________________Shares
UNITED FINANCIAL MORTGAGE CORP.
Common Stock
Dear Sirs:
Section 1. Introductory.
UNITED FINANCIAL MORTGAGE CORP., an Illinois corporation (the "Company"),
proposes to issue and sell _____________ shares of its authorized but unissued
Common Stock, no par value (the "Firm Common Stock") to you, or if there be any
so named, to the several underwriters named in Schedule A annexed hereto (the
"Underwriters"), for whom you are acting as representative. In addition, the
Company proposes to grant to you or to the Underwriters, as the case may be, an
option to purchase up to an aggregate of ________ additional shares of Common
Stock (the "Optional Common Shares"), as provided in Section 5 hereof. The Firm
Common Shares and, to the extent such option is exercised, the Optional Common
Shares are hereinafter collectively referred to as the "Common Shares."
In addition, the Company proposes to sell to ▇▇▇▇▇ Financial Services, Inc.
warrants ("Underwriter's Warrants") to purchase _________ (up-to __________ if
the over-allotment option is exercised) pursuant to an Underwriter's Warrant
Purchase Agreement between the Company and ▇▇▇▇▇ Financial Services, Inc.
You have advised the Company that you or the Underwriters, as the case may
be, propose to make a public offering of their respective portions of the
Common Shares on the effective date of the registration statement hereinafter
referred to, or as soon thereafter as in your judgment is advisable.
The Company hereby confirms its agreements with respect to the purchase of
the Common Shares by you or the Underwriters, as the case may be, as follows.
Section 2. Representations and Warranties of the Company.
The Company represents and warrants to the several Underwriters that:
(a) A registration statement on Form SB-2 (File No. 33- ) with respect
to the Common Shares has been prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder, and has been filed with the
Commission. If the Company prepares and files prior to the effective date of
such registration statement an amendment or amendments to such registration
statement, such amendment or amendments will have been similarly prepared. There
have been delivered to you two signed copies of such registration statement and
all amendments, if any, together with two copies of each exhibit filed
therewith. Conformed copies of such registration statement and amendments, if
any, (but without exhibits) and of any related preliminary prospectus have been
delivered to you in such reasonable quantities as you have requested for you and
for each of the Underwriters, as the case may be. The Company will next file
with the Commission one of the following: (i) prior to effectiveness of such
registration statement, a further amendment thereto, including the form of final
prospectus, or (ii) a final prospectus in accordance with Rules 430A and 424(b)
of the Rules and Regulations. As filed, such amendment and form of final
prospectus, or such final prospectus, shall include all Rule 430A Information
and, except to the extent that you shall agree in writing to a modification,
shall be in all substantive respects in the form furnished to you prior to the
date and time that this Agreement was executed and delivered by the parties
hereto, or, to the extent not completed at such date and time, shall contain
only such specific substantive changes (beyond that contained in the latest
Preliminary Prospectus) as the Company shall have previously advised you in
writing would be included or made therein.
The term "Registration Statement" as used in this Agreement shall mean
such registration statement at the time such registration statement becomes
effective and, in the event any post-effective amendment thereto becomes
effective prior to the First Closing Date (as hereinafter defined), shall also
mean such registration statement as so amended; provided, however, that such
term shall also include all Rule 430A Information deemed to be included in such
registration statement at the time such registration statement becomes
effective as provided by Rule 430A of the Rules and Regulations. The term
"Preliminary Prospectus" shall mean any preliminary prospectus referred to in
the preceding paragraph and any preliminary prospectus included in the
Registration Statement at the time it becomes effective that omits Rule 430A
Information. The term "Prospectus" as used in this Agreement shall mean the
prospectus relating to the Common Shares in the form in which it is first filed
with the Commission pursuant to Rule 424(b) of the Rules and Regulations or, if
no filing pursuant to Rule 424(b) of the
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Rules and Regulations is required, shall mean the form of final prospectus
included in the Registration Statement at the time such registration statement
becomes effective. The term "Rule 430(A) Information" means information with
respect to the Common Shares and the offering thereof permitted to be omitted
from the Registration Statement when it becomes effective pursuant to Rule
430(A) of the Rules and Regulations. Any reference herein to any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Form SB-2 under the Act,
as of the date of such Preliminary Prospectus or Prospectus, as the case may be.
(b) The Commission has not issued any order preventing or suspending the
use of any Preliminary Prospectus, and at the time the Registration Statement
becomes effective, and at all times subsequent thereto up to and including each
Closing Date hereinafter mentioned, the Registration Statement and the
Prospectus, and any amendments or supplements thereto, will contain all material
statements and information required to be included therein by the Act and the
Rules and Regulations and will in all material respects conform to the
requirements of the Act and the Rules and Regulations, and neither the
Registration Statement nor the Prospectus, nor any amendment or supplement
thereto, will include any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, no representation or warranty
contained in this subsection 2(b) shall be applicable to information contained
in or omitted from the Registration Statement, the Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by you or by or on behalf of any
Underwriter, directly or through the Representative, specifically for use in the
preparation thereof.
(c) The Company does not own or control, directly or indirectly,
any corporation, association or other entity. The Company has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation, with full power and authority
(corporate and other) to own and lease its properties and conduct its business
as described in the Prospectus; the Company is in possession of and operating in
compliance with all authorizations, licenses, permits, consents, certificates
and orders material to the conduct of its business, all of which are valid and
in full force and effect; the Company is duly qualified to do business and in
good standing as a foreign corporation in each jurisdiction in which the
ownership or leasing of properties or the conduct of its business requires such
qualification except for jurisdictions in which the Company has no place of
business and in which the failure to so qualify would not have a material
adverse effect upon the Company; and no proceeding has been instituted in any
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such jurisdiction, revoking, limiting or curtailing, or seeking to
revoke, limit or curtail, such power and authority or qualification.
(d) The Company has an authorized and outstanding capital stock as set
forth under the heading "Capitalization" in the Prospectus and has outstanding
____________ shares of Common Stock and ______ shares of Class ______ Preferred
stock; the issued and outstanding shares of Common Stock and Preferred Stock
have been duly authorized and validly issued, are fully paid and nonassessable,
have been issued in compliance with all federal and state securities laws, were
not issued in violation of or subject to any preemptive rights or other rights
to subscribe for or purchase securities, and conform to the description thereof
contained in the Prospectus. Except as disclosed in or contemplated by the
Prospectus and the financial statements of the Company, and the related notes
thereto, included in the Prospectus, the Company does not have outstanding any
options to purchase, or any preemptive rights or other rights to subscribe for
or to purchase, any securities or obligations convertible into, or any
contracts or commitments to issue or sell, shares of its capital stock or any
such options, rights, convertible securities or obligations. The description of
the Company's stock option, stock purchase and other stock plans or
arrangements, and the options or other rights granted and exercised thereunder,
set forth under the heading ________ in Prospectus accurately and fairly
presents the information required to be shown with respect to such plans,
arrangements, options and rights.
(e) The Common Shares to be sold by the Company have been duly authorized
and, when issued, delivered and paid for in the manner set forth in this
Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, and will conform to the description thereof contained in the
Prospectus. No preemptive rights or other rights to subscribe for or purchase
exist with respect to the issuance and sale of the Common Shares by the Company
pursuant to this Agreement. No stockholder of the Company has any right which
has not been waived to require the Company to register the sale of any shares
owned by such stockholder under the Act in the public offering contemplated by
this Agreement. No further approval or authority of the stockholders or the
Board of Directors of the Company will be required for the transfer and sale of
the Common Shares to be sold by the Company as contemplated herein.
(f) The Company has full legal right, power and authority to enter into
this Agreement and perform the transactions contemplated hereby. This Agreement
has been duly authorized, executed and delivered by the Company and constitutes
a valid and binding obligation of the Company in accordance with its terms. The
making and performance of this
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Agreement by the Company and the consummation of the transactions herein
contemplated will not violate any provisions of the Company's Articles of
Incorporation or Bylaws and will not conflict with, result in the breach or
violation of, or constitute, either by itself or upon notice or the passage of
time or both, a default under any agreement, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other instrument to which the Company
is a party or by which the Company or any of its properties may be bound or
affected, any statute or any authorization, judgment, decree, order, rule or
regulation of any court or any regulatory body, administrative agency or other
governmental body applicable to the Company or any of its properties. No
consent, approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental body is required for the execution
and delivery of this Agreement or the consummation of the transactions
contemplated by this Agreement, except for compliance with the Act, the Blue Sky
laws applicable to the public offering of the Common Shares by you or the
several Underwriters, as the case may be, the rules and regulations of the
Chicago Stock Exchange, Inc. and the clearance of such offering with the
National Association of Securities Dealers, Inc. (the "NASD").
(g) The financial statements and schedules of the Company, and the related
notes thereto, included in the Registration Statement and the Prospectus present
fairly the financial position of the Company as of the respective dates of such
financial statements and schedules, and the results of operations and changes in
financial position of the Company for the respective periods covered thereby.
Such statements, schedules and related notes have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis as
certified by ▇▇▇▇▇ ▇▇▇▇▇▇▇ and Associates, Ltd., C.P.A.
(h) There are no legal or governmental actions, suits or proceedings
pending or, to the best of the Company's knowledge, threatened to which the
Company is or may be a party or of which property owned or leased by the
Company is or may be the subject, or related to environmental or discrimination
matters, which actions, suits or proceedings might, individually or in the
aggregate, prevent or adversely affect the transactions contemplated by this
Agreement or result in a material adverse change in the condition (financial or
otherwise), properties, business, results of operations or prospects of the
Company; and no labor disturbance by the employees of the Company exists or is
imminent which might be expected to affect adversely such condition,
properties, business, results of operations or prospects. The Company is not a
party or subject to the provisions of any material injunction, judgment, decree
or order of any court, regulatory body, administrative agency or other
governmental body.
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(i) Since the respective dates as of which information is given in the
Registration Statement and Prospectus, and except as described in or
specifically contemplated by the Prospectus: (1) the Company has not incurred
any material liabilities or obligations, indirect, direct or contingent, or
entered into any material agreement or other transaction which is not in the
ordinary course of business; (2) the Company has not sustained any material
loss or interference with its business or properties from fire, flood,
windstorm, accident or other calamity, whether or not covered by insurance; (3)
the Company has not paid or declared any dividends or other distributions with
respect to its capital stock and the Company is not in default in the payment
of principal or interest on any outstanding debt obligations; (4) there has not
been any change in the capital stock (other than upon the sale of the Common
Shares hereunder and upon the exercise of options or pursuant to other employee
benefit plans described in the Registration Statement) or indebtedness material
to the Company (other than in the ordinary course of business); and (5) there
has not been any material adverse change in the condition (financial or
otherwise), business, properties, results of operations or prospects of the
Company.
(j) The Company has filed all necessary federal, state and foreign income
and franchise tax returns and has paid all taxes shown as due thereon; and the
Company has no knowledge of any tax deficiency which has been or might be
asserted or threatened against the Company which could materially and adversely
affect the business, operations or properties of the Company.
Section 4. Representations and Warranties of the Underwriters.
▇▇▇▇▇ Financial Services, Inc., for itself or as the Representative, on
behalf of the several Underwriters, as the case may be, represents and warrants
to the Company that the information set forth (i) on the cover page of the
Prospectus with respect to price, underwriting discounts and commissions and
terms of offering and (ii) under "Underwriting" in the Prospectus was the only
information furnished to the Company by it or on behalf of the Underwriters, as
the case may be, for use in connection with the preparation of the Registration
Statement and the Prospectus and is correct in all material respects. If
applicable, the Representative represents and warrants that it has been
authorized by each of the other Underwriters as the Representative to enter
into this Agreement on its behalf and to act for it in the manner herein
provided.
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Section 5. Purchase, Sale and Delivery of Underwritten Shares and
Underwriter's Warrants
(a) Firm Common Shares. On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to issue and sell to you or to the Underwriters, as
the case may be, the Firm Common Shares which are in the amount of _________
shares. You or, if applicable, you on behalf of the Underwriters agree,
severally and not jointly, as the case may be, to purchase from the Company the
number of Firm Common Shares described below which are in the aggregate equal to
__________ shares. The purchase price per share to be paid by you or the several
Underwriters, as the case may be, to the Company shall be $________ per share.
The obligation of you or, if applicable, each Underwriter to the Company
shall be to purchase from the Company that number of Firm Common Shares which is
equal to the number of shares set forth opposite the name of you or such
Underwriter, as the case may be, in Schedule A hereto.
Delivery of certificates for the Firm Common Shares to be purchased by the
Underwriters and payment therefor shall be made at the offices of ▇▇▇▇▇
Financial Services, Inc., ▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ (or
such other place as may be agreed upon by the Company and you) at such time and
date, not later than the fifth full business day following the effective date of
the Registration Statement, as you shall designate by at least 48 hours prior
notice to the Company (or at such other time and date, not later than one week
after such fifth full business day as may be agreed upon by the Company and you)
(the "First Closing Date").
Delivery of certificates for the Firm Common Shares shall be made by or on
behalf of the Company to you, for your account or for the respective accounts of
the Underwriters, as the case may be, with respect to the Firm Common Shares to
be sold by the Company against payment by you, for your account or for the
accounts of the several Underwriters, as the case may be, of the purchase price
therefor by certified or official bank checks payable in Chicago Clearing House
(next day) funds to the order of the Company. The certificates for the Firm
Common Shares shall be registered in such names and denominations as you shall
have requested at least two full business days prior to the First Closing Date,
and shall be made available for checking and packaging on the business day
preceding the First Closing Date at a location in Chicago, Illinois as may be
designated by you. Time shall be of the essence, and delivery at the time and
place specified in this Agreement is a further condition to your obligations or
the obligations of the Underwriters, as the case may be.
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(b) Optional Common Shares. In addition, on the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company hereby grants an option to
you or to the several Underwriters, as the case may be, to purchase, in the case
of the several Underwriters severally and not jointly, up to __________ Optional
Common Shares at the purchase price per share to be paid for the Firm Common
Shares, for use solely in covering any over-allotments made by you for your
account or for the account of the Underwriters, as the case may be, in the sale
and distribution of the Firm Common Shares. The option granted hereunder may be
exercised at any time (but not more than once) within 45 days after the first
date that any of the Common Shares are released by you for sale to the public,
upon notice by you to the Company setting forth the aggregate number of Optional
Common Shares as to which you or the Underwriters, as the case may be, are
exercising the option, the names and denominations in which the certificates for
such shares are to be registered and the time and place at which such
certificates are to be delivered. Such time of delivery (which may not be
earlier than the First Closing Date), being herein referred to as the "Second
Closing Date," shall be determined by you, but if at any time other than the
First Closing Date shall not be earlier than three nor later than five full
business days after delivery of such notice of exercise. If applicable, the
number of Optional Common Shares to be purchased by each Underwriter shall be
the same percentage of the total number of Optional Common Shares to be sold by
the Company as such Underwriter is purchasing of the Firm Common Shares (subject
to such adjustments to eliminate any fractional share purchases as you in your
discretion may make). Certificates for the Optional Common Shares will be made
available for checking and packaging on the business day preceding the Second
Closing Date at a location in Chicago, Illinois as may be designated by you. The
manner of payment for and delivery of the Optional Common Shares shall be the
same as for the Firm Common Shares purchased from the Company. At any time
before lapse of the option, you may cancel such option by giving written notice
of such cancellation to the Company. If the option is canceled or expires
unexercised in whole or in part, the Company will deregister under the Act the
number of Optional Common Shares as to which the option has not been exercised.
(c) Acceptance of Delivery and Payment. If applicable, you have advised
the Company that each Underwriter has authorized you to accept delivery of its
Common Shares, to make payment and to receipt therefor. If applicable, you,
individually and not as the Representative of the Underwriters, may (but shall
not be obligated to) make payment for any Common Shares to be purchased by any
Underwriter whose funds shall not have been received by you by the First Closing
Date or the Second Closing Date, as the case may be, for the account of such
Underwriter, but any such payment shall not
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relieve such Underwriter from any of its obligations under this Agreement.
(d) Public Offering. Subject to the terms and conditions hereof, you or
the Underwriters, as the case may be, propose to make a public offering of your
or their respective portions of the Common Shares as soon after the effective
date of the Registration Statement as in your judgment is advisable and at the
public offering price set forth on the cover page of and on the terms set forth
in the Prospectus.
(e) Underwriter's Warrants. On the basis of the representations,
warranties and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to sell to ▇▇▇▇▇ Financial
Services, Inc., and ▇▇▇▇▇ Financial Services, Inc. agrees to purchase, the
Underwriter's Warrants at a purchase price of $.01 per Underwriter's Warrant.
The Underwriter's Warrant shall be substantially in the form contained in the
Underwriter's Warrant Purchase Agreement filed as Exhibit ___ to the
Registration Statement, with such changes therein, if any, as may be agreed upon
by the Company and ▇▇▇▇▇ Financial Services, Inc., shall be dated the Closing
Date, and shall evidence the right of ▇▇▇▇▇ Financial Services, Inc. to purchase
from the Company up to _________ shares of Common Stock (subject to adjustment
as provided in the Underwriter's Warrants) at the price per share and upon the
terms and conditions provided in the Underwriter's Warrants and the
Underwriter's Warrant Purchase Agreement.
Section 5. Covenants of the Company.
The Company covenants and agrees that:
(a) The Company will use its reasonable best efforts to cause the
Registration Statement to become effective and will advise you immediately, and
confirm the advice in writing, (i) of the receipt of any comments of the
Commission, (ii) of any request of the Commission for amendment of or supplement
to the Registration Statement (either before or after it becomes effective), any
Preliminary Prospectus or the Prospectus or for additional information, (iii)
when the Registration Statement shall have become effective and (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the institution of any proceedings for that
purpose. If the Commission shall enter any such stop order at any time, the
Company will use its reasonable best efforts to obtain the lifting of such order
at the earliest possible moment. The Company will not file any amendment or
supplement to the Registration Statement (either before or after it becomes
effective), any Preliminary Prospectus or the Prospectus of which you have not
been furnished with a copy a reasonable time prior to such filing or to which
you reasonably object or
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which is not in compliance in all material respects with the Act and the Rules
and Regulations.
(b) If at any time within nine months of the effectiveness of the
Registration Statement when a prospectus relating to the Common Shares is
required to be delivered under the Act any event occurs, as a result of which
the Prospectus, including any amendments or supplements, would include an untrue
statement of a material fact, or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, or if
it is necessary at any time to amend the Prospectus, including any amendments or
supplements, to comply with the Act or the Rules and Regulations, the Company
will promptly advise you thereof and will promptly prepare and file with the
Commission, at its own expense, an amendment or supplement which will correct
such statement or omission or an amendment or supplement which will effect such
compliance and will use its best efforts to cause the same to become effective
as soon as possible; and, in case you or any Underwriter, as the case may be, is
required to deliver a prospectus nine months or more after the effective date of
the Registration Statement, the Company upon request, but at your expense or the
expense of such Underwriter, will promptly prepare such amendment or amendments
to the Registration Statement and such Prospectus or Prospectuses as may be
necessary to permit compliance with the requirements of Section 10(a)(3) of the
Act.
(c) Prior to the Second Closing Date, the Company will not repurchase or
otherwise acquire any of the Company's Common Stock or declare or pay any
dividend or make any other distribution upon its Common Stock.
(d) As soon as practicable, but not later than 45 days after the end of the
first quarter ending after one year following the effective date of the
Registration Statement, the Company will make generally available to its
security holders an earnings statement (which need not be audited) covering a
period of 12 consecutive months beginning after the effective date of the
Registration Statement which will satisfy the provisions of the last paragraph
of Section 11(a) of the Act.
(e) During such period as a prospectus is required by law to be delivered
in connection with sales by an Underwriter or dealer, the Company, at its
expense, but only for the first nine months after the effective date of the
Registration Statement, will furnish to you or mail to your order copies of the
Registration Statement, the Prospectus, the Preliminary Prospectus and all
amendments and supplements to any such documents in each case as soon as
available and in such quantities as you may request, for the purposes
contemplated by the Act.
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(f) The Company shall cooperate with you and your counsel in order to list
the Common Shares for trading on the Chicago Stock Exchange and qualify or
register the Common Shares for sale under (or obtain exemptions from the
application of) the Blue Sky laws of such jurisdictions as you designate, will
use its best efforts to comply with such laws and use its best efforts to
continue such listing, qualifications, registrations and exemptions in effect
so long as reasonably required for the distribution of the Common Shares. The
Company shall not be required to qualify as a foreign corporation or to file a
general consent to service of process in any such jurisdiction where it is not
presently qualified or where it would be subject to taxation as a foreign
corporation. The Company will advise you promptly of the suspension of the
qualification or registration of (or any such exemption relating to) the Common
Shares for offering, sale or trading in any jurisdiction or any initiation or
threat of any proceeding for any such purpose, and in the event of the issuance
of any order suspending such qualification, registration or exemption, the
Company, with your cooperation, will use its reasonable best efforts to obtain
the withdrawal thereof.
(g) During the period of five years hereafter, the Company will furnish to
you or upon your request as Representative of the Underwriters, to each of the
other Underwriters, as the case may be: (i) as soon as practicable after the
end of each fiscal year, copies of the Annual Report of the Company containing
the balance sheet of the Company as of the close of such fiscal year and
statements of income, stockholders' equity and changes in financial position
for the year then ended and the opinion thereon of the Company's independent
public accountants; (ii) as soon as practicable after the filing thereof,
copies of each proxy statement, Annual Report on Form 10-KSB, Quarterly Report
on Form 10-QSB, Report on Form 8-K or other report filed by the Company with
the Commission, the NASD or any securities exchange; and (iii) as soon as
available, copies of any report or communication of the Company mailed
generally to holders of its Common Stock.
(h) During the period of 180 days after the date hereof, without your prior
written consent, individually or as Representative of the Underwriters, the
Company will not other than pursuant to outstanding stock options and the terms
of other employee benefit plans disclosed in the Prospectus issue, offer, sell,
grant options to purchase or otherwise dispose of any of the Company's equity
securities or any other securities convertible into or exchangeable for its
Common Stock or other equity security under circumstances where such securities
may be sold into the public market during such period.
You, individually or on behalf of the Underwriters, as the case may be,
may, in your sole discretion, waive in
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writing the performance by the Company of any one or more of the foregoing
covenants or extend the time for their performance.
Section 6. Non-Accountable Allowance; Payment of Expenses.
(a) Non-Accountable Allowance. Upon the consummation of the transactions
contemplated hereunder and, in any event, not later than the date of the First
Closing and, if applicable, again on the date of the Second Closing, the
Company shall reimburse ▇▇▇▇▇ Financial Services, Inc. for its expenses on a
non-accountable basis in the amount of $ , which amount shall not
exceed three percent (3%) of the gross proceeds to the Company from the
transactions contemplated herein.
(b) Other Expenses. Whether or not the transactions contemplated hereunder
are consummated or this Agreement becomes effective or is terminated, the
Company agrees to pay all costs, fees and expenses (excluding any legal fees,
costs or expenses of counsel to the Underwriters) incurred in connection with
the performance of its obligations hereunder and in connection with the
transactions contemplated hereby, including without limiting the generality of
the foregoing, (i) the cost of preparation, printing and filing of the
Registration and exhibits and all amendments and supplements thereto with the
Securities and Exchange Commission, (ii) the cost of printing and delivering to
the Underwriters all copies of the preliminary prospectus and final prospectus
reasonably requested by the Underwriters, (iii) all filing fees and costs
(other than legal fees of counsel to the Underwriters) connected with the
Securities and Exchange Commission, National Association of Securities Dealers,
Inc., the Chicago Stock Exchange and the "blue sky" commissions of those states
in which the offering is to be made, and (iv) the costs and expenses of
tombstone advertisements and those associated with a series of presentations in
various financial centers.
Section 7. Conditions of the Obligations of the Underwriters.
The obligations of the several Underwriters to purchase and pay for the
Firm Common Shares on the First Closing Date and the Optional Common Shares on
the Second Closing Date shall be subject to the accuracy of the representations
and warranties on the part of the Company herein set forth as of the date
hereof and as of the First Closing Date or the Second Closing Date, as the case
may be, to the accuracy of the statements of Company officers made pursuant to
the provisions hereof, to the performance by the Company of its
obligations hereunder, and to the following additional conditions:
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(a) The Registration Statement shall have become effective not later than
5:00 P.M., Washington, D.C. Time, on the date of this Agreement, or at such
later time as shall have been consented to by you; if the filing of the
Prospectus, or any supplement thereto, is required pursuant to Rule 424(b) of
the Rules and Regulations, the Prospectus shall have been filed in the manner
and within the time period required by Rule 424(b) of the Rules and
Regulations; and prior to such Closing Date, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or shall be pending or,
to the knowledge of the Company shall be contemplated by the Commission; and
any request of the Commission for inclusion of additional information in the
Registration Statement, or otherwise, shall have been complied with to your
satisfaction.
(b) The legality and sufficiency of the authorization, issuance and sale of
the Common Shares being sold by the Company, the validity and form of the
certificates representing the Common Shares, the execution and delivery of this
Agreement and all corporate proceedings and other legal matters incident
thereto, and the form of the Registration Statement and the Prospectus (except
financial statements and numerical data) shall have been approved by counsel
for you or the Underwriters, as the case may be.
(c) You shall not have advised the Company that the Registration Statement
or Prospectus, or any amendment or supplement thereto, contains an untrue
statement of fact, which, in the opinion of counsel for you or the
Underwriters, as the case may be, is or may be material or omits to state a
fact which, in the opinion of such counsel, is or may be material and is or may
be required to be stated therein or necessary to make the statements therein
not misleading.
(d) You shall be satisfied that since the respective dates as of which
information is given in the Registration Statement and Prospectus, (i) there
shall not have been any change in the capital stock other than pursuant to the
exercise of outstanding options and other employee benefit plans disclosed in
the Prospectus of the Company or any material change in the indebtedness (other
than in the ordinary course of business) of the Company or any of its
subsidiaries, (ii) except as set forth or contemplated by the Registration
Statement or the Prospectus, no material agreement or other transaction shall
have been entered into by the Company which is not in the ordinary course of
business, (iii) no loss or damage (whether or not insured) to the property of
the Company shall have been sustained which materially and adversely affects
the condition (financial or otherwise), business, results of operations or
prospects of the Company, (iv) no legal or governmental action, suit or
proceeding affecting the Company which is material to the
13
Company or which affects or may affect the transactions contemplated by this
Agreement shall have been instituted or threatened and (v) there shall not have
been any material adverse change in the condition (financial or otherwise),
business, management, results of operations or prospects of the Company which
makes it impractical or inadvisable in your reasonable judgment to proceed with
the public offering or purchase the Common Shares as contemplated hereby.
(e) There shall have been furnished to you, individually or as
Representative of the Underwriters, as the case may be, on each Closing Date, in
form and substance satisfactory to you, except as otherwise expressly provided
below:
(i) An opinion of ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq., counsel for the Company addressed
to you or to you as Representative of the several Underwriters, as the
case may be, and dated the First Closing Date or the Second Closing
Date as the case may be, to the effect that:
(1) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of its jurisdiction
of incorporation, is duly qualified to do business as a foreign
corporation and is in good standing in all other jurisdictions
where the ownership or leasing of properties or the conduct of
its business requires such qualification, except for
jurisdictions in which the failure to so qualify would not have a
material adverse effect on the Company, and has full corporate
power and authority to own its properties and conduct its
business as described in the Registration Statement;
(2) The authorized capital stock of the Company is as set forth under
the caption "Capitalization" in the Prospectus and has
outstanding ___________shares of Common Stock and ____shares of
Class ___Preferred Stock; all necessary and proper corporate
proceedings have been taken in order to authorize validly such
authorized Common Stock; all outstanding shares of Common Stock
(including the Firm Common Shares and any Optional Common Shares)
and all outstanding shares of Class ___ Preferred Stock have been
duly and validly issued, are fully paid and nonassessable, not
issued in violation of or subject to any preemptive rights or
other rights to subscribe for or purchase any securities and
conform to the description thereof contained in the Prospectus;
without limiting the foregoing, there are no preemptive or other
rights to subscribe for or purchase
14
any of the Common Shares to be sold by the Company hereunder;
(3) Except as disclosed in or specifically contemplated by the
Prospectus, to the best of such counsel's knowledge, there are no
outstanding options, warrants or other rights calling for the
issuance of, and no commitments, plans or arrangements to issue,
any shares of capital stock of the Company or any security
convertible into or exchangeable for capital stock of the
Company;
(4) (a) The Registration Statement has become effective under the
Act, and, to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement or
preventing the use of the Prospectus has been issued and no
proceedings for that purpose have been instituted or are pending
or contemplated by the Commission;
(b) The Registration Statement, the Prospectus and each amendment
or supplement thereto (except for the financial statements and
schedules included therein as to which such counsel need express
no opinion) comply as to form in all material respects with the
requirements of the Act and the Rules and Regulations, and
nothing has come to such counsel's attention that would lead such
counsel to believe that either at the effective date of the
Registration Statement or at the applicable Closing Date the
Registration Statement or the Prospectus, or any such amendment
or supplement, contains any untrue statement of a material fact
or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading;
(c) To the best of such counsel's knowledge, there are no
franchises, leases, contracts, agreements or documents required
to be disclosed in the Registration Statement or Prospectus or to
be filed as exhibits to the Registration Statement which are not
disclosed or filed, as required;
(d) The descriptions in the Registration Statement and the
Prospectus of franchises, leases, contracts, agreements and other
documents are accurate in all material respects
15
and such descriptions fairly present in all material respects the
information required to be shown;
(e) The description of the Company's stock option, stock purchase
and other stock plans and arrangements, and the options or other
rights granted and exercised thereunder, set forth in the
Prospectus accurately and fairly presents the information
required to be shown with respect to said plans, arrangements,
options and rights;
(f) To the best of such counsel's knowledge, there are no legal
or governmental actions, suits or proceedings pending or
threatened against the Company which are required to be described
in the Prospectus which are not described as required; and
(g) The documents incorporated by reference in the Prospectus
(except for any financial statements and schedules included in
such documents as to which such counsel need express no opinion),
when they were filed with the Commission, complied as to form in
all material respects with the requirements of the Exchange Act
and the rules and regulations of the Commission thereunder; and
such counsel has no reason to believe that any of such documents
(except for any financial statements and schedules included in
such documents as to which such counsel need express no opinion),
when they were so filed, contained an untrue statement of a
material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made when such documents were
so filed, not misleading.
(5) The Company has full right and authority to enter into this
Agreement and to sell and deliver the Common Shares to be sold by
it to you or the several Underwriters, as the case may be; this
Agreement has been duly and validly authorized by all necessary
corporate action by the Company, has been duly and validly
executed and delivered by and on behalf of the Company, and is a
valid and binding agreement of the Company in accordance with its
terms, except as enforceability may be limited by general
equitable principles, bankruptcy, insolvency, reorganization,
moratorium or other
16
laws affecting creditors' rights generally and except as to those
provisions relating to indemnity or contribution for liabilities
arising under the Act as to which no opinion need be expressed;
and no approval, authorization, order, consent, registration,
filing, qualification, license or permit of or with any court,
regulatory, administrative or other governmental body is required
for the execution and delivery of this Agreement by the Company
or the consummation of the transactions contemplated by this
Agreement, except such as have been obtained and are in full
force and effect under the Act and such as may be required under
applicable Blue Sky laws in connection with the purchase and
distribution of the Common Shares by the Underwriter or the
several Underwriters, as the case may be, and the clearance of
such offering with the NASD;
(6) The execution and performance of this Agreement and the
consummation of the transactions herein contemplated will not
conflict with, result in the breach of, or constitute, either by
itself or upon notice or the passage of time or both, a default
under, any agreement, mortgage, deed of trust, lease, franchise,
license, indenture, permit or other instrument known to such
counsel to which the Company is a party or by which the Company
or any of its property may be bound or affected which is material
to the Company, or violate any of the provisions of the Articles
of Incorporation or Bylaws of the Company or, so far as is known
to such counsel, violate any statute, judgment, decree, order,
rule or regulation of any court or governmental body having
jurisdiction over the Company or any of its property;
(7) The Company is not in violation of its Articles of Incorporation
or Bylaws, or, to the best of such counsel's knowledge (such
counsel having made reasonable investigation with respect
thereto) in material breach of or default with respect to any
provision of any material agreement, mortgage, deed of trust,
lease, franchise, license, indenture, permit or other instrument
known to such counsel to which the Company is a party or by which
it or any of its properties may be bound or affected, except
where such default would not materially adversely affect the
Company; and, to the best of such counsel's knowledge, the
Company is in compliance with all laws, rules, regulations,
17
judgments, decrees, orders and statutes of any court or
jurisdiction to which it is subject, except where noncompliance
would not materially adversely affect the Company;
(8) To the best of such counsel's knowledge, no holders of securities
of the Company have rights which have not been waived to the
registration of shares of Common Stock or other securities,
because of the filing of the Registration Statement by the
Company or the offering contemplated hereby.
In rendering such opinion, such counsel may rely as to matters of local law,
on opinions of local counsel, as to matters of fact, on certificates of the
officers of the Company and of governmental officials, and as to matters set
forth in Section 3(f) and in the last phrase of paragraph (7) of this Section
7, such counsel may rely in part on opinions of other counsel retained by the
Company, in which case their opinion is to state that they are so doing and
that the Underwriter or the several Underwriters, as the case may be, are
justified in relying on such opinions or certificates and copies of said
opinions or certificates are to be attached to the opinion.
(ii) Such opinion or opinions of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Attorney-at-law,
counsel for you or the Underwriters, as the case may be, dated the First
Closing Date or the Second Closing Date, as the case may be, with respect to
the incorporation of the Company, the sufficiency of all corporate proceedings
and other legal matters relating to this Agreement, the validity of the Common
Shares, the Registration Statement and the Prospectus and other related matters
as you may reasonably require, and the Company shall have furnished to such
counsel such documents and shall have exhibited to him such papers and records
as he may reasonably request for the purpose of enabling him to pass upon such
matters. In connection with such opinions, such counsel may rely on
representations or certificates of officers of the Company and governmental
officials.
(iii) A certificate of the Company executed by the President and such other
officer or key employees of the Company as may reasonably be designated by you,
dated the First Closing Date or the Second Closing Date, as the case may be, to
the effect that, and you shall be reasonably satisfied that:
(1) The representations and warranties of the Company set forth in
Section 2 of this Agreement are true and correct as of the date of this
Agreement and as of the First Closing Date or the Second Closing Date, as
the case may be, and the Company has complied with all
18
the agreements and satisfied all the conditions on its part to be performed
or satisfied on or prior to such Closing Date;
(2) The Commission has not issued any order preventing or suspending
the use of the Prospectus or any Preliminary Prospectus filed as a part of
the Registration Statement or any amendment thereto; no stop order
suspending the effectiveness of the Registration Statement has been issued,
and to the best of the knowledge of the respective signers, no proceedings
for that purpose have been instituted or are pending or contemplated under
the Act;
(3) Each of the respective signers of the certificate has carefully
examined the Registration Statement and the Prospectus; in his opinion and
to the best of his knowledge, the Registration Statement and the Prospectus
and any amendments or supplements thereto contain all statements required
to be stated therein regarding the Company; and neither the Registration
Statement nor the Prospectus nor any amendment or supplement thereto
includes any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading;
(4) Since the initial date on which the Registration Statement was
filed, no agreement, written or oral, transaction or event has occurred
which should have been set forth in an amendment to the Registration
Statement or in a supplement to or amendment of any prospectus which has
not been disclosed in such a supplement or amendment;
(5) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, and except as disclosed in or
contemplated by the Prospectus, there has not been any material adverse
change or a development involving a material adverse change in the
condition (financial or otherwise), business, properties, results of
operations, management or prospects of the Company; and no legal or
governmental action, suit or proceeding is pending or threatened against
the Company which is material to the Company, whether or not arising from
transactions in the ordinary course of business, or which may adversely
affect the transactions contemplated by this Agreement; since such dates
and except as so disclosed, the Company has not entered into any agreement
or other transaction which is not in the ordinary course of business or
incurred any material liability or obligation, direct, contingent or
indirect, made any change in its capital stock, made any material change in
its short-term debt or
19
funded debt or repurchased or otherwise acquired any of the Company's
capital stock; and the Company has not declared or paid any dividend, or
made any other distribution, upon its outstanding capital stock payable to
stockholders of record on a date prior to the First Closing Date or Second
Closing Date; and
(6) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus and except as disclosed in or
contemplated by the Prospectus, the Company has not sustained a material
loss or damage by strike, fire, flood, windstorm, accident or other
calamity (whether or not insured).
(iv) On the day before the date of the Registration Statement and also on
the First Closing Date and the Second Closing Date a letter addressed to you or
to you as Representative of the Underwriters, as the case may be, from ▇▇▇▇▇
▇▇▇▇▇▇▇ and Associates, Ltd., C.P.A., independent accountants, the first one to
be dated the day before the date of this Agreement, the second one to be dated
the First Closing Date and the third one (in the event of a Second Closing) to
be dated the Second Closing Date, in form and substance satisfactory to you.
(v) Such assurances as you may require that on the First Closing Date and
the Second Closing Date the Common Shares are qualified for public offering and
sale by registered dealers or exempt from the necessity of qualifications or
registrations for such public offering and sale in such jurisdictions as you
have theretofore specified; that the Registration Statement has been declared
effective under the Act; and that there is no stop order or similar proceeding
in effect, pending or contemplated with respect to any such qualification,
exemption, effectiveness or approval.
(vi) On or before the First Closing Date, such letters from the
shareholders of the Company as the Company, with our assistance, shall have
obtained after using the Company's best efforts, in form and substance
satisfactory to you, confirming that for a period of 180 days after the date of
the Prospectus such person will not directly or indirectly sell or offer to sell
or otherwise dispose of any shares of Common Stock or any right to acquire such
shares without your prior, written consent.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to you and
to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, counsel for you or the Underwriters, as the case may be.
The Company shall furnish you with such manually signed or conformed copies of
such opinions, certificates, letters and documents as you request. Any
certificate signed by any officer or key employee
20
of the Company and delivered to you or to counsel for you or the Underwriters,
as the case may be, shall be deemed to be a representation and warranty by the
Company to you or the Underwriters, as the case may be, as to the statements
made therein.
If any condition to the Underwriters' obligations hereunder to be
satisfied prior to or at the First Closing Date is not so satisfied, this
Agreement at your election will terminate upon notification by you to the
Company without liability on the part of any Underwriter or the Company except
for the expenses to be paid or reimbursed by the Company pursuant to Sections
6(b) and 8 hereof and except to the extent provided in Section 10 hereof.
Section 8. No Reimbursement of Costs or Expenses.
Notwithstanding any other provisions hereof, if this Agreement shall be
terminated by you pursuant to Section 7 or by you or the Company pursuant to
Section 14, or if the sale to you or the Underwriters, as the case may be, of
the Common Shares at the First Closing is not consummated because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or to comply with any provisions hereof, neither you or the
Underwriter, as the case may be, nor the Company shall be required to reimburse
the other or others, as the case may be, for any costs or expenses incurred by
you or them or incurred by the Company. Any such termination shall be without
liability of any party to any other party except that the provisions of this
Section, Section 6(b) and Section 10 shall at all times be effective and shall
apply.
Section 9. Effectiveness of Registration Statement.
The Company will use its best efforts to cause the Registration Statement
to become effective, to prevent the issuance of any stop order suspending the
effectiveness of the Registration Statement and, if such stop order be issued,
to obtain as soon as possible the lifting thereof.
Section 10. Indemnification.
(a) The Company agrees to indemnify and hold harmless you or each
Underwriter and each person, if any, who controls you or any such Underwriter,
as the case may be, within the meaning of the Act against any losses, claims,
damages, liabilities or expenses, joint or several, to which you or such
Underwriter, as the case may be, or such controlling person may become subject,
under the Act, the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or other federal or state statutory law or regulation, or at common law
or otherwise (including in settlement of any litigation, if such settlement is
effected with the written
21
consent of the Company), insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state in any of them a material fact required to be stated therein or necessary
to make the statements in any of them not misleading; and will reimburse you or
each Underwriter, as the case may be, and each such controlling person for any
legal and other expenses reasonably incurred by you or such Underwriter or such
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action; provided, however, that the Company will not be liable in any such case
to the extent that any such loss, claim, damage, liability or expense arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in the Registration Statement, the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with written
information furnished to the Company by you or by or on behalf of any
Underwriter through the Representative, as the case may be, specifically for use
therein; and provided further, that with respect to any untrue statement or
omission or alleged untrue statement or omission made in any Preliminary
Prospectus, the indemnity agreement contained in this paragraph shall not inure
to the benefit of you or any Underwriter, as the case may be, from whom the
person asserting any such losses, claims, damages, liabilities or expenses
purchased the Common Shares concerned (or to the benefit of any person
controlling you or such Underwriter, as the case may be) to the extent that any
such loss, claim, damage, liability or expense of you or such Underwriter, as
the case may be, or controlling person results from the fact that a copy of the
Prospectus was not sent or given to such person at or prior to the written
confirmation of sale of such Common Shares to such person as required by the
Act, and if the untrue statement or omission has been corrected in the
Prospectus unless such failure to deliver the Prospectus was a result of
noncompliance by the Company with its obligations under Section 5(e) hereof; and
provided further, that with respect to any untrue statement or omission or
alleged untrue statement or omission made in the Registration Statement, the
Prospectus, or any amendment or supplement thereto.
(b) You or each Underwriter severally, as the case may be, will indemnify
and hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement and each person, if any, who controls the
Company within the meaning of the Act, against any losses, claims, damages,
liabilities or expenses to which the Company, or any such director, officer or
controlling person may become subject, under the Act, the Exchange Act, or
other federal or
22
state statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of such Underwriter), insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) arise out of or are
based upon any untrue or alleged untrue statement of any material fact contained
in the Registration Statement, the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in the Registration Statement, the Prospectus, or
any amendment or supplement thereto, in reliance upon and in conformity with
Section 4 of this Agreement or any other written information furnished to the
Company by you or such Underwriter through the Representative, as the case may
be, specifically for use in the preparation thereof; and will reimburse the
Company, or any such director, officer or controlling person for any legal and
other expense reasonably incurred by the Company, or any such director, officer
or controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action. This indemnity agreement will be in addition to any liability which you
or such Underwriter, as the case may be, may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section, notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party for contribution or
otherwise than under the indemnity agreement contained in this Section or to the
extent it is not prejudiced as a proximate result of such failure. In case any
such action is brought against any indemnified party and such indemnified party
seeks or intends to seek indemnity from an indemnifying party, the indemnifying
party will be entitled to participate in, and, to the extent that it may wish,
jointly with all other indemnifying parties similarly notified, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and counsel for the indemnified
party shall have reasonably concluded that there may be a conflict between the
positions of the indemnifying party and the indemnified party in conducting the
defense of any such action or that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the
23
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed such counsel in
connection with the assumption of legal defenses in accordance with the proviso
to the next preceding sentence or (ii) the indemnifying party shall not have
employed counsel reasonably satisfactory to the indemnified party to represent
the indemnified party within a reasonable time after notice of commencement of
the action, in each of which cases the fees and expenses of counsel shall be at
the expense of the indemnifying party.
(d) If the indemnification provided for in this Section 10 is required by
its terms but is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party under paragraphs (a), (b) or
(c) in respect of any losses, claims, damages, liabilities or expenses referred
to herein, then such applicable indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of any losses,
claims, damages, liabilities or expenses referred to herein (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and you or the Underwriters, as the case may be, from the offering of
the Common Shares or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company and you or the Underwriters, as the case may be, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The respective relative benefits received by the
Company and you or the Underwriters 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 you or the Underwriters, as the case may
be, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid or
payable by a party as a result of the losses, claims, damages, liabilities and
expenses referred to above shall be deemed to include, subject to the
limitations set forth in subparagraph (c) of this Section 10, any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or
24
claim. The provisions set forth in subparagraph (c) of this Section 10 with
respect to notice of commencement of any action shall apply if a claim for
contribution is to be made under this subparagraph (d); provided, however, that
no additional notice shall be required with respect to any action for which
notice has been given under subparagraph (c) for purposes of indemnification.
The Company and you or the Underwriters, as the case may be, agree that it would
not be just and equitable if contribution pursuant to this Section 10 were
determined solely by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this Section
10, neither you nor any Underwriter, as the case may be, shall be required to
contribute any amount in excess of the amount by which the total underwriting
discount received by you or such Underwriter, as the case may be, in connection
with the Common Shares underwritten by it and distributed to the public exceeds
the amount of any damages which you or such Underwriter has otherwise been
required to pay by reason of such untrue alleged untrue statement or omission or
alleged omission. 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. If applicable,
the Underwriters' obligations to contribute pursuant to this Section 10 are
several in proportion to their respective underwriting commitments and not
joint.
(e) In addition to and without in any way limiting the other obligations of
the parties under this Section 10, the Company hereby further agrees to
reimburse you or each Underwriter, as the case may be, and each person who
controls you or any such Underwriter within the meaning of Section 15 of the Act
on a quarterly basis for one-half of all reasonable legal and other expenses
incurred in connection with investigating or defending any claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
statement or omission, or any alleged statement or omission, described in
paragraph (a) of this Section 10, notwithstanding the possibility that such
payments might later be held to be improper, but only under circumstances where
you or such Underwriter has selected separate counsel or elected to participate
in the defense of the action as permitted by the proviso of the second sentence
of Section 10(c) hereof. To the extent that any payment is ultimately held to be
improper, you or each Underwriter, as the case may be, shall promptly refund
such payment.
Section 11. Default of the Underwriters.
It shall be a condition to this Agreement and the obligation of the Company
to sell and deliver the Common Shares hereunder, and a condition of your
obligation, or the
25
obligation of each Underwriter, as the case may be, to purchase the Common
Shares in the manner as described herein, that, except as hereinafter in this
paragraph provided, you or each of the Underwriters, as the case may be, shall
purchase and pay for all the Common Shares agreed to be purchased by you or such
Underwriter hereunder upon tender to you individually or as the Representative
of the several Underwriters, as the case may be, of all such shares in
accordance with the terms hereof. If applicable, if any Underwriter or
Underwriters default in their obligations to purchase Common Shares hereunder on
either the First or Second Closing Date and the aggregate number of Common
Shares which such defaulting Underwriter or Underwriters agreed but failed to
purchase on such Closing Date does not exceed 10% of the total number of Common
Shares which the Underwriters are obligated to purchase on such Closing Date,
the non-defaulting Underwriters shall be obligated severally, in proportion to
their respective commitments hereunder, to purchase the Common Shares which such
defaulting Underwriters agreed but failed to purchase on such Closing Date. If
any Underwriter or Underwriters so default and the aggregate number of Common
Shares with respect to which such default occurs is more than the above
percentage and arrangements satisfactory to you and the Company for the purchase
of such Common Shares by other persons are not made within 48 hours after such
default, this Agreement will terminate without liability on the part of any non-
defaulting Underwriter or the Company except for the expenses to be paid by the
Company pursuant to Section 6(b) hereof and except to the extent provided in
Section 10 hereof.
If applicable, in the event that Common Shares to which a default relates
are to be purchased by the non-defaulting Underwriters or by another party or
parties, the Representative or the Company shall have the right to postpone the
First or Second Closing Date as the case may be, for not more than five business
days in order that the necessary changes in the Registration Statement,
Prospectus and any other documents, as well as any other arrangements, may be
effected. As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section. Nothing herein will relieve a
defaulting Underwriter from liability for its default.
Section 12. Effective Date.
This Agreement shall become effective immediately as to Sections 6(b), 8,
10, 14 and 15 and, as to all other provisions, (i) if at the time of execution
of this Agreement the Registration Statement has not become effective, at 4:00
P.M., Chicago time, on the first full business day following the effectiveness
of the Registration Statement, or (ii) if at the time of execution of this
Agreement the Registration Statement has been declared effective, at 4:00 P.M.,
Chicago time, on the first full business day following the date of
26
execution of this Agreement; but this Agreement shall nevertheless become
effective at such earlier time after the Registration Statement becomes
effective as you may determine on and by notice to the Company or by release of
any of the Common Shares for sale to the public. For the purposes of this
Section 12, the Common Shares shall be deemed to have been so released upon the
release for publication of any newspaper advertisement relating to the Common
Shares or upon the release by you of telegrams (i) advising Underwriters that
the Common Shares are released for public offering, or (ii) offering the Common
Shares for sale to securities dealers, whichever may occur first.
Section 13. Right of First Refusal
For a period of three (3) years from the date of this Agreement, the
Company will not enter into an agreement for a public or private cash (other
than to employees) of any securities of the Company or any affiliate of the
Company or any securities offered by the Company or any affiliate, including any
shareholder owning ten percent (10%) or more of the Company's issued and
outstanding Common Stock, for cash to or through any person, firm or corporation
other than ▇▇▇▇▇ Financial Services, Inc. unless and until the Company shall
have first negotiated for the sale of such securities with or through or offered
to sell such securities to ▇▇▇▇▇ Financial Securities, Inc. The Company shall
notify ▇▇▇▇▇ Financial Services, Inc. in writing of the Company's intention to
offer such securities in an offering covered by this right of first refusal and
the terms (including the price or other method of determining the underwriting
or placement discount or fee) and the conditions of the proposed offering. ▇▇▇▇▇
Financial Services, Inc. shall then have 10 days from the date of receipt of
such written notice to decide whether to participate in such proposed offering.
If ▇▇▇▇▇ Financial Services, Inc. determines that it does not wish to
participate in the proposed offering, then it shall so notify the Company of its
intention in writing not later than 30 days from the receipt of notice from the
Company of such proposed offering. If ▇▇▇▇▇ Financial Services, Inc. determines
not to participate in such offering, then the Company may, within a period of 90
days from the date of receipt of notice from ▇▇▇▇▇ Financial Services, Inc. of
its intention not to participate, enter into a letter of intent for the public
sale or, as appropriate, a contract for the private sale, of any of such
securities through any other person, firm or corporation on the same general
terms and conditions as those which were tendered by the Company to ▇▇▇▇▇
Financial Services, Inc. Provided, however, as to a public offering, it a
definitive underwriting agreement with a firm commitment is not executed by the
Company with such third party within 180 days thereafter, all the rights of
▇▇▇▇▇ Financial Services, Inc. hereunder with respect to such offering shall be
reinstated. Nothing in this Agreement shall be construed as granting the
continuation of such preferential right on the part of ▇▇▇▇▇ Financial
27
Services, Inc. beyond such three-year period.
Section 14. Termination.
Without limiting the right to terminate this Agreement pursuant to any
other provision hereof:
(a) This Agreement may be terminated by the Company by notice to you
or by you by notice to the Company at any time prior to the time this
Agreement shall become effective as to all its provisions, and any such
termination shall be without liability on the part of the Company to you or
any Underwriter, as the case may be (except for the expenses to be paid or
reimbursed by the Company pursuant to Sections 6 and 8 hereof and except to
the extent provided in Section 10 hereof) or of any Underwriter to the
Company(except to the extent provided in Section 10 hereof).
(b) This Agreement may also be terminated by you, individually or as
Representative of the several Underwriters, as the case may be, prior to
the First Closing Date by notice to the Company (i) if additional material
governmental restrictions, not in force and effect on the date hereof,
shall have been imposed upon trading in securities generally or minimum or
maximum prices shall have been generally established on the New York Stock
Exchange, the American Stock Exchange, the Chicago Stock Exchange or in the
over the counter market by the NASD, or trading in securities generally
shall have been suspended on any such Exchange or in the over the counter
market by the NASD, or a general banking moratorium shall have been
established by federal, New York or Illinois authorities or (ii) if an
outbreak of major hostilities or other national or international calamity
or any substantial change in political, financial or economic conditions
shall have occurred or shall have accelerated to such an extent, as, in
your judgment, to affect adversely the marketability of the Common Shares.
Any termination pursuant to this subsection (b) shall be without liability
on your part or on the part of any Underwriter, as the case may be, to the
Company or on the part of the Company to you or any Underwriter, as the
case may be (except to the extent provided in Section 10 hereof).
Section 15. Representations and Indemnities to Survive Delivery.
The respective indemnities, agreements, representations, warranties and
other statements of the Company, of its officers or key employees and of you or
the Underwriters, as the case may be, set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of
28
any investigation made by you individually or on behalf of any Underwriter, as
the case may be, or the Company or any of its or their partners, officers or
directors or any controlling person, and will survive delivery of and payment
for the Common Shares sold hereunder and any termination of this Agreement.
Section 16. Notices.
All communications hereunder shall be in writing and, if sent to you
individually or on behalf of the several Underwriters, shall be mailed,
delivered, telefaxed or telegraphed and confirmed to you at ▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇; and if sent
to the Company shall be mailed, delivered, telefaxed or telegraphed and
confirmed to the Company at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇. The Company, or you may change the address
for receipt of communications hereunder by giving notice to the other.
Section 17. Successors.
This Agreement shall inure to the benefit of and be binding upon the
parties hereto, including any substitute Underwriters pursuant to Section 12
hereof, and to the benefit of the officers and directors and controlling persons
referred to in Section 10, and in each case their respective successors,
personal representatives and assigns, and no other person will have any right or
obligation hereunder. No such assignment shall relieve any party of its
obligations hereunder. The term "successors" shall not include any purchaser of
the Common Shares as such from you or any of the Underwriters merely by reason
of such purchase.
Section 18. Representative of Underwriters.
If applicable, you will act as Representative for the several Underwriters
in connection with all dealings hereunder, and any action under or in respect of
this Agreement taken by the Underwriters jointly or by ▇▇▇▇▇ Financial Services,
Inc., as Representative, will be binding upon all the Underwriters.
Section 19. Partial Unenforceability.
The invalidity or unenforceability of any Section, paragraph or provision
of this Agreement shall not affect the validity or enforceability of any other
Section, paragraph or provision hereof. If any Section, paragraph or provision
of this Agreement is for any reason determined to be invalid or unenforceable,
there shall be deemed to be made such minor changes (and only such minor
changes) as are necessary to make it valid and enforceable.
29
Section 20. Applicable Law.
This Agreement shall be governed by and construed in accordance with the
internal laws (and not the laws pertaining to conflicts of laws) of the State
of Illinois.
Section 21. Underwriter's Board Representative or Designee
For a period of three-years from the date of this Agreement, the Company,
at the request of ▇▇▇▇▇ Financial Services, Inc., shall nominate and use its
best efforts (including solicitation of proxies) to elect a designee of ▇▇▇▇▇
Financial Services, Inc. to the Board of Directors of the Company or,
alternatively, to permit a designee of ▇▇▇▇▇ Financial Services, Inc. to receive
notice of and attend all special and regular meetings of the Board of Directors
of the Company. Any designation by ▇▇▇▇▇ Financial Services, Inc. shall be made
in writing.
Section 22. General.
This Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter
hereof. This Agreement may be executed in several counterparts, each one of
which shall be an original, and all of which shall constitute one and the same
document.
In this Agreement, the masculine, feminine and neuter genders and the
singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company and you, individually or on behalf of
the several Underwriters, as the case may be.
(Balance of Page Left Blank, Intentionally)
30
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed copies hereof, whereupon
it will become a binding agreement among the Company and ▇▇▇▇▇ Financial
Services, Inc. or the several Underwriters including you, as the case may be,
all in accordance with its terms.
Very truly yours,
UNITED FINANCIAL MORTGAGE CORP.
By:____________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
The foregoing Underwriting Agreement is hereby confirmed and accepted by us
in Chicago, Illinois as of the date first above written.
▇▇▇▇▇ FINANCIAL SERVICES, INC.
If applicable, acting as Representative of the several Underwriters named in
the attached Schedule A.
By ▇▇▇▇▇ FINANCIAL SERVICES, INC.
By: ______________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, President
31
SCHEDULE A
Number of Firm Common
Name of Underwriter Shares to be Purchased
------------------- ----------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Services, Inc.
32
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED FOR SALE, SOLD
OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO ANY EFFECTIVE REGISTRATION STATEMENT
MADE UNDER THE SECURITIES ACT OF 1933 (THE "ACT"), OR PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE ACT
Underwriter's Warrant to Purchase ______
Shares of Common Stock
UNDERWRITER'S WARRANT
UNITED FINANCIAL MORTGAGE CORP.
THIS IS TO CERTIFY THAT for $______ consideration paid and received, ▇▇▇▇▇
FINANCIAL SERVICES, INC., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ or registered assigns (hereinafter the "Holder" or "▇▇▇▇▇") is entitled to
purchase from UNITED FINANCIAL MORTGAGE CORP., an Illinois corporation
(hereinafter the "Company"), ______________ Shares of the Company's at a price
of $______ per Share of Common Stock. Except as otherwise provide herein, this
Underwriter's Warrant is exercisable at any time on or after _________, 1998,
and not later than 3:30 P.M., Chicago Time, on ___________, 2002.
The Shares of Common Stock issuable upon exercise of the Underwriter's
Warrant have been registered under a registration statement filed by the Company
on Form SB-2 (File No.________) and declared effective by the Securities and
Exchange Commission on _____________________, 199 (the "Registration
Statement"). This Underwriter's Warrant is issued pursuant to an underwriting
agreement dated __________, 199 between the Company and ▇▇▇▇▇ Financial
Services, Inc. (the "Underwriter").
The Common Stock which is issuable upon exercise of the Underwriter's
Warrant shall bear the same terms and conditions as described under the section
captioned "Description of Capital Stock" in the Registration Statement,
provided, however, that the holders of such Common Stock shall have registration
rights under the Securities Act of 1933 as more fully described in Paragraph 6
of this Underwriter's Warrant.
1. Exercise of Underwriter's Warrant.
(a) The Underwriter's Warrant will not be exercisable and may not be
sold from ___________, 1997 until 3:30 P.M., Chicago Time, on _____________,
1998, provided, however, that if the Company merges or reorganizes during such
period in such a way as to terminate the Underwriter's Warrant or any component
thereof, it will be exercisable immediately prior to such action.
(b) The Underwriter's Warrant will be exercisable in whole or in part
at any time or from time to time from and after 3:30 P.M., Chicago Time, on
_________, 1998 until 3:30 P.M., Chicago Time, on _____________, 2002.
(c) After 3:30 P.M., Chicago Time, on ______________, 2002, the
Holder shall have no right to exercise the Underwriter's Warrant.
(d) The exercise price of the Underwriter's Warrant shall be $______
per Share of Common Stock, which exercise price shall be subject to adjustment
as provided in Section 8 herein.
2. Procedures for Exercise of Underwriter's Warrant. The rights
represented by this Underwriter's Warrant may be exercised in whole or in part
by (i) presentation and surrender hereof to the Company (or such other office or
agency of the Company as it may designate by notice in writing to the Holder at
the address of the Holder appearing on the books of the Company) with the
purchase form annexed hereto duly executed; (ii) payment to the Company of the
exercise price then in effect for the number of Shares of Common Stock specified
in the purchase form together with any applicable stock transfer taxes; and
(iii) delivery to the Company of a duly executed agreement signed by the
person(s) designated in the purchase form to the effect that such person(s)
agree(s) to be bound by the provisions of Section 6 and Section 7 of this
Underwriter's Warrant. This Underwriter's Warrant shall be deemed to have been
exercised, in whole or in part to the extent specified, immediately prior to the
close of business on the date this Underwriter's Warrant is surrendered and
payment is made in accordance with the foregoing provisions of this Section 2,
and the person or persons in whose name or names the certificates for shares of
Common Stock shall be issuable upon such exercise shall become the holder or
holders of record of such Common Stock at that time and date. The certificates
for the Common Stock and Unit Warrants so purchased shall be delivered to the
holder within a reasonable time, not exceeding ten (10) days after the rights
represented by this Underwriter's Warrant shall have been so exercised. If this
Underwriter's Warrant should be exercised in part only, the Company shall, upon
surrender of this Underwriter's Warrant for cancellation, execute and deliver a
new Underwriter's Warrant evidencing the right of the holder to purchase the
balance of the Shares of Common Stock purchasable hereunder.
3. Assignment, Transfer, Exchange or Loss of Underwriter's Warrant. The
Underwriter's Warrants may not be transferred, assigned or hypothecated, except
that they may be assigned, in whole or in part, to any successor of the
Underwriter, or to a bona fide officer of the Underwriter who is also a
shareholder of the Underwriter, or to members of any underwriting or selling
group who are members of the National
2
Association of Securities Dealers, Inc. or to a bona fide partner of such member
or a bona fide officer of such member who is also a shareholder of such member,
or pursuant to the laws of inheritance or intestacy, provided, however, that
such assigns, if any, are permitted by applicable rules of the NASD and the
applicable state blue sky laws. Any such assignment shall be made by surrender
of this Underwriter's Warrant to the Company with the assignment form annexed
hereto duly executed with funds sufficient to pay any transfer tax; whereupon
the Company shall, without charge, execute and deliver a new Underwriter's
Warrant in the name of the assignee named in such instrument of assignment and
this Underwriter's Warrant shall be promptly canceled. This Underwriter's
Warrant may be divided or combined with other Underwriter's Warrants which carry
the same rights upon presentation thereof at the office of the Company together
with a written notice signed by the Holder specifying the names and
denominations in which new Underwriter's Warrants are to be issued. Upon receipt
by the Company of evidence satisfactory to it of the loss, theft, destruction or
mutilation of this Underwriter's Warrant, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Underwriter's Warrant, if mutilated, the Company will
execute and deliver a new Underwriter's Warrant of like tenor and date. Any such
new Underwriter's Warrant executed and delivered shall constitute an additional
contractual obligation on the part of the Company, whether or not this
Underwriter's Warrant so lost, stolen, destroyed or mutilated shall be at any
time enforceable by anyone.
4. Reservation of Shares; Fractional Shares; The Company covenants and
agrees that all shares of Common Stock which may be issued upon exercise of the
Underwriter's Warrant will, upon issuance, be duly and validly issued, fully
paid and nonassessable, and no personal liability will attach to the holder
thereof. The Company further covenants and agrees that during the periods within
which this Underwriter's Warrant may be exercised, the Company will at all times
have authorized and reserved a sufficient number of shares of its Common Stock
for issuance upon exercise of the Underwriter's Warrant.
5. Rights of Holder. The Holder of this Underwriter's Warrant shall not,
by virtue hereof, be entitled to any rights of a shareholder in the Company,
either at law or equity, and the rights of the Holder are limited to those
expressed in the Underwriter's Warrant and are not enforceable against the
Company except to the extent set forth herein.
3
6. Registration Under the Securities Act of 1933
(a) Registration Rights - Piggy-Back.
(i) Right. In the event that the Company files a registration
statement (defined here to include a Notification under Regulation A under the
Act and the Offering Circular included therein) under the Securities Act of
1933, as amended, ("Act") which relates to a current offering of securities of
the Company (except in connection with an offering to employees), such
registration statement and the prospectus included therein shall, at the written
request to the Company by the holder of an Underwriter's Warrant or the Common
Stock purchased upon exercise of the Underwriter's Warrant (such securities
collectively referred to as the "Registrable Securities"), include and relate
to, and meet the requirements of the Act with respect to, the public offering of
such Registrable Securities so as to permit the public sale thereof in
compliance with the Act. In addition, the Company shall use its best efforts to
register and qualify any of the Registrable Securities for sale in such states
as are reasonably designated by the holders of the Registrable Securities.
(ii) Notice Requirement. The Company shall give written notice
to the holders of the Registrable Securities of the Company's intention to file
a registration statement under the Act relating to a current offering of
securities of the Company, sixty (60) or more days prior to the filing of such
registration statement, and the written request provided for in subsection
6(a)(i) herein shall be made by the holders of the Registrable Securities forty-
five (45) or more days prior to the date specified in the notice as the date on
which the Company intends to file such registration statement. The persons
giving notice hereunder shall be referred to hereinafter as "Distributing
Holders".
(iii) Duration of Piggy-Back Right. The registration rights
and notification requirements provided for in subsections 6(a)(i) and 6(a)(ii)
herein shall be in force during the period from ______________, 1998 to 3:30
P.M., Chicago Time on ___________, 2004.
(iv) Information and Indemnification. The Distributing Holders
shall furnish the Company with such information as the Company may reasonably
request in connection with the registration of the Registrable Securities. The
Distributing Holders and the Company shall provide and receive indemnification
as provided for in Section 7 hereof, except that the maximum amount which may be
recovered by a Distributing Holder from the Company shall be limited to the
amount of proceeds received by the Distributing Holder pursuant to the sale of
securities pursuant to the registration statement.
4
(v) Expenses. The Company shall bear all the costs of the
registration and qualification provided for in this Section 6(a), but the
Company shall not be responsible for the cost of separate counsel for the
Distributing Holders to review the registration statement. Nor will the Company
be responsible for any underwriting compensation applicable to the securities
sold pursuant to the registration right provided for herein.
(b) Registration Rights - Demand.
(i) Right. If any Fifty-Percent Holder ("50% Holder"), as
defined in paragraph 6(d) below, shall give written notice to the Company to the
effect that such 50% Holder desires to transfer any or all of the Registrable
Securities owned by the 50% Holder under such circumstances that a public
distribution (within the meaning of the Act) of any such Registrable Securities
may be involved, then the Company will promptly, but no later than sixty (60)
days after receipt of such notice, file, not more than once, a registration
statement or, if available, a Notification on Form 1-A (collectively,
"registration statement"), and all necessary amendments thereto, under the
Securities Act, registering or qualifying, as the case may be, the Registrable
Securities requested to be registered or qualified. The Company will use its
best efforts to cause such registration statement to become and remain effective
(including the taking of such steps as are necessary to obtain the removal of
any stop order) and shall use its best efforts to register and qualify any of
the Registrable Securities for sale in such states as are reasonably designated
by the 50% Holder. The Company will maintain such registration statement current
under the Act for a period of at least six (6) months (and for up to an
additional three (3) months if requested by the 50% Holder) from the effective
date thereof.
(ii) Limitation - One-Time Right. The registration right
provided for in subsection 6(b)(i) shall be exercised only once.
(iii) Notification to Other Holders. Within ten (10) days after
receipt of the written notice provided for in subsection 6(b)(i), the Company
shall give notice to the other holders of Registrable Securities advising that
the Company is proceeding with such registration statement and offering to
include therein the Registrable Securities of such other holders. The election
by such other holders to participate shall be made in writing to the Company not
later than ten (10) days after receipt of the notice provided for herein. The
50% Holder and the other holders electing to participate shall be hereinafter
referred to as the "Distributing Holders".
5
(iv) Duration of Demand Right. The registration right and
notification requirements provided for in subsections 6(b)(i) and 6(b)(iii)
herein shall be in force during the period from ______________, 1998 to 3:30
P.M., Chicago Time on ___________, 2002.
(v) Information and Indemnification. The Distributing Holders
shall furnish the Company with such information as the Company may reasonably
request in connection with the registration of the Registrable Securities. The
Distributing Holders and the Company shall provide and receive indemnification
as provided for in Section 7 hereof, except that the maximum amount which may be
recovered by a Distributing Holder from the Company shall be limited to the
amount of proceeds received by the Distributing Holder pursuant to the sale of
securities pursuant to the registration statement.
(vi) Expenses. The Company shall bear all the costs of the
registration and qualification provided for in this Section 6(b), but the
Company shall not be responsible for the cost of separate counsel for the
Distributing Holders to review the registration statement. Nor will the Company
be responsible for any underwriting compensation applicable to the securities
sold pursuant to the registration right provided for herein.
(c) Registration - Non-Demand. In addition to the rights above
provided in subsections 6(a) and 6(b) herein, the Company will cooperate with
the then holder(s) of the Underwriter's Warrants in preparing and signing any
Registration Statement or Notification, in addition to the Registration
Statements or Notifications discussed above, required in order to sell or
transfer the shares issued upon the exercise of the Underwriter's Warrant, and
will supply all information required therefor, but such additional Registration
Statement or Notification shall be at the then holder(s) cost and expense.
(d) Fifty-Percent (50%) Holder. The term "50% Holder" as used in
this Paragraph 6 shall mean, assuming exercise of all Underwriter's Warrants,
the holder of at least fifty-percent (50%) of the Common Stock issued or
issuable upon such exercise and shall include any owner or combination of owners
of such securities.
(e) Registration on Form S-3. In the event the Company receives from
the 50% Holder a request that the Company effect a registration on Form S-3 with
respect to Registrable Securities and if Form S-3 is available for such offering
by the 50% Holder, the Company shall, as soon as practicable, effect such
registration as would permit or facilitate the sale and distribution of the
Registrable Securities as are specified in the request. All expenses incurred in
connection with the registration pursuant to this Section 6(e) shall be borne by
the Company. Registrations pursuant to this Section 6(e) shall not
6
be counted as a demand for registration pursuant to Section 6(b) hereof. Holders
of other securities of the Company having registration rights shall have the
ability to be included in the registration on Form S-3.
7. Indemnification
(a) Whenever pursuant to Paragraph 6 a registration statement
relating to the Underwriter's Warrant or any Shares of Common Stock issued or
issuable upon the exercise of any Underwriter's Warrants, is filed under the
Act, amended or supplemented, the Company will indemnify and hold harmless each
holder of the securities covered by such registration statement, amendment or
supplement (such holder being hereinafter called the "Distributing Holder"), and
each person, if any, who controls (within the meaning of the Act) the
Distributing Holder, and each underwriter (within the meaning of the Act) of
such securities and each person, if any, who controls (within the meaning of the
Act) any such underwriter, against any losses, claims, damages or liabilities,
joint or several, to which the Distributing Holder, any such controlling person
or any such underwriter may become subject, under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any such registration statement or any
preliminary prospectus or final prospectus constituting a part thereof or any
amendment or supplement thereto, or arise out of or are based upon the omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading; and will reimburse the Distributing
Holder and each such controlling person and underwriter for any legal or other
expenses reasonably incurred by the Distributing Holder or such controlling
person or underwriter in connection with investigating or defending any such
loss, claim, damage, liability or action; provided; however, that the Company
will not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in said
registration statement, said preliminary prospectus, said final prospectus or
said amendment or supplement in reliance upon and in conformity with written
information furnished by such Distributing Holder or any other Distributing
Holder, for use in the preparation thereof.
(b) The Distributing Holder will indemnify and hold harmless the Company,
each of its directors, each of its officers who have signed said registration
statement and such amendments and supplements thereto, each person, if any, who
controls the Company (within the meaning of the Act) against any losses, claims,
damages or liabilities to which the Company or any such director, officer or
controlling person may become
7
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities arise out of or are based upon any untrue or alleged untrue
statement of any material fact contained in said registration statement, said
preliminary prospectus, said final prospectus, or said amendment or supplement,
or arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent that such untrue statement or alleged untrue statement or omission or
alleged omission was made in said registration statement, said preliminary
prospectus, said final prospectus or said amendment or supplement in reliance
upon and in conformity with written information furnished by such Distributing
Holder for use in the preparation thereof; and will reimburse the Company or any
such director, officer or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action.
(c) Promptly after receipt by an indemnified party under this Paragraph 7
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party, give the
indemnifying party notice of the commencement thereof; but the omission so to
notify the indemnifying party will not relieve it from any liability which it
may have to any indemnified party otherwise than under this Paragraph 7.
(d) In case any such action is brought against any indemnified party, and
it notifies an indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate in, and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party, and
under such circumstances, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
8. Anti-Dilution Provisions. The exercise price of the Underwriter's
Warrant and the number of Shares of Common Stock purchasable upon the exercise
of the Underwriter's Warrants shall be subject to adjustment from time to time
upon the happening of certain events as follows:
(a) Adjustments of Exercise Prices.
(1) No Consideration or Consideration Less than Exercise Price
of Underwriter's Warrant. In case the Company should at any time or from time to
time during the life of the Underwriter's Warrants issue or sell any shares of
Common
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Stock (other than the Common Stock which may be purchased pursuant to options,
warrants and/or conversion rights outstanding as of the date of this
Underwriter's Warrant) without consideration or for a consideration per share
less than the exercise price of the Underwriter's Warrant in effect immediately
prior to the time of the issue or sale, then forthwith upon such issue or sale,
the exercise price of the Underwriter's Warrant shall be adjusted to a price
(computed to the nearest cent) determined by dividing (i) the sum of (x) the
number of shares of the Company's Common Stock outstanding immediately prior to
such issue or sale multiplied by the exercise price in effect immediately prior
to such issue or sale and (y) the consideration, if any, received by the Company
upon such issuance or sale by (ii) the total number of shares of the Company's
Common Stock outstanding immediately after such issue or sale.
(2) Options. For purposes of the computations provided for in
subsection 8(a)(1) above, this subsection 8(a)(2) shall be applicable. In case
the Company at any time hereafter shall in any manner grant any right to
subscribe for or to purchase, or grant any option for the purchase of Common
Stock or for the purchase of securities convertible into or exchangeable for
Common Stock, and the minimum price per share (determined in accordance with
subsection 8(a)(2)(i) below) for which Common Stock is issuable upon exercise or
conversion shall be less than the exercise price of the Underwriter's Warrant,
then, for purposes of the calculations provided for in subsection 8(a)(1) above,
the maximum amount of Common Stock issuable upon exercise of the purchase rights
or conversion rights described herein shall be deemed to have been issued for
the minimum price per share, provided, that no further adjustment of the
exercise price of the Underwriter's Warrant shall be made upon the actual issue
of Common Stock so deemed to have been issued; and further provided, that upon
the expiration of such rights, options or conversion rights, the exercise price
of the Underwriter's Warrant shall be adjusted to the price that would have
prevailed had all prior adjustments been made on the basis of the issuance only
of the Common Stock actually issued upon the exercise of the purchase rights and
conversion rights described herein.
(i) The "minimum price per share" referred to in subsection
8(a)(2) shall be determined by dividing the total amount to be received by
the Company in consideration both for the right to purchase the Common
Stock and the actual purchase of the Common Stock, by the maximum number of
shares of Common Stock issuable pursuant to the purchase rights, options or
conversion rights.
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(3) Convertible Securities. For purposes of the computation
provided for in subsection 8(a)(1) above, this subsection 8(a)(3) shall be
applicable. In case the Company at any time hereafter shall in any manner issue
or sell any securities which are convertible into Common Stock ("Convertible
Securities") and the minimum price per share (determined in accordance with
subsection 8(a)(3)(i) below) for which Common Stock is issuable upon conversion
shall be less than the exercise price of the Underwriter's Warrant, then, for
purposes of the calculation provided for in subsection 8(a)(1) above, the
maximum amount of Common Stock issuable upon conversion of the Convertible
Securities shall be deemed to have been issued for the minimum price per share,
provided, that no further adjustment of the exercise price of the Underwriter's
Warrant shall be made upon the actual issue of Common Stock so deemed to have
been issued; and further provided, that if any such issue or sale of Convertible
Securities is made upon exercise of any right to subscribe of or to purchase or
any option to purchase any such Convertible Securities for which an adjustment
of the exercise price of the Underwriter's Warrant has been or is to be made
pursuant to Section 8(a)(2), no further adjustment of the exercise prices shall
be made by reason of such issue or sale; and further provided, that upon
termination of the right to convert or to exchange such Convertible Securities
for Common Stock, the exercise price of the Underwriter's Warrant shall be
adjusted to the price that would have prevailed had all prior adjustments been
made on the basis of the issuance only of the Common Stock actually issued upon
the conversion or exchange of the Convertible Securities described herein.
(i) The "minimum price per share" referred to in subsection
8(a)(3) shall be determined by dividing the total amount to be received by
the Company in consideration both for the both for the issuance of the
Convertible Security and for actual exchange or conversion of the
Convertible Security into shares of Common Stock, by the maximum number of
shares of Common Stock issuable pursuant to the exchange or conversion of
the Convertible Securities.
(4) Determination of Issue Price. For purposes of the
computations provided for in this Section 8, this subsection 8(a)(4) shall be
applicable. In case any shares of Common Stock or Convertible Securities or any
rights or options to purchase any such stock or securities shall be issued for
cash the consideration received therefor, after deducting therefrom any
commissions or other expenses paid or incurred by the Company for any
underwriting of, or otherwise in connection with, the issuance thereof, shall be
deemed to be the amount received by the Company therefor. In case any shares of
Common Stock or Convertible Securities or any rights or options to purchase any
such stock or securities shall be issued for consideration part or all of which
shall be other than cash,
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then, for the purposes of this Section 8, the Board of Directors of the Company
shall make a good faith determination of the fair value of such consideration,
irrespective of accounting treatment, and such Common Stock, Convertible
Securities, rights or options shall be deemed to have been issued for an amount
of cash equal to the value so determined by the Board of Directors. The
reclassification of securities other than Common Stock into securities including
Common Stock shall be deemed to involve the issuance of Common Stock for a
consideration other than cash and the issuance of such securities shall be
deemed to have occurred immediately prior to the close of business on the date
fixed for the determination of the identity of the security holders entitled to
receive such Common Stock. In case any shares of Common Stock or Convertible
Securities or any rights or options to purchase any such stock or other
securities shall be issued together with other stock or securities or other
assets of the Company for a consideration which includes both, the Board of
Directors of the Company shall determine what part of the consideration so
received is to be deemed to be consideration for the issuance of such shares of
Common Stock, Convertible Securities, rights or options.
(5) Determination of Date of Issue. In case the Company shall
take a record of the holders of any Common Stock for the purpose of entitling
them (i) to receive a dividend or other distribution payable in Common Stock or
in Convertible Securities, or (ii) to subscribe for or purchase Common Stock or
Convertible Securities, then such record date shall be deemed to be the date of
the issue or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
(6) Treasury Shares. For the purpose of this Section 8, shares
of Common Stock at any relevant time owned or held by, or for the account of,
the Company shall not be deemed outstanding.
(b) Adjustment of Exercise Prices - Stock Dividend, Distribution,
Subdivision or Reclassification. Anything in this Section 8 to the contrary
notwithstanding, in case the Company shall at any time (i) issue Common Stock or
Convertible Securities by way of dividend or other distribution on any stock of
the Company or (ii) subdivide or reclassify its outstanding shares of Common
Stock into a greater number of shares, or (iii) combine or reclassify its
outstanding shares of Common Stock into a smaller number of shares, the exercise
price of the Underwriter's Warrant in effect at the time of the record date for
such dividend or distribution or of the effective date of such subdivision,
combination or reclassification shall each be adjusted so that each shall equal
a price determined by multiplying the exercise price by a fraction, the
denominator of
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which shall be the number of shares of Common Stock outstanding after giving
effect to such action, and the numerator of which shall be the number of shares
of Common Stock outstanding immediately prior to such action. Notwithstanding
anything to the contrary contained in this Underwriter's Warrant, in the event
an adjustment to the exercise price of the Underwriter's Warrant is effected
pursuant to this subsection 8(b) a corresponding adjustment to the number of
Shares of Common Stock issuable upon exercise of the Underwriter's Warrant shall
be made pursuant to Section 8(c) below. Adjustment of the exercise price shall
be made successively whenever any event described herein shall occur.
(c) Adjustment of Number of Shares of Common stock Issuable upon
Exercise of Underwriter's Warrants. Whenever the exercise price of the
Underwriter's Warrant is adjusted pursuant to subsection 8(a) above, the number
of Shares of Common Stock issuable upon exercise of this Underwriter's Warrant
shall simultaneously be adjusted by multiplying the number of Shares of Common
Stock initially issuable upon exercise of this Underwriter's Warrant by the
exercise price in effect immediately prior to the referenced adjustment and
dividing the product so obtained by the exercise price as adjusted. Adjustment
of the number of Shares of Common Stock issuable upon exercise of the
Underwriter's Warrants shall be made successively whenever any event described
herein shall occur.
(d) No Adjustment For Small Amounts. Anything in this Section 8 to
the contrary notwithstanding, the Company shall not be required to give effect
to any adjustment in an exercise price unless and until the net effect of one or
more adjustments, determined as above provided, shall have required an
adjustment by at least five cents ($.05), but when the cumulative net effect of
more than one adjustment so determined shall be to change the actual exercise
price by at least five cents ($.05), such change in the exercise price shall
thereupon be given effect.
(e) Computations and Notifications. Whenever any exercise price is
adjusted as provided for herein, the Company shall promptly but no later than
ten (10) days after any written request for such adjustment by Holder, cause a
notice setting forth the adjusted exercise price and adjusted number of
securities to be issued upon exercise and, if requested, information describing
the transactions giving rise to such adjustments, to be mailed to Holder, at the
addresses set forth herein, and shall cause a certified copy thereof to be
mailed to the warrant agent of the Company. The Company may retain a firm of
independent certified public accountants selected by the Board of Directors (who
may be the regular accountants employed by the Company) to make any computation
required by this Section 8, and a certificate signed by such firm shall be
conclusive evidence of the correctness of such adjustment.
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(f) Notices to Holders of Underwriter's Warrant. So long as this
Underwriter's Warrant shall be outstanding and unexercised (i) if the Company
shall pay any dividend or make any distribution upon the Common Stock or (ii) if
the Company shall offer to the holders of Common Stock for subscription or
purchase by them any shares of stock of any class or any other rights or (iii)
if any capital reorganization of the Company, reclassification of the capital
stock of the Company, consolidation or merger of the Company with or into
another corporation, sale, lease or transfer of all or substantially all of the
property and assets of the Company to another corporation, or voluntary or
involuntary dissolution, liquidation or winding up of the Company shall be
effected, then, in any such case, the Company shall cause to be delivered to the
Holder, at least ten days prior to the date specified in (x) or (y) below, as
the case may be, a notice containing a brief description of the proposed action
and stating the date on which (x) a record is to be taken for the purpose of
such dividend, distribution or rights, or (y) such reclassification,
reorganization, consolidation, merger, conveyance, lease, dissolution,
liquidation or winding up is to take place and the date, if any, is to be fixed,
as of which the place and date, if any, is to be fixed, as of which the holders
of Common Stock of record shall be entitled to exchange their shares of Common
Stock for securities or other property deliverable upon such reclassification,
reorganization, consolidation, merger, conveyance, dissolution, liquidation or
winding up.
(g) Reclassification, Reorganization or Merger. In case of any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the Company (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of an
issuance of Common Stock by way of dividend or other distribution or of a
subdivision or combination), or in case of any consolidation or merger of the
Company with or into another corporation (other than a merger with a subsidiary
in which merger the Company is the continuing corporation and which does not
result in any reclassification, capital reorganization or other change of
outstanding shares of Common Stock of the class issuable upon exercise of this
Underwriter's Warrant) or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as an
entirety, the Company shall cause effective provision to be made so that the
holder shall have the right thereafter, by exercising this Underwriter's
Warrant, to purchase the kind and amount of shares of stock and other securities
and property receivable upon such reclassification, capital reorganization or
other change, consolidation, merger, sale or conveyance. Any such provision
shall include provision for adjustments which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Underwriter's
Warrant. The foregoing provisions of this
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Section (i) shall similarly apply to successive reclassification, capital
reorganizations and changes of shares of Common Stock and to successive
consolidations, mergers, sales or conveyances. In the event that in any such
capital reorganization or reclassification, consolidation, merger, sale or
conveyance, additional shares of Common Stock shall be issued in exchange,
conversion, substitution or payment, in whole or in part, for or of a security
of the Company other than Common Stock, any such issue shall be treated as an
issue of Common Stock covered by the provisions of subsection(f)(i) hereof with
the amount of the consideration received upon the issue thereof being determined
by the Board of Directors of the Company, such determination to be final and
binding on the holder.
(h) Spin-Offs. In the event the Company spins-off a subsidiary by
distributing to the shareholders of the Company as a dividend or otherwise the
stock of the subsidiary, the Company shall reserve for the life of the
Underwriter's Warrants, shares of the subsidiary to be delivered to the holders
of the Underwriter's Warrants upon exercise to the same extent as if they were
owners of record of the Shares of Common Stock issuable upon exercise of the
Underwriter's Warrant on the record date for payment of the shares of the
subsidiary.
9. Governing Law. This Warrant shall be governed by and in accordance
with the laws of the State of Illinois.
IN WITNESS WHEREOF, United Financial Mortgage Corp. has caused this Warrant
to be signed by its duly authorized officer under its corporate seal on
this ____ day of ____________, 1997.
UNITED FINANCIAL MORTGAGE CORP.
By:
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
and Chief Executive Officer
[Seal]
Attest:
------------------------------
Secretary
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PURCHASE FORM
-------------
(To be completed only upon exercise of Underwriter's Warrant)
Dated: ________________, 199__
The undersigned, the Holder of the foregoing Underwriter's Warrant, hereby
irrevocably elects to exercise the purchase rights represented by such
Underwriter's Warrant to the extent of purchasing ________ Shares of Common
Stock and hereby makes payment of $____________ in payment of the actual
exercise price thereof.
---------------------------------
(Signature)
---------------------------------
(Please print or type name)
---------------------------------
INSTRUCTIONS FOR REGISTRATION OF COMMON STOCK
Name:
---------------------------------
(Please print or type name)
Address:
---------------------------------
---------------------------------
---------------------------------
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ASSIGNMENT FORM
---------------
(To be completed only upon assignment of Underwriter's Warrant)
For value received, the undersigned hereby sells, assigns and transfers
unto
Name:
----------------------------------------------
(Please type or print name)
Address:
----------------------------------------------
----------------------------------------------
----------------------------------------------
the right to purchase Shares of Common Stock represented by the foregoing
Underwriter's Warrant to the extent of ___________ Shares of Common Stock, and
does hereby irrevocably constitute and appoint ______________________________
___________________________ attorney, to transfer the Underwriter's Warrant on
the books of the Company with full power of substitution in the premises.
Dated: ,
--------------- ----
---------------------------------
(Signature)
---------------------------------
(Please print or type name)
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