the Custody Agreement do not and shall not, with or
without the giving of notice or lapse of time or both, (A) conflict with any
term or provision of such Selling Shareholder's charter, bylaws or other organic
or governing documents, if applicable, (B) conflict with or result in a breach
or a violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage or other agreement or instrument to which such
Selling Shareholder is a party or by which such Selling Shareholder or any of
his, her or its Shares is bound, or (C) violate any existing, applicable law,
rule, regulation, judgment, order or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction over such
Selling Shareholder or any of his, her or its Shares;
(iv) all authorizations, approvals and consents
necessary for the valid execution and delivery by such Selling Shareholder of
this Agreement, the Power of Attorney and the Custody Agreement have been
obtained and are in full force and effect, and the sale and delivery of the
Shares to be sold by such Selling Shareholder hereunder (other than, at the time
of the execution hereof, the issuance of the order of the Commission declaring
the Registration Statement effective and such authorizations, approvals or
consents as may be necessary under the state or foreign securities or Blue Sky
laws and the Bylaws, rules and pronouncements of the NASD), have been obtained
and are in full force and effect;
(v) such Selling Shareholder now is, and on the
Closing Date and any Option Closing Date will be, the lawful owner of the Shares
to be sold by such Selling Shareholder pursuant to this Agreement. On the
Closing Date and any Option Closing Date, such Selling
-13-
Shareholder will have good and marketable title to such Shares, free and clear
of all liens, encumbrances, security interests or other restrictions (other than
those created under the Custody Agreement). Upon proper delivery of, and payment
for, such Shares as provided herein, the Underwriters will acquire good and
marketable title thereto, free and clear of all liens, encumbrances, security
interests and other restrictions and defects whatsoever;
(vi) such Selling Shareholder has examined the
Primary Registration Statement and the Prospectus and the information relating
to such Selling Shareholder set forth therein and, as to such information,
neither the Primary Registration Statement nor the Prospectus contains any
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
(vii) such Selling Shareholder has not incurred
any liability for any finder's fee or similar payment in connection with the
sale of such Selling Shareholder's Shares hereunder; and
(viii) such Selling Shareholder has not distributed
and will not distribute any offering material in connection with the offering
and sale of the Shares other than the Registration Statements, a Preliminary
Prospectus, the Prospectus and other material, if any, permitted by the Act and
the Regulations. Neither such Selling Shareholder nor any affiliate of such
Selling Shareholder has taken or shall take any action designed, or that might
be reasonably expected, to cause or result in stabilization or manipulation of
the price of the Shares.
2. Purchase and Sale of Firm Shares. On the basis of the
representations, warranties, covenants and agreements contained herein, and
subject to the terms and conditions set forth herein, the Company shall sell
1,000,000 of the Firm Shares, and each Selling Shareholder, severally and not
jointly, shall sell the number of Firm Shares set forth opposite his name in
Table 1 of Schedule II hereto, to the several Underwriters, and each of the
Underwriters, severally and not jointly, shall purchase the number of Firm
Shares set forth opposite its name in Schedule I hereto, The purchase price of
the Firm Shares hereunder shall be the Offering Price less the Underwriting
Discounts and Commissions shown on the cover page of the Prospectus. Each
Underwriter shall be obligated to purchase from the Company, and from each
Selling Shareholder, that number of Firm Shares that represents the same
proportion of the number of Firm Shares to be sold by the Company, and by each
Selling Shareholder, as the number of Firm Shares set forth opposite the name of
such Underwriter in Schedule I hereto represents of the total number of Firm
Shares to be purchased by all of the Underwriters pursuant to this Agreement.
The respective purchase obligations of the Underwriters with respect to the Firm
Shares shall be rounded among the Underwriters to avoid fractional shares, as
the Representatives may determine. In making this Agreement, each Underwriter is
contracting severally and not jointly, and except as provided in Sections 4 and
11 hereof, the agreement of each Underwriter is to purchase only that number of
shares specified with respect to that Underwriter in Schedule I hereto. The
several Underwriters intend to offer the Shares to the public as set forth in
the Prospectus; provided, however, that no Shares registered pursuant to the
Rule 462(b) Registration Statement, if any, will be offered prior to the filing
of such registration
-14-
statement with the SEC. After the public offering, the several Underwriters may,
in their discretion, vary the public offering price.
3. Payment and Delivery.
(a) Delivery of and payment for the Firm Shares shall be made
at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ at 10:00 a.m., Philadelphia, Pennsylvania time (i) on
the third full business day following the first day that the Firm are traded, or
(ii) at such other time and date not later than seven full business days
following the first day the Firm Shares are traded as the Representatives and
the Company may determine (or at such time and date to which delivery and
payment shall have been postponed pursuant to Section 11 hereof). Such date and
time of delivery and payment are referred to collectively herein as the "Closing
Date." Notwithstanding the foregoing, if the Company has not made available to
the Representatives copies of the Prospectus in the quantities and within the
time provided for in Section 5(a)(vii) hereof, the Representatives may, in their
sole discretion, postpone the Closing Date until no later than two full business
days following delivery of such copies of the Prospectus to the Representatives.
(b) On the Closing Date, the Company and the Selling
Shareholders shall deliver or cause to be delivered certificates representing
the Firm Shares to the Representatives for the account of each Underwriter
against payment to or upon the order of the Company (with respect to the Firm
Shares sold by it) and the Custodian (with respect to the Firm Shares sold by
the Selling Shareholders) of the purchase price (i) by certified or official
bank check or checks payable in New York Clearing House (next-day) funds, or
(ii) in immediately available funds wired to such accounts as the Company and/or
the Custodian may specify (with all costs and expenses incurred by the
Underwriters in connection with such settlement in immediately available funds,
including, but not limited to, interest or cost of funds expense, to be borne by
the Company and/or the Selling Shareholders, as the case may be). Time is of the
essence, and delivery at the time and place specified pursuant to this Agreement
is a further condition of each Underwriter's obligation hereunder.
(c) The certificates representing the Firm Shares to be sold
and delivered will be in such denominations and registered in such names as the
Representatives request not less than two full business days prior to the
Closing Date, and will be made available to the Representatives for inspection,
checking and packaging at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc., ▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, not less than one full business day prior to the
Closing Date. If the Representatives so elect, delivery of the Firm Shares may
be made by credit through full fast transfer to the accounts at The Depository
Trust Company designated by the Representatives.
(d) The Company and the Selling Shareholders shall not be
obligated to deliver any Firm Shares to be delivered on the Closing Date, except
upon payment for all the Firm Shares to be purchased on such date.
-15-
4. Option to Purchase Optional Shares.
(a) For the purposes of covering any over-allotments in
connection with the distribution and sale of the Firm Shares as contemplated by
the Prospectus, subject to the terms and conditions herein set forth, the
several Underwriters are hereby granted an option by the Company and the Selling
Shareholders to purchase all or any part of the Optional Shares (the
"Over-allotment Option"). The purchase price to be paid for the Optional Shares
shall be the Offering Price less the Underwriting Discounts and Commissions
shown on the cover page of the Prospectus. The Over-allotment Option granted
hereby may be exercised by the Representatives on behalf of the several
Underwriters as to all or any part of the Optional Shares at any time and from
time to time within 30 days after the date of the Prospectus. No Underwriter
shall be under any obligation to purchase any Optional Shares prior to an
exercise of the Over-allotment Option.
(b) The Over-allotment Option granted hereby may be exercised
by the Representatives on behalf of the several Underwriters by giving notice to
the Company and the Selling Shareholders by a letter delivered by hand or sent
by registered or certified mail, postage prepaid, or by courier, telegram or
facsimile (such notice to be effective when received), addressed as provided in
Section 13 hereof, setting forth the number of Optional Shares to be purchased,
the date and time for delivery of, and payment for, such Optional Shares and
stating that the Optional Shares referred to therein are to be used for the
purpose of covering over-allotments in connection with the distribution and sale
of the Firm Shares. If such notice is given at least two full business days
prior to the Closing Date, the date set forth therein for such delivery and
payment shall be the Closing Date. If such notice is given less than two full
business days prior to the Closing Date, the date set forth therein for such
delivery and payment shall be a date selected by the Representatives that is not
more than three full business days after the date the notice is effective. The
date and time set forth in such a notice is referred to herein as an "Option
Closing Date," and a closing held pursuant to such a notice is referred to
herein as an "Option Closing." Upon each exercise of the Over-allotment Option,
and on the basis of the representations, warranties, covenants and agreements
herein contained, and subject to the terms and conditions herein set forth, the
several Underwriters shall become severally, but not jointly, obligated to
purchase from the Selling Shareholders and the Company the number of Optional
Shares specified in each notice of exercise of the Over-allotment Option
(allocated among the several Underwriters in accordance with Section 4(c)
hereof).
(c) To the extent any Optional Shares are purchased, then the
Underwriters shall purchase all the Optional Shares of the Selling Shareholders,
as reflected in Table 2 of Schedule II hereto, before they purchase any Optional
Shares of the Company. To the extent the number of Optional Shares to be
purchased by the Underwriters at any Option Closing accounts for some but not
all of the Optional Shares of the Selling Shareholders listed in Table 2 of
Schedule II hereto, then the Underwriters shall purchase Optional Shares from
the Selling Shareholders pro rata in proportion to the amounts set forth
opposite their names in Table 2 of Schedule II hereto. At each Option Closing,
the Selling Shareholders will be obligated, severally and not jointly, to sell
their Optional Shares to the Underwriters in accordance with the foregoing
sentences. Subject to the foregoing, at each Option Closing, each Underwriter
shall be obligated, severally and not jointly, to purchase from each Selling
Shareholder, and from the Company, that number of Optional Shares that
represents the same proportion of the number of Optional Shares to be sold by
each Selling Shareholder, and
-16-
by the Company, as the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I hereto represents of the total number of Firm Shares
to be purchased by all of the Underwriters pursuant to this Agreement.
Notwithstanding the foregoing, the number of Optional Shares purchased and sold
pursuant to each exercise of the Over-allotment Option shall be subject to such
adjustment as the Representatives may approve to eliminate fractional shares and
shall be subject to the provisions for the allocation of Optional Shares
purchased for the purpose of covering over-allotments set forth in the agreement
entered into by and among the Underwriters in connection herewith (the
"Agreement Among Underwriters").
(d) Delivery of and payment for the Optional Shares to be
purchased by the several Underwriters pursuant to any exercise of the
Over-allotment Option shall be made at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Inc., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, or such other place as
shall be agreed upon by the Company and the Representatives at 10:00 a.m.,
Philadelphia, Pennsylvania time on the Option Closing Date set forth in the
notice of such exercise. On such Option Closing Date, the Selling Shareholders
(who are obligated to sell Optional Shares pursuant to Section 4(c) hereof) and
the Company, if applicable, shall deliver or cause to be delivered certificates
representing the Optional Shares to the Representatives for the account of each
Underwriter against payment to or upon the order of the Custodian (with respect
to Optional Shares sold by Selling Shareholders) and the Company (with respect
to Optional Shares sold by it, if any), (i) by certified or official bank check
or checks payable in New York Clearing House (next-day) funds, or (ii) in
immediately available funds wired to such accounts as the Custodian and the
Company may specify (with all costs and expenses incurred by the Underwriters in
connection with such settlement in immediately available funds, including, but
not limited to, interest or cost of funds expense, to be borne by the Selling
Shareholders and the Company). Time shall be of the essence, and delivery at the
time and place specified pursuant to this Agreement is a further condition of
the obligation of each Underwriter hereunder.
(e) The certificates representing the Optional Shares to be
issued and delivered will be in such denominations and registered in such names
as the Representatives request not less than two full business days prior to the
Option Closing Date, and will be made available to the Representatives for
inspection, checking and packaging at the Philadelphia correspondent office of
the Company's transfer agent not less than one full business day prior to the
Option Closing Date. If the Representatives so elect, delivery of the Option
Shares may be made by credit through full fast transfer to the accounts at The
Depository Trust Company designated by the Representatives.
5. Certain Covenants and Agreements.
(a) Certain Covenants and Agreements of the Company. The
Company covenants and agrees with the several Underwriters as follows:
(i) if the Rule 462(b) Registration Statement
has not been filed at the time this Agreement is executed and delivered by the
parties hereto and such Rule 462(b) Registration Statement is required to be
filed, the Company will use its best efforts to cause such registration
statement to be filed and become effective as promptly as possible;
-17-
(ii) if the Company omitted information from
the Primary Registration Statement at the time it was declared effective in
reliance upon Rule 430A of the Regulations, the Company will timely file the
Prospectus pursuant to and in compliance with Rule 424(b)(1) or (4) and Rule
430A(a)(3) of the Regulations and will advise the Representatives of the time
and manner of such filing; provided, however, that if the Representatives shall
agree to the utilization of Rule 434 of the Regulations, the Company will timely
file pursuant to and in compliance with Rule 424(b)(7) and Rule 430A(a)(3) of
the Regulations the information required to be included in the Term Sheet, and
will advise the Representatives of the time and manner of such filing;
(iii) if for any reason the filing of a form of
Prospectus is required under Rule 424(b)(3) of the Regulations, the Company will
timely file such Prospectus pursuant to and in compliance with such Rule and
will advise the Representatives of the time and manner of such filing;
(iv) the Company will not file or publish any
Rule 462(b) Registration Statement or any amendment or supplement to the
Registration Statement(s), Preliminary Prospectus or Prospectus at any time
before the completion (in the opinion of the Underwriters' counsel) of the
distribution of the Shares by the Underwriters that is not (A) in compliance
with the Regulations; and (B) approved by the Representatives (such approval not
to be unreasonably withheld or delayed);
(v) the Company will advise the Representatives
immediately, and confirm such advice in writing, (A) when any Rule 462(b)
Registration Statement or post-effective amendment to the Registration
Statements is filed with the SEC, (B) of the receipt of any comments from the
SEC concerning the Registration Statements, (C) when any post-effective
amendment to the Registration Statements becomes effective, or when any
supplement to the Prospectus or any amended Prospectus has been filed, (D) of
any request of the SEC for amendment or supplementation of the Registration
Statements or Prospectus or for additional information, (E) during the period
when the Prospectus is required to be delivered under the Act and Regulations,
of the happening of any event as a result of which the Registration Statements
would include an untrue statement of a material fact or omit to state a material
fact required therein or necessary to make the statements therein not
misleading, or as a result of which the Prospectus, as then amended or
supplemented, would include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, (F)
during the period noted in clause (E) above, of the need to amend the
Registration Statements or supplement the Prospectus to comply with the Act, (G)
of the issuance by the SEC of any stop order suspending the effectiveness of the
Registration Statements or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus, and (H) of the suspension of the
qualification of any the Shares for offering or sale in any jurisdiction in
which the Underwriters intend to make such offers or sales, or of the initiation
or threatening of any proceedings for any of such purposes known to the Company.
The Company will use its best efforts to prevent the issuance of any such stop
order or of any order preventing or suspending such use, and if any such order
is issued, to obtain as soon as possible the lifting thereof;
-18-
(vi) in case of any event (occurring at any time
within the period during which, in the opinion of Blank Rome ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
counsel for the Underwriters ("Underwriters' Counsel"), a prospectus is required
to be delivered under the Act and Regulations), as a result of which any
Preliminary Prospectus or the Prospectus, as then amended or supplemented, would
contain, in the opinion of Underwriters' Counsel, an untrue statement of a
material fact, or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or, if it is necessary at any time to amend any Preliminary
Prospectus or the Prospectus to comply with the Act and Regulations or any
applicable securities or Blue Sky laws, the Company promptly will prepare and
file with the SEC, and any applicable state or foreign securities commission, an
amendment, supplement or document that will correct such statement or omission
or effect such compliance and will furnish to the several Underwriters such
number of copies of such amendments, supplements or documents (in form and
substance satisfactory to the Representatives and counsel for the Underwriters)
as the Representatives may reasonably request. For purposes of this Section 5(a)
(vi), the Company will provide such information to the Representatives, the
Underwriters' Counsel and counsel to the Company as shall be necessary to enable
such persons to consult with the Company as shall be necessary to enable such
persons to consult with the Company with respect to the need to amend or
supplement the Registration Statements, Preliminary Prospectus or Prospectus or
file any document, and shall furnish to the Representatives and the
Underwriters' Counsel such further information as each may from time to time
reasonably request;
(vii) the Company has delivered to the
Representatives, without charge, as many copies of each Preliminary Prospectus
as the Representatives have reasonably requested. The Company will deliver to
the Representatives, without charge, from time to time during the period when
delivery of the Prospectus is required under the Act, such number of copies of
the Prospectus (as supplemented or amended) as the Representatives may
reasonably request. The Company hereby consents to the use of such copies of the
Preliminary Prospectus and the Prospectus for purposes permitted by the Act, the
Regulations and the securities or Blue Sky laws of the states or foreign
jurisdictions in which the Common Shares are offered by the several Underwriters
and by all dealers to whom Shares may be sold, both in connection with the
offering and sale of the Shares and for such period of time thereafter as the
Prospectus is required by the Act to be delivered in connection with sales by
any Underwriter or dealer. The Company has furnished or will furnish to the
Representatives at least three original signed copies of the Registration
Statements as originally filed and of all amendments and supplements thereto,
whether filed before or after the Effective Date, at least three copies of all
exhibits filed therewith and of all consents and certificates of experts, and
will deliver to the Representatives such number of conformed copies of the
Registration Statements, including financial statements and exhibits, and all
amendments thereto, as the Representatives may reasonably request;
(viii) the Company will comply with the Act, the
Regulations, the Exchange Act and the rules and regulations thereunder so as to
permit the continuance of sales of, and dealings in, the Shares for as long as
may be necessary to complete the distribution of the Shares as contemplated
hereby;
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(ix) the Company will furnish such information
and pay such filing fees and other expenses as may be required, and otherwise
cooperate in the registration or qualification of the Shares, or exemption
therefrom, for offering and sale by the several Underwriters and by dealers
under the securities or Blue Sky laws of such jurisdictions in which the
Representatives determine to offer the Shares, after consultation with the
Company, and will file such consents to service of process or other documents
necessary or appropriate in order to effect such registration or qualification;
provided, however, that no such qualification shall be required in any
jurisdiction where, solely as a result thereof, the Company would be subject to
taxation or qualification as a foreign corporation doing business in such
jurisdiction where it is not now so qualified or to take any action that would
subject it to service of process in suits, other than those arising out of the
offering or sale of the Shares, in any jurisdiction where it is not now so
subject. The Company will, from time to time, prepare and file such statements
and reports as are or may be required to continue such qualification in effect
for so long a period as is required under the laws of such jurisdictions for
such offering and sale;
(x) the Company will make generally available to
its security holders, as soon as practicable, but not later than 45 days after
the end of the period covered thereby, an earnings statement of the Company
(which need not be audited unless required by the Act or the Regulations) that
shall comply with Section 11 (a) of the Act and the Regulations (including, at
the option of the Company, Rule 158) and cover a period of at least 12
consecutive months beginning not later than the first day of the Company's
fiscal quarter next following the Effective Date;
(xi) for a period of three years from the
Effective Date, the Company will deliver to the Representatives: (A) a copy of
each report or document, including, without limitation, reports on Forms 8-K,
10-K and 10-Q (or such similar forms as may be designated by the SEC),
registration statements and any exhibits thereto, filed with or furnished to the
SEC or any securities exchange or the Nasdaq Stock Market's National Market
System or the NASD, on the date each such report or document is so filed or
furnished; (B) as soon as practicable, copies of any reports or communications
(financial or other) of the Company mailed to its security holders; and (C)
every press release in respect of the Company or its affairs that is released or
prepared by the Company;
(xii) during the course of the distribution of the
Shares, the Company will not take, directly or indirectly, any action designed
to, or that could reasonably be expected to, cause or result in stabilization or
manipulation of the price of the Common Shares;
(xiii) the Company will not engage in any
transactions with affiliates (as defined in the Regulations) without the prior
approval of a majority of the disinterested members of its Board of Directors;
(xiv) the Company will use all reasonable efforts
to maintain the inclusion of the Common Shares (including, without limitation,
the Shares) for quotation on the Nasdaq Stock Market's National Market System;
(xv) the Company shall, at its sole cost and
expense, supply and deliver to the Representatives and the Underwriters'
Counsel, within a reasonable period from the Closing
-20-
Date, closing binders, in such number as the Representatives shall reasonably
request, each of which shall include the Registration Statements, as amended or
supplemented, all exhibits to the Registration Statements, the Prospectus, as
amended or supplemented, the Preliminary Blue Sky Memorandum and any supplement
thereto, all underwriting and closing documents and all other correspondence,
filings and applications with the SEC, the NASD and the Nasdaq Stock Market's
National Market System;
(xvi) the Company will use the net proceeds from
the sale of the Shares to be sold by it hereunder substantially in accordance
with the description set forth under the caption "Use of Proceeds" in the
Prospectus and shall file such reports with the SEC with respect to the sale of
such Shares and the application of the proceeds therefrom as may be required
under the Regulations, including, but not limited to, Rule 463;
(xvii) the Company will maintain a transfer agent
and, if necessary under the jurisdiction of incorporation of the Company, a
registrar (which may be the same entity as the transfer agent) for its Common
Shares;
(xviii) the Company will take such steps as shall be
necessary to insure that neither it nor any Subsidiary shall become an
"investment company" within the meaning of such term under the Investment
Company Act of 1940, as amended, and the rules and regulations of the SEC
thereunder;
(xix) during the Lock-Up Period, the Company will
not, without the prior written consent of the Representatives, effect the
Disposition of, directly or indirectly, any Securities other than the sale of
the Firm Shares and the Optional Shares hereunder and the Company's issuance of
Common Stock upon the exercise of options, presently outstanding, under the
Company's stock option plans (the "Stock Plans") and expressly described in the
Prospectus plan; and
(xx) for a period of three years from the
Effective Date, the Company will deliver to the Representatives, subject to
execution of an appropriate confidentiality agreement, such additional
information concerning the business and financial condition of the Company as
the Representatives may from time to time reasonably request, and which can be
prepared or obtained by the Company without unreasonable effort or expense.
(b) Certain Covenants and Agreements of the Selling
Shareholders. Each Selling Shareholder covenants and agrees with the several
Underwriters as follows:
(i) during the course of the distribution of the
Shares, such Selling Shareholder shall not take, directly or indirectly, any
action designed to, or that could reasonably be expected to, cause or result in
stabilization or manipulation of the market price of the Shares;
(ii) during the Lock-Up Period, such Selling
Shareholder will not, without the prior written consent of the Representatives,
effect the Disposition of, directly or indirectly, any Securities other than
such Selling Shareholder's Firm Shares and Optional Shares hereunder; and
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(iii) such Selling Shareholder will deliver to the
Representatives prior to the Closing Date a properly completed and executed
United States Treasury Department Form W-8 (if the Selling Shareholder is a
non-United States person) or Form W-9 (if the Selling Shareholder is a United
States person).
6. Payment of Fees.
(a) Whether or not the transactions contemplated by this
Agreement are consummated and regardless of the reason this Agreement is
terminated, the Company will pay or cause to be paid, and bear or cause to be
borne, all costs and expenses incident to the performance of the obligations of
the Company under this Agreement, including:
(i) the fees and expenses of the accountants and
counsel for the Company incurred in the preparation of the Registration
Statements and any post-effective amendments thereto (including financial
statements and exhibits), Preliminary Prospectuses and the Prospectus and any
amendments or supplements thereto;
(ii) printing and mailing expenses associated
with the Registration Statements and any post-effective amendments thereto,
Preliminary Prospectus, the Prospectus, this Agreement, the Agreement Among
Underwriters, the Underwriters' Questionnaire submitted to each of the
Underwriters by the Representatives in connection herewith, the Power of
Attorney executed by each of the Underwriters in favor of the Representatives in
connection herewith, the Selected Dealer Agreement and related documents and the
preliminary Blue Sky memorandum (collectively with any supplement thereto, the
"Blue Sky Memorandum");
(iii) the costs (other than fees and expenses of
the Underwriters' Counsel, except such fees incurred in connection with Blue Sky
and NASD filings or exemptions as provided herein) incident to the
authentication, insurance, sale and delivery of the Shares to the Underwriters;
(iv) the fees, expenses and all other costs of
qualifying the Shares for sale under the securities or Blue Sky laws of those
states in which the Shares are to be offered or sold, including, without
limitation, the reasonable fees (not to exceed $10,000) and expenses of
Underwriters' Counsel and such local counsel as may have been reasonably
required and retained for such purpose;
(v) the fees, expenses and other costs of, or
incident to, securing any review or approvals by or from the NASD, including the
reasonable fees and expenses of the Underwriters' Counsel;
(vi) the filing fees of the SEC;
(vii) the cost of furnishing to the Underwriters
copies of the Registration Statements, Preliminary Prospectuses and Prospectuses
as herein provided;
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(viii) the Company's travel expenses in connection
with meetings with the brokerage community and institutional investors;
(ix) the costs and expenses associated with
settlement in same day funds (including, but not limited to, interest or cost of
funds expenses), if desired by the Company;
(x) any fees or costs payable to the Nasdaq
Stock Market's National Market System as a result of the offering;
(xi) the cost of printing certificates for the
Shares;
(xii) the cost and charges of any transfer agent;
(xiii) all taxes, if any, on the issuance, delivery
and transfer of the Shares sold by the Company; and
(xiv) all other costs and expenses reasonably
incident to the performance of the Company's and the Selling Shareholders'
obligations hereunder that are not otherwise specifically provided for in this
Section 6(a); provided, however, that, except as specifically set forth in
Section 6(c) hereof, (A) the Company shall pay to the Representatives a
non-accountable expense allowance of $150,000 to cover expenses incurred by the
Representatives in connection with the Offering (including price stabilization
transactions), and (B) the Selling Shareholders shall be responsible for any
transfer or income taxes assessed with respect to the Shares sold by the Selling
Shareholders and any fees and expenses of the Selling Shareholders' counsel and
such other expenses as are agreed to by the Company and the Selling Shareholders
or as may be required by law or regulation.
(b) The Company shall pay as due any state or foreign
registration, qualification and filing fees and any accountable out-of-pocket
disbursements in connection with such registration, qualification or filing in
the states and foreign jurisdictions in which the Representatives determine to
offer or sell the Shares.
(c) If the Underwriters are willing to proceed with the
offering, and the transactions contemplated by this Agreement are not
consummated because the Company or the Selling Shareholders elect not to proceed
with the offering for any reason or if the Representatives terminate this
Agreement pursuant to Section 10(b) hereof, then the Company will reimburse the
Representatives for their actual and accountable out-of-pocket expenses,
including, without limitation, fees and disbursements of Underwriters' Counsel,
incurred in the performance of or in contemplation of performing their
obligations hereunder, in an amount not to exceed $100,000.
7. Conditions of Underwriters' Obligations.
The obligation of each Underwriter to purchase and pay for the
Firm Shares that it has agreed to purchase hereunder on the Closing Date, and to
purchase and pay for any Optional Shares as to which it exercises its right to
purchase under Section 4 on an Option Closing Date, is
-23-
subject at the date hereof, the Closing Date and any option Closing Date, to the
continuing accuracy and fulfillment of the representations and warranties of the
Company and the Selling Shareholders, to the performance by the Company and the
Selling Shareholders of their covenants and obligations hereunder, and to the
following additional conditions:
(a) if required by the Regulations, the Prospectus shall have
been filed with the SEC pursuant to Rule 424(b) of the Regulations within the
applicable time period prescribed for such filing by the Regulations. On or
prior to the Closing Date or any Option Closing Date, as the case may be, no
stop order or other order preventing or suspending the effectiveness of the
Primary Registration Statement or the Rule 462(b) Registration Statement, if
any, or the sale of any of the Shares shall have been issued under the Act or
any state securities law, and no proceedings for that purpose shall have been
initiated or shall be pending or, to the Representatives' knowledge or the
knowledge of the Company, shall be contemplated by the SEC or by any authority
in any jurisdiction designated by the Representatives pursuant to Section
5(a)(x) hereof. Any request on the part of the SEC for additional information
shall have been complied with to the reasonable satisfaction of Underwriters'
Counsel;
(b) all corporate proceedings and other matters incident to
the authorization, for and validity of this Agreement, the Shares and the form
of the Registration Statements and the Prospectus, as amended and supplemented,
and all other legal matters relating to this Agreement and the transactions
contemplated hereby shall be satisfactory in all material respects to
Underwriters' Counsel. The Company and the Selling Shareholders shall have
furnished to such counsel all documents and information that they may have
reasonably requested to enable them to pass upon such matters;
(c) the NASD shall have indicated it has no objection to the
underwriting arrangements pertaining to the sale of any Shares;
(d) the Representatives shall have received a copy of an
executed Lock-up Agreement from each person described on Schedule IV hereto;
(e) the Representatives shall have received at or prior to the
Closing Date from the Underwriters' counsel a memorandum or summary, in form and
substance satisfactory to the Representatives, with respect to the qualification
for offering and sale by the Underwriters of the Shares under the securities or
Blue Sky laws of such jurisdictions designated by the Representatives pursuant
to Section 5(a)(x) hereof;
(f) on the Closing Date and any Option Closing Date, there
shall have been delivered to the Representatives a signed opinion of ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, a professional corporation, counsel for the Company in the form
attached hereto as Exhibit 1, dated as of each such date and addressed to the
Representatives individually and as representatives of the several Underwriters
to such effect as is reasonably satisfactory to the Representatives;
(g) on the Closing Date and any Option Closing Date, there
shall have been delivered to the Representatives signed opinions of one or more
counsel for the Selling Shareholders
-24-
in the form attached hereto as Exhibit 2, dated as of each such date and
addressed to the Representatives individually and as representatives of the
several Underwriters to such effect as is reasonably satisfactory to the
Representatives;
(h) at the Closing Date and any Option Closing Date: (i) the
Registration Statements and any post-effective amendment thereto and the
Prospectus and any amendments or supplements thereto shall contain all
statements that are required to be stated therein in accordance with the Act and
the Regulations and in all material respects shall conform to the requirements
of the Act and the Regulations, and the Registration Statements and any
Post-effective amendment thereto shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and the Prospectus,
as amended or supplemented, shall not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; (ii) since the respective dates as of which information is
given in the Registration Statements and any post-effective amendment thereto
and the Prospectus and any amendments or supplements thereto, except as
otherwise expressly stated therein, there shall have been no material adverse
change in the properties, condition (financial or otherwise), results of
operations, stockholders' equity, business or management of the Company and the
Subsidiary taken as a whole, from that set forth therein, whether or not arising
in the ordinary course of business; (iii) since the respective dates as of which
information is given in the Registration Statements and any post-effective
amendment thereto and the Prospectus or any amendment or supplement thereto,
there shall have been no event or transaction, contract or agreement entered
into by the Company or any Subsidiary, other than in the ordinary course of
business and as set forth in the Registration Statements or Prospectus, that has
not been, but would be required to be, set forth in the Registration Statements
or Prospectus; and (iv) no action, suit or proceeding at law or in equity shall
be pending or threatened against the Company or any Subsidiary that would be
required to be set forth in the Prospectus, other than as set forth therein, and
no proceedings shall be pending or threatened against or directly affecting the
Company or any Subsidiary before or by any federal, state or other commission,
board or administrative agency wherein an unfavorable decision, ruling or
finding would have a Material Adverse Effect other than as set forth in the
Prospectus;
(i) the Representatives shall have received at the Closing
Date and any Option Closing Date certificates of the Company signed by the Chief
Executive Officer and the Chief Financial Officer of the Company dated as of the
date of the Closing Date or Option Closing Date, as the case may be, and
addressed to the Representatives, individually and as representatives of the
several Underwriters, to the effect that (i) the signers of the certificate have
read this Agreement, and the representations and warranties of the Company in
this Agreement are true and correct in all material respects, as if made at and
as of the Closing Date or the Option Closing Date, as the case may be, and the
Company has complied in all material respects with all the agreements, fulfilled
in all material respects all the covenants and satisfied in all material
respects all the conditions on its part to be performed, fulfilled or satisfied
at or prior to the Closing Date or the Option Closing Date, as the case may be,
and (ii) the signers of the certificate have carefully examined the Registration
Statement and the Prospectus and any amendments or supplements thereto, and the
conditions set forth in Section 7(h) hereof have been satisfied;
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(j) the Representatives shall have received at the Closing
Date and any Option Closing Date certificates of or on behalf of the Selling
Shareholders dated as of the date of the Closing Date or Option Closing Date, as
the case may be, and addressed to the Representatives, individually and as
representatives of the several Underwriters, to the effect that (i) the Selling
Shareholders have read this Agreement, and the representations and warranties of
the Selling Shareholders in this Agreement are true and correct in all material
respects, as if made at and as of the Closing Date or the Option Closing Date,
as the case may be, and (ii) the Selling Shareholders have examined the
Registration Statement and the Prospectus and any amendments or supplements
thereto, and the conditions set forth in Section 7(h) hereof have been satisfied
with respect to the Selling Shareholders;
(k) at the time this Agreement is executed and at the Closing
Date and any Option Closing Date, the Representatives shall have received a
letter addressed to the Representatives, individually and as representatives of
the several Underwriters, in form and substance satisfactory to the
Representatives in all respects (including, without limitation, the non-material
nature of the changes or decreases, if any, referred to in clause (iii) below)
from KPMG Peat Marwick dated as of the date of this Agreement, the Closing Date
or the Option Closing Date, as the case may be:
(i) confirming they are independent certified
public accountants within the meaning of the Act and the Regulations, and
stating that the section of the Primary Registration Statement under the caption
"Experts" is correct insofar as it relates to them;
(ii) stating that, in their opinion, the
consolidated financial statements, schedules and notes of the Company and the
Subsidiaries audited by them and included in the Registration Statements comply
in form in all material respects with the applicable accounting requirements of
the Act and the Regulations;
(iii) stating that, on the basis of specified
procedures, which included the applicable procedures specified by the American
Institute of Certified Public Accountants for a review of interim financial
information, as described in SAS No. 71, Interim Financial Information, a
reading of the latest available unaudited interim consolidated financial
statements of the Company (with an indication of the date of the latest
available unaudited interim financial statements), a reading of the minutes of
the meetings of the stockholders and the Boards of Directors of the Company and
the Subsidiaries, and audit and compensation committees of such Boards, if any,
and inquiries to certain officers and other employees of the Company and the
Subsidiaries responsible for operational, financial and accounting matters and
other specified procedures and inquiries, nothing has come to their attention
that would cause them to believe that (A) the unaudited consolidated financial
statements of the Company and the Subsidiaries included in the Registration
Statements and related schedules if any, (1) do not comply in form and in all
material respects with the applicable accounting requirements of the Act and the
Regulations, or (2) should be materially modified in order for such unaudited
financial statements to be in conformity with generally accepted accounting
principles; (B) at a specified date not more than five business days prior to
the date of such letter, there was any change in the capital stock or debt of
the Company or any decrease in net current assets, total assets or stockholders'
equity of the Company as compared with the amounts shown in the April 30, 1997
consolidated balance sheet of the Company included the
-26-
Registration Statements, or that for the period from May 1, 1997 to a specified
date not more than five days prior to the date of the letter, there were any
decreases, in revenues, operating income or total or per share amounts of net
income, except in all instances for changes, decreases or increases that the
Registration Statements disclose have occurred or may occur and except for such
other changes, decreases or increases which the Representatives shall in their
sole discretion accept; or (C) the unaudited pro forma financial statements
included in the Registration Statements, if any, do not comply as to form in all
material respects with the applicable accounting requirements of Regulation S-X
under the Act and that the pro forma adjustments have not been properly applied
to the historical amounts in the compilation of those statements; and
(iv) stating that they have compared specific
dollar amounts, numbers of shares and other numerical data and financial
information set forth in the Registration Statement that have been specified by
the Representatives prior to the date of this Agreement (to the extent that such
information is derived from the accounting records subject to the internal
control structure, policies and procedures of the Company's or the Subsidiaries'
accounting system, or has been derived directly from such accounting records by
analysis or comparison or has been derived from other records and analyses
maintained or prepared by the Company or any Subsidiary thereof) with the
results obtained from the application of readings, inquiries and other
appropriate procedures (which procedures do not constitute an audit in
accordance with generally accepted auditing standards) set forth in the letter,
and found them to be in agreement;
(l) the Representatives shall have received from KPMG Peat
Marwick a letter addressed to the Company and made available to the
Representatives for the use of the Underwriters stating that their review of the
Company's system of internal accounting controls, to the extent they deem
necessary in establishing the scope of their audit of the Company's consolidated
financial statements as of April 30, 1997 did not disclose any weaknesses in
internal controls that they considered to be material weaknesses;
(m) there shall have been duly tendered to the Representatives
for the respective accounts of the Underwriters certificates representing all of
the Shares to be purchased by the Underwriters on the Closing Date or any Option
Closing Date, as the case may be;
(n) at the Closing Date and any Option Closing Date, the
Representatives shall have been furnished such additional documents, information
and certificates as they shall have reasonably requested;
(o) the issuance and sale of the Shares shall be legally
permitted under applicable Blue Sky or state securities laws so long as such
sales are made in accordance with the Blue Sky Memorandum;
(p) the Representatives shall have received copies of the
executed Custody Agreement provided for in Section 1(b)(i) hereof for each
Selling Shareholder, and such documents shall have been approved in form and
substance by the Underwriters' Counsel, such approval not to be withheld
unreasonably; and
-27-
(q) all corporate and other proceedings and other matters
incident to the authorization, form and validity of this Agreement and the form
of the Registration Statements and Prospectus and all other legal matters
related to this Agreement and the transactions contemplated hereby (including
but not limited to all opinions, certificates, letters and documents required or
permitted hereunder) shall be reasonably satisfactory in all respects to
Underwriters' Counsel. The Company and the Selling Shareholders shall have
furnished to such counsel all documents and information that they shall have
reasonably requested to enable them to pass upon such matters.
The Company and the Selling Shareholders shall furnish the
Representatives with such conformed copies of such opinions, certificates,
letters and other documents as they shall reasonably request. All such opinions,
certificates, letters and documents shall be in compliance with the provisions
hereof only if they are reasonably satisfactory in form and substance to the
Representatives and the Underwriters' counsel. If any condition to the
Underwriters' obligations hereunder to be fulfilled prior to or at the Closing
Date or any Option Closing Date, as the case may be, is not fulfilled, the
Representatives may on behalf of the several Underwriters, terminate this
Agreement with respect to the Closing Date or such Option Closing Date, as
applicable, or, if they so elect, waive any such conditions that have not been
fulfilled or extend the time for their fulfillment. Any such termination shall
be without liability of the Underwriters to the Company or the Selling
Shareholders.
8. Indemnification and Contribution
(a) The Company and each Selling Shareholder, severally and
not jointly, shall indemnify and hold harmless each Underwriter, and each
person, if any, who controls each Underwriter within the meaning of Section 15
of the Act or Section 20 of the Exchange Act, against any and all loss,
liability, claim, damage and expense whatsoever, including, but not limited to,
any and all reasonable expenses incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any claim
whatsoever or in connection with any investigation or inquiry of, or action or
proceeding that may be brought against, the respective indemnified parties,
arising out of or based upon (x) in the case of each Selling Shareholder, any
breach of such Selling Shareholder's representation and warranties made in this
Agreement, and (y) in the case of the Company, (i) any breach of representations
and warranties made in this Agreement; (ii) any untrue statements or alleged
untrue statements of material fact contained in any Preliminary Prospectus, the
Registration Statements or the Prospectus, or any amendment or supplement
thereto, any application or other document (in this Section 8 collectively
called "application") executed by the Company and based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify all or any part of the Shares under the securities laws thereof or filed
with the SEC or the NASD, (iii) the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, (iv) any untrue statement or alleged untrue statement of
material fact contained in any audio or visual materials used in connection with
the marketing of the Shares, including without limitation, slides, videos, films
and tape recordings, or (v) any act or failure to act or any alleged act or
failure to act by any Underwriter in connection with, or relating in any manner
to, the Shares or the offering contemplated hereby, and which is included as
part of or referenced in any claim or action arising out of or based upon
matters covered by (i) or (ii) above; provided, however, that the foregoing
indemnity:
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(i) shall not apply in respect of any statement
or omission made in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through the Representatives
expressly for use in any Preliminary Prospectus, the Registration Statements or
Prospectus, or any amendment or supplement thereto, as the case may be; and
(ii) with respect to any Preliminary Prospectus,
shall not inure to the benefit of any Underwriter from whom the person asserting
any such losses, claims, damages, liabilities or expenses purchased the Shares
if, at or prior to the written confirmation of the sale of such Shares, a copy
of an amended Preliminary Prospectus or the Prospectus (or the Prospectus as
amended or supplemented) was delivered to such Underwriter, but was not sent, or
delivered to such person and the untrue statement or omission of a material fact
contained in such Preliminary Prospectus was corrected in the amended
Preliminary Prospectus or Prospectus (or the Prospectus as amended or
supplemented), unless such failure on the part of such Underwriter is the result
of noncompliance by the Company with Section 5(a)(vi) hereof.
The obligations of the Company and the Selling Shareholders under this
Section 8(a) will be in addition to any liability the Company and the Selling
Shareholders may otherwise have.
(b) Each Underwriter, severally and not jointly, shall
indemnify and hold harmless the Company, each of the directors of the Company,
each of the officers of the Company who shall have signed the Registration
Statements, each Selling Shareholder, and each other person, if any, who
controls the Company or a Selling Shareholder within the meaning of the Act to
the same extent as the foregoing indemnities from the Company and the Selling
Shareholders to the several Underwriters, but only with respect to any loss,
liability, claim, damage or expense resulting from statements or omissions, or
alleged statements or omissions, if any, made in any Preliminary Prospectus, the
Registration Statements or Prospectus or any amendment or supplement thereto,
and in conformity with written information furnished to the Company by any
Underwriter through the Representatives expressly for use in any Preliminary
Prospectus, the Registration Statements or Prospectus, or any amendment or
supplement thereto, or any application, as the case may be. The obligations of
each Underwriter under this Section 8(a) will be in addition to any liability
such Underwriter may otherwise have.
(c) If any action, inquiry, investigation or proceeding is
brought against any person in respect of which indemnification may be sought
pursuant to Section 8(a) or (b) hereof, such person (hereinafter called the
"indemnified party") shall, promptly after notification of, or receipt of
service of process for, such action, inquiry, investigation or proceeding,
notify in writing the party or parties against whom indemnification is to be
sought (hereinafter called the "indemnifying party") of the institution of such
action, inquiry, investigation or proceeding. The indemnifying party, upon the
request of the indemnified party, shall assume the defense of such action,
inquiry, investigation or proceeding, including, without limitation, the
employment of counsel (reasonably satisfactory to such indemnified party) and
payment of expenses. No indemnification provided for in this Section 8 shall be
available to any indemnified party who shall fail to give such notice if the
indemnifying party does not have knowledge of such action, inquiry,
investigation or proceeding, to the extent that such indemnifying party has been
materially
-29-
prejudiced by the failure to give such notice, but the omission to so notify the
indemnifying party shall not relieve the indemnifying party otherwise than under
this Section 8. Such indemnified party or controlling person thereof shall have
the right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party
unless the employment of such counsel shall have been authorized in writing by
the indemnifying party in connection with the defense of such action. If such
indemnified party or parties shall have been advised by counsel that there may
be a conflict between the positions of the indemnifying party or parties and of
the indemnified party or parties or that there may be legal defenses available
to such indemnified party or parties different from or in addition to those
available to the indemnifying party or parties, the indemnified party or parties
shall be entitled to select counsel to conduct the defense to the extent
determined by such counsel to be necessary to protect the interests of the
indemnified party or parties, and the reasonable fees and expenses of such
counsel shall be borne by the indemnifying party. Expenses covered by the
indemnification in this Section 8 shall be paid by the indemnifying party as
they are incurred by the indemnified party. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement of any
pending or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement includes an unconditional release of
such indemnified party from all liability on any claims that are the subject
matter of such action. Anything in this Section 8 to the contrary
notwithstanding, the indemnifying party shall not be liable for any settlement
of any such claim effected without its written consent.
(d) Each Selling Shareholder's aggregate liability under this
Section 8 shall be limited to an amount equal to the net proceeds (before
deducting expenses) received by such Selling Shareholder from the sale of such
Selling Shareholder's Shares pursuant to this Agreement.
(e) If the indemnification provided for in this Section 8 is
unavailable or insufficient to hold harmless an indemnified party under Section
8(a) or (b) hereof in respect of any losses, liabilities, claims, damages or
expenses (or actions, inquiries, investigations or proceedings in respect
thereof) referred to herein, except by reason of the provisos set forth in
Section 8(a) hereof or the failure to give notice as required in Section 8(c)
hereof (provided that the indemnifying party does not have knowledge of the
action, inquiry, investigation or proceeding and to the extent such party has
been materially prejudiced by the failure to give such notice), then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, liabilities, claims, damages or
expenses (or actions, inquiries, investigations or proceedings in respect
thereof) in such proportion as is appropriate to reflect the relative benefits
received by the Company or the Selling Shareholders on the one hand and the
Underwriters on the other from the offering of the Shares. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law, then each indemnifying party shall contribute to such amount
paid or payable by such indemnified party in such proportion as is appropriate
to reflect not only such relative benefits but also the relative fault of the
Company or each Selling Shareholder on the one hand and the Underwriters on the
other in connection with the statements or omissions that resulted in such
losses, liabilities, claims or reasonable expenses (or actions, inquiries,
investigations or proceedings in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company or each
Selling Shareholder an the one hand and the
-30-
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by the
Company or each Selling Shareholder bears to the total underwriting discount and
commissions received by the Underwriters, in each case as set forth in the table
on the cover page of the Prospectus. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or a Selling Shareholder on the
one hand or the Underwriters on the other hand and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company, the Selling Shareholders and the Underwriters agree that
it would not be just and equitable if contributions pursuant to this Section
8(e) were determined by pro rata allocation (even if the Selling Shareholders or
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation that does not take account of the equitable considerations
referred to above in this Section 8(e). The amount paid or payable by an
indemnified party as a result of the losses, liabilities, claims, damages or
reasonable expenses (or actions, inquiries, investigations or proceedings in
respect thereof) referred to above in this Section 8(e) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8(e), (i) the provisions of the
Agreement Among Underwriters shall govern contribution among Underwriters, (ii)
no Underwriter (except as provided in the Agreement Among Underwriters) shall be
required to contribute any amount in excess of the underwriting discounts and
commissions applicable to the Shares purchased by such Underwriter, and (iii) no
person guilty of fraudulent misrepresentation (within the meaning of Section 11
(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' and the Selling
Shareholders' obligations in this Section 8(e) to contribute are several in
proportion to their individual underwriting obligations and number of Shares
sold, respectively, and not joint.
9. Representations and Agreements to Survive Delivery. Except as the
context otherwise requires, all representations, warranties and agreements
contained in this Agreement shall be deemed to be representations, warranties
and agreements made as of the Closing Date and any Option Closing Date. All such
representations, warranties and agreements of the Underwriters, the Company and
the Selling Shareholders, including, without limitation, the indemnity and
contribution agreements contained in Section 8 hereof and the agreements
contained in Sections 6, 9, 10 and 13 hereof, shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of any
Underwriter or any controlling person, and shall survive delivery of the Shares
and termination of this Agreement, whether before or after the Closing Date or
any Option Closing Date.
10. Effective Date of this Agreement and Termination Hereof.
(a) This Agreement shall become effective at the earlier of
(i) 10:00 a.m., Philadelphia, Pennsylvania time, on the first business day
following the Effective Date or (ii) at the time of the public offering by the
Underwriters of the Shares, whichever is earlier, except that the
-31-
provisions of Sections 6, 8, 10 and 13 hereof shall be effective upon execution
hereof. The time of the public offering, for the purpose of this Section 10,
shall mean the time when any of the Shares are first released by the
Underwriters for offering by dealers. The Representatives may prevent the
provisions of this Agreement (other than those contained in Sections 6, 8, 10
and 13) hereof from becoming effective without liability of any party to any
other party, except as provided in Sections 6 and 8 hereof, by giving the notice
indicated in Section 10(c) hereof before the time the other provisions of this
Agreement become effective.
(b) The Representatives shall have the right to terminate this
Agreement at any time prior to the Closing Date as provided in Sections 7 and 11
hereof or if any of the following have occurred:
(i) since the respective dates as of which
information is given in the Registration Statements and the Prospectus, any
material adverse change or any development involving a prospective material
adverse change in or affecting the condition, financial or otherwise, of the
Company, or the earnings, business affairs, management or business prospects of
the Company, whether or not arising in the ordinary course of business, that
would, in the Representatives' reasonable judgment, make the offering or
delivery of the Shares impracticable;
(ii) any outbreak of hostilities or other
national or international calamity or crisis or change in economic, political or
financial market conditions if the effect on the financial markets of the United
States of such outbreak, calamity, crisis or change would, in the
Representatives' reasonable judgment, make the offering or delivery of the
Shares impracticable;
(iii) suspension of trading generally in
securities on the New York Stock Exchange, the American Stock Exchange, or the
over-the-counter market (including, without limitation, the Nasdaq Stock
Market's National Market System) or limitation on prices (other than limitations
on hours or numbers of days of trading) for securities or the promulgation of
any federal or state statute, regulation, rule or order of any court or other
governmental authority that in the Representatives' reasonable opinion
materially and adversely affects trading of the Shares on such exchange or
over-the-counter market;
(iv) the enactment, publication, decree or other
promulgation of any federal or state statute, regulation, rule or order of any
court or other governmental authority that in the Representatives' reasonable
opinion materially and adversely affects or will materially or adversely affect
the business or operations of the Company;
(v) the taking of any action by any federal,
state or local government or agency in respect of monetary or fiscal affairs
that in the Representatives' reasonable opinion has a material adverse effect on
the securities markets in the United States; or
(vi) trading in any securities of the Company
shall have been suspended or halted by the Nasdaq Stock Market's National Market
System or the SEC.
-32-
(c) If the Representatives elect to prevent this Agreement
from becoming effective or to terminate this Agreement as provided in this
Section 10, the Representatives shall notify the Company and the Selling
Shareholders thereof promptly by telephone, telegram or facsimile, confirmed by
letter.
11. Default by an Underwriter.
(a) If any Underwriter or Underwriters shall default in its or
their obligation to purchase Firm Shares or Optional Shares hereunder, and if
the Firm Shares or Optional Shares with respect to which such default relates do
not exceed in the aggregate 10% of the number of Firm Shares or Optional
Shares, as the case may be, that all Underwriters have agreed to purchase
hereunder, then such Firm Shares or Optional Shares to which the default relates
shall be purchased severally by the non-defaulting Underwriters in proportion to
their respective commitments hereunder.
(b) If such default relates to more than 10% of the Firm
Shares or Optional Shares, as the case may be, the Representatives may in their
discretion arrange for another party or parties (including a non-defaulting
Underwriter) to purchase such Firm Shares or Optional Shares to which such
default relates, on the terms contained herein. In the event that the
Representatives do not arrange for the purchase of the Firm Shares or Optional
Shares to which a default relates as provided in this Section 11(b), this
Agreement may be terminated by the Representatives or by the Company without
liability on the part of the several Underwriters (except as provided in Section
8 hereof) or the Company (except as provided in Sections 6 and 8 hereof);
provided that if such default occurs with respect to Optional Shares after the
Closing Date, this Agreement will not terminate as to the Firm Shares or any
Optional Shares purchased prior to such termination. Nothing herein shall
relieve a defaulting Underwriter of its liability, if any, to the other several
Underwriters and to the Company for damages occasioned by its default hereunder.
(c) If the Firm Shares or Optional Shares to which the default
relates are to be purchased by the nondefaulting Underwriters, or are to be
purchased by another party or parties, the Representatives or the Company shall
have the right to postpone the Closing Date or any Option Closing Date, as the
case may be, for a reasonable period, but not in any event exceeding seven days,
in order to effect whatever changes may thereby be made necessary in the
Registration Statements or the Prospectus or in any other documents and
arrangements, and the Company agrees to file promptly any amendment to the
Registration Statements or supplement to the Prospectus that in the opinion of
Underwriters' Counsel may thereby be made necessary. The terms "Underwriters"
and "Underwriter" as used in this Agreement shall include any party substituted
under this Section 11 with like effect as if it had originally been a party to
this Agreement with respect to the Firm Shares and/or Optional Shares purchased
by it.
(d) It is understood that the Representatives (or either of
them), individually and not as the representatives of the several Underwriters,
may (but shall not be obligated to) make payment of the purchase price on behalf
of any Underwriter or Underwriters whose check or checks shall not have been
received by them prior to the Closing Date or the Option Closing Date for the
Firm Shares or Optional Shares, as the case may be, to be purchased by such
Underwriter or
-33-
Underwriters. Any such payment by the Representatives shall not relieve any
such Underwriter or Underwriters of any of its or their obligations hereunder.
12. Information Furnished by Underwriters. The statement set forth on
the inside cover page regarding stabilization and in the second and eighth
paragraph under the caption "Underwriting" in any Preliminary Prospectus and the
Prospectus constitute the only written information furnished by or on behalf of
any Underwriter referred to in Sections l(a)(ii) and 8 hereof.
13. Notice. All communications hereunder, except as otherwise
specifically provided herein, shall be in writing and, if sent to the
Underwriters, shall be mailed, delivered, telegrammed or faxed and confirmed to
such Underwriters, c/o Janney ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, with a copy to Blank
Rome ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Four ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire; if sent to the Company, shall be mailed,
delivered, telegrammed or faxed and confirmed to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc., ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman,
President and Chief Executive Officer, with a copy to ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇ ▇. Paris,
Jr., Esquire and if sent to the Selling Shareholders shall be mailed, delivered,
telegrammed or faxed and confirmed to ________________________________, with a
copy to _________________________________.
14. Parties. This Agreement shall inure solely to the benefit of, and
shall be binding upon, the several Underwriters, the Company, the Selling
Shareholders and the controlling persons, directors and officers thereof, and
their respective successors, assigns, heirs, legatees and legal representatives,
and no other person shall have or be construed to have any legal or equitable
right, remedy or claim under or in respect of or by virtue of this Agreement or
any provision herein contained. The terms "successors" and "assigns" shall not
include any purchaser of the Shares merely because of such purchase.
15. Definition of Business Day. For purposes of this Agreement,
"business day" means any day on which the Nasdaq Stock Market's National Market
System is opened for trading.
16. Counterparts. This Agreement may be executed in one or more
counterparts, and all such counterparts will constitute one and the same
instrument.
17. Construction. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania applicable to
agreements made and performed entirely within the Commonwealth.
-34-
If the foregoing correctly sets forth your understanding of our
agreement, please sign and return to the Company the enclosed duplicate hereof,
whereupon it will become a binding agreement in accordance with its terms.
Very truly yours,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, INC.
By:_________________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman, President and
Chief Executive Officer
THE SELLING SHAREHOLDERS
By:______________________________________
Attorney-in-Fact, acting on behalf of
each of the Selling Shareholders
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ INC.
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇▇, INC.
As Representatives of the Several Underwriters
named in Schedule I hereto
BY: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ INC.
By:_________________________________________
Authorized Representative
BY: ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇▇, INC.
By:_________________________________________
Authorized Representative
-35-
SCHEDULE I
Underwriters
Number of Firm Shares
Underwriter to be Purchased
-------------------------------------------- ---------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc.................
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇▇, Inc...................
---------------------
TOTAL.............................. 1,129,099
=====================
I-1
SCHEDULE II
Table 1. Selling Shareholders
Number of Firm Shares
Selling Shareholders to be Sold
------------------------------------- ---------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc. 401(k) Plan Trust 20,917
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 70,790
▇▇▇▇ ▇▇▇▇▇▇▇▇ 20,000
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 4,348
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 13,044
-------
TOTAL 129,099
=======
II-1
TABLE 2. OPTIONAL SHARES
Number of
Optional
Selling Shareholders Shares
To Be Sold
---------------------------------------------------------------- ----------
A. All shares of these persons to be sold pro rata before any of
those listed in Section B below:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc. 401(k) Plan Trust 3,137
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 10,619
▇▇▇▇ ▇▇▇▇▇▇▇▇ 3,000
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 652
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 1,956
19,364
======
B. All Shares of the following persons to be sold after
all shares in Section A above are sold:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc....................... 150,000
-------
TOTAL 169,364 Shares
=======
II-2
SCHEDULE III
The Company's Subsidiaries
Name Jurisdiction in Which Incorporated/Organized
---- --------------------------------------------
▇▇▇▇, Inc. Virginia
Refant Partners Pennsylvania
Hewfant, Inc. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ of Memphis, LLC Virginia
III-1
SCHEDULE IV
Persons Who Are to Deliver Lock-Up Agreements
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
Lock-up obligations included in Underwriting Agreement.
The Selling Shareholders
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc. 401(k) Plan Trust
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Officers and Directors
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇-1
EXHIBIT B
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ INC.
1,129,099 Common Shares*
----------------------------------
SELECTED DEALER AGREEMENT
----------------------------------
Philadelphia, Pennsylvania
__________, 1997
Ladies and Gentlemen:
We have delivered to you a prospectus (the "Prospectus") relating to
the offering by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc., a Virginia corporation (the "Company"), and
certain selling shareholders thereof of the number of shares of common stock of
the Company stated therein ("Shares"). The undersigned and the other
underwriters (the "Underwriters") listed in Schedule I to the Underwriting
Agreement referred to in the Prospectus (the "Underwriting Agreement") have
agreed to purchase the Shares, subject to the conditions specified in the
Underwriting Agreement.
Subject to the terms and conditions hereof and to the modification,
withdrawal or cancellation of the offering without notice, and subject to the
terms and conditions of the Underwriting Agreement, one or more of the
Underwriters, acting through us, are severally offering to certain dealers
("Dealers") (included among whom may be any or all of the Underwriters and their
respective subsidiaries) who are members of the National Association of
Securities Dealers, Inc. (the "NASD") or foreign dealers registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), who shall
agree, in making sales of the Shares in the United States, to conform to the
NASD Conduct Rules, or if not so registered, shall agree not to reoffer, resell
or deliver the Shares in the United States, its territories or possessions or to
persons who they have reason to believe are citizens thereof or residents
therein, unless they comply with the NASD's Interpretation with Respect to
Free-Riding and Withholding and comply, as though they were members of the NASD,
with the provisions of Rules 2730, 2740 and 2750 of the NASD Conduct Rules and
with Rule 2420 of the NASD Conduct Rules as that rule applies to a nonmember
foreign dealer, the opportunity to purchase Shares at $_______ per Share (the
"public offering price") less a concession to Dealers of $______ per Share. This
offer is extended to you only on behalf of such of the Underwriters as may
lawfully sell Shares to Dealers in your state.
We shall advise you by telegram, facsimile or letter of the method and
terms of the offering. Acceptance of any reserved Shares, which must be sent by
telegraph or in writing to us, received by the time specified therefor in the
offering telegram, facsimile or letter to us by the time specified therefore in
the offering communication, and any application for additional Shares, will be
subject
--------
* Plus an over-allotment option to purchase up to 169,364 additional shares.
IV-2
to rejection in whole or in part. The subscription books for the offering to
Dealers may be closed by us at any time without notice and we reserve the right
to reject any subscription in whole or in part. All subscriptions will be
received subject to prior sale.
Immediately upon receipt of the aforementioned telegram, facsimile or
letter, you may reoffer the Shares purchased by you hereunder, subject to the
Underwriters receipt and acceptance of the Shares, and upon the other terms and
conditions set forth herein and in the Prospectus. Shares purchased hereunder or
pursuant to the following sentence are to be offered to the public at the public
offering price, except that an amount not exceeding $_____ per Share may be
allowed to any member of the NASD (or to foreign dealers who are not eligible
for such membership but who agree to conform to the NASD Conduct Rules in making
sales to purchasers in the United States) acting as principal or as buyer's
agent, if such allowance is to be retained and not reallowed in whole or in
part. With our consent or after the books in respect of the offering to Dealers
have been closed, Dealers who are parties to the Selected Dealer Agreement and
Underwriters may deal in Shares with each other at the public offering price
less an amount not exceeding the concession to Dealers. After the Shares are
released for sale to the public, we are authorized to vary the public offering
price and other selling terms.
The Shares confirmed to you are to be paid for at the public offering
price less the concession to Dealers at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Inc., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇,
IV-3
Pennsylvania, prior to 9:00 a.m., Philadelphia, Pennsylvania time, on the
Closing Date and, if applicable, the Option Closing Date, as defined in the
Underwriting Agreement, by certified or official bank check payable in next day
funds to our order against delivery of such Shares. Dealers not located in
Philadelphia should arrange to have a Philadelphia bank or correspondent accept
delivery of, and pay for, the Shares that they agree to purchase and should
advise us immediately of the name of such bank or correspondent.
In order to facilitate distribution of the Shares, we, for the
respective accounts of the several Underwriters, during the term of the
agreement among the Underwriters (the "Agreement Among Underwriters") may,
within the limits specified in such agreement, make purchases and sales of
Shares (but are without obligation to do so) in the open market or otherwise,
for long or short account, at such prices, in such amounts and in such manner as
we may determine, and, in arranging for the sale of Shares to Dealers, may
over-allot for the accounts of the Underwriters, and may make purchases for the
purposes of covering such over-allotments. There can be no assurance that the
price of Shares will be stabilized or that stabilization, if commenced, will not
be discontinued at any time.
Your acceptance hereof shall constitute an obligation on your part to
purchase, upon the terms and conditions hereof, the Shares confirmed to you in
respect hereof and to observe all of the terms and conditions hereof. You agree
that in reoffering the Shares you will comply with all applicable requirements
of the Securities Act of 1933, as amended, the Exchange Act, and of all
applicable rules and regulations under the federal securities laws. If you fail
to pay for the Shares confirmed to you or fail to perform any of your other
obligations hereunder, we may, in our discretion and without demand, notice or
legal proceedings, and in addition to any and all remedies otherwise available
to us and to the other several Underwriters (a) terminate any right or interest
on your part hereunder, and (b) at any time and from time to time sell, without
notice to you, any Shares then held for your account at public or private sale
at such price or prices and upon such terms and conditions as we may deem fair,
and apply the net proceeds so realized, as determined by us, toward payment of
any obligations in respect of which you are in default, and, notwithstanding any
action
IV-4
taken under (a) or (b) above, or both, you shall remain liable to the
Underwriters for all loss and expense resulting from your default. At any such
sale or sales, any of the Underwriters may purchase any portion of the Shares so
sold, free from any right or interest on your part in such Shares. A default by
one or more Dealers shall not release you from any obligation hereunder.
You agree that until termination of this Agreement you will advise us,
from time to time upon request, as to the number of Shares confirmed to you
hereunder which then remain unsold; and you further agree that, until
termination of this Agreement, you will upon our request sell to us for the
account of one or more of the Underwriters such number of such unsold Shares as
we may specify at the public offering price or, if agreeable to you, at the
public offering price less an amount not in excess of the concession to Dealers.
As representatives of the Underwriters, we shall have full authority to
take such action as we may deem advisable in respect to all matters pertaining
to the offering or arising hereunder. You are not authorized (a) by the Company
or by any of the Underwriters to give any information or to make any
representations in connection with the offering or sale of the Shares other than
those contained in the Prospectus or (b) to act as agent for the Company or for
any of the Underwriters when offering the Shares to the public or otherwise.
Nothing contained herein shall constitute the Dealers as an association or
partnership with us or with each other, or an unincorporated business or other
separate entity.
We will advise you on request of the jurisdictions under the Blue Sky
or securities laws of which counsel for the Underwriters have advised us that
the Shares have been qualified for public offering and sale, or are exempt from
qualification. We shall, however, be under no responsibility whatsoever to any
Dealer with respect to the right of such Dealer to sell the Shares in any
jurisdiction.
We have undertaken and undertake to mail copies of the Prospectus upon
receipt of written requests to the addresses stated in such requests. You
confirm that you have undertaken and undertake to do the same with regard to the
delivery of such copies to your associated persons and to other persons.
Neither we nor any Underwriters shall be under any liability (except
for our own want of good faith) for or in respect of the validity or value of,
or title to, any of the Shares, the form of, or the statements contained in, or
the validity of, the Prospectus or any amendment or supplement thereto, or any
other instruments executed by or on behalf of the Company or others, the form or
validity of the Underwriting Agreement, the Agreement Among Underwriters or this
Agreement, the delivery of the Shares, the performance by the Company or others
of any agreement on its or their part or any matter in connection with any of
the foregoing; provided, however, that nothing in this paragraph shall be deemed
to relieve us or any Underwriters from any liability imposed by federal
securities laws.
You confirm that you are familiar with the Interpretation of the Board
of Governors of the NASD with respect to Free-Riding and Withholding, and you
agree that you will comply with such Interpretation in offering and selling
Shares to the public.
You further represent that neither you nor any of your directors,
officers, partners or "persons associated with" you (as defined in the By-Laws
of the NASD), nor, to your knowledge any "related
IV-5
person" (as defined by the Rule 2710 of the NASD Conduct Rules) have
participated or intend to participate in any transaction or dealing as to which
documents or information are required to be filed with the NASD pursuant to such
Rule 2710.
All communications from you should be addressed to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ Inc., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
Syndicate Department. Any notice from us to you shall be deemed to have been
duly authorized by the Underwriters and to have been duly given if mailed or
telegraphed to you at the address to which this letter is addressed.
This Agreement shall terminate simultaneously with termination of the
Agreement Among Underwriters, but it may be terminated by us at any time
theretofore without notice. Upon termination of this Agreement, all
authorizations, rights and obligations hereunder shall cease, except rights and
obligations accrued or unsatisfied at the date of termination. Notwithstanding
termination of this Agreement, you shall be liable for your proper proportion of
any transfer tax or other liability which may be asserted against us or any of
the Underwriters or Dealers purchasing Shares hereunder, based upon the claim
that the Dealers, or any of them, constitute a partnership, an association, an
unincorporated business or other separate entity.
If before the termination of this Agreement, we shall purchase, or
contract to purchase, for the accounts of the Underwriters, in the open market
or otherwise, any Shares delivered to you pursuant hereto, you shall repay to
us, for the account of the Underwriters, the concession to Dealers with respect
to such Shares, and all brokerage commissions and transfer taxes paid in
connection with such purchase or contract to purchase.
Please confirm your agreement to abide by and conform to all the terms
and conditions of this Agreement by signing and returning at once the duplicate
copy enclosed herewith.
Yours very truly,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ INC.
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇▇, INC.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ INC.
By: _______________________________
(Authorized Signature)
Please execute the Confirmation on next page.
IV-6
CONFIRMATION
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ INC.
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇▇, Inc.
c/o Janney ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We hereby confirm our agreement to purchase the Shares to which the
foregoing Selected Dealer Agreement relates, subject to your acceptance or
rejection in whole or in part in case of a subscription or application in excess
of any reservation, and acknowledge that such purchase and the purchase of
additional Shares, if any, prior to the termination of the Selected Dealer
Agreement, are subject to all the applicable terms and conditions thereof. We
agree to abide by and conform to the Selected Dealer Agreement and to your
offering telegram, facsimile or letter referred to therein, and to take up and
pay for such Shares as therein provided. We acknowledge receipt of the
Prospectus relating to the Shares and we hereby confirm that in entering into
the Selected Dealer Agreement and in offering the Shares we have relied and will
rely upon the Prospectus and on no other statements whatsoever, written or oral.
We further confirm that we are a member of the National Association of
Securities Dealers, Inc. ("NASD"), or if we are not such a member, that (i) we
are a foreign dealer registered under the Securities Exchange Act of 1934, as
amended, and hereby agree that in making sales of Shares in the United States we
will conform to the NASD Conduct Rules, or (ii) if not so registered, we hereby
agree not to reoffer, resell or deliver Shares in the United States, its
territories or possessions or to any person who we have reason to believe is a
citizen thereof or resident therein, unless we comply with the NASD's
Interpretation with Respect to Free-Riding and Withholding and comply, as though
we were a member of the NASD, with the provisions of Rules 2730, 2740 and 2750
of the NASD Conduct Rules and with Rule 2420 of such rules as that Rule applies
to a non-member foreign dealer.
________________________________________
(Name of Firm)
By: ____________________________________
(Authorized Signature)
________________________________________
(Address)
________________________________________
(City and State)
Dated:________________, 1997
IV-7
Exhibit 1
Opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
Counsel for ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
1. Each of the Company and the Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia, with all necessary corporate power and authority to
own or lease and operate its properties and to conduct its business as described
in the Prospectus. To the knowledge of such counsel, each of the Company and the
Subsidiaries has all licenses, permits, clearances, certifications,
registrations, approvals, consents and franchises required to own or lease and
operate its properties and to conduct their respective businesses as described
in the Prospectus. Each of the Company and the Subsidiaries is duly qualified to
do business as a foreign corporation and is in good standing in all
jurisdictions in which such qualification is required, except where the failure
to so qualify would not have a Material Adverse Effect.
2. The Company has all requisite power and authority to enter into the
Underwriting Agreement and the Underwriting Agreement has been duly authorized,
executed and delivered by the Company and constitutes a legal, valid and
binding, obligation of the Company, enforceable against the Company in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting creditors rights generally or
by general equitable principles, and except that the enforceability of the
indemnification and contribution provisions set forth in Section 8 of the
Underwriting Agreement may be limited by the federal and state securities laws
or principles of public policy.
3. The execution, delivery and performance of the Underwriting
Agreement by the Company and the consummation of the transactions contemplated
herein, do not and will not, with or without the giving of notice or the lapse
of time, or both, (a) conflict with any terms or provisions of the Certificate
of Incorporation or Bylaws of the Company or any Subsidiary, (b) result in a
breach of, or constitute a default under, result in the termination or
modification of, or result in the creation or imposition of any lien, security
interest, charge or encumbrance upon any of the assets of the Company or any
Subsidiary pursuant to, any contract, indenture, mortgage, deed of trust,
commitment or other agreement or instrument to which the Company or any
Subsidiary is a party or by which any of their respective assets is bound or
affected; (c) violate any applicable law, rule or regulation, or to such
counsel's knowledge, any judgment, order or decree, of any government or
governmental agency, instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any Subsidiary or any of their respective
properties or businesses; or (d) result in a breach, termination or lapse of the
Company's or any Subsidiary's corporate power and authority to own or lease and
operate their respective assets and to conduct its respective businesses as
described in the Prospectus.
4. At the date or dates indicated in the Prospectus, the Company had
the duly authorized and outstanding shares of capital stock as set forth under
the caption "Capitalization" and "Description of Capital Stock" in the
Prospectus and following the issuance of the Shares on the Closing Date, will
have the capitalization set forth under capitalization as adjusted in the
Prospectus. The description of the Company's capitalization in the Prospectus
conforms in all material respects to the instruments defining the same. There
are no options or warrants for the purchase of, other
1
outstanding rights to purchase, agreements or obligations to issue, or
agreements or other rights to convert or exchange any obligation or security
into, capital stock of the Company or securities convertible into or
exchangeable for capital stock of the Company, except as and to the extent
expressly described in the Prospectus. All of the outstanding stock or other
ownership interests in the Subsidiaries is owned by the Company free and clear
of all liens, encumbrances and security interests. The Company owns no other
stock or other interest, whether debt or equity, in any corporation, partnership
or other entity other than the Subsidiaries.
5. The authorized capital stock of the Company, including, without
limitation, the outstanding Common Shares, the Shares being issued, and the
authorized but unissued Preferred Stock, conforms in all material respects with
the descriptions thereof in the Prospectus, and such descriptions conform in all
material respects with the instruments defining the same. The information in the
Prospectus insofar as it relates to options, warrants and any other derivative
or convertible security with respect to the Common Shares and the preferred
stock is true and correct in all material respects.
6. The Common Shares outstanding immediately prior to the Closing Date
(including the shares to be purchased from the Selling Shareholders) have been
duly authorized and are validly issued, fully paid and non-assessable. The
Common Shares issuable upon exercise of outstanding options and warrants when
issued in accordance with the respective terms thereof, will be duly authorized,
validly issued, fully-paid and non-assessable; and none of such outstanding
Common Shares, were, and none of such issuable Shares will be, issued in
violation of any statutory preemptive rights, preemptive rights in the Company's
Certificate of Incorporation or Bylaws or, to such counsel's knowledge, any
other preemptive right of any securityholder of the Company.
7. The issuance and sale of the Shares by the Company have been duly
authorized and, when duly delivered against payment therefor as contemplated by
the Underwriting Agreement, the Shares will be validly issued, fully paid and
nonassessable, the holders thereof will not be subject to personal liability
solely by reason of being such holders, and good and valid title to the Shares,
free and clear of all liens, claims, encumbrances, security interests,
restrictions, and defects of title whatsoever, will pass to each of the
Underwriters who have purchased such Shares. None of the Shares will be issued
in violation of any statutory preemptive rights, preemptive rights in the
Company's Certificate of Incorporation or Bylaws or, to such counsel's
knowledge, any other preemptive right of any securityholder of the Company. The
certificates representing the Common Shares (including the shares to be issued
by the Company) are in proper legal form under, and conform in all respects to
the requirements of, the VSCA. To the knowledge of such counsel, neither the
filing of the Registration Statements nor the offering or sale of the Shares as
contemplated by the Underwriting Agreement gives any securityholder of the
Company any rights, other than those which have been waived, for or relating to
the registration of any Common Shares or any other securities of the Company.
8. The Common Shares (including the Shares) have been included for
quotation on the Nasdaq National Market. All previous offers and sales by or on
behalf of the Company in its own securities complied in all material respects
with the provisions of all applicable federal, state and foreign securities and
corporate laws.
9. No consent, approval, authorization, order, registration, license or
permit of any court, government, governmental agency, instrumentality or other
regulatory body or official is required
2
for (a) the valid authorization, issuance, sale and delivery by the Company of
any of the Shares, (b) the valid and legal execution, delivery or performance by
the Company of the Underwriting Agreement or (c) the taking of any action
contemplated therein or in the Registration Statements or the Prospectus except
such as may be required for the registration of the Shares under the Act, the
Regulations or the Exchange Act (all of which have been obtained), or for
compliance with the applicable state or foreign securities or Blue Sky laws.
10. The statements in the Registration Statements and Prospectus,
insofar as they are descriptions or summaries of, or references to, statutes,
regulations, governmental or other proceedings, contracts, agreements, or other
documents, are accurate in all material respects and present or summarize fairly
the information required to be disclosed under the Act or the Regulations. There
are no contracts, agreements or other documents required to be described or
referred to in the Registration Statements or Prospectus or to be filed as
exhibits to the Registration Statements under the Act or the Regulations that
have not been so described, referred to or filed as required. Such counsel has
read all contracts referred to in the Registration Statements or the Prospectus,
and such contracts are fairly summarized or described therein and conform in all
material respects to the descriptions thereof contained therein.
11. Neither the Company nor any Subsidiary is in violation of, or in
default under, any of the terms or provisions of (a) its Certificate or Articles
of Incorporation, as amended, or Bylaws, as amended, or similar governing
instruments, or (b) except to the extent such action would not have a Material
Adverse Effect, (i) any indenture, mortgage, deed of trust, contract, commitment
or other agreement or instrument to which it is a party or by which it or any of
its properties is bound or affected; (ii) any law, rule, regulation, judgment,
order or decree of any government or governmental agency, instrumentality or
court, domestic or foreign, having jurisdiction over it or any of its properties
or business; or (iii) any license, permit, certification, registration,
approval, consent or franchise referred to in Paragraph 1 hereof.
12. There are no claims, actions, suits, proceedings, arbitrations,
investigations or inquiries pending before, or to such counsel's knowledge,
threatened or contemplated by, any governmental agency, instrumentality, court
or tribunal, domestic or foreign, or before any private arbitration tribunal, to
which the Company or any Subsidiary is a party or is threatened to be made a
party that, if determined adversely to the Company or any Subsidiary, would, in
any case or in the aggregate, result have a Material Adverse Effect. Except as
disclosed in the Prospectus, there are no outstanding orders, judgments or
decrees of any court, governmental agency, instrumentality or tribunal enjoining
the Company or any Subsidiary from or requiring the Company or any Subsidiary to
take or refrain from taking, any action, or pursuant to which the properties or
assets of the Company or any Subsidiary are bound.
13. The Primary Registration Statement has become effective under the
Act, as of the Effective Date and, if applicable, any Rule 462 Registration
Statement became effective under the Act upon its filing. The SEC has not issued
any stop order suspending the effectiveness of the Registration Statement, nor
to such counsel's knowledge, has the SEC instituted or threatened to institute
proceedings with respect to any such order. Any and all filings required to be
made by Rules 424, 430A and 462 under the Act have been made.
14. The Primary Registration Statement and the Prospectus, as of the
Effective Date (and any Rule 462 Registration Statement upon its filing), and
each amendment or supplement thereto
3
as of its effective or issue date (except for the financial statements,
schedules and the notes thereto, as to which counsel expresses no opinion)
comply as to form in all material respects with, and appear on their face to be
appropriately responsive in all material respects to the applicable requirements
of the Act and Regulations.
15. The Company is not, and will not be immediately after receiving the
proceeds from the sale of any of the Shares, an "investment company" within the
meaning of the 1940 Act.
16. The Company is in compliance with the requirements of the Federal
Trade Commission rules governing franchising, including 16 C.F.R. ss.436, and
the applicable provisions of federal and state laws or regulations governing the
activities of a franchiser and the tax preparation business. The Company's
Franchise Offering Circular complies with the applicable requirements of state
law governing the activities of franchisers and complies as to form with the
requirements of the North American Securities Administrators Association's
Uniform Franchise Offering Circular.
Such counsel shall also state that they have participated in the
preparation of the Registration Statements and the Prospectus, including reviews
and discussions of the contents thereof, and while such counsel (for the
purposes of this paragraph) is not passing upon the accuracy or completeness of
the statements contained in the Registration Statements or the Prospectus, in
the course of such reviews and discussions, no facts came to its attention that
would cause them to have reason to believe that (a) the Registration Statements
or any post-effective amendment thereto, on the date it became effective,
contained any untrue statement of a material fact or omitted to state any
material fact necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, except that such counsel
need not express any opinion with respect to the financial statements, schedules
and the notes thereto or the financial tables included in the Prospectus and the
Registration Statements, or that (b) the Prospectus on the Effective Date, on
the date it was filed pursuant to Rule 424(b) and on the Closing Date or Option
Closing Date, as the case may be, contains any untrue statement of material fact
or omits to state any material fact necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, except that
such counsel need not express any opinion with respect to the financial
statements, schedules and the notes thereto or the financial tables included in
the Prospectus or the Registration Statements.
The foregoing opinion may be limited to the laws of the United States
and the laws of the Commonwealth of Virginia and such counsel may rely as to
matters of fact upon the representations of the Company set forth in the
Underwriting Agreement and upon certificates of officers of the Company and of
government officials, all of which certificates must be satisfactory in form and
scope to counsel for the Underwriters. Counsel shall state in such opinion that
its opinion may be relied upon by counsel to the Underwriters.
4
Exhibit 2
OPINION OF COUNSEL FOR SELLING SHAREHOLDERS
(i) With respect to Selling Shareholders that are corporations, each
Selling Shareholder is a corporation duly organized and validly existing under
the laws of its jurisdiction of incorporation;
(ii) Each Selling Shareholder has the power to enter into the
Underwriting Agreement, the Custody Agreement and the Power-of-Attorney and to
sell, transfer and deliver the shares being sold by such Selling Shareholder
hereunder in the manner provided in the Underwriting Agreement and to perform
its obligations under the Custody Agreement;
(iii) the execution and delivery of the Underwriting Agreement, the
Custody Agreement and the Power-of-Attorney have been duly authorized by all
necessary action on the part of each Selling Shareholder;
(iv) the Underwriting Agreement, the Custody Agreement and the
Power-of-Attorney have been duly executed and delivered by each Selling
Shareholder; and assuming due authorization, execution and delivery by the
Custodian, the Custody Agreement and the Power-of-Attorney are the legal, valid,
binding and enforceable instruments of each Selling Shareholder, subject to
applicable bankruptcy, insolvency, reorganization and similar laws affecting
creditors' rights generally and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law) and the availability of equitable remedies or
the enforceability of provisions concerning contribution and indemnification
contained in Section 8 of the Underwriting Agreement.
(v) the delivery by each Selling Shareholder to the several
Underwriters of certificates for the shares being sold hereunder by each Selling
Shareholder against payment therefor as provided herein, will convey good and
marketable title to such shares to the several Underwriters (assuming that they
are bona fide purchasers within the meaning of Section 8-302 of the Uniform
Commercial Code), free and clear of any adverse claim (within the meaning of the
Uniform Commercial Code);
(vi) the sale of shares to the Underwriters by each Selling Shareholder
pursuant to the Underwriting Agreement, the compliance by each Selling
Shareholder with the other provisions of the Underwriting Agreement, the Custody
Agreement and the Power-of-Attorney and the consummation of the other
transactions herein contemplated do not (A) require the consent, approval,
authorization, registration or qualification of or with any governmental
authority, except such as have been obtained and such as may be required under
state securities or blue sky laws, or (B) to such counsel's knowledge, conflict
with or result in a breach or violation of any of the terms and provisions of,
or constitute a default under any indenture, mortgage, deed of trust, lease or
other agreement or instrument to which any Selling Shareholder is a party or by
which any Selling Shareholder or the property of any Selling Shareholders are
bound, or, in the case of a Selling Shareholder that is a corporation, the
charter
1
documents or by-laws of the Selling Shareholder or any statute or any judgment,
decree, order, rule or regulation of any court or other governmental authority
or any arbitrator applicable to the Selling Shareholder.
In rendering such opinion, counsel may rely as to matters of fact, to
the extent such counsel deems proper, on certificates of the Selling
Shareholders and public officials, to the extent satisfactory in form and scope
to counsel for the Underwriters.
2