2,000,000 SHARES
NATIONS FLOORING, INC.
COMMON STOCK
(PAR VALUE $0.001 PER SHARE)
UNDERWRITING AGREEMENT
February __, 1997
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & CO., INC.
As Representatives of the
several Underwriters
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs:
1. INTRODUCTION. Nations Flooring, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to the several Underwriters named in
Schedule I hereto (the "Underwriters"), for which ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & Co., Inc. and
____________ are acting as Representatives (the "Representatives"), an aggregate
of 2,000,000 shares of the Company's Common Stock, par value $0.001 per share
(the "Common Stock"). The 2,000,000 shares of Common Stock to be sold by the
Company are referred to herein as the "Firm Shares." The Company also proposes
to issue and sell to the several Underwriters an aggregate of not more than
300,000 additional shares of Common Stock (the "Additional Shares"), if
requested by the Underwriters in accordance with Section 9 hereof. The Firm
Shares and the Additional Shares are collectively referred to herein as the
"Shares." The words "you" and "your" refer to the Representatives of the
Underwriters.
The Company also proposes to issue and sell to the Representatives in their
individual capacity the warrants referred to in Section 3 hereof to purchase up
to 200,000 shares of Common Stock (the "Warrants").
The Company hereby agrees with the several Underwriters as follows:
2. REPRESENTATIONS AND WARRANTIES.
(a) The Company represents, warrants and agrees with each of the
Underwriters that:
(i) A registration statement on Form S-1 (Registration No.
333- ____) under the Securities Act of 1933 as amended (the "Act"), with
respect to the Shares, including a form of prospectus subject to
completion, has been prepared by the Company in conformity with the
requirements of the Act and the rules and regulations of the Securities and
Exchange Commission (the "Commission") thereunder (the "Rules and
Regulations"). Such registration statement has been filed with the
Commission under the Act, and one or more amendments to such registration
statement may also have been so filed. After the execution of this
Agreement, the Company shall file with the Commission either (A) if such
registration statement, as it may have been amended, has been declared by
the Commission to be effective under the Act, either (x) if the Company
relies on Rule 434 under the Act, a Term Sheet (as hereinafter defined)
relating to the Shares, that shall identify the Preliminary Prospectus (as
hereinafter defined) that it supplements containing such information as is
required or permitted by Rules 434, 430A and 424(b) under the Act or (y) if
the Company does not rely on Rule 434 under the Act, a prospectus in the
form most recently included in an amendment to such registration statement
filed with the Commission (or, if no such amendment shall have been filed,
in such registration statement), with such insertions and changes as are
required by Rule 430A under the Act or permitted by Rule 424(b) under the
Act, in the case of either clause (x) or (y) of this sentence, as shall
have been provided to and approved by the Representatives prior to the
filing thereof, or (B) if such registration statement, as it may have been
amended, has not been declared by the Commission to be effective under the
Act, an amendment to such registration statement, including a form of
prospectus, a copy of which amendment has been furnished to and approved by
the Representatives prior to the filing thereof. As used in this
Agreement, the term "Registration Statement" means such registration
statement, as amended at the time when it was or is declared effective,
including all financial schedules and exhibits thereto; the Registration
Statement shall be deemed to include any information omitted therefrom
pursuant to Rule 430A under the Act and included in the Prospectus (as
hereinafter defined); the term
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"Preliminary Prospectus" means each prospectus subject to completion
contained in such registration statement or any amendment thereto
(including the prospectus subject to completion, if any, included in the
Registration Statement or any amendment thereto or filed pursuant to
Rule 424(a) under the Act at the time it was or is declared effective); and
the term "Prospectus" means the prospectus first filed with the Commission
pursuant to Rule 424(b) under the Act or, if no prospectus is required to
be filed pursuant to said Rule 424(b), such term means (A) if the Company
relies on Rule 434 under the Act, the Term Sheet relating to the Shares
that is first filed pursuant to Rule 424(b)(7) under the Act, together with
the Preliminary Prospectus identified therein that such Term Sheet
supplements; (B) if the Company does not rely on Rule 434 under the Act,
the prospectus first filed with the Commission pursuant to Rule 424(b)
under the Act; or (C) if the Company does not rely on Rule 434 under the
Act, the prospectus included in the Registration Statement; and the "Term
Sheet" means any term sheet that satisfies the requirements of Rule 434
under the Act. Reference made herein to any Preliminary Prospectus or the
Prospectus shall be deemed to include all documents and information
incorporated by reference therein. Any reference herein to the "date" of
a Prospectus that includes a Term Sheet shall mean the date of such Term
Sheet.
(ii) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus and has not instituted or
threatened to institute any proceedings with respect to such an order.
When any Preliminary Prospectus was filed with the Commission it
(A) complied in all material respects with the requirements of the Act and
the Rules and Regulations and (B) did not include any untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading. When the Registration Statement or any
amendment thereto was or is declared effective, it (A) complied or will
comply in all material respects with the requirements of the Act and the
Rules and Regulations and (B) did not or will not include any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein not misleading. When the Prospectus or any
Term Sheet that is a part thereof and when any amendment or supplement to
the Prospectus is filed with the Commission pursuant to Rule 424(b) (or, if
the Prospectus or any part thereof or such amendment or supplement is not
required to be so filed, when the Registration Statement and when any
amendment thereto containing such amendment or supplement to the Prospectus
was or is declared effective) and at all times subsequent
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thereto up to and including the Closing Date (as defined in Section 3
hereof) and the Option Closing Date (as defined in Section 9 hereof), the
Prospectus, as amended or supplemented at any such time, (A) complied or
will comply in all material respects with the requirements of, the Act and
the Rules and Regulations and (B) did not or will not include any untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The foregoing provisions of
this paragraph (ii) shall not apply to statements or omissions made in any
Preliminary Prospectus, the Registration Statement or any amendment thereto
or the Prospectus or any amendment or supplement thereto in reliance upon,
and in conformity with, information furnished in writing to the Company by
or on behalf of the Underwriters through the Representatives expressly for
use therein.
(iii) Each of the Company and its subsidiaries set forth on
Schedule II hereto, which schedule sets forth all of the Company's
subsidiaries on the date hereof (the "Subsidiaries"), (A) is a duly
incorporated and validly existing corporation in good standing under the
laws of its jurisdiction of incorporation, with full power and authority
(corporate and other) to own or lease its properties and to conduct its
business as described in the Registration Statement and the Prospectus (or,
if the Prospectus is not in existence, the most recent Preliminary
Prospectus); and (B) is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction (x) in which the
conduct of its business requires such qualification (except for those
jurisdictions in which the failure so to qualify has not had and will not
have a Material Adverse Effect (as hereinafter defined)) and (y) in which
it owns or leases property. "Material Adverse Effect" means, when used in
connection with the Company or its Subsidiaries, any development, change or
effect that is materially adverse to the business, properties, assets, net
worth, condition (financial or other), results of operations or prospects
of the Company and its Subsidiaries taken as a whole.
(iv) The Company had the duly authorized and validly
outstanding capitalization set forth under the caption "Capitalization" in
the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) as of the date of the table thereunder and on the
Closing Date and the Option Closing Date will have the adjusted
capitalization set forth therein as of the date of the table thereunder,
based on the assumptions set forth
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therein. The securities of the Company conform in all material respects to
the descriptions thereof contained in the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus). The
outstanding shares of Common Stock have been duly authorized and validly
issued by the Company and are fully paid and nonassessable. Except as
created hereby or referred to in the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus), there are no
outstanding options, warrants, rights or other arrangements requiring the
Company or any Subsidiary at any time to issue any capital stock. No
holders of outstanding shares of capital stock of the Company are entitled
as such to any preemptive or other rights to subscribe for any of the
Shares and neither the filing of the registration statement nor the
offering or sale of the Shares as contemplated by this Agreement gives rise
to any rights, other than those which have been waived or satisfied, for or
relating to, the registration of any securities of the Company. The Shares
have been duly authorized; on the Closing Date or the Option Closing Date
(as the case may be), after payment therefor in accordance with the terms
of this Agreement, (A) the Firm Shares and the Additional Shares to be sold
by the Company hereunder will be validly issued, fully paid and
nonassessable, and (B) good and marketable title to the Shares will pass to
the Underwriters on the Closing Date or the Option Closing Date (as the
case may be) free and clear of any lien, encumbrance, security interest,
claim or other restriction whatsoever. The Common Stock to be issued upon
exercise of the Warrants, when issued and delivered pursuant to the
Warrants, will be duly authorized, validly issued, fully paid and
nonassessable and free of any preemptive rights. All the outstanding
shares of capital stock of each Subsidiary has been duly authorized and
validly issued, are fully paid and nonassessable and are owned directly by
the Company or another Subsidiary, free and clear of any lien, encumbrance,
security interest or claim. The Company has received, subject to notice of
issuance, approval to have the Shares quoted on the National Market System
of the National Association of Securities Dealers' Automated Quotation
System and the Company knows of no reason or set of facts which is likely
to adversely affect such approval.
(v) The consolidated financial statements and the related
notes and schedules thereto included in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) fairly present the consolidated financial
condition, results of operations, shareholders' equity and cash flows of
the Company and its Subsidiaries at the dates and for the periods specified
therein. The financial
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statements and related notes and schedules of Carpet Barn, Inc. ("Carpet
Barn") thereto included in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus) fairly present the results of operations of Carpet Barn at the
dates and for the periods specified therein. Such financial statements
and the related notes and schedules thereto have been prepared in
accordance with generally accepted accounting principles ("GAAP")
consistently applied throughout the periods involved (except as otherwise
noted therein) and such financial statements as are audited have been
examined by McGladrey and ▇▇▇▇▇▇, LLP, who are independent public
accountants within the meaning of the Act and the Rules and Regulations, as
indicated in their reports filed therewith. The selected financial
information and statistical data set forth under the captions ["Summary
Consolidated Financial Information"] and ["Selected Consolidated Financial
Data"] in the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus) have been prepared on a basis
consistent with the financial statements of the Company and its
Subsidiaries. The pro forma combined financial statements and the related
notes and schedules thereto included in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) comply in all material respects with the applicable
requirements of Rule 11-02 of Regulation S-X of the Commission and fairly
present the information shown therein; and the pro forma adjustments have
been properly applied to the historical amounts in the compilation of such
statements. No other financial statements or schedules of the Company or
any other entity are required by the Act or the Rules and Regulations to be
included in the Registration Statement or the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus).
The pro forma financial data set forth in the prospectus (or, if the
Prospectus is not in existence, most recent Preliminary Prospectus), under
the captions "[Summary Consolidated Financial Information]" and "[Selected
Consolidated Financial Data]" have been prepared on a basis consistent with
the pro forma combined financial statements of the Company and its
Subsidiaries, included therein.
(vi) The Company and each of its Subsidiaries has filed all
necessary federal, state and local income, franchise and other material tax
returns and have paid all taxes shown as due thereunder, and the Company
has no knowledge of any tax deficiency which might be assessed against the
Company which, if so assessed, may have a Material Adverse Effect.
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(vii) The Company and each of its Subsidiaries maintains
insurance of the types and in amounts which they reasonably believe to be
adequate for their business in such amounts and with such deductibles as is
customary for companies in the same or similar business, all of which
insurance is in full force and effect.
(viii) Except as disclosed in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus),
there is no pending action, suit, proceeding or investigation or, to the
Company's best knowledge, threatened action, suit, proceeding or
investigation before or by any court, regulatory body or administrative
agency or any other governmental agency or body, domestic or foreign, which
(A) questions the validity of the capital stock of the Company or this
Agreement or of any action taken or to be taken by the Company pursuant to
or in connection with this Agreement, (B) is required to be disclosed in
the Registration Statement which is not so disclosed (and such proceedings,
if any, as are summarized in the Registration Statement are accurately
summarized in all material respects), or (C) may have a Material Adverse
Effect.
(ix) The Company has full legal right, power and authority to
enter into this Agreement and the Warrant Agreement (as defined in
Section 3 hereof) and to consummate the transactions provided for herein
and therein. This Agreement and the Warrant Agreement have been duly
authorized, executed and delivered by the Company and, assuming that this
Agreement and the Warrant Agreement are binding agreements of yours,
constitute legal, valid and binding agreements of the Company enforceable
against the Company in accordance with their terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to
or affecting the enforcement of creditors' rights and the application of
equitable principles relating to the availability of remedies and except as
rights to indemnity or contribution may be limited by federal or state
securities laws and the public policy underlying such laws), and none of
the Company's execution or delivery of this Agreement or the Warrant
Agreement, its performance hereunder or thereunder, its consummation of the
transactions contemplated herein and therein, its application of the net
proceeds of the offering in the manner set forth under the caption "Use of
Proceeds" or the conduct of its business as described in the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus), conflicts or will conflict with or results or will result in
any breach or violation of any of
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the terms or provisions of, or constitutes or will constitute a default
under, causes or will cause (or permits or will permit) the maturation or
acceleration of any liability or obligation or the termination of any right
under, or result in the creation or imposition of any lien, charge, or
encumbrance upon, any property or assets of the Company or any of its
Subsidiaries pursuant to the terms of (A) the charter or by-laws of the
Company or any of its Subsidiaries, (B) any indenture, mortgage, deed of
trust, voting trust agreement, shareholders' agreement, note agreement or
other agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which it is or any of them are or may be
bound or to which any of their respective property is or may be subject or
(C) any statute, judgment, decree, order, rule or regulation applicable to
the Company or any of its Subsidiaries of any government, arbitrator,
court, regulatory body or administrative agency or other governmental
agency or body, domestic or foreign, having jurisdiction over the Company,
any of its Subsidiaries or any of their respective activities or
properties.
(x) All executed agreements or copies of executed agreements
filed or incorporated by reference as exhibits to the Registration
Statement to which the Company or any of its Subsidiaries is a party or by
which any of them are or may be bound or to which any of their assets,
properties or businesses is or may be subject have been duly and validly
authorized, executed and delivered by the Company or such Subsidiary, as
the case may be, and constitute the legal, valid and binding agreements of
the Company or such Subsidiary, as the case may be, enforceable against
each of them in accordance with their respective terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws relating to enforcement of creditors'
rights generally, and general equitable principles relating to the
availability of remedies, and except as rights to indemnity or contribution
may be limited by federal or state securities laws and the public policy
underlying such laws). The descriptions in the Registration Statement of
contracts and other documents are accurate in all material respects and
fairly present the information required to be shown with respect thereto by
the Act and the Rules and Regulations, and there are no contracts or other
documents which are required by the Act or the Rules and Regulations to be
described in the Registration Statement or filed as exhibits to the
Registration Statement which are not described or filed as required, and
the exhibits which have been filed are complete and correct copies of the
documents of which they purport to be copies.
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(xi) Subsequent to the most recent respective dates as of which
information is given in the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), and except as expressly
contemplated therein, neither the Company nor any of its Subsidiaries has
incurred, other than in the ordinary course of its business, any material
liabilities or obligations, direct or contingent, purchased any of its
outstanding capital stock, paid or declared any dividends or other
distributions on its capital stock or entered into any material
transactions not in the ordinary course of business, and there has been no
material change in capital stock or debt or any material adverse change in
the business, properties, assets, net worth, condition (financial or
other), or results of operations or prospects of the Company and its
Subsidiaries taken as a whole. Neither the Company nor any of its
Subsidiaries (or the manner in which any of them conducts its business) is
in breach or violation of, or in default under, any term or provision of
(A) its charter or by-laws, (B) any indenture, mortgage, deed of trust,
voting trust agreement, shareholders' agreement, note agreement or other
agreement or instrument to which it is a party or by which it is or may be
bound or to which any of its property is or may be subject, or any
indebtedness, the effect of which breach or default singly or in the
aggregate may have a Material Adverse Effect, or (C) any statute, judgment,
decree, order, rule or regulation applicable to the Company or any of its
Subsidiaries or of any arbitrator, court, regulatory body, administrative
agency or any other governmental agency or body, domestic or foreign,
having jurisdiction over the Company or any of its Subsidiaries or any of
their respective activities or properties and the effect of which breach or
default singly or in the aggregate may have a Material Adverse Effect.
(xii) No labor disturbance by the employees of the Company or
any of its Subsidiaries exists or is imminent which may have a Material
Adverse Effect.
(xiii) Since its inception, the Company has not incurred any
material liability arising under or as a result of the application of the
provisions of the Act.
(xiv) Each of the Company and its Subsidiaries owns, or is
licensed or otherwise has sufficient right to use, the proprietary
knowledge, inventions, patents, trademarks, service marks, trade names,
logo marks and copyrights used in or necessary for the conduct of its
business (collectively "Rights") as described in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus).
No claims have been
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asserted against the Company or any of its Subsidiaries by any person with
respect to the use of any such Rights or challenging or questioning the
validity or effectiveness of any such Rights.
(xv) No consent, approval, authorization or order of or filing
with any court, regulatory body, administrative agency or any other
governmental agency or body, domestic or foreign, is required for the
performance of this Agreement or the consummation of the transactions
contemplated hereby, except such as have been or may be obtained under the
Act or may be required under state securities or Blue Sky laws in
connection with the Underwriters' purchase and distribution of the Shares.
(xvi) There are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company to file a registration statement under the Act with
respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities under the
Registration Statement (other than those that have been disclosed in the
Prospectus or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), that have not been waived with respect to the
Registration Statement.
(xvii) Neither the Company nor any of its officers, directors or
affiliates (within the meaning of the Rules and Regulations) has taken,
directly or indirectly, any action designed to stabilize or manipulate the
price of any security of the Company, or which has constituted or which
might in the future reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the Company,
to facilitate the sale or resale of the Shares or otherwise.
(xviii) Each of the Company and its Subsidiaries has good and
marketable title to, or valid and enforceable leasehold interests in, all
properties and assets owned or leased by it, free and clear of all liens,
encumbrances, security interests, claims, restrictions, equities, claims
and defects, except (A) such as are described in the Registration Statement
and Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), or such as do not materially adversely affect the
value of any of such properties or assets taken as a whole and do not
materially interfere with the use made and proposed to be made of any of
such properties or assets, and (B) liens for taxes not yet due and payable
as to which appropriate reserves have been established and reflected in
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the financial statements included in the Registration Statement. The
Company owns or leases all such properties as are necessary to its
operations as now conducted, and as proposed to be conducted as set forth
in the Registration Statement and the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus); and the
properties and business of the Company and its Subsidiaries conform in all
material respects to the descriptions thereof contained in the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus). All the material leases and
subleases of the Company and its Subsidiaries, and under which the Company
or any Subsidiary holds properties or assets as lessee or sublessee,
constitute valid leasehold interests of the Company or such Subsidiary free
and clear of any lien, encumbrance, security interest, restriction, equity,
claim or defect, are in full force and effect, and neither the Company nor
any Subsidiary is in default in respect of any of the material terms or
provisions of any such material leases or subleases, and neither the
Company nor any Subsidiary has notice of any claim which has been asserted
by anyone adverse to the Company's or any of its Subsidiaries' rights as
lessee or sublessee under either the material lease or sublease, or
affecting or questioning the Company's or any Subsidiary's right to the
continued possession of the leased or subleased premises under any such
material lease or sublease, which may have a Material Adverse Effect.
(xix) Neither the Company nor any Subsidiary has violated any
applicable environmental, safety, health or similar law applicable to the
business of the Company, nor any federal or state law relating to
discrimination in the hiring, promotion, or pay of employees, nor any
applicable federal or state wages and hours law, nor any provisions of
ERISA or the rules and regulations promulgated thereunder, the consequences
of which violation may have a Material Adverse Effect.
(xx) Each of the Company and its Subsidiaries holds all
franchises, licenses, permits, approvals, certificates and other
authorizations from federal, state and other governmental or regulatory
authorities necessary to the ownership, leasing and operation of its
properties or required for the present conduct of its business, and such
franchises, licenses, permits, approvals, certificates and other
governmental authorizations are in full force and effect and the Company
and its Subsidiaries are in compliance therewith in all material respects
except where the failure so to obtain, maintain or comply with would not
have a Material Adverse Effect.
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(xxi) No Subsidiary of the Company is currently prohibited,
directly or indirectly, from paying any dividends to the Company, from
making any other distribution on such Subsidiary's capital stock, from
repaying to the Company any loans or advances to such Subsidiary from the
Company or from transferring any of such Subsidiary's property or assets to
the Company or any other Subsidiary of the Company, except as described in
or contemplated by the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus).
[Additional representations to come, as needed]
3. PURCHASE, SALE AND DELIVERY OF THE SHARES. On the basis of the
representations, warranties, covenants and agreements herein contained, but
subject to the terms and conditions herein set forth, the Company agrees to sell
to each Underwriter and each Underwriter, severally and not jointly, agrees to
purchase from the Company at a purchase price of $_____ per Share, the number of
Firm Shares set forth opposite the name of such Underwriter in Schedule I
hereto.
Delivery of certificates, and payment of the purchase price, for the
Firm Shares shall be made at the offices of Stroock & Stroock & ▇▇▇▇▇, [Seven
▇▇▇▇▇▇▇ ▇▇▇▇▇▇], ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such other location as shall be
agreed upon by the Company and the Representatives. Such delivery and payment
shall be made at 10:00 a.m., New York City time, on _____________, 1997 or at
such other time and date not more than [five] business days thereafter as shall
be agreed upon by the Representatives and the Company. The time and date of
such delivery and payment are herein called the "Closing Date." Delivery of the
certificates for the Firm Shares shall be made to the Representatives for the
respective accounts of the several Underwriters against payment by the several
Underwriters through the Representatives of the purchase price for the Firm
Shares by certified or official bank checks in New York Clearing House (next
day) funds drawn to the order of the Company. The certificates for the Shares
to be so delivered will be in definitive, fully registered form, will bear no
restrictive legends and will be in such denominations and registered in such
names as the Representatives shall request, not less than two full business days
prior to the Closing Date. The certificates for the Firm Shares will be made
available to the Representatives at such office or such other place as the
Representatives may designate for inspection, checking and packaging not later
than 9:30 a.m., New York City time, on the business day prior to the Closing
Date.
On the Closing Date, the Company will issue and sell to ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
& Co., Inc. (for its own account and not as the
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Representatives of the several Underwriters) or, at the discretion of ▇▇▇▇▇▇▇▇▇
▇▇▇▇ & Co., Inc., to its respective bona fide officers or to other Underwriters,
the Warrants entitling the holders thereof to purchase an aggregate of 200,000
shares of Common Stock at a price per share equal to 120% of the "Price to
Public" as set forth on the cover page of the Prospectus. Such Warrants shall
contain such other terms and provisions as may be set forth in an agreement with
respect thereto (the "Warrant Agreement") executed and delivered by the Company
and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & Co., Inc. simultaneously. The Warrants will be exercisable
at any time and from time to time on or after the first anniversary of the date
of this Agreement up to the fifth anniversary thereof. Each Warrant shall be
substantially identical to the form of Warrant filed as an exhibit to the
Registration Statement. The holders of the Warrants will be entitled to the
registration rights set forth in Section [10] of the Warrant Agreement.
4. PUBLIC OFFERING OF THE SHARES. It is understood that the Underwriters
will make a public offering of the Shares at the price and upon the other terms
set forth in the Prospectus and subject to the terms and conditions hereunder.
5. COVENANTS OF THE COMPANY. The Company covenants and agrees with each
of the Underwriters that:
(i) The Company will use its best efforts to cause the
Registration Statement, if not effective at the time of execution of this
Agreement, and any amendments thereto, to become effective as promptly as
practicable. If required, the Company will file the Prospectus or any Term
Sheet that constitutes a part thereof and any amendment or supplement
thereto with the Commission in the manner and within the time period
required by Rules 434 and 424(b) under the Act. During any time when a
prospectus relating to the Shares is required to be delivered under the
Act, the Company (A) will comply with all requirements imposed upon it by
the Act and the Rules and Regulations to the extent necessary to permit the
continuance of sales of or dealings in the Shares in accordance with the
provisions hereof and of the Prospectus, as then amended or supplemented,
and (B) will not file with the Commission the prospectus, Term Sheet or the
amendment referred to in the third sentence of Section 2(a)(i) hereof, any
amendment or supplement to such prospectus, Term Sheet or any amendment to
the Registration Statement of which the Representatives shall not
previously have been advised and furnished with a copy a reasonable period
of time prior to the proposed filing and as to which filing the
Representatives shall not have given its consent, such consent to not be
unreasonably withheld.
- 13 -
(ii) As soon as the Company is advised or obtains knowledge
thereof, the Company will advise the Representatives (A) when the
Registration Statement, as amended, has become effective; if the provisions
of Rule 430A promulgated under the Act will be relied upon, when the
Prospectus has been filed in accordance with said Rule 430A and when any
post-effective amendment to the Registration Statement becomes effective;
(B) of any request made by the Commission for amending the Registration
Statement, for supplementing any Preliminary Prospectus or the Prospectus
or for additional information, or (C) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement
or any post-effective amendment thereto or any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto or the institution or threat of any
investigation or proceeding for that purpose, and will use its best efforts
to prevent the issuance of any such order and, if issued, to obtain the
lifting thereof as soon as possible.
(iii) The Company will (A) take or cause to be taken all such
actions and furnish all such information as the Representatives may
reasonably require in order to qualify the Shares for offer and sale under
the state securities or blue sky laws of such jurisdictions as the
Representatives may designate, (B) continue such qualifications in effect
for as long as may be necessary to complete the distribution of the Shares
but not to exceed one year from the date of this Agreement, and (C) make
such applications, file such documents and furnish such information as may
be required for the purposes set forth in clauses (A) and (B); PROVIDED,
HOWEVER, that the Company shall not be required to qualify as a foreign
corporation or file a general or unlimited consent to service of process in
any such jurisdiction.
(iv) The Company consents to the use of the Prospectus (and any
amendment or supplement thereto) by the Underwriters and all dealers to
whom the Shares may be sold, in connection with the offering or sale of the
Shares and for such period of time thereafter as the Prospectus is required
by law to be delivered in connection therewith. If, at any time when a
prospectus relating to the Shares is required to be delivered under the
Act, any event occurs as a result of which the Prospectus, as then amended
or supplemented, would include any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein not
misleading, or if it becomes necessary at any time to amend or supplement
the Prospectus to comply with the Act or the Rules and Regulations, the
- 14 -
Company promptly will so notify the Representatives and, subject to Section
5(a)(i) hereof, will prepare and file with the Commission an amendment to
the Registration Statement or an amendment or supplement to the Prospectus
which will correct such statement or omission or effect such compliance,
each such amendment or supplement to be reasonably satisfactory to counsel
to the Underwriters.
(v) As soon as practicable, but in any event not later than 45
days after the end of the 12-month period beginning on the day after the
end of the fiscal quarter of the Company during which the effective date of
the Registration Statement occurs (90 days in the event that the end of
such fiscal quarter is the end of the Company's fiscal year), the Company
will make generally available to its security holders, in the manner
specified in Rule 158(b) of the Rules and Regulations, and to the
Representatives, an earnings statement which will be in the detail required
by, and will otherwise comply with, the provisions of Section 11(a) of the
Act and Rule 158(a) of the Rules and Regulations, which statement need not
be audited unless required by the Act or the Rules and Regulations,
covering a period of at least 12 consecutive months after the effective
date of the Registration Statement.
(vi) During a period of five years after the date hereof, the
Company will furnish to its shareholders, as soon as practicable, annual
reports (including financial statements audited by independent public
accountants) and unaudited quarterly reports of earnings, and will deliver
to the Representatives:
(A) concurrently with furnishing such quarterly reports
to its shareholders, statements of income of the Company for each
quarter in the form furnished to the Company's shareholders and
certified by the Company's principal financial or accounting officer;
(B) concurrently with furnishing such annual reports to
its shareholders, a balance sheet of the Company as at the end of the
preceding fiscal year, together with statements of operations,
shareholders' equity, and cash flows of the Company for such fiscal
year, accompanied by a copy of the report thereon of independent
public accountants;
(C) as soon as they are available, copies of all
information (financial or other) mailed to shareholders;
- 15 -
(D) as soon as they are available, copies of all reports
and financial statements furnished to or filed with the Commission,
the National Association of Securities Dealers, Inc. ("NASD") or any
securities exchange;
(E) every press release and every material news item or
article of interest to the financial community in respect of the
Company or its affairs which was released or prepared by the Company;
and
(F) any additional information of a public nature
concerning the Company or its business which the Representatives may
reasonably request.
During such five-year period, if the Company has active
subsidiaries, the foregoing financial statements will be on a consolidated
basis to the extent that the accounts of the Company and its subsidiaries
are consolidated, and will be accompanied by similar financial statements
for any significant subsidiary which is not so consolidated.
(vii) The Company will maintain a Transfer Agent and, if
necessary under the jurisdiction of incorporation of the Company, a
Registrar (which may be the same entity as the Transfer Agent) for its
Common Stock.
(viii) The Company will furnish, without charge, to the
Representatives or on the Representatives' order, at such place as the
Representatives may designate, copies of each Preliminary Prospectus, the
Registration Statement and any pre-effective or post-effective amendments
thereto (two of which copies will be signed and will include all financial
statements and exhibits) and the Prospectus, and all amendments and
supplements thereto, in each case as soon as available and in such
quantities as the Representatives may reasonably request.
[(ix) The Company will not, directly or indirectly, without the
prior written consent of the Representatives, offer, sell, grant any option
to purchase or otherwise dispose (or announce any offer, sale, grant of any
option to purchase or other disposition) of any shares of Common Stock or
any securities convertible into, or exchangeable or exercisable for, shares
of Common Stock for a period of 180 days after the date hereof, except
pursuant to this Agreement and except as contemplated by the Prospectus.]
- 16 -
(x) The Company will cause the Shares to be duly included for
quotation on the National Association of Securities Dealers Automated
Quotations/National Market System, subject only to notice of issuance,
prior to the Closing Date.
(xi) Neither the Company nor any of its officers or directors,
nor affiliates of any of them (within the meaning of the Rules and
Regulations) will take, directly or indirectly, any action designed to, or
which might in the future reasonably be expected to cause or result in,
stabilization or manipulation of the price of any securities of the
Company.
(xii) The Company will apply the net proceeds of the offering
received by it in the manner set forth under the caption "Use of Proceeds"
in the Prospectus.
(xiii) The Company will timely file all such reports, forms or
other documents as may be required from time to time, under the Act, the
Rules and Regulations, the Exchange Act, and the rules and regulations
thereunder, and all such reports, forms and documents filed will comply in
all material respects as to form and substance with the applicable
requirements under the Act, the Rules and Regulations, the Exchange Act and
the rules and regulations thereunder.
(xiv) On the Closing Date and simultaneously with the delivery
of the Firm Shares, the Company shall execute and deliver to ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
& Co., Inc. and its designees the Warrants.
(xv) The Company will reserve and keep available the maximum
number of its authorized but unissued shares of Common Stock which are
issuable upon exercise of the Warrants outstanding from time to time.
6. EXPENSES. Regardless of whether the transactions contemplated in
this Agreement are consummated, and regardless of whether for any reason this
Agreement is terminated, the Company will pay, and hereby agrees to indemnify
each Underwriter against, all fees and expenses incident to the performance of
the obligations of the Company under this Agreement, including, but not limited
to, (i) fees and expenses of accountants and counsel for the Company, (ii) all
costs and expenses incurred in connection with the preparation, duplication,
printing, filing, delivery and shipping of copies of the Registration Statement
and any pre-effective or post-effective amendments thereto, any Preliminary
Prospectus and the Prospectus and any amendments or supplements thereto
(including postage costs related to the
- 17 -
delivery by the Underwriters of any Preliminary Prospectus or Prospectus, or any
amendment or supplement thereto), this Agreement, the Warrant Agreement, the
Warrants, the Agreement Among Underwriters, any Selected Dealer Agreement,
Underwriters' Questionnaire, Underwriters' Power of Attorney, and all other
documents in connection with the transactions contemplated herein, including the
cost of all copies thereof, (iii) fees and expenses relating to qualification of
the Shares under state securities or blue sky laws, including the cost of
preparing and mailing the preliminary and final blue sky memoranda and filing
fees and disbursements and fees of counsel and other related expenses, if any,
in connection therewith, (iv) filing fees of the Commission and the NASD
relating to the Shares, (v) any fees and expenses in connection with the
quotation of the Shares on the National Association of Securities Dealers
Automated Quotations/National Market System, (vi) costs and expenses incident to
the preparation, issuance and delivery to the Underwriters of any certificates
evidencing the Shares, including transfer agent's and registrar's fees and any
applicable transfer taxes incurred in connection with the delivery to the
Underwriters of the Shares to be sold by the Company pursuant to this Agreement,
(vii) costs and expenses incident to any meetings with prospective investors in
the Shares (other than as shall have been specifically approved by the
Representatives to be paid for by the Underwriters),(viii) costs and expenses of
advertising relating to the offering of the Shares (other than as shall have
been specifically approved by the Representatives to be paid for by the
Underwriters) up to $15,000, (ix) a non-accountable expense allowance of $
________, which amount shall be equal to 3% of the gross proceeds to the Company
from the sale of the Firm Shares and (x) the costs incurred for visits by
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ or its representatives to the Company, for which the Company has
given prior written authorization, occurring for a period of twelve months
following the "effective date" of the Registration Statement.
7. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligation of each
Underwriter to purchase and pay for the Shares set forth opposite the name of
such Underwriter in Schedule I is subject to the continuing accuracy of the
representations and warranties of the Company herein as of the date hereof and
as of the Closing Date as if they had been made on and as of the Closing Date;
the accuracy on and as of the Closing Date of the statements of officers of the
Company made pursuant to the provisions hereof; the performance by the Company
on and as of the Closing Date of its covenants and agreements hereunder; and the
following additional conditions:
(a) If the Company has elected to rely on Rule 430A under the Act,
the Registration Statement shall have been declared effective, and the
Prospectus (containing the
- 18 -
information omitted pursuant to Rule 430A) shall have been filed with the
Commission not later than the Commission's close of business on the second
business day following the date hereof or such later time and date to which the
Representatives shall have consented; if the Company does not elect to rely on
Rule 430A, the Registration Statement shall have been declared effective not
later than 11:00 A.M., New York time, on the date hereof or such later time and
date to which the Representatives shall have consented; if required, in the case
of any changes or amendments or supplements to the Prospectus or any Term Sheet
that constitutes a part thereof in addition to those contemplated above, the
Company shall have filed such Prospectus as amended or supplemented with the
Commission in the manner and within the time period required by Rules 434 and
424(b) under the Act; no stop order suspending the effectiveness of the
Registration Statement or any amendment thereto shall have been issued, and no
proceedings for that purpose shall have been instituted or threatened or, to the
knowledge of the Company or the Representatives, shall be contemplated by the
Commission; and the Company shall have complied with any request of the
Commission for additional information (to be included in the Registration
Statement or the Prospectus or otherwise).
(b) The Representatives shall not have advised the Company that the
Registration Statement, or any amendment thereto, contains an untrue statement
of fact which, in the Representatives' opinion, is material, or omits to state a
fact which, in the Representatives' opinion, is material and is required to be
stated therein or is necessary to make the statements therein not misleading, or
that the Prospectus, or any supplement thereto, contains an untrue statement of
fact which, in the Representatives' opinion, is material, or omits to state a
fact which, in the Representatives' opinion, is material and is required to be
stated therein or is necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) On or prior to the Closing Date, the Representatives shall have
received from counsel to the Underwriters, such opinion or opinions with respect
to the issuance and sale of the Firm Shares, the Registration Statement and the
Prospectus and such other related matters as the Representatives reasonably may
request and such counsel shall have received such documents and other
information as they request to enable them to pass upon such matters.
(d) On the Closing Date the Underwriters shall have received the
opinion, dated the Closing Date, of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to the Company
("Company Counsel"), to the effect set forth below:
- 19 -
(i) Each of the Company and the Subsidiaries (such
subsidiaries shall be defined to include all of the subsidiaries listed on
Schedule II to this Agreement) is a duly incorporated and validly existing
corporation in good standing under the laws of its jurisdiction of
incorporation with the corporate power and authority to own or lease its
properties and to conduct its business as described in the Prospectus. The
Company is duly qualified to do business as a foreign corporation and is in
good standing under the laws of the States of [Nevada, ____], which, to the
best knowledge of such counsel, constitute all of the jurisdictions (x) in
which the conduct of its business requires such qualification (except for
those jurisdictions in which the failure so to qualify can be cured without
having a Material Adverse Effect) and (y) in which it owns or leases
property;
(ii) The Company has authorized capital stock as set forth in
the Prospectus; the securities of the Company conform in all material
respects to the description thereof contained in the Prospectus; the
outstanding shares of Common Stock have been duly authorized and validly
issued by the Company, are fully paid and nonassessable, and are free of
any preemptive or other rights to subscribe for any of the Shares; the
Company has duly authorized the issuance and sale of the Shares and the
shares of Common Stock issuable upon exercise of the Warrants to be sold by
it hereunder and thereunder; the Shares and the shares of Common Stock
issuable upon exercise of the Warrants, when issued by the Company and paid
for in accordance with the terms hereof and thereof, will be validly
issued, fully paid and nonassessable and will conform in all material
respects to the description thereof contained in the Prospectus and will
not be subject to any preemptive, subscription or other similar rights; the
shares of Common Stock issuable upon exercise of the Warrants have been
reserved for issuance upon such exercise; and the Shares have been duly
authorized for quotation, subject only to notice of issuance, on the
National Association of Securities Dealers Automated Quotation/National
Market System;
(iii) The Registration Statement is effective under the Act; any
required filing of the Prospectus or any Term Sheet that constitutes a part
thereof, pursuant to Rules 434 and 424(b) has been made; and, to the best
knowledge of such counsel, no stop order suspending the effectiveness of
the Registration Statement or any amendment thereto has been issued, and no
proceedings for that purpose have been instituted or are pending or are
threatened or contemplated under the Act; the Registration Statement, as of
the effective date, and the Prospectus, as of the date
- 20 -
thereof, and, if any, each amendment and supplement thereto (except for the
financial statements, schedules and other financial data included therein,
as to which such counsel need not express any opinion), complied as to form
in all material respects with the requirements of the Act and the Rules and
Regulations; and to the best knowledge of such counsel, there are no
contracts or documents which are required by the Act to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement which are not described or filed as required by the
Act and the Rules and Regulations; to the best knowledge of such counsel,
there is not pending or threatened against the Company any action, suit,
proceeding or investigation before or by any court, regulatory body, or
administrative agency or any other governmental agency or body, domestic or
foreign, of a character required to be disclosed in the Registration
Statement or the Prospectus which is not so disclosed therein;
(iv) The Company has full corporate right, power, and authority
to enter into this Agreement and the Warrant Agreement and to consummate
the transactions provided for herein and therein; each of this Agreement
and the Warrant Agreement has been duly authorized, executed and delivered
by the Company; and each of this Agreement and the Warrant Agreement,
assuming due authorization, execution and delivery by each other party
hereto and thereto, is a valid and binding agreement of the Company,
enforceable in accordance with its terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws now or
hereafter in effect relating to or affecting creditors' rights generally or
by general principles of equity relating to the availability of remedies
and except as rights to indemnity and contribution may be limited by
federal or state securities laws or the public policy underlying such laws.
None of the Company's execution or delivery of this Agreement or the
Warrant Agreement, its performance hereof or thereof, its consummation of
the transactions contemplated herein or therein or its application of the
net proceeds of the offering in the manner set forth under the caption "Use
of Proceeds", conflicts or will conflict with or results or will result in
any breach or violation of any of the terms or provisions of, or constitute
a default under, or result in the creation or imposition of any lien,
charge or encumbrance upon, any property or assets of the Company or any of
its Subsidiaries pursuant to the terms of the charter or by-laws of the
Company or any of its Subsidiaries; the terms of any indenture, mortgage,
deed of trust, voting trust agreement, stockholder's agreement, note
agreement or other agreement or instrument known to such counsel to which
the Company or
- 21 -
any of its Subsidiaries is a party or by which it or any of its
Subsidiaries is or may be bound or to which any of their respective
properties may be subject; any statute, rule or regulation of any
regulatory body or administrative agency or other governmental agency or
body, domestic or foreign, having jurisdiction over the Company or any of
its Subsidiaries or any of their respective activities or properties; or
any judgment, decree or order, known to such counsel after reasonable
investigation, of any government, arbitrator, court, regulatory body or
administrative agency or other governmental agency or body, domestic or
foreign, having such jurisdiction; and no consent, approval, authorization
or order of any court, regulatory body or administrative agency or other
governmental agency or body, domestic or foreign, has been or is required
for the Company's performance of this Agreement or the Warrant Agreement or
the consummation of the transactions contemplated hereby or thereby, or the
issuance of the Warrants or the Common Stock underlying such Warrants,
except under the Act or as may be required under state securities or blue
sky laws;
(v) To such counsel's knowledge, the conduct of the businesses
of the Company and its Subsidiaries is not in violation of any federal,
state or local statute, administrative regulation or other law, which
violation is likely to have a Material Adverse Effect; and each of the
Company and its Subsidiaries has obtained all licenses, permits,
franchises, certificates and other authorizations from state, federal and
other regulatory authorities as are necessary or required for the
ownership, leasing and operation of its properties and the conduct of its
business as presently conducted and as contemplated in the Prospectus,
except where the failure to so obtain any such license, permit, franchise,
certificate or other authorization would not have a Material Adverse
Effect;
(vi) The issued shares of capital stock of each of the
Subsidiaries are owned by the Company or another Subsidiary, to the
knowledge of such counsel, free and clear of any perfected security
interests or any other liens, encumbrances, claims or security interests;
and
(vii) To the best of such counsel's knowledge, except as
described in the Prospectus, no claims have been asserted against the
Company or any of its Subsidiaries by any person to the use of any Rights
or challenging or questioning the validity or effectiveness of any such
rights.
- 22 -
In addition, such counsel shall state that in the course of the
preparation of the Registration Statement and the Prospectus, such counsel has
participated in conferences with officers and representatives of the Company and
with the Company's independent public accountants, at which conferences such
counsel made inquiries of such officers, representatives and accountants and
discussed the contents of the Registration Statement and the Prospectus and
(without taking any further action to verify independently the statements made
in the Registration Statement and the Prospectus and, except as stated in the
foregoing opinion, without assuming responsibility for the accuracy,
completeness or fairness of such statements) nothing has come to such counsel's
attention that causes such counsel to believe that either the Registration
Statement as of the date it is declared effective and as of the Closing Date or
the Prospectus as of the date thereof and as of the Closing Date contained or
contains any untrue statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading (it being understood that such counsel need not express
any opinion with respect to the financial statements, schedules and other
financial data included in the Registration Statement or the Prospectus).
In rendering any such opinion, such counsel may rely, as to
matters of fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company and public officials.
References to the Registration Statement and the Prospectus in
this paragraph (d) shall include any amendment or supplement thereto at the date
of such opinion.
(e) On or prior to the Closing Date, counsel to the Underwriters
shall have been furnished such documents, certificates and opinions as they may
reasonably require in order to evidence the accuracy, completeness or
satisfaction of any of the representations or warranties of the Company, or
conditions herein contained.
(f) At the time that this Agreement is executed by the Company, the
Underwriters shall have received from McGladrey & ▇▇▇▇▇▇, LLP a letter as of the
date of this Agreement in form and substance satisfactory to you (the "Original
Letter"), and on the Closing Date the Underwriters shall have received from such
firm a letter dated the Closing Date stating that, as of a specified date not
earlier than five (5) days prior to the Closing Date, nothing has come to the
attention of such firm to suggest that the statements made in the Original
Letter are not true and correct.
- 23 -
(g) On the Closing Date, the Underwriters shall have received a
certificate, dated the Closing Date, of the principal executive officer and the
principal financial or accounting officer of the Company to the effect that each
of such persons has carefully examined the Registration Statement and the
Prospectus and any amendments or supplements thereto and this Agreement, and
that:
(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,
and the Company has complied with all agreements and covenants and
satisfied all conditions contained in this Agreement on its part to be
performed or satisfied at or prior to the Closing Date;
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for that purpose
have been instituted or are pending or, to the best knowledge of each of
such persons are contemplated or threatened under the Act and any and all
filings required by Rule 424 and Rule 430A have been timely made;
(iii) The Registration Statement and Prospectus and, if any,
each amendment and each supplement thereto, contain all statements and
information required to be included therein, and neither the Registration
Statement nor any amendment thereto includes any untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and
neither the Prospectus (or any supplement thereto) nor any Preliminary
Prospectus includes or included any untrue statement of a material fact or
omits or omitted to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; and
(iv) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus up to and
including the Closing Date, neither the Company nor any of the Subsidiaries
has incurred, other than in the ordinary course of its business, any
material liabilities or obligations, direct or contingent; neither the
Company nor any of the Subsidiaries has purchased any of its outstanding
capital stock or paid or declared any dividends or other distributions on
its capital stock; neither the Company nor any of the Subsidiaries has
entered into any transactions not in the ordinary course of business; and
there has not been any change in the capital stock or[, except with respect
to the Securitization
- 24 -
Subsidiaries,] consolidated long-term debt or[, except with respect to the
Securitization Subsidiaries,] any increase in the consolidated short-term
borrowings (other than any increase in short-term borrowings in the
ordinary course of business) of the Company or any material adverse change
to the business, properties, assets, net worth, condition (financial or
other), results of operations or prospects of the Company and its
Subsidiaries taken as a whole; neither the Company nor any of the
Subsidiaries has sustained any material loss or damage to its property or
assets, whether or not insured; there is no litigation which is pending or
threatened against the Company or any of its Subsidiaries which is required
under the Act or the Rules and Regulations to be set forth in an amended or
supplemented Prospectus which has not been set forth; and there has not
occurred any event required to be set forth in an amended or supplemented
Prospectus which has not been set forth.
References to the Registration Statement and the Prospectus in
this paragraph (g) are to such documents as amended and supplemented at the
date of the certificate.
(h) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus up to and including the
Closing Date there has not been (i) any adverse change or decrease specified in
the letter or letters referred to in paragraph (f) of this Section 7 or (ii) any
adverse change, or any development involving a prospective adverse change, in
the business or properties of the Company or its Subsidiaries which change or
decrease in the case of clause (i) or change or development in the case of
clause (ii) makes it impractical or inadvisable in the Representatives' judgment
to proceed with the public offering or the delivery of the Shares as
contemplated by the Prospectus.
(i) No order suspending the sale of the Shares in any jurisdiction
designated by you pursuant to Section 5(a)(iii)(A) hereof has been issued on or
prior to the Closing Date and no proceedings for that purpose have been
instituted or, to your knowledge or that of the Company, have been or are
contemplated.
(j) The Representatives shall have received from (A) each person who
is an officer or director of the Company or who owns more than five (5) percent
of the outstanding shares of Common Stock, (B) substantially all (75% or more)
of the investors identified in the registration statement dated December 22,
1995 who acquired their shares in a private placement in September 1994 and (C)
substantially all of the holders of Carpet Barn Holdings, Inc. preferred stock
whose shares of common stock are included in the December 22, 1995 registration
statement, an agreement (a "Lock-up Agreement") to the effect that such person
- 25 -
will not, directly or indirectly, without the prior written consent of the
Representatives, offer, sell, grant any option to purchase or otherwise dispose
(or announce any offer, sale, grant of any option to purchase or other
disposition) of any shares of Common Stock or any securities convertible into,
or exchangeable or excerciseable for, shares of common stock for a period of
twenty-four (24) months, six (6) months and twelve (12) months, respectively,
from the effective date of the offering; provided, however, that after twelve
(12) months 25% of the shares will be released and after eighteen (18) months
another 25% will be released, that shares may be sold if such sale or
disposition is a privately negotiated transaction, that the purchaser agrees in
writing with the Representatives to the provisions of the Lock-up Agreement and
the disposition is otherwise in accordance with the Federal securities and other
laws.
(k) Prior to the "effective date" of the Registration Statement, the
Company's Board of Directors shall have duly appointed two independent directors
to serve on its Board of Directors until the Company's next annual stockholders'
meeting.
(l) Prior to the "effective date" of the Registration Statement, the
Company's Board of Directors shall have established a Compensation Committee and
an Audit Committee, each consisting of at least two independent ("outside")
members of the Board of Directors.
(m) The Company shall have effected a four-to-one reverse split of
its then outstanding common stock.
(n) The Company shall have entered into employment agreements with
those key employees listed on Exhibit ___ hereto in substance satisfactory to
▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
(o) The Company shall have furnished the Underwriters with such
further opinions, letters, certificates or documents as you or counsel for the
Underwriters may reasonably request. All opinions, certificates, letters and
documents to be furnished by the Company will comply with the provisions hereof
only if they are reasonably satisfactory in all material respects to the
Underwriters and to counsel for the Underwriters. The Company shall furnish the
Underwriters with conformed copies of such opinions, certificates, letters and
documents in such quantities as you reasonably request. The certificates
delivered under this Section 7 shall constitute representations, warranties and
agreements of the Company as to all matters set forth therein as fully and
effectively as if such matters had been set forth in Section 2 of this
Agreement.
(p) The Shares shall have been duly authorized for quotation on the
National Association of Securities Dealers
- 26 -
Automated Quotation/National Market System, subject only to notice of issuance.
8. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls such Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, against any
and all losses, claims, damages or liabilities, joint or several (and actions in
respect thereof), to which such Underwriter or such controlling person may
become subject, under the Act or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages,
liabilities or actions arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement or the Prospectus or any Preliminary Prospectus, or any amendment or
supplement thereto, or any blue sky application or other document executed by
the Company specifically for the purpose of qualifying, or based upon written
information furnished by the Company filed in any state or other jurisdiction in
order to qualify, any or all of the Shares under the securities or blue sky laws
thereof (any such application, document or information being hereinafter called
a "Blue Sky Application"), or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements not misleading and will reimburse, as
incurred, such Underwriter or such controlling persons for any legal or other
expenses incurred by such Underwriter or such controlling persons in connection
with investigating, defending or appearing as a third party witness in
connection with any such loss, claim, damage, liability or action; PROVIDED,
HOWEVER, that the Company will not be liable in any such case to the extent that
any such loss, claim, damage, liability or action arises out of or is based upon
any untrue statement or alleged untrue statement or omission or alleged omission
made in any of such documents in reliance upon and in conformity with
information furnished in writing to the Company on behalf of such Underwriter
through the Representatives expressly for use therein, and PROVIDED, FURTHER,
that such indemnity with respect to any Preliminary Prospectus shall not inure
to the benefit of any Underwriter (or to the benefit of any person controlling
such Underwriter) from whom the person asserting any such loss, claim, damage,
liability or action purchased Shares which are the subject thereof to the extent
that any such loss, claim, damage, liability or action (i) results from the fact
that such Underwriter failed to send or give a copy of the Prospectus (as
amended or supplemented) to such person at or prior to the confirmation of the
sale of such Shares to such person in any case where such delivery is required
by the Act and (ii) arises out of or is based upon an untrue statement or
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omission of a material fact contained in such Preliminary Prospectus that was
corrected in the Prospectus (as amended and supplemented), unless such failure
resulted from non-compliance by the Company with Section 5(a)(viii) hereof.
The indemnity agreement in this paragraph (a) shall be in
addition to any liability which the Company may have at common law or otherwise.
(b) Each of the Underwriters agrees severally, but not jointly, to
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section 20
of the Exchange Act against any and all losses, claims, damages or liabilities
(and actions in respect thereof) to which the Company or any such director,
officer, or controlling person may become subject, under the Act or other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or actions arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or the Prospectus or any
Preliminary Prospectus, or any amendment or supplement thereto or in any Blue
Sky Application, 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 not misleading, in each case to the extent, but
only to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
information furnished in writing by that Underwriter through the Representatives
to the Company expressly for use therein; and will reimburse, as incurred, all
legal or other expenses reasonably incurred by the Company or any such director,
officer, controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action. The Company acknowledges that
the statements with respect to the public offering of the Shares set forth under
the heading "Underwriting" and the stabilization legend in the Prospectus have
been furnished by the Underwriters to the Company expressly for use therein and
constitute the only information furnished in writing by or on behalf of the
Underwriters for inclusion in the Prospectus. The indemnity agreement contained
in this paragraph (b) shall be in addition to any liability which the
Underwriters may have at common law or otherwise.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against one or more indemnifying parties
under this Section 8, notify such indemnifying party or parties of the
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commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under paragraph (a) or (b) of this Section 8 or to the extent
that the indemnifying party was not adversely affected by such omission. In
case any such action is brought against an indemnified party and it notifies an
indemnifying party or parties of the commencement thereof, the indemnifying
party or parties against which a claim is to be made will be entitled to
participate therein and, to the extent that it or they may wish, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party;
PROVIDED HOWEVER, that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party has
reasonably concluded that there may be legal defenses available to it and/or
other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to assume such legal defenses and otherwise
to participate in the defense of such action on behalf of such indemnified party
or parties. Upon receipt of notice from the indemnifying party to such
indemnified party of its election so to assume the defense of such action and
approval by the indemnified party of counsel, the indemnifying party will not be
liable to such indemnified party under this Section 8 for any legal or other
expenses (other than the reasonable costs of investigation) subsequently
incurred by such indemnified party in connection with the defense thereof unless
(i) the indemnified party has employed such counsel in connection with the
assumption of such different or additional legal defenses in accordance with the
proviso to the immediately preceding sentence, (ii) the indemnifying party has
not employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action, or (iii) the indemnifying party has authorized in
writing the employment of counsel for the indemnified party at the expense of
the indemnifying party.
(d) If the indemnification provided for in this Section 8 is
unavailable to hold harmless an indemnified party under paragraph (a) or (b)
above in respect of any losses, claims, damages, expenses or liabilities (or
actions 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 losses, claims, damages or liabilities (or actions in respect
thereof) (i) in such proportion as is appropriate to reflect the relative
benefits received by each of the contributing parties, on the one hand, and the
party to be indemnified, on the other hand, from the offering of the Shares or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause
- 29 -
(i) above but also the relative fault of each of the contributing parties, on
the one hand, and the party to be indemnified, on the other hand, in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations. In any
case where the Company is a contributing party and the Underwriters are the
indemnified party, the relative benefits received by the Company, 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 of the Shares (before
deducting expenses) bear to the total underwriting discounts received by the
Underwriters hereunder, in each case as set forth in the table on the cover page
of the Prospectus. Relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Underwriters, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this paragraph (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 paragraph (d), the
Underwriters shall not be required to contribute any amount in excess of the
underwriting discount applicable to the Shares purchased by the Underwriters
hereunder. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
paragraph (d), (i) each person, if any, who controls an Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act shall have
the same rights to contribution as such Underwriter and (ii) each director of
the Company, each officer of the Company who has signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act, shall have the same
rights to contribution as the Company, subject in each case to this paragraph
(d). Any party entitled to contribution will, promptly after receipt of notice
of commencement of any action, suit or proceeding against such party in respect
to which a claim for contribution may be made against another party or parties
under this paragraph (d), notify such party or parties from whom contribution
may be sought, but the omission so to notify such party or parties shall not
relieve the party or parties from whom contribution may be sought from any other
obligation (x) it or they may have hereunder or otherwise than under this
paragraph (d) or (y) to the extent that such party or parties were not adversely
affected
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by such omission. The contribution agreement set forth above shall be in
addition to any liabilities which any indemnifying party may have at common law
or otherwise.
9. RIGHT TO INCREASE OFFERING. At anytime during a period of 45 days
from the date of the Prospectus, the Underwriters, by no less than two business
days' prior notice to the Company, may designate a closing (which may be
concurrent with, and part of, the closing on the Closing Date with respect to
the Firm Shares or may be a second closing held on a date subsequent to the
Closing Date, in either case such date shall be referred to herein as the
"Option Closing Date") at which the Underwriters may purchase all or less than
all of the Additional Shares in accordance with the provisions of this Section 9
at the purchase price per share to be paid for the Firm Shares. In no event
shall the Option Closing Date be later than 10 business days after written
notice of election to purchase Additional Shares is given.
The Company agrees to sell to the several Underwriters on the Option
Closing Date the number of Additional Shares specified in such notice and the
Underwriters agree, severally and not jointly, to purchase such Additional
Shares on the Option Closing Date. Such Additional Shares shall be purchased
for the account of each Underwriter in the same proportion as the number of Firm
Shares set forth opposite the name of such Underwriter in Schedule I bears to
the total number of Firm Shares (subject to adjustment by you to eliminate
fractions) and may be purchased by the Underwriters only for the purpose of
covering over-allotments made in connection with the sale of the Firm Shares.
No Additional Shares shall be sold or delivered unless the Firm Shares
previously have been, or simultaneously are, sold and delivered. The right to
purchase the Additional Shares or any portion thereof may be surrendered and
terminated at any time upon notice by you to the Company.
Except to the extent modified by this Section 9, all provisions of
this Agreement relating to the transactions contemplated to occur on the Closing
Date for the sale of the Firm Shares shall apply, MUTATIS MUTANDIS, to the
Option Closing Date for the sale of the Additional Shares.
- 31 -
10. REPRESENTATIONS, ETC. TO SURVIVE DELIVERY. The respective
representations, warranties, agreements, covenants, indemnities and statements
of, and on behalf of, the Company and its officers and the Underwriters,
respectively, set forth in or made pursuant to this Agreement will remain in
full force and effect, regardless of any investigation made by or on behalf of
the Underwriters, and will survive delivery of and payment for the Shares. Any
successors to the Underwriters shall be entitled to the indemnity, contribution
and reimbursement agreements contained in this Agreement.
11. EFFECTIVE DATE AND TERMINATION.
(a) This Agreement shall become effective at 11:00 A.M., New York
time, on the first business day following the date hereof, or at such earlier
time after the Registration Statement becomes effective as the Representatives,
in its sole discretion, shall release the Shares for the sale to the public
unless prior to such time the Representatives shall have received written notice
from the Company that it elects that this Agreement shall not become effective,
or the Representatives shall have given written notice to the Company that the
Representatives on behalf of the Underwriters elects that this Agreement shall
not become effective; PROVIDED, HOWEVER, that the provisions of this Section and
of Section 6 and Section 8 hereof shall at all times be effective. For purposes
of this Section 11(a), the Shares to be purchased hereunder shall be deemed to
have been so released upon the earlier of notification by the Representatives to
securities dealers releasing such Shares for offering or the release by the
Representatives for publication of the first newspaper advertisement which is
subsequently published relating to the Shares.
(b) This Agreement (except for the provisions of Sections 6 and 8
hereof) may be terminated by the Representatives by notice to the Company in the
event that the Company has failed to comply in any respect with any of the
provisions of this Agreement required on its part to be performed at or prior to
the Closing Date or the Option Closing Date, or if any of the representations or
warranties of the Company are not accurate in any respect or if the covenants,
agreements or conditions of, or applicable to the Company herein contained have
not been complied with in any respect or satisfied within the time specified on
the Closing Date or the Option Closing Date, respectively, or if prior to the
Closing Date or the Option Closing Date:
(i) the Company or any of its Subsidiaries shall have
sustained a loss by strike, fire, flood, accident or other calamity of such
a character as to interfere materially with the conduct of the business and
operations
- 32 -
of the Company and its Subsidiaries takes as a whole regardless of whether
or not such loss was insured;
(ii) trading in the Common Stock shall have been suspended by
the Commission or the National Association of Securities Dealers Automated
Quotations/National Market System or trading in securities generally on the
New York Stock Exchange or the National Association of Securities Dealers
Automated Quotations/National Market System shall have been suspended or a
material limitation on such trading shall have been imposed or minimum or
maximum prices shall have been established on either any such exchange or
market system;
(iii) a banking moratorium shall have been declared by New York
or United States authorities;
(iv) there shall have been an outbreak or escalation of
hostilities between the United States and any foreign power or an outbreak
or escalation of any other insurrection or armed conflict involving the
United States; or
(v) there shall have been a material adverse change in (A)
general economic, political or financial conditions or (B) the present or
prospective business or condition (financial or other) of the Company and
its Subsidiaries taken as a whole that, in each case, in the
Representatives' judgment makes it impracticable or inadvisable to make or
consummate the public offering, sale or delivery of the Company's Shares on
the terms and in the manner contemplated in the Prospectus and the
Registration Statement.
(c) Termination of this Agreement under this Section 11 or Section 12
after the Firm Shares have been purchased by the Underwriters hereunder shall be
applicable only to the Additional Shares. Termination of this Agreement shall
be without liability of any party to any other party other than as provided in
Sections 6 and 8 hereof.
12. SUBSTITUTION OF UNDERWRITERS. If one or more of the Underwriters
shall fail or refuse (otherwise than for a reason sufficient to justify the
termination of this Agreement under the provisions of Section 7 or 11 hereof) to
purchase and pay for (a) in the case of the Closing Date, the number of Firm
Shares agreed to be purchased by such Underwriter or Underwriters upon tender to
you of such Firm Shares in accordance with the terms hereof or (b) in the case
of the Option Closing Date, the number of Additional Shares agreed to be
purchased by such Underwriter or Underwriters upon tender to you of such
Additional Shares in
- 33 -
accordance with the terms hereof, and the number of such Shares shall not exceed
10% of the Firm Shares or Additional Shares required to be purchased on the
Closing Date or the Option Closing Date, as the case may be, then, each of the
non-defaulting Underwriters shall purchase and pay for (in addition to the
number of such Shares which it has severally agreed to purchase hereunder) that
proportion of the number of Shares which the defaulting Underwriter or
Underwriters shall have so failed or refused to purchase on such Closing Date or
Option Closing Date, as the case may be, which the number of Shares agreed to be
purchased by such non-defaulting Underwriter bears to the aggregate number of
Shares so agreed to be purchased by all such non-defaulting Underwriters on such
Closing Date or Option Closing Date, as the case may be. In such case, you
shall have the right to postpone the Closing Date or the Option Closing Date, as
the case may be, to a date not exceeding seven full business days after the date
originally fixed as such Closing Date or the Option Closing Date, as the case
may be, pursuant to the terms hereof in order that any necessary changes in the
Registration Statement, the Prospectus or any other documents or arrangements
may be made.
If one or more of the Underwriters shall fail or refuse (otherwise
than for a reason sufficient to justify the termination of this Agreement under
the provisions of Section 7 or 11 hereof) to purchase and pay for (a) in the
case of the Closing Date, the number of Firm Shares agreed to be purchased by
such Underwriter or Underwriters upon tender to you of such Firm Shares in
accordance with the terms hereof or (b) in the case of the Option Closing Date,
the number of Additional Shares agreed to be purchased by such Underwriter or
Underwriters upon tender to you of such Additional Shares in accordance with the
terms hereof, and the number of such Shares shall exceed 10% of the Firm Shares
or Additional Shares required to be purchased by all the Underwriters on the
Closing Date or the Option Closing Date, as the case may be, then (unless within
48 hours after such default arrangements to your satisfaction shall have been
made for the purchase of the defaulted Shares by an Underwriter or Underwriters)
and subject to the provisions of Section 11(b) hereof, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or on
the part of the Company except as otherwise provided in Sections 6 and 8 hereof.
As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this paragraph. Nothing in this Section
12, and no action taken hereunder, shall relieve any defaulting Underwriter from
liability in respect of any default of such Underwriter under this Agreement.
13. ADDITIONAL FINANCING. The Company hereby agrees that if on or prior
to September 17, 1999, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ (i) introduces, negotiates or arranges for
a non-public equity
- 34 -
financing for the Company which is consummated, (ii) arranges for a non-public
debt financing for the Company which is consummated, or (iii) arranges for the
purchase or sale of assets, a merger, acquisition or joint venture for the
Company which is consummated, then the Company shall pay ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ a fee
for its services which shall be calculated as follows: a fee of 3% of the value
of a transaction up to and including $5,000,000; 2% of the value of a
transaction greater than $5,000,000 and up to and including $6,000,000; 1.5% of
the value of a transaction greater than $6,000,000 and up to and including
$7,000,000; and 1% of the value of a transaction in excess of $7,000,000.
14. NOTICES. All communications hereunder shall be in writing and if sent
to the Representatives shall be mailed or delivered or telegraphed and confirmed
by letter or telecopied and confirmed by letter to ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & Co., Inc.,
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, with a copy to Stroock & Stroock & ▇▇▇▇▇,
[Seven ▇▇▇▇▇▇▇ ▇▇▇▇▇▇], ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, or if sent to the Company, shall be mailed or delivered or
telegraphed and confirmed to the Company at ▇▇▇▇▇▇ Investments, Inc., ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, with
a copy to ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
15. SUCCESSORS. This Agreement shall inure to the benefit of and be
binding upon the Company and each Underwriter and the Company's and each
Underwriter's respective successors and legal representatives, and nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any other person any legal or equitable right, remedy or claim under or in
respect of this Agreement, or any provisions herein contained, this Agreement
and all conditions and provisions hereof being intended to be and being for the
sole and exclusive benefit of such persons and for the benefit of no other
person, except that the representations, warranties, indemnities and
contribution agreements of the Company contained in this Agreement shall also be
for the benefit of any person or persons, if any, who control any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
and except that the Underwriters' indemnity and contribution agreements shall
also be for the benefit of the directors of the Company, the officers of the
Company who have signed the Registration Statement, and any person or persons,
if any, who control the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act. No purchaser of Shares from the Underwriters
will be deemed a successor because of such purchase.
16. APPLICABLE LAW; JURISDICTION. This Agreement shall be governed by and
construed in accordance with the laws of the
- 35 -
State of New York, without giving effect to the choice of law or conflict of law
principles thereof. Each party hereto consents to the jurisdiction of each
court in which any action is commenced seeking indemnity or contribution
pursuant to Section 8 above and agrees to accept, either directly or through an
agent, service of process of each such court.
17. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
- 36 -
If the foregoing correctly sets forth our understanding, please indicate
the Underwriters' acceptance thereof in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement between us.
Very truly yours,
NATIONS FLOORING, INC.
By:
------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
Accepted as of the date first
above written:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & CO., INC.
By: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & Co., Inc.
Acting on its own behalf and as
the Representatives of the several
Underwriters referred to in the
foregoing Agreement
By:
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
- 37 -
SCHEDULE I
UNDERWRITERS
Underwriting Agreement dated November __, 1996
Number of Firm
Shares to be
Purchased from
Name the Company
---- --------------
- 38 -
SCHEDULE II
SUBSIDIARIES
Nation Flooring, Inc.
List of Subsidiaries
As of November __, 1996
State of Incorporation
Name of Subsidiary or Formation
------------------ -----------------------
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