1,000,000 Common Shares
AMERILINK CORPORATION
UNDERWRITING AGREEMENT
Baltimore, Maryland
, 1997
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▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, INCORPORATED
▇.▇. ▇▇▇▇▇▇▇▇ & CO.
As Representatives of the Several Underwriters
Named in Schedule I Hereto
c/▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated
▇▇▇▇ ▇▇▇▇▇ Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen/Ladies:
AmeriLink Corporation, an Ohio corporation (the "Company"), proposes to
issue and sell to ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated and ▇.▇. ▇▇▇▇▇▇▇▇ & Co.
(the "Representatives") and the several underwriters named in Schedule I hereto
(collectively with the Representatives, the "Underwriters" and, individually, an
"Underwriter," which terms shall include any Underwriter substituted as provided
in Section 10 of this Agreement) 600,000 of the Company's Common Shares, without
par value (the "Common Shares"), and the selling shareholders of the Company
named in Schedule II hereto (the "Selling Shareholders") propose severally to
sell an aggregate of 400,000 outstanding Common Shares as set forth opposite
their respective names in Schedule II hereto. The aforementioned aggregate of
1,000,000 Common Shares to be sold to the several Underwriters by the Company
and the Selling Shareholders are referred to herein as the "Firm Shares." The
respective amounts of the Firm Shares to be so purchased by the several
Underwriters are set forth opposite their names in Schedule I hereto. In
addition, the Selling Shareholders propose severally to grant to the
Underwriters, solely for the purpose of covering over-allotments, the option
described in Section 3(b) of this Agreement to purchase up to an aggregate of
150,000 additional Common Shares (the "Option Shares") as set forth below. The
Firm Shares and the Option Shares (to the extent the aforementioned option is
exercised) are referred to herein collectively as the "Shares."
As the Representatives, you have advised the Company (a) that you shall
execute this Agreement on behalf of the several Underwriters and (b) that the
several Underwriters are willing, acting severally and not jointly, to purchase
the numbers of Firm Shares set forth opposite their respective names in Schedule
I hereto, plus their respective pro rata portions of the Option Shares
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if you elect to exercise the over-allotment option in whole or in part for
the respective accounts of the several Underwriters.
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
1. Representations and Warranties of the Company. The Company represents,
warrants, covenants and agrees with Underwriters as follows:
(a) Registration Statement and Prospectus. A registration statement on
Form S-2 (File No. 333-[ ]) with respect to the Shares has been prepared by the
Company in conformity with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission")
thereunder and has been duly filed with the Commission under the Securities Act.
Copies of such registration statement, including any amendments thereto, the
preliminary prospectuses (meeting the requirements of Rule 430A of the Rules and
Regulations under the Securities Act) contained therein and the exhibits,
financial statements and schedules, as finally amended and revised, have
heretofore been delivered by the Company to the Representatives (and to such of
the Underwriters which have requested the foregoing from the Company). Such
registration statement, herein referred to as the "Registration Statement,"
which shall be deemed to include all information, if any, omitted therefrom in
reliance upon Rule 430A of the Rules and Regulations under the Securities Act
and contained in the Prospectus referred to below, has been declared effective
by the Commission under the Securities Act and no post-effective amendment to
the Registration Statement has been filed as of the date of this Agreement. The
form of prospectus first filed by the Company with the Commission pursuant to
Rule 424(b) and Rule 430A of the Rules and Regulations under the Securities Act
is herein referred to as the "Prospectus." Each preliminary prospectus included
in the Registration Statement prior to the time it became or becomes effective
and each form of prospectus that pursuant to Rule 430A of the Rules and
Regulations under the Securities Act omits certain information is herein
referred to as a "Preliminary Prospectus." Any reference herein to the
Prospectus shall be deemed to include any supplements or amendments thereto
filed with the Commission after the date of filing of the Prospectus under said
Rules 424(b) and 430A, and prior to the termination of the offering of the
Shares by the Underwriters. Each of the terms "Preliminary Prospectus,"
"Prospectus" and "Registration Statement," as used herein, shall include all
documents and other information incorporated by reference therein including
(without limitation) exhibits to such documents.
(b) Compliance with the Securities Act. At the effective time of the
Registration Statement and at all times subsequent thereto, up to and including
the Closing Date and each Option Closing Date (as such terms are herein
defined), if any, and during such longer period until any post-effective
amendment to the Registration Statement shall become effective, the Registration
Statement (and any post-effective amendment to the Registration Statement) will
contain all statements which are required to be stated therein in accordance
with the Securities Act and the Rules and Regulations under the Securities Act,
will fully comply with the applicable provisions of the Securities Act and the
Rules and Regulations under the Securities Act, and neither the Registration
Statement nor any post-effective amendment to the Registration Statement will
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contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; and the Prospectus and any amendment or supplement thereto will
at all times up to any including the Closing Date and any Option Closing Date,
and during such longer period as the Prospectus may be required to be delivered
in connection with sales of Firm Shares or Option Shares by the Underwriters or
any dealer, fully comply with the provisions of the Securities Act and the Rules
and Regulations thereunder, and will not contain any untrue statement of a
material fact and will not omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that the foregoing representations or warranties do not apply to the information
contained in or omitted from the Registration Statement or the Prospectus or any
amendment of, or supplement to, either of them in reliance upon and in
conformity with information furnished in writing to the Company by or on behalf
of any Underwriter through the Representatives expressly for use in the
Registration Statement or the Prospectus. It is understood that the statements
set forth on the inside cover page of the Prospectus with respect to
stabilization and passive market-making activities, in the table beneath the
first paragraph of the section of the Prospectus entitled "Underwriting," the
amounts of the concession to certain dealers and the concession that such
dealers may allow to certain other dealers in the second paragraph following
such table and the five paragraphs preceding the last paragraph of such section
and the identity of counsel for the Underwriters under the section of the
Prospectus entitled "Legal Matters" constitute the only information furnished in
writing by or on behalf of any Underwriter for inclusion in the Registration
Statement or the Prospectus, as the case may be.
(c) Organization and Qualification. The Company has been duly organized
and is validly existing as a corporation in good standing under the law of the
State of Ohio, with the corporate power and authority to own, lease and operate
its properties and conduct its business as described in the Registration
Statement. The Company is duly qualified to transact business and is in good
standing in all jurisdictions in which the conduct of its business requires such
qualification except where the failure to so qualify or be in good standing
would not have a materially adverse effect upon the business of the Company and
its Subsidiaries (as defined herein), taken as a whole.
(d) Subsidiaries. Schedule III hereto lists all of the subsidiaries of
the Company (collectively, the "Subsidiaries" and, individually, a
"Subsidiary"). All of the outstanding shares of capital stock of each Subsidiary
have been duly authorized and validly issued and are fully paid and
non-assessable, and are owned by the Company, free and clear of any pledge,
lien, security interest, claim, equitable interest or encumbrance of any kind.
Each Subsidiary has been duly organized and is validly existing as a corporation
in good standing under the law of its state of incorporation, with the corporate
power and authority to own, lease and operate is properties and conduct its
business as described in the Registration Statement. Each Subsidiary is duly
qualified to transact business and is in good standing in all jurisdictions in
which the conduct of its business requires such qualification except where the
failure to so qualify or be in good standing would not have a materially adverse
effect upon the business of the Company and its Subsidiaries, taken as a whole.
None of the outstanding shares of capital stock of any Subsidiary was issued in
violation of, or subject to, any preemptive rights or other rights to subscribe
for or purchase securities, that were not
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provided or waived. None of such shares has been issued in violation of any
federal or state securities laws or regulations.
(e) Capitalization; Description of Securities. All issued and
outstanding shares of capital stock of the Company have been duly authorized and
validly issued and are fully paid and non-assessable, have been issued in
compliance with all federal and state securities laws, and were not issued in
violation of, or subject to, any preemptive rights or other rights to subscribe
for or purchase securities that were not provided or waived. The authorized and
outstanding capital stock of the Company conforms, and the authorized and
outstanding capital stock of the Company will conform as of the Closing Date and
any Option Closing Date to the statements relating thereto contained in the
Registration Statement and the Prospectus (and such statements correctly state
the substance of the instruments defining the capitalization of the Company).
The Company had, at the date indicated, the duly authorized and outstanding
capitalization as set forth in the Prospectus in the "Actual" column under the
caption "Capitalization." The Firm Shares to be purchased from the Company
hereunder have been duly authorized for issuance and sale, and the Firm Shares
and the Option Shares (if and to the extent the Underwriters' over-allotment
option is exercised) to be purchased from the Selling Shareholders hereunder
have been duly authorized for sale, to the Underwriters pursuant to this
Agreement and, when issued and delivered by the Company and delivered by the
Selling Shareholders, as the case may be, against payment therefor in accordance
with the terms of this Agreement, will be duly and validly issued and fully paid
and nonassessable; no holder thereof will be subject to personal liability by
reason of being such holder; and no preemptive right, co-sale right,
registration right, right of first refusal or other similar right of
shareholders exists with respect to any of the Firm Shares or Option Shares or
the issuance and sale thereof. No further approval or authorization of any
shareholder, the Board of Directors of the Company or others is required for the
issuance and sale or transfer of the Shares in the manner set forth in this
Agreement except as may be required under the Securities Act, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or under state or other
securities or Blue Sky laws. Except as described in the Prospectus, neither the
Company nor any Subsidiary has outstanding any options to purchase, any warrants
or other rights calling for the issuance of 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, warrants, rights, convertible securities
or obligations. The descriptions of the Company's stock option, stock bonus and
other stock or stock-based plans or arrangements, and the options or other
rights granted and exercised thereunder, included in the Prospectus accurately
and fairly present the information required to be shown with respect to such
plans, arrangements, options and rights. The only outstanding shares of capital
stock of the Company are 3,525,580 Common Shares.
(f) No Stop Order. Neither the Commission nor any state securities
commission in a jurisdiction designated by the Representatives pursuant to
Section 5(c) hereof has issued an order preventing or suspending the use of any
Preliminary Prospectus relating to the proposed offering of the Shares nor
instituted proceedings for that purpose.
(g) Financial Statements. The audited consolidated financial statements
of the Company and its Subsidiaries, together with related notes and schedules,
and the unaudited consolidated financial statements of the Company and its
Subsidiaries, together with any related
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notes and schedules (the "Unaudited Financial Statements"), as included in
any Preliminary Prospectus, the Prospectus and the Registration Statement
(collectively, the "Company Financial Statements"), present fairly the financial
position, the results of operations and changes in cash flows of the Company and
its Subsidiaries, on a consolidated basis, at the indicated dates and for the
indicated periods and comply with the requirements of the Securities Act and the
Rules and Regulations thereunder. The Company Financial Statements have been
prepared in accordance with generally accepted accounting principles,
consistently applied throughout the periods involved, and all adjustments
necessary for a fair presentation of the results for such periods have been
made, none of which, individually or in the aggregate, will be material. The
financial statement schedules and the summary, selected and statistical
financial information and data, and related notes thereto, included in any
Preliminary Prospectus, the Prospectus and the Registration Statement present
fairly the information and data shown therein, have been compiled on a basis
consistent with the Company Financial Statements included therein and comply
with the requirements of the Securities Act and the Rules and Regulations
thereunder. The pro forma financial information included in any Preliminary
Prospectus, the Prospectus and the Registration Statement has been prepared in
accordance with the Rules and Regulations relating to pro forma financial
information, has been properly compiled on the pro forma bases described
therein, and the assumptions used in the preparation thereof are reasonable and
the adjustments used therein are appropriate to give effect to the transactions
or circumstances referred to therein. No other financial statements or schedules
are required to be included in the Registration Statement.
(h) Litigation. Except as described in the Prospectus, there is no
action, suit, claim or proceeding pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries or any of their
respective directors or officers or any of their properties, assets or rights,
before any court or administrative agency or body or otherwise which (i) might
result in any materially adverse change in the business, condition (financial or
otherwise), operations, earnings or business prospects of the Company or any of
its Subsidiaries or might adversely affect their properties, assets or rights,
(ii) if determined adversely to the Company or any of its Subsidiaries would
prevent consummation of the transactions contemplated hereby or (iii) is
required to be disclosed in the Registration Statement or the Prospectus. There
are no contracts or documents of the Company or any of its Subsidiaries that are
required to be described in the Prospectus or to be filed as an exhibit to the
Registration Statement by the Securities Act or by the Rules and Regulations
thereunder which have not been accurately described in the Prospectus and filed
as exhibits to the Registration Statement. The contracts so described in the
Prospectus are in full force and effect on the date hereof or the Closing Date
or any Option Closing Date, as the case may be, and neither the Company nor any
of its Subsidiaries, nor to the best knowledge of the Company, any other party,
is in breach or default under any of such contracts.
(i) Title to Assets. The Company and its Subsidiaries have good and
marketable title to all of the properties and assets reflected in the Company
Financial Statements (or as described in the Registration Statement as owned by
such party) subject to no lien, mortgage, pledge, charge or encumbrance of any
kind, except those reflected in the Company Financial Statements (or as referred
to in the Registration Statement). Except as set forth in the Prospectus,
neither the Company nor any of its Subsidiaries owns any real property. All of
the deeds, leases or documents of title under which the Company or its
Subsidiaries holds properties or assets are as described in the
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Prospectus and are valid and in full force and effect and enforceable as
to the Company or its Subsidiaries, as the case may be, in accordance with their
respective terms, and no claim has been asserted by anyone adverse to rights of
the Company or any of its Subsidiaries as owner or lessee, as the case may be,
under any of the deeds, leases or documents of title mentioned above, or
affecting or questioning the right of the Company or any Subsidiary to continued
possession of the owned or leased premises or assets under any such deed, lease
or document of title.
(j) Taxes. All federal, state, local and other income tax returns with
respect to the Company and its Subsidiaries which have been required to be filed
have been filed and all taxes indicated by said returns and all assessments
received with respect to said returns, to the extent that such taxes have become
due, have been paid. There is no tax deficiency against the Company or any of
its Subsidiaries and there is no reasonable basis for the assertion of any such
deficiency that, if determined adversely, would have a material adverse effect
on the condition (financial or otherwise), earnings, operations, business or
business prospects of the Company or any of its Subsidiaries and all tax
liabilities are adequately provided for on the books of the Company and its
Subsidiaries.
(k) No Material Adverse Change. Since the date as of which information
is given in the Registration Statement and the Prospectus, (i) there has not
been any materially adverse development in or affecting the condition (financial
or otherwise) of the Company or any of its Subsidiaries or the condition
(financial or otherwise), earnings, operations, business, or business prospects
of the Company or any of its Subsidiaries, whether or not occurring in the
ordinary course of business, (ii) there has not been any material transaction
entered into by the Company or any of its Subsidiaries, other than transactions
in the ordinary course of business and changes and transactions disclosed in the
Registration Statement, as it may be amended or supplemented, (iii) there has
not been any obligation that is material to the Company or any of its
Subsidiaries, direct or contingent, incurred by the Company or any of its
Subsidiaries, except obligations incurred in the ordinary course of business,
(iv) there has not been any change in the capital stock or outstanding
indebtedness of the Company or any of its Subsidiaries that is material to the
Company or any of its Subsidiaries and (v) the Company has not declared, paid or
made any dividend or other distribution on or with respect to its capital stock.
Neither the Company nor any of its Subsidiaries has any material contingent
obligations which are not disclosed in the Prospectus.
(l) No Violation. Neither the Company nor any of its Subsidiaries is in
violation of its Articles of Incorporation or Code of Regulations or is in
default under any agreement, lease, contract, indenture or other instrument or
obligation to which it is a party or by which it or any of its properties is
bound. The consummation of the transactions contemplated by this Agreement and
the Registration Statement and the execution and performance of this Agreement
and the fulfillment of the terms hereof or thereof will not conflict with, or
result in a breach of, any of the terms or provisions of, or constitute a
default or require any payment by the Company or any of its Subsidiaries under
(i) any indenture, mortgage, deed of trust or other agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries is bound, or of the Articles of Incorporation or Code
of Regulations of the Company or any of its Subsidiaries or (ii) any law, rule
or regulation, or any judgment, order or decree of any court or of any
regulatory body or administrative agency or other governmental body having
jurisdiction over the Company or any of its Subsidiaries or any of their
properties.
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(m) Authorizations. Each approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory, administrative or
other governmental body necessary in connection with the execution and delivery
by the Company of this Agreement and the consummation of the transactions herein
contemplated or that may be necessary to qualify the Shares for public offering
by the Underwriters under state securities or Blue Sky laws has been obtained or
made and is in full force and effect.
(n) Permits, Licenses, Etc. The Company and its Subsidiaries are in
possession of, and are operating in compliance with, all authorizations,
licenses, certificates, consents, orders and permits from governmental
authorities (collectively, the "Governmental Licenses") which are necessary to
the conduct of their business, all of which are valid and in full force and
effect. Neither the Company nor any of its Subsidiaries has received any notice
of proceedings relating to the revocation, suspension or modification of any of
the Governmental Licenses. The Company and its Subsidiaries own or possess all
patents, trade names, trademarks, service marks, copyrights, know-how (including
trade secrets and other unpatented or unpatentable proprietary information) and
other intellectual property, and rights thereto, described or referred to in the
Prospectus or which are necessary for the conduct of their business as described
in the Prospectus. Neither the Company nor any of its Subsidiaries has
infringed, or received any notice of infringement of, any patents or asserted
patents, trade names, trademarks, service marks, copyrights or other
intellectual property of other persons, or rights thereto.
(o) Accountants. Ernst & Young LLP have audited the Company Financial
Statements (except for the Unaudited Financial Statements) filed as part of the
Registration Statement and included in any Preliminary Prospectus or the
Prospectus, to the extent set forth in its reports contained in the Registration
Statement, any Preliminary Prospectus and the Prospectus. Ernst & Young LLP are
independent public accountants as required by the Securities Act and the Rules
and Regulations thereunder. The Company and its Subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's general and
specific authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformance with generally accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or specific
authorizations; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(p) Authority. The Company has the full legal right, power and authority
to enter into this Agreement and perform the transactions contemplated hereby.
This Agreement and the documents contemplated hereby have been duly authorized,
executed and delivered by the Company, and constitute its valid and binding
obligation, enforceable in accordance with their respective terms, except (i) as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting creditors' rights generally and
general principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity) and (ii) as rights to indemnity
and contribution may be limited by federal or state securities laws or
principles of public policy.
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(q) No Stabilization or Manipulation of Price. The Company has not taken
and will not take, directly or indirectly, any action designed to, or which has
constituted, or which might reasonably be expected to, cause or result in
stabilization or manipulation of the price of the Common Shares of the Company.
(r) Affiliations. To the Company's knowledge after due investigation,
none of the officers, directors (other than ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ who is an sdvisory
director of ▇.▇. ▇▇▇▇▇▇▇▇ & Co.) or five percent or greater shareholders of the
Company have any affiliation with the National Association of Securities
Dealers, Inc. (the "NASD") or any firm which is a member of the NASD.
(s) Insurance. The Company and its Subsidiaries maintain insurance of
the types and in the amounts generally deemed adequate for their respective
business, including but not limited to, insurance covering real and personal
property owned or leased by the Company or its Subsidiaries against theft,
damages, destruction, acts of vandalism and all other risks customarily insured
against, all of which insurance is in full force and effect.
(t) Labor Matters. No labor disturbance by the employees of, or any
independent contractors engaged by, the Company or any of its Subsidiaries
exists or is imminent and the Company is not aware of any existing or imminent
labor disturbance by the employees of any of its principal suppliers,
subassemblers, value added suppliers, subcontractors, independent contractors,
original equipment manufacturers, authorized dealers or distributors that might
reasonably be expected to result in any material adverse change in the condition
(financial or otherwise), earnings, operations, business or business prospects
of the Company or its Subsidiaries. No collective bargaining agreement exists
with any of the Company's or its Subsidiaries' employees and no such agreement
is imminent.
(u) Compliance with Laws. The Company and its Subsidiaries are
conducting their business in all material respects in compliance with all of the
laws, rules and regulations of each jurisdiction in which they are conducting
business.
(v) Distribution of Materials. The Company has not distributed and will
not distribute prior to the Closing Date or any date on which Option Shares are
to be purchased, as the case may be, any material in connection with the
offering and sale of the Shares other than a Preliminary Prospectus or the
Prospectus.
(w) Illegal Contributions. Neither the Company nor any of its
Subsidiaries has at any time during the last five years (i) made any unlawful
contribution to any candidate for foreign office, or failed to disclose fully
any contribution in violation of law, or (ii) made any payment to any federal or
state governmental officer or official, or other person charged with similar
public or quasi-public duties, other than payments required or permitted by the
laws of the United States or of any jurisdiction thereof.
(x) Lock-Up Agreements. The Company, each member of the Board of
Directors of the Company, each officer (as such term is defined in Rule 16a-1(f)
under the Exchange Act) of the Company and each other holder listed on Schedule
IV hereto of the Common Shares, has
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agreed that such person will not, for a period of 120 days after the
later of the Closing Date or the latest Option Closing Date (the "Restricted
Period"), directly or indirectly sell, offer to sell, contract to sell, grant
any option for the sale of, or otherwise dispose of, by any means, any Common
Shares or announce an intent to sell any Common Shares without the prior written
consent of the Representatives.
(y) No Registration Rights. Except as described in the Prospectus, there
are no holders of securities (debt or equity) of the Company, or holders of
rights (including, without limitation, preemptive rights), warrants or options
to obtain securities of the Company who have the right to request the Company to
register securities held by them under the Securities Act.
(z) Company Not an Investment Company. The Company is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
(aa) Listing of Shares. The Firm Shares and the Option Shares, if any,
have been approved for inclusion in Nasdaq National Market of the NASD (the
"Nasdaq National Market"), subject to official notice of issuance.
(bb) Related Transactions. Except as described in the Prospectus, there
are no business relationships or related-party transactions of the nature
described in Item 404 of Regulation S-K of the Rules and Regulations under the
Securities Act, involving the Company and any other persons referred to in said
Item 404 that are required to be described in the Prospectus and which have not
been so disclosed.
(cc) Environmental Liabilities. The Company and the Subsidiaries have
been in compliance with all Environmental Laws (as defined below). Neither the
Company nor any of its Subsidiaries (i) is the subject of any pending or, to the
knowledge of the Company, threatened federal, state or local investigation
evaluating whether any remedial action is needed to respond to a release of any
Hazardous Materials (as defined below) into the environment, resulting from the
business operations of the Company or any of its Subsidiaries or the ownership
or possession of any of their respective properties or assets or (ii) is in
contravention of any Environmental Law that could reasonably be expected to have
a materially adverse effect on the condition (financial or otherwise), earnings,
business affairs or business prospects of the Company or any of its
Subsidiaries. Neither the Company nor any of its Subsidiaries has received any
notice or claim, nor are there pending or, to the knowledge of the Company,
threatened lawsuits against them, with respect to violations of any
Environmental Law or in connection with any release of any Hazardous Material
into the environment that, individually or in the aggregate, if the subject of
any unfavorable decision, ruling or finding, might reasonably be expected to
have a materially adverse effect on the condition (financial or otherwise),
earnings, business affairs or business prospects of the Company or any of its
Subsidiaries. As used herein, "Environmental Laws" means any federal, state or
local law or regulation applicable to the Company's or any of its Subsidiaries'
business operations or ownership or possession of any of their respective
properties or assets relating to environmental matters, and "Hazardous
Materials" means those substances that are regulated by or form the basis of
liability under any Environmental Laws.
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2. Representations and Warranties of the Selling Shareholders. Each
Selling Shareholder represents, warrants, covenants and agrees with Underwriters
as follows:
(a) Compliance with the Securities Act. At the effective time of the
Registration Statement and at all times subsequent thereto, up to and including
the Closing Date and any Option Closing Date, and during such longer period
until any post-effective amendment to the Registration Statement shall become
effective, the Registration Statement (and any post-effective amendment to the
Registration Statement) will contain all statements which are required to be
stated therein in accordance with the Securities Act and the Rules and
Regulations thereunder, will fully comply with the applicable provisions of the
Securities Act and the Rules and Regulations thereunder, and neither the
Registration Statement (nor any post-effective amendment to the Registration
Statement) will contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; and the Prospectus and any amendment or supplement thereto
will at all times up to and including the Closing Date and, if the Option Shares
are purchased, the Option Closing Date, and during such longer period as the
Prospectus may be required to be delivered in connection with sales of Firm
Shares or Option Shares by the Underwriters or any dealer, fully comply with the
provisions of the Securities Act and the Rules and Regulations thereunder, and
will not contain any untrue statement of a material fact and will not omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the foregoing representations or
warranties do not apply to the information contained in or omitted from the
Registration Statement or the Prospectus or any amendment of, or supplement to,
either of them in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of any Underwriter through the
Representatives expressly for use in the Registration Statement or of the
Prospectus. It is understood that the statements set forth on the inside cover
page of the Prospectus with respect to stabilization and passive market-making
activities, in the table beneath the first paragraph of the section of the
Prospectus entitled "Underwriting," the amounts of the concession to certain
dealers and the concession that such dealers may allow to certain other dealers
in the second paragraph following such table and the five paragraphs preceding
the last paragraph of such section and the identity of counsel for the
Underwriters under the section of the Prospectus entitled "Legal Matters"
constitute the only information furnished in writing by or on behalf of any
Underwriter for inclusion in the Registration Statement or the Prospectus, as
the case may be.
(b) No Violation. The consummation of the transactions contemplated in
this Agreement and the Registration Statement and the execution and performance
of this Agreement and the fulfillment of the terms hereof or thereof will not
conflict with, or result in a breach of, any of the terms or provisions of, or
constitute a default or require any payment by any Selling Shareholder under (i)
any indenture, mortgage, deed of trust or other agreement or instrument to which
any Selling Shareholder is a party or by which any Selling Shareholder is bound,
or of the organizational documents of any Selling Shareholder that is not a
natural person or (ii) any law, rule or regulation, or any judgment, order or
decree of any court or of any regulatory body or administrative agency or other
governmental body having jurisdiction over any Selling Shareholder or any
properties of any Selling Shareholder.
-10-
(c) Authorizations. Each approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory, administrative or
other governmental body necessary in connection with the execution and delivery
of this Agreement by or on behalf of each Selling Shareholder and the
consummation of the transactions herein contemplated or that may be necessary to
qualify the Shares for public offering by the Underwriters under state
securities or Blue Sky laws) has been obtained or made and is in full force and
effect.
(d) No Stabilization or Manipulation of Price. No Selling Shareholder
has taken and no Selling Shareholder will take, directly or indirectly, any
action designed to, or which has constituted, or which might reasonably be
expected to, cause or result in stabilization or manipulation of the price of
the Common Shares of the Company.
(e) Distribution of Materials. No Selling Shareholder has distributed
and no Selling Shareholder will distribute prior to the Closing Date or any date
on which Option Shares are to be purchased, as the case may be, any offering
material in connection with the offering and sale of the Shares other than a
Preliminary Prospectus or the Prospectus.
(f) Conveyance of Shares. Each Selling Shareholder is or will be on the
Closing Date the lawful or beneficial owner of the Shares to be sold by such
Selling Shareholder hereunder, and upon the delivery and sale of, and payment
for, such Shares, as provided herein, such Selling Shareholder will convey or
cause its representative to convey good and marketable title to such Shares,
free and clear or all liens, encumbrances, equities and claims whatsoever.
3. Purchase and Delivery of the Shares.
(a) On the basis of the representations, warranties and covenants herein
contained, and subject to the conditions herein set forth, the Company and each
Selling Shareholder, severally and not jointly, agree to sell to the
Underwriters and each Underwriter agrees, severally and not jointly, to
purchase, at a price of $[ ] per share, the number of Firm Shares set forth
opposite the name of each Underwriter in Schedule I hereof, subject to
adjustments in accordance with Section 10 hereof.
Certificates in negotiable form for the Shares of each Selling
Shareholder to be sold hereunder have been placed in custody for delivery under
this Agreement under a Power of Attorney and Custody Agreement duly authorized,
executed and delivered by each Selling Shareholder, in the form heretofore
furnished to the Representatives (the "Custody Agreement") with Squire, ▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇, as custodian (the "Custodian"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇, as Attorneys-in-Fact (each, an "Attorney-in-Fact"). Each Selling
Shareholder agrees that the Shares represented by the certificates held in
custody for each Selling Shareholder under each of the respective Custody
Agreements are subject to the interests of the Underwriters hereunder, that the
arrangements made by each Selling Shareholder for such custody are to that
extent irrevocable, and that the obligations of each Selling Shareholder
hereunder shall not be terminated by operation of law, whether by the death of
any such Selling Shareholder or the occurrence of any other event, or in the
case of a trust, by the death of any trustee or trustees or the termination of
such trust. If any such Selling Shareholder or any such trustee or trustees
should die, or if any other such event should
-11-
occur, or if any of such trusts should terminate, before the delivery of
the Shares hereunder, certificates for such Selling Shareholder's Shares shall
be delivered by the Custodian in accordance with the terms and conditions of
this Agreement and the Custody Agreement as if such death or other event or
termination had not occurred, regardless of whether or not the Custodian shall
have received notice of such death or other event or termination.
Payment for the Firm Shares to be sold hereunder is to be made in
Baltimore Clearing House funds (next day funds) by certified or bank cashier's
check drawn to the order of the Company for the Shares to be sold by the
Company, and each Selling Shareholder for the Shares to be sold by such Selling
Shareholder, against delivery of certificates therefor to the Representatives
for the several accounts of the Underwriters. Such payment and delivery are to
be made at the offices of ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated, ▇▇▇▇ ▇▇▇▇▇
Tower, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ at 10:00 A.M.,
Baltimore time, on the third business day after the date of this Agreement or at
such other time and date not later than three business days thereafter as the
Representatives and the Company shall agree upon, such time and date being
herein referred to as the "Closing Date." The certificates for the Firm Shares
will be delivered in such denominations and in such registrations as the
Representatives request in writing not less than two full business days prior to
the Closing Date, and will be made available for inspection by the
Representatives at least one business day prior to the Closing Date. At the
election of the Company or any Selling Shareholder, as the case may be,
settlement for the Shares shall be made in same day funds in accordance with
Section 6(a)(xiv) of this Agreement.
It is understood that each of you, individually and not as the
Representatives of the several Underwriters, may (but shall not be obligated to)
make payment of the purchase price on behalf of any Underwriter or Underwriters
whose check or checks shall not have been received by either of you prior to the
Closing Date for the Firm Shares (or the Option Shares discussed below) to be
purchased by such Underwriter or Underwriters. Any such payment by either of you
shall not relieve any such Underwriter or Underwriters of any of its or their
obligations hereunder.
(b) In addition, on the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Selling Shareholders hereby grant an option to the several Underwriters to
purchase up to 150,000 Option Shares at the price per share as set forth in
Section 3(a) of this Agreement. The Selling Shareholders shall be obligated to
sell Option Shares to the several Underwriters pro rata based on the respective
number of Firm Shares to be sold by each of them. The option granted hereby may
be exercised in whole or in part at any time and from time to time upon written
notice given within 30 days after the date of this Agreement, by you, as
Representatives of the several Underwriters, to the Company setting forth the
number of Option Shares as to which the several Underwriters are exercising the
option, the names and denominations in which the Option Shares are to be
registered and the time and date at which such certificates are to be delivered.
The time and date at which certificates for Option Shares are to be delivered
shall be determined by the Representatives but shall not be earlier than three
nor later than 10 full business days after the exercise of such option, nor in
any event prior to the Closing Date (such time and date being herein referred to
as the "Option Closing Date"). If the date of exercise of the option is two or
more days before the Closing Date, the notice of exercise shall set the Closing
Date as the Option Closing Date. The number of Option Shares to be purchased by
each
-12-
Underwriter shall be in the same proportion to the total number of Option Shares
being purchased as the number of Firm Shares being purchased by such Underwriter
bears to 1,000,000, adjusted by the Representatives in such manner as to avoid
fractional shares. The option with respect to the Option Shares granted
hereunder may be exercised only to cover over-allotments in the sale of the Firm
Shares by the Underwriters. To the extent, if any, that the option is exercised,
payment for the Option Shares shall be made on the Option Closing Date in
Baltimore Clearing House funds (next day funds) by certified or bank cashier's
check drawn to the order of the Company for the Option Shares to be sold by the
Company against delivery of certificates therefor to the Representatives for the
several accounts of the Underwriters at the offices of ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
Incorporated, ▇▇▇▇ ▇▇▇▇▇ Tower, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. At the election of the Company,
settlement for the Option Shares shall be made in same day funds in accordance
with Section 6(a)(xiv) of this Agreement.
Upon exercise of any option provided for in Section 3(b) hereof, the
obligations of the Underwriters to purchase such Option Shares will be subject
(as of the date hereof and as of the date of payment for such Option Shares) to
the accuracy of and compliance with the representations and warranties of the
Company and the Selling Shareholders, to the accuracy of the statements of the
Company, officers of the Company and the Selling Shareholders, made pursuant to
the provisions hereof, to the performance by the Company and the Selling
Shareholders, and to the condition that all proceedings taken at or prior to the
payment date in connection with the sale and transfer of such Option Shares
shall be satisfactory in form and substance to you and to Underwriters' counsel,
and you shall have been furnished with all such documents, certificates and
opinions as you may request in order to evidence the accuracy and completeness
of any of the representations, warranties or statements, the performance of any
of the covenants of the Company and the Selling Shareholders, or compliance by
the Company and its officers and directors and the Selling Shareholders, with
any of the conditions herein contained.
4. Offering by the Underwriters. It is understood that the several
Underwriters are to make a public offering of the Firm Shares as soon as the
Representatives deem it advisable to do so. The Firm Shares are to be initially
offered to the public at the public offering price set forth in the Prospectus.
The Representatives may from time to time thereafter change the public offering
price and other selling terms. To the extent, if at all, that any Option Shares
are purchased pursuant to Section 3(b) hereof, the Underwriters will offer them
to the public on the foregoing terms.
It is further understood that you will act as the Representatives for
the Underwriters in the offering and sale of the Shares in accordance with an
Agreement Among Underwriters entered into by you and the several other
Underwriters.
5. Covenants of the Company. The Company covenants and agrees with the
several Underwriters that:
(a) The Company will use its best efforts to cause the Registration
Statement and amendments thereof, if not effective at the time and date that
this Agreement is executed and delivered by the parties hereto, to become
effective as promptly as possible thereafter; and it will notify you, promptly
after it shall receive notice thereof, of the time when the Registration
Statement
-13-
or any subsequent amendment to the Registration Statement has become
effective or any supplement to the Prospectus has been filed. The Company will
(i) prepare and timely file with the Commission under Rule 424(b) of the Rules
and Regulations, a Prospectus containing information previously omitted at the
time of effectiveness of the Registration Statement in reliance on Rule 430A of
the Rules and Regulations, (ii) not file any amendment to the Registration
Statement or supplement to the Prospectus of which the Representatives shall not
previously have been advised and furnished with a copy or to which the
Representatives shall have reasonably objected in writing or which is not in
compliance with the Rules and Regulations, (iii) file on a timely basis all
reports and any definitive proxy or information statements required to be filed
by the Company with the Commission subsequent to the date of the Prospectus and
prior to the termination of the offering of the Shares by the Underwriters. In
case any Underwriter is required to deliver a prospectus nine months or more
after the effective date of the Registration Statement in connection with the
sale of the Shares, it will prepare promptly upon request, but at the expense of
such Underwriter, 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 Securities Act.
(b) The Company shall advise the Representatives promptly of any request
of the Commission for amendment of the Registration Statement or for supplement
to the Prospectus or for any additional information, or of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or the use of any Preliminary Prospectus or the Prospectus or of the
suspension of the qualification or registration of any Shares for offering in
any jurisdiction, or of the institution or threatening of any proceedings for
any of the foregoing purposes. The Company shall use its best efforts to prevent
the issuance of any such stop order preventing or suspending the effectiveness
of the Registration Statement or the use of any Preliminary Prospectus or the
Prospectus and to obtain as soon as possible the lifting thereof, if issued.
(c) The Company will cooperate with the Representatives in endeavoring
to qualify the Shares for sale under the securities laws of such jurisdictions
as the Representatives may reasonably have designated in writing and will make
such applications, file such documents, and furnish such information as may be
reasonably required for that purpose, provided the Company shall not be required
to qualify the Shares for sale under the securities laws of any jurisdiction or
to file a general consent to service of process in any jurisdiction in which the
Company would be required thereby to qualify to do business or in which the
Company would thereby become subject to taxation. The Company will, from time to
time, prepare and file such statements, reports, and other documents, as are or
may be required to continue such qualifications in effect for so long a period
as the Representatives may reasonably request.
(d) The Company will deliver to the Representatives, or such other
entity or person as the Representatives may designate, from time to time,
without charge, as many copies of any Preliminary Prospectus as the
Representatives may reasonably request. The Company will deliver to the
Representatives, or such other entity or person as the Representatives may
designate, without charge, during the period when delivery of a Prospectus is
required under the Securities Act, as many copies of the Prospectus in final
form, or as thereafter amended or supplemented, as the Representatives may
reasonably request. The Company will deliver to the Representatives at or before
the Closing Date, without charge, four signed copies of the Registration
Statement as
-14-
originally filed and all amendments thereto, including all exhibits
filed therewith, and will deliver to the Representatives such number of copies
of the Registration Statement, but without exhibits, and of all amendments
thereto, without charge, as the Representatives may reasonably request.
(e) The Company shall comply with the Securities Act and the Rules and
Regulations thereunder and the Exchange Act and the Rules and Regulations
thereunder so as to permit the completion of the distribution of the Shares as
contemplated in this Agreement and in the Prospectus. If during the period in
which a prospectus is required by law to be delivered by an Underwriter or
dealer, any event shall occur or condition shall exist as a result of which, in
the judgment of the Company or in the opinion of the Representatives, it becomes
necessary to amend the Registration Statement or amend or supplement the
Prospectus so that the Prospectus will not include any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances existing at the time the
Prospectus is delivered, not misleading, or, if it is necessary at any time to
amend the Registration Statement or amend or supplement the Prospectus to comply
with any law, the Company promptly shall prepare and file with the Commission an
appropriate amendment to the Registration Statement or supplement to the
Prospectus as may be necessary to correct such untrue statement or omission or
so that the Prospectus will comply with such law; provided that the Company
shall make such changes in any such document as the Underwriters upon advice of
counsel may reasonably request.
(f) The Company will make generally available to its shareholders, as
soon as it is practicable to do so, but in any event not later than 15 months
after the effective date of the Registration Statement, an earnings statement
(which need not be audited) in reasonable detail, covering a period of at least
12 consecutive months beginning after the effective date of the Registration
Statement, which earnings statement shall satisfy the requirements of Section
11(a) of the Securities Act and Rule 158 of the Rules and Regulations thereunder
and will advise the Representatives, and such of the Underwriters which request
the foregoing from the Company, in writing when such statement has been so made
available.
(g) The Company will, for a period of three years from the Closing Date,
deliver to the Representatives copies of annual reports and copies of all other
documents, reports and information furnished by the Company to its shareholders
or filed with any securities exchange or interdealer quotation system pursuant
to the requirements of such exchange or system or with the Commission pursuant
to the Securities Act or the Exchange Act. The Company will deliver to the
Representatives similar information with respect to significant subsidiaries, as
that term is defined in the Rules and Regulations, which are not consolidated in
the Company's financial statements.
(h) No offering, sale or other disposition by the Company of any Common
Shares or any other class of securities or warrants or options to purchase any
class of securities of the Company will be made during the period beginning on
the date of this Agreement and ending 120 days after the later of the Closing
Date or the latest Option Closing Date, directly or indirectly, otherwise than
hereunder or with the prior written consent of the Representatives.
(i) The Company will apply the net proceeds from the sale of the Shares
being sold by it in the manner set forth under the caption "Use of Proceeds" in
the Prospectus.
-15-
(j) If at any time during the 90 day period after the Registration
Statement becomes effective, any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in your opinion the
market price of the Common Shares has been or is likely to be materially
affected (regardless of whether such rumor, publication or event necessitates a
supplement to or amendment of the Prospectus), the Company will, after written
notice from you advising the Company to the effect set forth above, forthwith
prepare, consult with you concerning the substance of, and disseminate a press
release or other public statement, reasonably satisfactory to you, responding to
or commenting on such rumor, publication or event.
(k) The Company shall cause the Shares to be included in the Nasdaq
National Market and shall comply with all applicable rules of the Nasdaq
National Market in connection with the transactions contemplated hereby.
6. Costs, Expenses and Fees.
(a) Whether or not the transactions contemplated by this Agreement are
consummated and regardless of the reason this Agreement is terminated, the
Company and the Selling Shareholders will pay or cause to be paid, and bear or
cause to be borne, all costs and expenses incident to the performance of the
respective obligations of the Company and the Selling Shareholders under this
Agreement, including (i) the fees and expenses of the accountants and counsel
for the Company and counsel for the Selling Shareholders incurred in the
preparation of the Registration Statement and any post-effective amendments
thereto (including financial statements and exhibits), Preliminary Prospectuses
and the Prospectus and any amendments or supplements thereto; (ii) the printing
and mailing expenses associated with the Registration Statement and any
post-effective amendments thereto, the Preliminary Prospectuses and the
Prospectus, and the duplication and mailing expenses associated with this
Agreement, the Agreement Among Underwriters, the Underwriters' Questionnaire,
the Power of Attorney, the Selected Dealer Agreement and related documents and
the Preliminary Blue Sky Memorandum and any supplement thereto; (iii) the costs
incident to the authentication, issuance, sale and delivery of the Shares to the
Underwriters; (iv) all taxes, if any, on the issuance, delivery and transfer of
the Shares to be sold by the Company and the Selling Shareholders; (v) NASD fees
and the fees, expenses and all other costs of qualifying the Shares for sale
under the securities or Blue Sky laws of those states in which the Shares are to
be offered or sold, including the reasonable fees and disbursements of
Underwriters' counsel and such local counsel as may have been reasonably
required and retained for such purpose; (vi) the filing fees incident to
securing any review or approvals by or from the NASD; (vii) the filing fees of
the Commission; (viii) the cost of furnishing to the Underwriters copies of the
Registration Statement, the Preliminary Prospectuses and Prospectuses as herein
provided; (ix) the Company's travel expenses in connection with meetings with
the brokerage community and institutional investors; (x) the fees for including
the Shares in the Nasdaq National Market; (xi) the cost of printing certificates
for the Shares; (xii) the cost and charges of any transfer agent; (xiii) the
cost of preparing and binding closing binders for the Company, the
Representatives and their counsel; (xiv) the cost of obtaining settlement in
same day funds, if desired by the Company or the Selling Shareholders; (xv) the
cost of any required due diligence with respect to any patent positions of the
Company; and (xvi) all other costs and expenses reasonably incident to the
performance of their respective obligations hereunder which are not otherwise
specifically provided for in this Section.
-16-
Subject to the reimbursement provided for in Section 6(c) below, the
Underwriters agree to pay all fees and expenses of their legal counsel, other
than counsel fees and expenses relating to the "Blue Sky" matters referred to in
clause (v) above, and all advertising, telephone, travel, clerical or other
office costs incurred or to be incurred by the Underwriters or by their sales
personnel in connection with the offering of the Shares.
(b) The Company shall pay as due any state registration, qualification
and filing fees and any accountable out-of-pocket disbursements in connection
with such registration, qualification or filing in the jurisdictions in which
the Representatives determine, after consultation with the Company, to offer or
sell the Shares.
(c) In the event that the transactions contemplated by this Agreement
are not consummated for any reason, other than as a result of the Underwriters'
intentional refusal to proceed without cause, or if the Representatives
terminate this Agreement pursuant to Section 11(b) hereof, then the Company
shall reimburse the Representatives for their accountable reasonable
out-of-pocket expenses associated with the offering contemplated hereby,
including, without limitation, reasonable fees and disbursements of counsel for
the Underwriters, in an amount not to exceed $135,000. If the offering
contemplated hereby is not consummated as a result of the Underwriters'
intentional refusal to proceed without cause, the Representatives shall not be
entitled to any expense reimbursement pursuant to the preceding sentence. For
purposes of this paragraph, "cause" shall not include the Underwriters'
inability to market the offering contemplated hereby where there have not been
any events materially adverse to the Company or the financial markets in
general. This amount shall be in addition to reimbursement of fees of counsel
for the Underwriters incurred in qualifying the Shares under state securities or
Blue Sky laws to be paid by the Company to the Representatives pursuant to
Section 6(a)(v) above.
7. Conditions of Obligations of the Underwriters. The obligation of any of
the Underwriters to purchase the Firm Shares on the Closing Date and the Option
Shares, if any, on the Option Closing Date are subject to the accuracy, as of
the date of this Agreement and the Closing Date and the Option Closing Date, as
the case may be, of the representations and warranties of the Company and the
Selling Shareholders contained herein, and to the performance of the covenants
and obligations of the Company and its officers, directors and shareholders
hereunder and to the following additional conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 P.M., Washington, D.C. time, on the date of this Agreement. All
filings, if any, required by Rules 424 and 430A under the Securities Act shall
have been timely made; no stop order suspending the effectiveness of the
Registration Statement, as amended from time to time, shall have been issued and
no proceedings for that purpose shall have been taken or, to your knowledge or
to the knowledge of the Company, shall be contemplated by the Commission; and
any request for additional information (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been complied with to the
satisfaction of the Underwriters' counsel.
(b) All corporate proceedings and other legal matters in connection with
this Agreement, the form of Registration Statement, the Preliminary Prospectuses
and the Prospectus,
-17-
and the registration, authorization, issuance, sale and delivery of the Shares,
shall have been taken to the satisfaction of Underwriters' counsel, and such
counsel shall have been furnished with such papers and information as they may
reasonably have requested to enable them to pass upon the matters referred to in
this subsection.
(c) The Representatives shall have received on the Closing Date and the
Option Closing Date, as the case may be, the opinion of Squire, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLP, counsel for the Company, dated the Closing Date or the Option
Closing Date, as the case may be, addressed to the Underwriters to the effect
that:
(i) Each of the Company and its Subsidiaries has been duly organized
and is validly existing as a corporation in good standing under the law of its
state of incorporation, with corporate power and authority to own its properties
and conduct its business as described in the Prospectus; the Company and its
Subsidiaries are duly qualified to transact business in all jurisdictions in
which the conduct of their business as described in the Prospectus requires such
qualification except where the failure to qualify would not have a materially
adverse effect upon the business of the Company or its Subsidiaries.
(ii) The Company has authorized and outstanding capital stock as set
forth in the Prospectus under the heading "Capitalization." The Company's
outstanding Common Shares have been duly authorized and validly issued and are
fully paid and nonassessable and none of the outstanding shares of the capital
stock of the Company was issued in violation of statutory or contractual
preemptive rights. All of the Shares conform to the description thereof
contained in the Prospectus. The certificates for the Shares are in due and
proper form under the Ohio General Corporation Law; the Firm Shares and the
Option Shares, if any, to be sold by the Company pursuant to this Agreement have
been duly authorized and will be validly issued, fully paid and nonassessable
when issued and paid for as contemplated by this Agreement; and no preemptive
rights of shareholders exist under applicable law or, by agreement or otherwise,
with respect to any of the Shares or the issue and sale thereof. The record
ownership of the outstanding stock of the Company is as set forth in the
Prospectus in the table under the heading "Principal and Selling Shareholders."
(iii) Any outstanding stock options relating to the Common Shares
have been duly authorized and validly issued and the description thereof
contained in the Registration Statement and the Prospectus is accurate in all
material respects.
(iv) Each Subsidiary has authorized and outstanding capital stock
as set forth in Schedule III to this Agreement. The outstanding shares of each
Subsidiary's capital stock have been duly authorized and validly issued and are
fully paid and nonassessable and none of the outstanding shares of the capital
stock of any Subsidiary was issued in violation of statutory or contractual
preemptive rights. All of the shares of each Subsidiary's capital stock are
owned by the Company.
(v) The Registration Statement has become effective under the
Securities Act and no stop order proceedings with respect thereto have been
instituted or are pending or, to the knowledge of such counsel, threatened under
the Securities Act; any required filing of the Prospectus
-18-
or any supplement thereto pursuant to Rule 424(b) of the Rules and Regulations
under the Securities Act has been made in the manner and within the time period
required by said Rule 424(b).
(vi) The Registration Statement, each Preliminary Prospectus, the
Prospectus and each amendment or supplement thereto comply as to form in all
material respects with the requirements of the Act and the applicable Rules and
Regulations thereunder and the Exchange Act and the rules and regulations
promulgated thereunder (except that such counsel need express no opinion as to
the financial statements, schedules and other financial information included
therein).
(vii) The documents incorporated by reference in the Prospectus
(except for any financial statements and schedules and other financial and
statistical data 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 and other financial and statistical data 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 a state
a material fact necessary in order to make the statements, in light of the
circumstances under which they were made when such documents were so filed, not
misleading;
(viii) The statements in the Prospectus, insofar as such statements
constitute a summary of documents referred to therein or matters of law, are
accurate summaries and fairly and correctly present the information required to
be set forth therein with respect to such documents and matters.
(ix) There are no contracts or documents known to such counsel
required to be filed as exhibits to the Registration Statement or described in
the Registration Statement or the Prospectus which are not so filed or described
as required, and such contracts and documents as are summarized in the
Registration Statement or the Prospectus are fairly summarized therein.
(x) To the knowledge of such counsel, after due inquiry, there are
no legal proceedings pending or threatened against the Company or any of its
Subsidiaries of a character which are required to be disclosed in the
Registration Statement or the Prospectus, by the Securities Act or the Rules and
Regulations thereunder, except as described in the Prospectus.
(xi) The performance of this Agreement and the consummation of the
transactions herein contemplated (other than performance of the Company's
indemnification, contribution or related or similar obligations hereunder, as to
which no opinion need be expressed) and the application of the net proceeds of
the offering contemplated by this Agreement as described in the Prospectus under
the caption "Use of Proceeds" will not (A) result in any violation of the
Company's or any of its Subsidiaries' Articles of Incorporation or Code of
Regulations, or (B) result in the breach or violation of any of the terms and
provisions, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement, bond, debenture, note agreement or other evidence of
indebtedness, or any lease, contract or other agreement or instrument, known to
such counsel, to which the Company or any of its Subsidiaries is a party or by
which any of their
-19-
respective properties is bound, or any applicable statute, rule or regulation or
any order, writ or decree of any court or governmental agency or body having
jurisdiction over the Company or any of its Subsidiaries or over any of their
properties or operations.
(xii) Neither the Company nor any of its Subsidiaries is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
(xiii) The Company has the power and authority to enter into this
Agreement and to issue, sell and deliver to the Underwriters the Firm Shares or
the Option Shares, as the case may be. This Agreement has been duly authorized
by all necessary corporate action by the Company, and has been duly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery by the other parties hereto, constitutes its valid and binding
obligation, enforceable in accordance with its terms, except (A) as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting creditors' rights generally and
general principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity) and (B) as enforceability of
rights to indemnity and contribution hereunder may be limited by federal or
state securities laws or principles of public policy.
(xiv) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body is necessary in connection with the execution and delivery of
this Agreement and the consummation of the transactions herein contemplated
(other than as may be required by the NASD or as required by state securities
and Blue Sky laws as to which such counsel need express no opinion) except such
as have been obtained or made, specifying the same.
(xv) Neither the Company nor any of its Subsidiaries is presently in
breach of, or in default under, any bond, debenture, note or other evidence of
indebtedness or any contract, indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument, known to such counsel, to
which the Company or any of its Subsidiaries is a party or by which any of their
property is bound.
(xvi) Except as provided in the Shareholders' Agreement filed as an
exhibit to the Registration Statement, no holders of Common Shares or other
securities of the Company have registration rights with respect to securities of
the Company because of the filing of the Registration Statement by the Company.
In addition to the matters set forth above, such opinion shall also
include a statement to the effect that nothing has come to the attention of such
counsel which leads them to believe that (A) the Registration Statement, as of
the time it became effective under the Securities Act, (B) the Prospectus or any
amendment or supplement thereto, on the date it was filed pursuant to Rule
424(b), or (C) the Registration Statement, or the Prospectus, or any amendment
or supplement thereto, as of the Closing Date or the Option Closing Date, as the
case may be, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or
-20-
necessary to make the statements therein not misleading (except that such
counsel need express no view as to financial statements, schedules and other
financial information included therein).
In giving such opinion such counsel may rely, as to all matters
governed by the laws of jurisdictions other than the law of the State of Ohio
and the federal law of the United States, upon the opinions of counsel
satisfactory to you. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and certificates of public officials.
(d) The Representatives shall have received on the Closing Date and the
Option Closing Date, as the case may be, the opinion of Squire, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLP, counsel for the Selling Shareholders, dated the Closing Date or the
Option Closing Date, as the case may be, addressed to the Underwriters in form
and substance reasonably satisfactory to the Representatives, to the effect
that:
(i) The performance of this Agreement and the Custody Agreements by
the Selling Shareholders and the consummation by the Selling Shareholders of the
transactions herein and therein contemplated (other than performance of the
Selling Shareholders' indemnification, contribution or related or similar
obligations hereunder, as to which no opinion need be expressed) will not result
in the material breach or violation of any of the terms and provisions, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement, bond, debenture, note agreement or other evidence of indebtedness, or
any lease, contract or other agreement or instrument, known to such counsel, to
which any Selling Shareholder is a party or by which any of their respective
properties is bound, or any applicable statute, rule or regulation, or any
order, writ or decree of any court or governmental agency or body having
jurisdiction over any Selling Shareholder or over any of their respective
properties.
(ii) This Agreement and the Custody Agreements have been duly
authorized, executed and delivered by the Selling Shareholders and, assuming the
due authorization, execution and delivery by the other parties hereto and
thereto, constitute their valid and binding obligations, enforceable in
accordance with their respective terms, except (A) as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting creditors' rights generally and general principles of equity
(regardless of whether such enforceability is considered in a proceeding at law
or in equity) and (B) as enforceability of rights to indemnify and contribution
hereunder may be limited by federal or state securities laws or principles of
public policy.
(iii) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body is necessary in connection with the execution and delivery by
the Selling Shareholders of this Agreement or the Custody Agreements and the
consummation by the Selling Shareholders of the transactions herein or therein
contemplated except such as have been obtained or made, specifying the same.
(iv) The delivery by each Selling Shareholder to the several
Underwriters of certificates for the Shares being sold hereunder by such Selling
Shareholder against payment therefor
-21-
as provided herein, will pass good and marketable title to such Shares to the
several Underwriters, free and clear of all liens, encumbrances, equities and
claims whatsoever.
In giving such opinion such counsel may rely, as to all matters
governed by the laws of jurisdictions other than the law of the State of Ohio
and the federal law of the United States, upon the opinions of counsel
satisfactory to you. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and certificates of public officials.
(e) The Representatives shall have received from Wolf, Block, ▇▇▇▇▇▇ and
▇▇▇▇▇-▇▇▇▇▇ LLP, counsel for the Underwriters, an opinion dated the Closing Date
or the Option Closing Date, as the case may be, addressed to the Underwriters to
the effect that:
(i) The Company is a corporation validly existing and in good
standing under the laws of the State of Ohio.
(ii) The issuance and sale of the Shares by the Company pursuant to
this Agreement have been duly authorized by all necessary corporate action and
the Shares, upon delivery thereof against payment as provided for in this
Agreement, will be validly issued, fully paid and nonassessable.
(iii) The Underwriting Agreement has been duly authorized, executed
and delivered by the Company.
(iv) To the knowledge of such counsel, no stop order suspending
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or threatened by the Commission.
(v) The Registration Statement and the Prospectus (except for the
financial and statistical information referred to above, as to which such
counsel need not express any opinion) as of the effective date of the
Registration Statement, comply as to form in all material respects with the
Securities Act and the Rules and Regulations thereunder relating to registration
statements and prospectuses.
In addition to the matters set forth above, such opinion shall also
include a statement to the effect that nothing has come to the attention of such
counsel which leads them to believe that (A) the Registration Statement as of
the time it became effective under the Securities Act, (B) the Prospectus or any
amendment or supplement thereto, on the date it was filed pursuant to Rule
424(b) of the Rules and Regulations under the Securities Act, or (C) the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, as of the Closing Date or the Option Closing Date, as the case may be,
contain an 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 (except that such counsel need express no view as to financial
statements, schedules and other financial information included therein).
-22-
In giving such opinion such counsel may rely, as to all matters
governed by the laws of jurisdictions other than the law of the Commonwealth of
Pennsylvania and the federal law of the United States, upon the opinions of
counsel satisfactory to you. Such counsel may also state that, insofar as such
opinion involves factual matters, they have relied, to the extent they deem
proper, upon certificates of officers of the Company and certificates of public
officials.
(f) The Representatives shall have received at or prior to the Closing
Date from Wolf, Block, ▇▇▇▇▇▇ and ▇▇▇▇▇-▇▇▇▇▇ LLP a memorandum or summary, in
form and substance satisfactory to the Representatives, with respect to the
qualification for offering and sale by the Underwriters of the Shares under the
state securities or Blue Sky laws of such jurisdictions as the Representatives
may reasonably have designated to the Company.
(g) At the time this Agreement is executed and at the Closing Date and
the Option Closing Date, as the case may be, the Representatives shall have
received a letter addressed to each of them individually and as Representatives
of the several Underwriters in form and substance satisfactory to
Representatives in all respects (including the nonmaterial nature of the changes
or decreases, if any, referred to in clause (iii) below) from Ernst & Young LLP
dated as of the date of this Agreement, the Closing Date and any Option Closing
Date, as the case may be:
(i) confirming that they are independent public accountants within
the meaning of the Securities Act and the Rules and Regulations thereunder and
stating that the section of the Registration Statement under the caption
"Experts" is correct insofar as it relates to them;
(ii) stating that, in their opinion, the Company Financial
Statements, together with the related notes and schedules as set forth in each
Preliminary Prospectus, the Prospectus and the Registration Statement, examined
by them and the summary, selected, and statistical financial information and
data, and related notes thereto, to the extent derived from the financial
statements examined by them and included in any Preliminary Prospectus, the
Prospectus and the Registration Statement, comply in form in all material
respects with the applicable accounting requirements of the Securities Act and
the Rules and Regulations thereunder;
(iii) stating that, on the basis of specified procedures which
included a reading of the latest available unaudited interim consolidated
financial statements of the Company (with an indication of the date of such
statements), a reading of the fiscal 1995, 1996, 1997 and 1998 (through the date
of such letter) minutes of the meetings of the shareholders and the Board of
Directors of the Company and audit and compensation committees of such Board, if
any, and inquiries to certain officers and other employees of the Company
responsible for financial and accounting matters and other specified procedures
and inquiries, nothing has come to their attention that would cause them to
believe that (1) at a specified date, not more than three business days prior to
the date of such letter, there was any change in the capital stock or
consolidated short-term or long-term debt or any decrease in consolidated net
current assets, total assets or shareholders' equity as compared with the
amounts shown in the June 30, 1997 audited consolidated balance sheet of the
Company, other than as set forth in or contemplated by the Registration
Statement and Prospectus, or, if there was any change or decrease, setting forth
the amount of such change or decrease, and (2) during the period from June 30,
1997 to a specified date not more than three business days prior to the date of
-23-
such letter, there has been any decrease in revenues or any decrease in income
from continuing operations or in total or per share net income of the Company as
compared with the corresponding period of the prior year other than as set forth
in the Registration Statement, or, if there was any such decrease or increase,
setting forth the amount thereof; and
(iv) stating that they have compared specific dollar amounts,
numbers of shares and other information pertaining to the Company set forth in
the Registration Statement and Prospectus, which have been specified by the
Representatives prior to the date of this Agreement, to the extent that such
amounts, numbers, percentages and information may be derived from the general
accounting or other records of the Company, with the results obtained from the
application of specified readings, inquiries and other appropriate procedures
(which procedures do not constitute an examination in accordance with generally
accepted auditing standards) set forth in the letter, and found them to be in
agreement.
(h) The Representatives shall have received on the Closing Date and the
Option Closing Date, as the case may be, a certificate or certificates of the
Chief Executive Officer and the Chief Financial Officer of the Company to the
effect that, as of the Closing Date or the Option Closing Date, as the case may
be, each of them severally represents as follows:
(i) The representations and warranties of the Company in this
Agreement are true and correct as if made on and as of the Closing Date or any
later date on which Option Shares are to be purchased and the Company has
complied with all the agreements and satisfied all the conditions on its part to
be performed or satisfied at or prior to the Closing Date or any later date on
which Option Shares are to be purchased, as the case may be.
(ii) The Registration Statement has become effective under the Act,
no stop order suspending the effectiveness of the Registration Statement has
been issued, and no proceedings for such purpose have been taken or, to his
knowledge, are contemplated by the Commission.
(iii) No litigation has been instituted or threatened against the
Company or any of its Subsidiaries of a character required to be disclosed in
the Registration Statement which is not so disclosed; no contract is required to
be filed as an exhibit to the Registration Statement which is not so filed; and,
the representations and warranties of the Company contained in Section 1 hereof
are true and correct on and as of the Closing Date or the Option Closing Date,
as the case may be, and as if made on such date.
-24-
(iv) He has carefully examined the Registration Statement and the
Prospectus and in his opinion, as of the effective date of the Registration
Statement, the Registration Statement and the Prospectus did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein not
misleading and, in his opinion, since the effective date of the Registration
Statement, no event has occurred which should have been set forth in a
supplement to or an amendment of the Prospectus which has not been so set forth
in such supplement or amendment.
(v) Except as described in the Registration Statement or Prospectus,
subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been (A) any material
adverse change in the properties or assets described or referred to in the
Registration Statement and the Prospectus or in the condition (financial or
otherwise), earnings, operations, business or business prospects of the Company
and its Subsidiaries, whether or not occurring in the ordinary course of
business; (B) any transaction which is material to the Company and its
Subsidiaries, except transactions entered into in the ordinary course of
business; (C) any obligation, direct or contingent, incurred by the Company or
any of its Subsidiaries which is material to the Company or its Subsidiaries,
except obligations incurred in the ordinary course of business; (D) any change
in the capital stock or outstanding indebtedness of the Company or any of its
Subsidiaries which is material to the Company or any of its Subsidiaries; or (E)
any dividend or distribution of any kind declared, paid or made on the capital
stock of the Company or any of its Subsidiaries.
(i) The Company shall have furnished to the Representatives such further
certificates and documents confirming the representations and warranties
contained herein and related matters as the Representatives or Wolf, Block,
▇▇▇▇▇▇ and ▇▇▇▇▇-▇▇▇▇▇ LLP, counsel for the Underwriters, may reasonably have
requested.
(j) The Firm Shares, and Option Shares, if any, shall have been approved
by all requisite corporate action by the Company and shall have been approved
for inclusion upon official notice of issuance in the Nasdaq National Market.
(k) The Company shall have obtained and delivered to the Representatives
an agreement from each member of the Board of Directors of the Company, each
officer (as such term is defined in Rule 16a-1(f) under the Exchange Act) of the
Company and each holder listed on Schedule IV hereto of Common Shares in writing
prior to the date hereof, that such person will not, during the Restricted
Period, offer to sell, sell, contract to sell or otherwise sell or dispose of,
any Common Shares, any options or warrants to purchase any Common Shares or any
securities convertible into or exchangeable for Common Shares owned by such
person or entity or with respect to which such person has the power of
disposition. Each such person shall also agree and consent to the entry of stop
transfer instructions with the Company's transfer agent against the transfer of
Common Shares held by such person except in compliance with the foregoing
restrictions.
(l) The NASD shall have indicated that it had no objection to the
underwriting arrangements pertaining to the sale of the Shares and the
participation by the Underwriters in the sale of the Firm Shares and the Option
Shares.
The opinions and certificates mentioned in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
material respects satisfactory to the Representatives and to Wolf, Block, ▇▇▇▇▇▇
and ▇▇▇▇▇-▇▇▇▇▇ LLP, counsel for the Underwriters.
If any of the conditions hereinabove provided for in this Section 7
shall not have been fulfilled when and as required by this Agreement to be
fulfilled, the obligations of the Underwriters hereunder may be terminated by
the Representatives by notifying the Company of such termination
-25-
in writing or by telegram or by facsimile at or prior to the Closing Date or the
Option Closing Date, as the case may be, and any such termination shall be
without liability of any party to any other party, except to the extent provided
in Sections 6 and 9 of this Agreement, which Sections shall survive such
termination.
8. Conditions of the Obligations of the Company. The obligations of the
Company to sell and deliver the portion of the Shares required to be delivered
as and when specified in this Agreement are subject to the conditions that at
the Closing Date or the Option Closing Date, as the case may be, no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and in effect or proceedings therefor initiated or threatened.
9. Indemnification and Contribution.
(a) The Company and the Selling Shareholders, jointly and
severally, agree to indemnify and hold harmless each Underwriter and their
respective officers, directors, employees and agents, and each person, if any,
who controls any Underwriter within the meaning of the Securities Act (each
Underwriter and each such other person or entity previously described in this
Paragraph 9(a) is hereinafter sometimes referred to as an "Indemnified
Underwriter Person" and collectively as the "Indemnified Underwriter Persons")
from and against all claims, liabilities, losses or damages (or actions or
proceedings in respect thereof) to which any such Indemnified Underwriter Person
may become subject under the Securities Act or otherwise, insofar as such
claims, liabilities, losses or damages (or actions or proceedings in respect
thereof) arise out of, are related to or are based upon (i) any untrue statement
or alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto, (ii) 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 light of the circumstances under which they were made,
(iii) any enforcement of any of the Underwriters' rights hereunder, (iv) any
misrepresentation with respect to or breach or violation of the representations,
warranties and covenants of the Company set forth in this Agreement or any
certificate delivered pursuant to this Agreement or (v) any material written
misrepresentations of the Company, its officers, directors, employees or agents
(other than any Indemnified Underwriter Person) or the Company or any Selling
Shareholder in connection with the offering and sale of the Shares, and will
reimburse each Indemnified Underwriter Person for any legal or other expenses
incurred by such Indemnified Underwriter Person in connection with investigating
or defending any such claim, liability, loss, damage, action or proceeding;
provided, however, that neither the Company nor the Selling Shareholders will be
liable in any such case to the extent that any such claim, liability, loss or
damage arises out of or is based upon an untrue statement or alleged untrue
statement, or omission or alleged omission made in the Registration Statement,
any Preliminary Prospectus, the Prospectus, or such amendment or supplement, in
reliance upon and in conformity with written information furnished to the
Company by or through the Representatives and specifically approved in writing
by the Representatives for use in the preparation thereof. It is understood that
the statements set forth on the inside cover page of the Prospectus with respect
to stabilization and passive market-making activities, in the table beneath the
first paragraph of the section of the Prospectus entitled "Underwriting," the
amounts of the concession to certain dealers and the concession that such
dealers may allow to certain other dealers in the second paragraph following
such table and the five
-26-
paragraphs preceding the last paragraph of such section and the identity of
counsel for the Underwriters under the section of the Prospectus entitled "Legal
Matters" constitute the only information furnished in writing by or on behalf of
any Underwriter for inclusion in the Registration Statement or the Prospectus,
as the case may be. This indemnity agreement will be in addition to any
liability which the Company or the Selling Shareholders, as the case may be, may
otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Company, each
of its directors, each of its officers who have signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of the Securities Act (each of the Company and each such other person or entity
previously described in this Paragraph 9(b) is hereinafter sometimes
individually referred to as an "Indemnified Company Person" and collectively as
the "Indemnified Company Persons") and each Selling Shareholder, from and
against all claims, liabilities, losses or damages (or actions or proceedings in
respect thereof) to which any such Indemnified Company Person or Selling
Shareholder may become subject under the Securities Act or otherwise, insofar as
such claims, liabilities, losses or damages (or actions or proceedings in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact made in the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto,
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 the light of the circumstances under which
they were made, and will reimburse each Indemnified Company Person and Selling
Shareholder for any legal or other expenses reasonably incurred by such
Indemnified Company Person or Selling Shareholder in connection with
investigating or defending any such claim, liability, loss, damage, action or
proceeding; provided, however, that each Underwriter will be liable in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission has been made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by or through the Representatives and
specifically approved in writing by the Representatives for use in the
preparation thereof. It is understood that the statements set forth on the
inside cover page of the Prospectus with respect to stabilization and passive
market-making activities, in the table beneath the first paragraph of the
section of the Prospectus entitled "Underwriting," the amounts of the concession
to certain dealers and the concession that such dealers may allow to certain
other dealers in the second paragraph following such table and the five
paragraphs preceding the last paragraph of such section and the identity of
counsel for the Underwriters under the section of the Prospectus entitled "Legal
Matters" constitute the only information furnished in writing by or on behalf of
any Underwriter for inclusion in the Registration Statement or the Prospectus,
as the case may be. This indemnity agreement will be in addition to any
liability which such Underwiter may otherwise have.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to this Section 9, such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party
-27-
to represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay as incurred the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own counsel
at its own expense; provided, however, that the indemnifying party shall pay as
incurred the fees and expenses of the counsel retained by the indemnified party
in the event (i) the indemnifying party and the indemnified party shall have
mutually agreed to the retention of such counsel or (ii) the named parties to
any such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both parties
by the same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the indemnifying party shall not,
in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm (in addition to counsel for the indemnifying party) for all such
indemnified parties. Such firm shall be designated in writing by the
Representatives in the case of parties indemnified pursuant to Section 9(a) and
by the Company in the case of parties indemnified pursuant to Section 9(b). The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment.
(d) If the indemnification provided for in this Section 9 is unavailable
to or insufficient to hold harmless an indemnified party under Section 9(a) or
(b) above in respect of any claims, liabilities, losses or damages (or actions
or proceedings in respect thereof) referred to therein, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of such claims, liabilities, losses or damages (or actions or
proceedings in respect thereof) in such proportion as is appropriate to reflect
the relative benefits received by the Company and the Selling Shareholders on
the one hand and the Underwriters on the other from the offering of the Shares.
If, however, the allocation provided by the immediately preceding sentence is
not permitted by applicable law, then each indemnifying party shall contribute
to such amount paid or payable by such indemnified party in such proportion as
is appropriate to reflect not only the relative benefits but also the relative
fault of the Company and the Selling Shareholders on the one hand and the
Underwriters on the other in connection with the statements or omissions which
resulted in such claims, liabilities, losses or damages (or actions or
proceedings in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Shareholders on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company [and the Selling Shareholders] bear
to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company and the Selling Shareholders on the one hand or the
Underwriters on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Shareholders and the Underwriters agree that it
would not be just and equitable if contributions pursuant to this Section 9(d)
were determined by pro rata
-28-
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
order and method of the equitable considerations referred to above in this
Section 9(d). The amount paid or payable by an indemnified party as a result of
the claims, liabilities, losses or damages (or actions or proceedings in respect
thereof) referred to above in this Section 9(d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), (i) no Underwriter shall
be required to contribute any amount in excess of the underwriting discounts and
commissions applicable to the Shares purchased by such Underwriter and (ii) no
person guilty of a fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this Section 9(d) to contribute are several in proportion to
their respective underwriting obligations and not joint.
(e) In any proceeding relating to the Registration Statement, any
Preliminary Prospectus, the Prospectus or any supplement or amendment thereto,
each party against whom contribution may be sought under this Section 9 hereby
consents to the jurisdiction of any court having jurisdiction over any other
contributing party, agrees that process issuing from such court may be served
upon him or it by any other contributing party and consents to the service of
such process and agrees that any other contributing party may join him or it as
an additional defendant in any such proceeding in which such other contributing
party is a party.
(f) Each of the Company and the Selling Shareholders agrees that it will
not settle or compromise or consent to the entry of any judgment in any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought from the Company or the Selling Shareholders by an
Indemnified Underwriter Person (whether any Indemnified Underwriter Person is an
actual or potential party to such claim, action, suit or proceeding) unless such
settlement, compromise or consent includes an unconditional release of each
Indemnified Underwriter Person hereunder from all liability arising out of such
claim; action, suit or proceeding.
(g) If any personnel of any Indemnified Underwriter Person appear as
witnesses, are deposed or are otherwise involved in any action (except to the
extent that it is finally judicially determined that such action resulted from
such Indemnified Underwriter Person's gross negligence or willful misconduct)
against any Indemnified Underwriter Person or any Indemnified Company Person,
the Company and the Selling Shareholders, jointly and severally, agree to
reimburse such Indemnified Underwriter Person for all expenses (including fees
and expenses of counsel) incurred by it by reason of any of its personnel being
involved in any such action and will compensate the Indemnified Underwriter
Person for time spent by its employees preparing for and testifying as witnesses
in any deposition or proceeding at the Indemnified Underwriter Person's
customary rates.
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10. Default by Underwriters. If on the Closing Date or the Option Closing
Date, as the case may be, any Underwriter shall fail to purchase and pay for the
portion of the Shares which such Underwriter has agreed to purchase and pay for
on such date (otherwise than by reason of any default on the part of the Company
or any Selling Shareholder), you, as Representatives of the Underwriters, shall
use your best efforts to procure within 24 hours thereafter one or more of the
other Underwriters, or any others, to purchase from the Company and, if
applicable, the Selling Shareholders such amounts as may be agreed upon and upon
the terms set forth herein, the Firm Shares or Option Shares, as the case may
be, which the defaulting Underwriter or Underwriters failed to purchase. If
during such 24 hours you, as such Representatives, shall not have procured such
other Underwriters, or any others, to purchase the Firm Shares or Option Shares,
as the case may be, agreed to be purchased by the defaulting Underwriter or
Underwriters, then (a) if the aggregate number of shares with respect to which
such default shall occur does not exceed 10% of the Firm Shares or Option
Shares, as the case may be, covered hereby, the other Underwriters shall be
obligated, severally, in proportion to the respective numbers of Firm Shares or
Option Shares, as the case may be, which they are obligated to purchase
hereunder, to purchase the Firm Shares or Option Shares, as the case may be,
which such defaulting Underwriter or Underwriters failed to purchase, or (b) if
the aggregate number of shares of Firm Shares or Option Shares, as the case may
be, with respect to which such default shall occur exceeds 10% of the Firm
Shares or Option Shares, as the case may be, covered hereby, the Company or you
as the Representatives of the Underwriters will have the right, by written
notice given within the next 24-hour period to the parties to this Agreement, to
terminate this Agreement without liability on the part of the non-defaulting
Underwriters or of the Company or the Selling Shareholders except to the extent
provided in Sections 6 and 9 hereof. In the event of a default by any
Underwriter or Underwriters, as set forth in this Section 10, the Closing Date
or Option Closing Date, as the case may be, may be postponed for such period,
not exceeding seven days, as you, as Representatives, may determine in order
that the required changes in the Registration Statement or in the Prospectus or
in any other documents or arrangements may be effected. The term "Underwriter"
includes any person substituted for a defaulting Underwriter. Any action taken
under this Section 10 shall not relieve any defaulting Underwriter from
liability in respect of any default of such Underwriter under this Agreement.
11. Termination. This Agreement may be terminated by the Representatives by
notice to the Company as follows:
(a) at any time prior to the earlier of (i) the time the Shares are
released by the Representatives for sale by notice to the Underwriters, or (ii)
11:30 A.M., Baltimore time, on the first business day following the date of this
Agreement;
(b) at any time prior to the Closing Date if any of the following has
occurred: (i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any materially adverse change or any
development involving a prospective materially adverse change in or affecting
the condition, financial or otherwise, of the Company or any of its Subsidiaries
or the earnings, operations, management, business or business prospects of the
Company or any of its Subsidiaries, whether or not arising in the ordinary
course of business, (ii) any outbreak of hostilities or other national or
international calamity or crisis or change in economic or political conditions
if the effect of such outbreak, calamity, crisis or change on the financial
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markets of the United States would, in the Representatives' reasonable judgment,
make the offering or delivery of the Shares impracticable, (iii) suspension of
trading in securities on the New York Stock Exchange or the American Stock
Exchange or limitation on prices (other than limitations on hours or numbers of
days of trading) for securities on either such Exchange, (iv) the enactment,
publication, decree or other promulgation of any federal or state statute,
regulation, rule or order of any court or other governmental authority which in
the Representatives' reasonable opinion materially and adversely affects or will
materially or adversely affect the business or operations of the Company or any
of its Subsidiaries, (v) declaration of a banking moratorium by either federal
or New York State authorities, or (vi) the taking of any action by any federal,
state or local government or agency in respect of its monetary or fiscal affairs
which in the Representatives' reasonable opinion has a material adverse effect
on the securities markets in the United States; or
(c) as provided in Sections 7 and 10 of this Agreement.
This Agreement also may be terminated by the Representatives, by notice
to the Company, as to any obligation of the Underwriters to purchase the Option
Shares, upon the occurrence at any time prior to the Option Closing Date of any
of the events descried in subparagraph (b) above or as provided in Sections 7
and 10 of this Agreement.
12. Notices. All communications hereunder shall be in writing and, except
as otherwise provided herein, will be mailed, delivered or telegraphed or sent
by facsimile and confirmed (postage and costs prepaid) as follows: if to the
Underwriters, to ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated, ▇▇▇▇ ▇▇▇▇▇ Tower, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, ▇▇., Facsimile (▇▇▇) ▇▇▇-▇▇▇▇, with a copy to Wolf, Block, ▇▇▇▇▇▇
and ▇▇▇▇▇-▇▇▇▇▇ LLP, Twelfth Floor Packard Building, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire,
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇, if to the Company, to AmeriLink Corporation, ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
President, Facsimile (▇▇▇) ▇▇▇-▇▇▇▇, with a copy to Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
1300 Huntington Center, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Facsimile
(▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esquire, if to the Selling
Shareholders, to Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, 1300 Huntington Center, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Facsimile (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇, Esquire.
13. Governing Law: Waiver of Trial by Jury: Severability. This Agreement
shall be governed by, and construed and enforced in accordance with, the laws of
the Commonwealth of Pennsylvania, without giving effect to the principles of
conflicts of law thereof. For the purpose of expediting the resolution of any
controversy, claim or dispute arising out of or related to this Agreement or the
transactions or agreements contemplated hereby, the Company, the Selling
Shareholders and the Underwriters hereby waive trial by jury. Any term or
provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to such jurisdiction, be deemed severable from the
remainder of this Agreement, and the remaining terms and provisions contained in
this Agreement shall be construed to preserve to the maximum permissible extent
the intent and purposes of this Agreement. Any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such term or provision in any other jurisdiction.
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14. Successors. This Agreement has been and is made solely for the benefit
of the Underwriters, the Company and the Selling Shareholders and their
respective successors, executors, administrators, heirs and assigns, and the
officers, directors and controlling persons referred to herein, and no other
person will have any right or obligation hereunder. The term "successors" shall
not include any purchaser of the Shares merely because of such purchase.
15. Miscellaneous. The reimbursement, indemnification and contribution
agreements contained in this Agreement and the representations, warranties and
covenants in this Agreement shall remain in full force and effect regardless of
(a) any termination of this Agreement, (b) any investigation made by or on
behalf of any Underwriter or controlling person thereof, or by or on behalf of
the Company or its directors or officers or the Selling Shareholders and (c)
delivery of and payment for the Shares under this Agreement. This Agreement
contains the entire agreement among the parties hereto with respect to the
matters governed hereby. All section headings used herein are for convenience
and ease of reference only and do not constitute part of this Agreement and
shall not be referred to for the purpose of defining, interpreting, construing
or enforcing any of the provisions of this Agreement.
16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument. One or more counterparts of this Agreement may
be delivered by facsimile, with the intention that they shall have the same
effect as an original counterpart hereof.
-32-
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicates hereof, whereupon it will
become a binding agreement among the Company, the Selling Shareholders and the
several Underwriters in accordance with its terms.
Very truly yours,
AMERILINK CORPORATION
By: (SEAL)
------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
SELLING SHAREHOLDERS
E. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
By:
------------------------
Attorney-in-Fact for each of
the Selling Shareholders
The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, INCORPORATED
▇.▇. ▇▇▇▇▇▇▇▇ & CO.
As Representatives of the Several Underwriters
Listed in Schedule I Hereto
By: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, INCORPORATED
By: (SEAL)
-------------------------
Authorized Officer
By: ▇.▇. ▇▇▇▇▇▇▇▇ & CO.
By: (SEAL)
------------------------
Authorized Officer
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SCHEDULE I
Underwriters
Number of Firm Shares
Underwriter to be Purchased
----------- ---------------
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated
▇.▇. ▇▇▇▇▇▇▇▇ & Co.
Total
SCHEDULE II
Selling Shareholders
E. ▇▇▇ ▇▇▇▇▇▇ 160,000 shares
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 160,000 shares
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 80,000 shares
SCHEDULE III
Subsidiaries
Name Class of Capital Stock Shares Authorized Shares Outstanding
---- ---------------------- ----------------- ------------------
AmeriLink Corp. Common Shares, 200 shares 200 shares
without par value
SCHEDULE IV
Directors and Certain Officers of the Company and
Owners of Two Percent of Common Shares
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
E. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. Govern
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇