1,200,000 SHARES
SERIES A CUMULATIVE CONVERTIBLE PREFERRED SHARES
WELLINGTON PROPERTIES TRUST
UNDERWRITING AGREEMENT
_________________, 1999
▇. ▇. ▇▇▇▇▇▇▇▇ & Company
One Financial Plaza
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Dear Ladies and Gentlemen:
Wellington Properties Trust, a Maryland Business Trust hereby confirms its
agreement, subject to the terms and conditions stated herein, to issue and sell
to the Underwriters named in Schedule I hereto (the "Underwriters"), for which
▇. ▇. ▇▇▇▇▇▇▇▇ & Company is acting as the representative (in such capacity, the
"Representative"), an aggregate of 1,200,000 Shares of Series A Cumulative
Convertible Preferred Stock, $.01 par value, of Wellington Properties Trust (the
"Firm Shares") and up to 180,000 additional Shares upon the request of the
Underwriters solely for the purpose of covering overallotments (the "Option
Shares"). The Firm Shares and the Option Shares, which aggregate 1,380,000
Shares, are collectively referred to herein as the "Shares." Further, the
Company hereby confirms its agreement to issue to the Underwriter warrants for
the purchase of up to 138,000 Shares as described in Section 5 hereof (the
"Underwriter's Warrants"), assuming purchase by the Underwriter of the Firm
Shares. The Shares issuable upon exercise of the Underwriter's Warrants are
referred to as the "Warrant Shares." Except as the context may otherwise
require, Wellington Properties Trust and its operating partnership, Wellington
Properties Investment, L.P., are referred to herein collectively as the
"Company." The Shares will be in the form and contain such rights and terms as
described in the Prospectus.
The Company hereby confirms the arrangements with respect to the purchase,
severally and not jointly, by each of the Underwriters the number of the Firm
Shares set forth opposite their respective names in Schedule I, plus their pro
rata portion of the Option Shares purchased if the overallotment option is
exercised in whole or in part. The Company has been advised and hereby
acknowledges that ▇. ▇. ▇▇▇▇▇▇▇▇ & Company has been duly authorized to act as
the representative of the Underwriters. As used in this Agreement, the term
"Underwriter" refers to any individual member of the underwriting syndicate and
includes any party substituted for an Underwriter under Section 9 hereof.
1. Representations and Warranties of the Company. The Company represents
and warrants to and agrees with each of the several Underwriters as follows:
(a) A registration statement on Form SB-2 with respect to the Shares,
and as a part thereof a preliminary Prospectus has been prepared by the
Company in conformity with the requirements of the Securities Act of 1933,
as amended (the "1933 Act") and the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "SEC")
thereunder and has been filed with the SEC under the 1933 Act. The Company
has filed such amendments to the registration statement and such amended
preliminary prospectuses as may have been required to be filed to the date
hereof. If the Company has elected not to rely upon Rule 430A, the Company
has prepared and will promptly file an amendment to the registration
statement and an amended prospectus (provided the Underwriters have
consented to such filing). If the Company has elected to rely upon Rule
430A, it will prepare and timely file a prospectus pursuant to Rule 424(b)
that discloses the information previously omitted from the prospectus in
reliance upon Rule 430A. Copies of such registration statement and each
pre-effective amendment thereto, and each related preliminary prospectus
have been delivered by the Company to the Underwriters. Such registration
statement, as amended or supplemented, including all prospectuses included
as a part thereof, financial schedules, exhibits, the information (if any)
deemed to be part thereof pursuant to Rules 430A and 434 under the 1933 Act
and any registration statement filed pursuant to Rule 462 under the 1933
Act, is herein referred to as the "Registration Statement." The term
"Prospectus" as used herein shall mean the final prospectus, as amended or
supplemented, included as a part of the Registration Statement on file with
the SEC when it becomes effective; provided, however, that if a prospectus
is filed by the Company pursuant to Rules 424(b) and 430A or a term sheet
is filed by the Company pursuant to Rule 434 under the 1933 Act, the term
"Prospectus" as used herein shall mean the prospectus so filed pursuant to
Rules 424(b) and 430A and the term sheet so filed pursuant to Rule 434. The
term "Preliminary Prospectus" as used herein means any prospectus, as
amended or supplemented, used prior to the Effective Date (as defined in
Section 4(a) hereof) and included as a part of the Registration Statement,
including any prospectus filed with the SEC pursuant to Rule 424(a).
(b) Neither the SEC nor any state securities division has issued any
order preventing or suspending the use of any Preliminary Prospectus, or
issued a stop order with respect to the offering of the Shares or requiring
the recirculation of a Preliminary Prospectus and, to the best knowledge of
the Company, no proceeding for any such purpose has been initiated or
threatened. Each part of the Registration Statement, when such part became
or becomes effective, each Preliminary Prospectus, on the date of filing
with the SEC, and the Prospectus and any amendment or supplement thereto,
on the date of filing thereof with the SEC and on any Closing Date (as
defined in Section 3 hereof), as the case may be, conformed or will conform
in all material respects with the requirements of the 1933 Act and the
Rules and Regulations and the securities laws ("Blue Sky laws") of the
states where the Shares are to be sold (the "States") and contained or will
contain all statements that are required to be stated therein in accordance
with the 1933 Act, the Rules and Regulations and the Blue Sky laws of the
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States. When the Registration Statement became or becomes effective and
when any post-effective amendments thereto shall become effective, the
Registration Statement did not and will not contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Neither any
Preliminary Prospectus, on the date of filing thereof with the SEC, nor the
Prospectus or any amendment or supplement thereto, on the date of filing
thereof with the SEC and on the First and Second Closing Dates, contained
or will contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading; provided,
however, that none of the representations and warranties in this Subsection
1(b) shall apply to statements in, or omissions from, the Registration
Statement, Preliminary Prospectus or the Prospectus, or any amendment
thereof or supplement thereto, which are based upon and conform to written
information furnished to the Company by the Underwriters, as identified in
Section 12 herein, specifically for use in the preparation of the
Registration Statement, Preliminary Prospectus or the Prospectus, or any
amendment or supplement thereto. There is no contract or other document of
the Company of a character required by the 1933 Act or the Rules and
Regulations to be described in the Registration Statement or Prospectus, or
to be filed as an exhibit to the Registration Statement, that has not been
described or filed as required. The descriptions of all such contracts and
documents or references thereto are correct and include the information
required under the 1933 Act and the Rules and Regulations.
(c) The Company has been duly organized and is validly existing in
good standing under the laws of the State of Maryland, with full corporate
power and authority, to own, lease and operate its properties and conduct
its business as described in the Registration Statement and Prospectus. The
Company is duly qualified to do business and is in good standing in each
jurisdiction in which the ownership or lease of its properties, or the
conduct of its business, requires such qualification and in which the
failure to be qualified or in good standing would have a material adverse
effect on the business of the Company. The Company has all necessary and
material authorizations, approvals and orders of and from all governmental
regulatory officials and bodies to own its properties and to conduct its
business as described in the Registration Statement and Prospectus, and is
conducting its business in substantial compliance with all applicable
material laws, rules and regulations of the jurisdictions in which it is
conducting business. The Company holds all material licenses, certificates,
permits, authorizations, approvals and orders of and from all state,
federal and other governmental regulatory officials and bodies necessary to
own its properties and to conduct its business as described in the
Registration Statement and Prospectus, or has obtained waivers from any
such applicable requirements from the appropriate state, federal or other
regulatory authorities. All such licenses, permits, approvals,
certificates, consents, orders and other authorizations are in full force
and effect, and the Company has not received notice of any proceeding or
action relating to the revocation or modification of any such license,
permit, approval, certificate, consent, order or other authorization which,
individually or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, might materially and adversely affect the
conduct of the business or the condition, financial or otherwise, or the
earnings, affairs or business prospects of the Company.
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(d) The Company has no subsidiaries and is not affiliated with any
other Company or business entity, except as disclosed in the Prospectus.
(e) The Company is not in violation of its Declaration of Trust or
Bylaws. The Company is not in default in the performance or observance of
any obligation, agreement, covenant or condition contained in any bond,
debenture, note or other evidence of indebtedness or in any contract,
indenture, mortgage, loan agreement, joint venture or other agreement or
instrument to which the Company is a party or by which the Company or its
properties are bound, and there does not exist any state of facts which
constitutes an event of default on the part of the Company or which, with
notice or lapse of time or both, would constitute such an event of default.
The Company is not, to the best of its knowledge, in violation of any law,
order, rule, regulation, writ, injunction or decree of any government,
governmental instrumentality or court, domestic or foreign, which violation
is material to the business of the Company.
(f) The Company has full requisite power and authority to enter into
this Agreement. This Agreement has been duly authorized, executed and
delivered by the Company and will be a valid and binding agreement on the
part of the Company, enforceable in accordance with its terms, if and when
this Agreement shall have become effective in accordance with Section 8,
except as enforceability may be limited by the application of bankruptcy,
insolvency, moratorium or similar laws affecting the rights of creditors
generally and by judicial limitations on the right of specific performance
and except as the enforceability of the indemnification or contribution
provisions hereof may be affected by applicable federal or state securities
laws. The performance of this Agreement and the consummation of the
transactions herein contemplated will not result in a breach or violation
of any of the terms and 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 pursuant to, (i) any indenture,
mortgage, deed of trust, loan agreement, bond, debenture, note, agreement
or other evidence of indebtedness, lease, contract or other agreement or
instrument to which the Company is a party or by which the property or
assets of the Company is bound, (ii) the Company's Declaration of Trust or
Bylaws or (iii) any statute or any order, rule or regulation of any court,
governmental agency or body having jurisdiction over the Company. No
consent, approval, authorization or order of any court, governmental agency
or body is required for the consummation by the Company of the transactions
on its part herein contemplated, except such as may be required under the
1933 Act, the Rules and Regulations, the Blue Sky laws, the rules and
regulations of the National Association of Securities Dealers, Inc.
("NASD") and the rules and regulations of Nasdaq.
(g) Except as is otherwise expressly stated in the Registration
Statement or Prospectus, there are no actions, suits or proceedings pending
before any court or governmental agency, authority or body to which the
Company is a party or of which the business or property of the Company is
the subject which might result in any material adverse change in the
condition (financial or otherwise), business or prospects of the Company,
materially and adversely affect its properties or assets or prevent
consummation of the transactions contemplated by this Agreement; and, to
the best of the Company's knowledge, no such actions, suits or proceedings
are threatened except as is
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otherwise expressly stated in the Registration Statement or Prospectus. The
Company is not aware of any facts which would form the basis for the
assertion of any material claim or liability which are not disclosed in the
Registration Statement or the Prospectus or adequately reserved for in the
financial statements which are a part thereof, except for such claims or
liabilities which are not currently expected to have a material adverse
effect on the condition (financial or otherwise) or the earnings, affairs
or business prospects of the Company. All pending legal or governmental
proceedings to which the Company is a party or to which any of its property
is subject, which are not described in the Registration Statement and the
Prospectus, including ordinary routine litigation incidental to the
business, are, considered in the aggregate, not material to the Company.
(h) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus. The outstanding Common Stock of
the Company is duly authorized, validly issued, fully paid and
nonassessable. The Shares and authorized securities of the Company conform
in substance to all statements relating thereto contained in the
Registration Statement and Prospectus. The securities to be sold by the
Company hereunder and the shares of Common Stock issuable upon conversion
of the Shares have been duly authorized and, when issued and delivered
pursuant to this Agreement, will be validly issued, fully paid and
nonassessable and will conform to the description thereof contained in the
Prospectus. No preemptive rights or similar rights of any security holders
of the Company exist with respect to the issuance and sale of the Shares by
the Company. Except as disclosed in the Prospectus, the Company has no
agreement with any security holder which gives such security holder the
right to require the Company to register under the 1933 Act any securities
of any nature owned or held by such person either in connection with the
transactions contemplated by this Agreement or after a demand for
registration by such holder. Upon payment for and delivery of the Shares
pursuant to this Agreement, the Underwriters will acquire the Shares, free
and clear of all liens, encumbrances or claims. The certificates evidencing
the Shares will comply as to form with all applicable provisions of the
laws of the State of Maryland. Except as set forth in any part of the
Registration Statement, the Company does not have outstanding any options
to purchase, or any rights or warrants to subscribe for, or any securities
or obligations convertible into, or any contracts or commitments to issue
or sell, any Common Stock or other securities of the Company, or any such
warrants, convertible securities or obligations.
(i) The Underwriters' Warrants, and the Shares issuable upon exercise
or conversion thereof (the "Warrant Shares") have been duly authorized. The
Underwriters' Warrants, when issued and delivered to the Underwriters, will
constitute valid and binding obligations of the Company in accordance with
their terms, except as enforceability may be limited by the application of
bankruptcy, insolvency, moratorium or similar laws affecting the rights of
creditors generally and by judicial limitations on the right of specific
performance. The Warrant Shares when issued in accordance with the terms of
the Underwriters' Warrants, will be validly issued, fully paid and
nonassessable and subject to no preemptive rights or similar rights on the
part of an person or entity. A sufficient number of Shares have been
reserved for issuance by the Company upon exercise of the Underwriters'
Warrants and a sufficient number of shares of Common
5
Stock have been reserved for issuance by the Company upon conversion of the
Warrant Shares.
(j) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, whose reports appear in the Registration Statement
and Prospectus, are independent accountants within the meaning of the 1933
Act and the Rules and Regulations. The financial statements of the Company,
together with the related notes, forming part of the Registration Statement
and Prospectus (the "Financial Statements"), fairly present the financial
position and the results of operations of the Company at the respective
dates and for the respective periods to which they apply. The Financial
Statements are accurate, complete and correct and have been prepared in
accordance with the 1933 Act, the Rules and Regulations and generally
accepted accounting principles ("GAAP"), consistently applied throughout
the periods involved, except as may be otherwise stated therein. The
summaries of the Financial Statements and the other financial and
statistical data and related notes set forth in the Registration Statement
and the Prospectus are (i) accurate and correct and fairly present the
information purported to be shown thereby as of the dates and for the
periods indicated on a basis consistent with the audited financial
statements of the Company and (ii) in compliance in all material respects
with the requirements of the 1933 Act and the Rules and Regulations. The
Financial Statements are based upon and consistent with the financial
statements and other reports filed by the Company with the SEC, except for
inconsistencies attributable solely to differences between GAAP and
regulatory accounting principles.
(k) Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus and at any Closing Date,
except as is otherwise disclosed in the Registration Statement or
Prospectus, there has not been:
(i) any change in the capital stock or long-term debt (including
any capitalized lease obligation), or except in the ordinary course of
business increase in the short-term debt of the Company;
(ii) any issuance of options, warrants, convertible securities or
other rights to purchase the capital stock of the Company;
(iii) any material adverse change, or any development involving a
material adverse change, in or affecting the business, business
prospects, properties, assets, patents or patent applications
(including those of the Company and those relating to devices or
technologies licensed to the Company), management, financial position,
stockholders' equity, results of operations or general condition of
the Company;
(iv) any material transaction entered into by the Company;
(v) any material obligation, direct or contingent, incurred by
the Company, except obligations incurred in the ordinary course of
business that, in the aggregate, are not material; or
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(vi) any dividend or distribution of any kind declared, paid or
made on the Company's capital stock.
(l) Except as is otherwise disclosed in the Registration Statement or
Prospectus, the Company has good and marketable title to all of the
property, real and personal, described in the Registration Statement or
Prospectus as being owned by the Company, free and clear of all liens,
encumbrances, equities, charges or claims, except as do not materially
interfere with the uses made and to be made by the Company of such property
or as disclosed in the Financial Statements. Except as is otherwise
disclosed in the Registration Statement or Prospectus, the Company has
valid and binding leases to the real and personal property described in the
Registration Statement or Prospectus as being under lease to the Company,
except as to those leases which are not material to the Company or the lack
of enforceability of which would not materially interfere with the use made
and to be made by the Company of such leased property.
(m) The Company has filed all necessary federal and state income and
franchise tax returns and paid all taxes shown as due thereon. The Company
is not in default in the payment of any taxes and has no knowledge of any
tax deficiency which might be asserted against it which would materially
and adversely affect the Company's business or properties.
(n) No labor disturbance by the employees of the Company exists or, to
the best of the Company's knowledge, is imminent which could reasonably be
expected to have a material adverse effect on the conduct of the business,
operations, financial condition or income of the Company.
(o) Except as disclosed in the Prospectus:
(i) The Company owns or possesses the unrestricted rights to use
all patents, copyrights, trademarks, trade secrets and proprietary
rights or information necessary for the development, manufacture,
operation and sale of all products and services sold or proposed to be
sold by the Company and for the conduct of its present or intended
business as described in the Prospectus. There are no pending legal,
governmental or administrative proceedings relating to patents,
copyrights, trademarks or proprietary rights or information to which
the Company is a party or to which any property of the Company is
subject and no such proceedings are, to the best of the Company's
knowledge, threatened or contemplated against the Company by any
governmental agency or authority or others. The Company has not
received any notice of conflict with asserted rights of others. The
Company is not using any confidential information or trade secrets of
any third party without such party's consent.
(ii) The Company does not infringe upon the right or claimed
rights of any person under or with respect to any of the intangible
rights listed in the preceding subsection. The Company is not
obligated or under any liability whatsoever to make any payments by
way of royalties, fees or otherwise to any owner of, licensor of, or
other claimant to, any patent, trademark, trade name,
7
copyright or other intangible asset, with respect to the use thereof
or in connection with the conduct of its business or otherwise, except
as disclosed in the Registration Statement.
(p) The Company intends to apply the proceeds from the sale of the
Shares by it to the purposes and substantially in the manner set forth in
the Prospectus.
(q) The Company has no defined benefit pension plan or other pension
benefit plan, except for its 401(K) Plan which has no benefit obligations
and has not been funded, which is intended to comply with the provisions of
the Employee Retirement Income Security Act of 1974 as amended from time to
time, except as disclosed in the Registration Statement.
(r) To the best of the Company's knowledge, no person is entitled,
directly or indirectly, to compensation from the Company or the
Underwriters for services as a finder in connection with the transactions
contemplated by this Agreement.
(s) The conditions for use of a Registration Statement on Form SB-2
for the distribution of the Shares have been satisfied with respect to the
Company.
(t) The Company has not taken and will not take, directly or
indirectly, any action (and does not know of any action by its directors,
officers, stockholders, or others) which has constituted or is designed to,
or which might reasonably be expected to, cause or result in stabilization
or manipulation, as defined in the Securities Exchange Act of 1934, as
amended (the "1934 Act") or otherwise, of the price of any security of the
Company to facilitate the sale or resale of the Shares.
(u) The Company has not sold any securities in violation of Section
5(a) of the 1933 Act.
(v) The Company maintains insurance, which is in full force and
effect, of the types and in the amounts adequate for its business and in
line with the insurance maintained by similar companies and businesses.
(w) The Company hereby represents that it has complied and will comply
with all provisions of Florida Statutes Section 517.075 (Ch. 92-198 and
Rule 3EER92-1 of the Rules of the Florida Department of Banking and
Finance, Division of Securities) copies of which are attached hereto.
Neither the issuer, nor any affiliate thereof, does business with the
government of Cuba or with any person or affiliate located in Cuba.
(x) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorizations
and (ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP.
(y) All material transactions between the Company and its shareholders
who beneficially own more than 5% of any class of the Company's voting
securities have been accurately disclosed in the Prospectus, and the terms
of each such transaction are
8
fair to the Company and no less favorable to the Company than the terms
that could have been obtained from unrelated parties.
(z) The Company has obtained a written agreement from each of the
officers and directors of the Company and certain other shareholders of the
Company determined by the Underwriters that such person will not, without
the prior written consent of the Underwriters, during the 180-day period
commencing on the effective date of the Registration Statement (the "Lockup
Period) (i) sell, transfer or otherwise dispose of, or agree to sell,
transfer or otherwise dispose of any Securities of the Company beneficially
held by the officer or director during the Lockup Period, (ii) sell,
transfer or otherwise dispose of or agree to sell, transfer or otherwise
dispose of any options, rights, warrants or other securities exercisable or
convertible into Shares of Common Stock of the Company beneficially held by
the officer or director during the Lockup Period, or (iii) sell or grant,
or agree to sell or grant, options, rights, warrants or other securities
exercisable or convertible into any such Shares of Common Stock; provided,
however, that the foregoing does not prohibit gifts by donees who agree to
be bound by the restrictions set forth in the lockup agreement or transfers
by will or the laws of descent.
(aa) The Shares have been approved by Nasdaq for trading on its
National Market System following effectiveness of the Registration
Statement subject to official notice of issuance. The Company's shares of
Common Stock are traded on the NASDAQ Small Cap Market.
(bb) The Company has timely filed all documents and amendments to
previously filed documents required to be filed by it pursuant to the 1934
Act and the rules and regulations of the SEC thereunder. Each such document
conformed in all material respects with the requirements of the 1934 Act
and contained all information required to be stated therein in accordance
with the 1934 Act. No part of any such document contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading. True copies of each of the documents incorporated by reference,
if any, into each Preliminary Prospectus and the Prospectus have been
delivered by the Company to the Representative. To the best of the
Company's knowledge, the executive officers and directors of the Company
and stockholders who hold more than 5% of the Company's outstanding Common
Stock, have made, and are current with, all filings, if any, that are
required under the 1934 Act.
2. Purchase, Sale, Delivery and Payment.
(a) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth,
the Company agrees to issue and sell to the Underwriters, and the
Underwriters agree, severally and not jointly, to purchase from the
Company, the Firm Shares at $9.20 per Unit. The respective amount of Firm
Shares set forth such Underwriter's name in Schedule I hereto. The
obligation of the Underwriters will collectively purchase all of the Firm
Shares if any are purchased.
9
(b) On the basis of the representations and warranties herein
contained, but subject to the terms and conditions herein set forth, the
Company hereby grants an option to the Underwriters to purchase the Option
Shares (not to exceed an aggregate of fifteen percent (15%) of the total
number of Firm Shares) at the same purchase price as the Firm Shares for
use solely in covering any overallotments made by the Underwriters in the
sale and distribution of the Firm Shares. The option granted hereunder may
be exercised at any time (but not more than once) within forty-five (45)
days after the Effective Date (as defined in Section 4(a) hereof) upon
notice (confirmed in writing) by the Representative to the Company setting
forth the aggregate number of Option Shares as to which the Underwriters
are exercising the option and the date on which certificates for such
Option Shares are to be delivered. The option granted hereby may be
canceled by the Representative as to the Option Shares for which the option
is unexercised at any time prior to the expiration of the forty-five (45)
day period upon notice to the Company.
(c) The Company will deliver the Firm Shares to the Representative at
the offices of Maun & Simon, PLC, unless some other place is agreed upon,
at 10:00 A.M., Minneapolis time, against payment of the purchase price at
the same place, on the third full business day after trading the Shares has
commenced (but not more than the third (3rd) full business day after the
date the Registration Statement is declared effective), or such earlier
time as may be agreed upon between the Representative and the Company. Such
time and place is herein referred to as the "First Closing Date."
(d) The Company will deliver the Option Shares being purchased by the
Underwriters to the Representative at the offices of Maun & Simon, PLC, set
forth in Section 2(c) above, unless some other place is agreed upon, at
10:00 A.M., Minneapolis time, against payment of the purchase price at the
same place, on the date determined by the Representative and of which the
Company has received notice as provided in Section 2(b), which shall not be
earlier than two nor later than three (3) full business days after the
exercise of the option as set forth in Section 2(b), or at such other time
not later than ten (10) full business days thereafter as may be agreed upon
by the Representative and the Company, such time and date being herein
referred to as the "Second Closing Date." The First and Second Closing
Dates are collectively referred to herein as the "Closing Date."
(e) Certificates for the Shares to be delivered will be registered in
such names and issued in such denominations as the Underwriters shall
request of the Company at least two (2) full business days prior to the
First Closing Date or the Second Closing Date, as the case may be. The
certificates will be made available to the Underwriters in definitive form
for the purpose of inspection and packaging at least 24 hours prior to each
respective Closing Date.
(f) Payment for the Shares shall be made, against delivery to the
Representative or its designated agent, of certificates for the Shares by
wire transfer to a designated account of the Company.
(g) The Underwriters will make a public offering of the Shares
directly to the public (which may include selected dealers who are members
in good standing with the
10
NASD or foreign dealers not eligible for membership in the NASD but who
have agreed to abide by the interpretation of the NASD's Board of
Governor's with respect to free-riding and withholding) as soon as the
Underwriters deem practicable after the Registration Statement becomes
effective at the Price to Public set forth in the Prospectus, subject to
the terms and conditions of this Agreement and in accordance with the
Prospectus. Such concessions from the public offering price may be allowed
selected dealers of the NASD as the Underwriters determines, and the
Underwriters will furnish the Company with such information about the
distribution arrangements as may be necessary for inclusion in the
Registration Statement. It is understood that the public offering price and
concessions may vary after the initial public offering. The Underwriters
shall offer and sell the Shares only in jurisdictions in which the offering
of Shares has been duly registered or qualified, or is exempt from
registration or qualification, and shall take reasonable measures to effect
compliance with applicable state and local securities laws.
(h) It is understood that the Representative, individually and not as
a Representative, may (but shall not be obligated to) make payment on
behalf of any Underwriter or Underwriters for the Shares to be purchased by
such Underwriter or Underwriters. No such payment by the Representative
shall relieve such Underwriter or Underwriters from any of its or their
other obligations hereunder.
3. Further Agreements of the Company. The Company hereby covenants and
agrees with the Underwriters as follows:
(a) If the Registration Statement has not become effective prior to
the date hereof, the Company will use its best efforts to cause the
Registration Statement and any subsequent amendments thereto to become
effective as promptly as possible. The Company will notify the
Representative promptly, after the Company shall receive notice thereof, of
the time when the Registration Statement, or any subsequent amendment
thereto, has become effective or any supplement to the Prospectus has been
filed. Following the execution and delivery of this Agreement, the Company
will prepare, and timely file or transmit for filing with the SEC in
accordance with Rules 430A, 424(b) and 434, as applicable, copies of the
Prospectus, or, if necessary, a post-effective amendment to the
Registration Statement (including the Prospectus), in which event, the
Company will take all necessary action to have such post-effective
amendment declared effective as soon as possible. The Company will notify
the Representative promptly upon the Company's obtaining knowledge of the
issuance by the SEC of any stop order suspending the effectiveness of the
Registration Statement or of the initiation or threat of any proceedings
for that purpose and will use its best efforts to prevent the issuance of
any stop order and, if a stop order is issued, to obtain as soon as
possible the withdrawal or lifting thereof. The Company will promptly
prepare and file at its own expense with the SEC any amendments of, or
supplements to, the Registration Statement or the Prospectus which may be
necessary in connection with the distribution of the Shares by the
Underwriters. During the period when a Prospectus relating to the Shares is
required to be delivered under the 1933 Act, the Company will promptly file
any amendments of, or supplements to, the Registration Statement or the
Prospectus which may be necessary to correct any untrue statement of a
material fact or any omission to state any material
11
fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company will
notify the Representative promptly of the receipt of any comments from the
SEC regarding the Registration Statement or Prospectus or request by the
SEC for any amendment thereof or supplement thereto or for any additional
information. The Company will not file any amendment of, or supplement to,
the Registration Statement or Prospectus, whether prior to or after the
Effective Date, which shall not previously have been submitted to the
Representative and its counsel a reasonable time prior to the proposed
filing or to which the Representative shall have reasonably objected.
(b) The Company has used and will continue to use its best efforts to
register or qualify the Shares for sale under the securities laws of such
jurisdictions as the Representative may designate and the Company will file
such consents to service of process or other documents necessary or
appropriate in order to effect such registration or qualification. In each
jurisdiction in which the Shares shall have been registered or qualified as
above provided, the Company will continue such registrations or
qualifications in effect for so long as may be required for purposes of the
distribution of the Shares; provided, however, that in no event shall the
Company be obligated to qualify to do business as a foreign corporation in
any jurisdiction in which it is not now so qualified or to take any action
which would subject it to the service of process in suits, other than those
arising out of the offering or sale of the Shares in any jurisdiction where
it is not now so subject. In each jurisdiction where any of the Shares
shall have been so qualified, the Company will file such statements and
reports as are or may be reasonably required by the laws of such
jurisdiction to continue such qualification in effect. The Company will
notify the Representative immediately of, and confirm in writing, the
suspension of qualification of the Shares or the threat of such action in
any jurisdiction. The Company will use its best efforts to qualify or
register its securities for sale in nonissuer transactions under (or obtain
exemptions from the application of) the securities laws of such states
designated by the Representative (and thereby permit market-making
transactions and secondary trading in its securities in such states), and
will comply with such securities laws and will continue such
qualifications, registrations and exemptions in effect for a period of five
(5) years after the date hereof.
(c) The Company will furnish to the Representative, as soon as
available, copies of the Registration Statement (one of which will be
signed and which shall include all exhibits), each Preliminary Prospectus,
the Prospectus and any amendments or supplements to such documents,
including any prospectus prepared to permit compliance with Section
10(a)(3) of the 1933 Act, all in such quantities as the Representative may
from time to time reasonably request prior to the printing of each such
document. The Company specifically authorizes the Underwriters and all
dealers to whom any of the Shares may be sold by the Underwriters to use
and distribute copies of such Preliminary Prospectuses and Prospectuses in
connection with the sale of the Shares as and to the extent permitted by
the federal and applicable state and local securities laws.
(d) For as long as the Company has more than 100 beneficial owners,
but in no event more than five (5) years after the Effective Date, the
Company will mail as soon as practicable to the holders of its securities
substantially the following documents, which
12
documents shall be in compliance with this Section if they are in the form
prescribed by the 1934 Act:
(i) within sixty (60) days after the end of the first three
quarters of each fiscal year, copies of the quarterly unaudited
statement of profit and loss and quarterly unaudited balance sheets of
the Company and any material subsidiaries; and
(ii) within one hundred twenty (120) days after the close of each
fiscal year, appropriate financial statements as of the close of such
fiscal year for the Company and any material subsidiary which shall be
certified to by a nationally recognized firm of independent certified
public accountants in such form as to disclose the Company's financial
condition and the results of its operations for such fiscal year.
(e) For as long as the Company has more than 100 beneficial owners,
but in no event more than five (5) years after the Effective Date, the
Company will furnish to the Representative (i) concurrently with furnishing
such reports to its security holders, the reports described in Section 4(d)
hereof; (ii) as soon as they are available, copies of all other reports
(financial or otherwise) mailed to security holders; and (iii) as soon as
they are available, copies of all reports and financial statements
furnished to, or filed with, the SEC, the NASD, any securities exchange or
market or any state securities commission by the Company. During such
period, the foregoing financial statements shall be on a consolidated basis
to the extent that the accounts of the Company and any subsidiary or
subsidiaries are consolidated and shall be accompanied by similar financial
statements for any significant subsidiary which is not so consolidated.
(f) The Company will not, without the prior written consent of the
Representative, which consent shall not be unreasonably withheld, sell or
otherwise dispose of any capital stock or securities convertible or
exercisable into capital stock of the Company (other than pursuant to
existing option plans, director compensation plans or currently outstanding
options and warrants) during the 180-day period following the Effective
Date. So long as the Shares remain outstanding, the Company will not,
without the prior written consent of the Representative, which consent
shall not be unreasonably withheld, sell any capital stock ranking superior
to the Shares in liquidation priority. Prior to the Closing Date, the
Company will not repurchase or otherwise acquire any of its capital stock
or declare or pay any dividend not in the ordinary course of business or
make any other distribution on any class of its capital stock.
(g) Subject to the proviso set forth below, the Company shall be
responsible for and pay all costs and expenses incident to the performance
of the obligations of the Company under this Agreement including, without
limiting the generality of the foregoing, (i) all costs and expenses in
connection with the preparation, printing and filing of the Registration
Statement (including financial statements and exhibits), Preliminary
Prospectuses and the Prospectus and any amendments thereof or supplements
to any of the foregoing; (ii) the issuance and delivery of the Shares,
including taxes, if any; (iii) the cost of all certificates representing
the Shares; (iv) the fees and expenses of
13
the Transfer Agent for the Shares; (v) the fees and disbursements of
counsel for the Company; (vi) all fees and other charges of the independent
public accountants of the Company; (vii) the cost of furnishing and
delivering to the Underwriters and dealers participating in the offering
copies of the Registration Statement (including appropriate exhibits),
Preliminary Prospectuses, the Prospectus and any amendments of, or
supplements to, any of the foregoing; (viii) the NASD filing and quotation
fees; and (ix) the fees and disbursements, including filing fees and all
accountable fees and expenses of counsel for the Company incurred in
registering or qualifying the Shares for sale under the laws of such
jurisdictions upon which the Representative and the Company may agree; and
(x) the non-accountable expenses of the Representative in an amount equal
to 2.0% of the gross proceeds of the Offering. The Representative hereby
acknowledges receipt of a $50,000.00 advance from the Company against the
non-accountable expense allowance referred to in the preceding sentence. In
the event this Agreement is terminated by the Representative pursuant to
Section 8 or for any reason beyond the Representative's control or through
no fault of the Representative or by the Company, the Company shall be
obligated to pay, to the Underwriter the greater of the $50,000.00 deposit
paid at the time of the execution of the letter of intent or all of its
actual accountable out-of-pocket expenses, including fees of its counsel,
not to exceed ______. In the event this Agreement is terminated by the
Company or the Underwriter for any reason within its control, including but
not limited to, an opinion of the NASD regarding the compensation
arrangement of the Underwriter, the Company shall be obligated to pay the
Underwriter only the $50,000.00 deposit paid at the time of the execution
of the letter of intent.
(h) The Company will not take, and will use its best efforts to cause
each of its officers and directors not to take, directly or indirectly, any
action designed to or which might reasonably be expected to cause or result
in the stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares.
(i) The Company will maintain the quotation of its Common Stock on the
Nasdaq SmallCap MarketSM and obtain and maintain the quotation of the
Shares on the NASDAQ National Market System.
(j) For a period of at least three (3) years after the Effective Date,
the Company will continue to file with the SEC all reports and other
documents as may be required by the 1933 Act, the Rules and Regulations and
the 1934 Act.
(k) The Company will apply the proceeds from the sale of the Shares
substantially in the manner set forth in the Prospectus.
(l) Prior to or as of the First Closing Date, the Company shall have
performed each condition to closing required to be performed by it pursuant
to Section 4 hereof.
(m) Other than as permitted by the 1933 Act and the Rules and
Regulations, the Company will not distribute any prospectus or other
offering material in connection with the Offering.
14
(n) The Company will, for a period of two (2) years after the
Effective Date, furnish directly to you, quarterly profit and loss
statements, reports of the Company's cash flow, and statements of
application of the proceeds of the offering contained in reports or
statements filed by the Company with the Commission.
(o) The Company will make generally available to its security holders
as soon as practicable, but in any event not later than eighteen (18)
months after the effective date of the Registration Statement, a statement
of earnings of the Company (which need not be audited) complying with
Section 11(a) of the 1933 Act and the Rules and Regulations of the
Commission thereunder (including at the option of the Company Rule 158).
(p) The Company authorizes the Underwriters and all dealers to whom
any of the Shares may be sold by the Underwriters in connection with the
distribution of the Shares to use the Prospectus as from time to time
amended or supplemented in connection with the offering and sale of the
Shares and in accordance with the applicable provisions of the Act and the
applicable Rules and Regulations and applicable state Blue Sky or
securities laws.
(q) The Company shall not request an Effective Date nor allow the
Registration Statement to be declared effective without the prior approval
of the Representative.
(r) Within the time during which the Prospectus is required to be
delivered under the Act, the Company will comply, at its own expense, with
all requirements imposed upon it by the 1933 Act, by the Rules and
Regulations, by the Exchange Act, and by any order of the Commission, so
far as necessary to permit the continuance of sales or dealing in the
Shares.
(s) The Company will reserve and keep available that maximum number of
its authorized but unissued shares of Common Stock which are issuable upon
conversion of the Shares or the Underwriter's Warrant during the term of
the Shares and the Underwriter's Warrant.
(t) Prior to the Closing Date, no discussions will be held by
officers, directors or any other affiliate or associate of the Company with
any member of the news media and no news release or other publicity about
the Company will be permitted without prior approval of the Company's and
the Representative's respective legal counsel.
(u) The Company shall have obtained a CUSIP number for the Shares (and
its components) prior to the effective date of the Registration Statement
under the Act.
(v) The Company shall supply to the Representative and its legal
counsel, at the Company's cost, one complete bound volume of all of the
documents relating to the public offering, within a reasonable time after
the Closing Date, not to exceed four (4) months. The volume shall be hard
cover bound in book format
(w) The Company will apply the proceeds from the sale of the Shares by
it to the purposes and in the manner set forth in the Registration
Statement and, pending such
15
application, shall invest such net proceeds only in one or more of the
following, except as otherwise provided by prior written consent of the
Underwriter: (i) interest-bearing obligations issued by the United States
Government or issued by an agency or instrumentality of the United States
Government and guaranteed by the United States Government and having a
maturity not in excess of one year, (ii) interest-bearing domestic
commercial paper having a maturity of not more than three hundred
sixty-five (365) days and, at the time of purchase by the Company, rated
investment grade by ▇▇▇▇▇'▇ Investors Service, Inc. or Standard & Poor's
Corporation, (iii) interest-bearing certificates of deposit issued by a
commercial bank chartered by the United States Government or by any state
of the United States having shareholders' equity of at least $500,000,000
except that the foregoing notwithstanding, the Company may invest no more
than $100,000 of such net proceeds in certificates of deposit issued by any
such commercial bank regardless of shareholders' equity, and (iv) shares or
other Shares of interest in a registered open-ended investment company the
assets of which aggregate at leas $200,000,000 and are invested solely in
so-called "money market" obligations.
4. Conditions of the Underwriters' Obligations. The respective obligation
of the several Underwriters to purchase and pay for the Shares as provided
herein shall be subject to the accuracy of the representations and warranties of
the Company, in the case of the Firm Shares as of the date hereof and the First
Closing Date (as if made on and as of the First Closing Date) and in the case of
the Option Shares, as of the date hereof and the Second Closing Date (as if made
on and as of the Second Closing Date), to the performance by the Company of its
obligations hereunder, and to the satisfaction of the following additional
conditions on or before the First Closing Date in the case of the Firm Shares
and on or before the Second Closing Date in the case of the Option Shares:
(a) The Registration Statement shall have become effective not later
than 5:00 P.M. Minneapolis time, on the first full business day following
the date of this Agreement, or such later date as shall be consented to in
writing by the Representative (the "Effective Date"). If the Company has
elected to rely upon Rule 430A, the information concerning the price of the
Shares and price-related information previously omitted from the effective
Registration Statement pursuant to Rule 430A shall have been transmitted to
the SEC for filing pursuant to Rule 424(b) within the prescribed time
period, and prior to the Closing Date the Company shall have provided
evidence satisfactory to the Representative of such timely filing (or a
post-effective amendment providing such information shall have been
promptly filed and declared effective in accordance with the 1933 Act and
the Rules and Regulations). No stop order suspending the effectiveness
thereof shall have been issued and no proceeding for that purpose shall
have been initiated or, to the knowledge of the Company or the
Representative, threatened by the SEC or any state securities commission or
similar regulatory body. Any request of the SEC for additional information
(to be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to the satisfaction of the
Underwriters and their legal counsel. The NASD, upon review of the terms of
the Offering, shall not have objected to the terms of the Underwriters'
participation in the Offering.
16
(b) The Representative shall not have advised the Company that the
Registration Statement or Prospectus, or any amendment thereof or
supplement thereto, contains any untrue statement of a fact which is
material or omits to state a fact which is material and is required to be
stated therein or is necessary to make the statements contained therein, in
light of the circumstances under which they were made, not misleading;
provided, however, that this Section 4(b) shall not apply to statements in,
or omissions from, the Registration Statement or Prospectus, or any
amendment thereof or supplement thereto, which are based upon and conform
to written information furnished to the Company by any of the Underwriters
specifically for use in the preparation of the Registration Statement or
the Prospectus, or any such amendment or supplement.
(c) Subsequent to the date as of which information is given the
Registration Statement and Prospectus, there shall not have occurred any
change, or any development involving a prospective change, which materially
and adversely affects the business or properties of the Company and which,
in the reasonable opinion of the Representative, materially and adversely
affects the market for the Shares.
(d) The Representative shall have received the opinion of ▇▇▇▇▇ &
▇▇▇▇▇▇▇, counsel for the Company, dated as of such respective Closing Date
and satisfactory in form and substance to the Representative and its
counsel, to the effect that:
(i) The Company and each of its subsidiaries has been duly
organized and is validly existing in good standing under the laws of
the State of organization with the requisite power to own, lease and
operate their properties and conduct their business as described in
the Prospectus; and are duly qualified to do business in good standing
in all jurisdictions where the ownership or leasing of its properties
or the conduct of their business requires such qualification and in
which the failure to be so qualified or in good standing would have a
material adverse effect on its business and the activities of the
Company or the respective subsidiary.
(ii) The number of authorized and, to the best of such counsel's
knowledge, the number of issued and outstanding shares of capital
stock of the Company are as set forth in the Prospectus, and all such
capital stock has been duly authorized and is validly issued, fully
paid and nonassessable. Upon delivery of and payment for the Shares
hereunder, the Underwriters will acquire the Shares free and clear of
all liens, encumbrances or claims. To the best knowledge of such
counsel's knowledge, no preemptive rights, contractual or otherwise,
of securities holders of the Company or others exist with respect to
the issuance or sale of the Shares by the Company pursuant to this
Agreement or to the issuance of Warrant Shares upon exercise of the
Underwriters' Warrants. To the best of such counsel's knowledge, no
rights to require registration of Shares of Common Stock or other
securities of the Company exist which may be exercised in connection
with the filing of the Registration Statement. The Shares,
Underwriters' Warrants and Warrant Shares conform as to matters of law
in all material respects to the description of these securities made
in the Prospectus and
17
such description accurately sets forth the material legal provisions
thereof required to be set forth in the Prospectus.
(iii) The shares of Common Stock issuable upon conversion of the
Shares have been duly authorized and reserved for issuance and when
issued, sold and delivered in accordance with the terms of the Shares,
will be validly issued, fully paid and nonassessable. The issuance,
sale and delivery of the Underwriter's Warrant has been duly
authorized and the Warrant Shares issuable upon the exercise thereof
have been reserved for issuance upon such exercise. The Warrant
Shares, when issued, sold and delivered in accordance with the terms
of the Underwriter's Warrant, will be validly issued, fully paid and
nonassessable. No preemptive rights of, or rights of refusal in favor
of, shareholders of the Company exist with respect to the Shares (or
any component thereof), the Underwriter's Warrant or the Warrant
Shares, or the issue and sale thereof, pursuant to the Company's
Declaration of Trust or Bylaws.
(iv) The authorized securities of the Company conform as to legal
matters in all material respects to the description thereof set forth
in the Prospectus under the caption "Description of Securities." The
certificates representing the Shares are in proper form under the
Maryland Trust Statute.
(v) The Registration Statement and the Prospectus comply as to
form in all material respects with the requirements of the 1933 Act
and with the Rules and Regulations, except the financial statements,
the notes thereto and the related schedules and other financial and
statistical data contained therein, as to which such counsel need not
express an opinion.
(vi) Counsel knows of no contracts, leases or documents that are
required to be described in the Prospectus or to be filed as exhibits
to the Registration Statement that are not so described or filed.
(vii) The Underwriting Agreement, the underlying common stock and
the Underwriter's Warrant have been duly authorized by all requisite
corporate action, executed and delivered by the Company and constitute
the valid and binding obligations of the Company enforceable in
accordance with their respective terms.
(viii) The execution and delivery of the Underwriting Agreement
and the issue and sale of the Underwriter's Warrant, the Shares and
the Warrant Shares will not violate or conflict with the
organizational documents or the Bylaws of the Company or any material
provision of any material contract or instrument to which the Company
is a party or by which the Company is bound, or any law of the United
States or the State of Maryland, any rule or regulation of any
governmental authority or regulatory body of the United States or the
State of Maryland, or any judgment, order or decree known by such
counsel and applicable to the Company of any court or governmental
authority.
18
(ix) No holders of capital stock of the Company, or securities
convertible into capital stock of the Company, have the right to cause
the Company to include such holder's capital stock in the Registration
Statement pursuant to the Company's organizational documents or Bylaws
or any contract or agreement.
(x) No consent, approval, authorization or order of, and no
notice to or filing with, any governmental agency or body or any court
is required to be obtained or made by the Company for the issue and
sale of the Shares pursuant to the Underwriting Agreement, except such
as may be required and obtained under the 1933 Act or under state or
other securities laws in connection with the purchase and distribution
of the Shares by the Underwriter.
(xi) The Underwriter's Warrants has been duly authorized,
executed and delivered by the Company and are the valid and binding
obligations of the Company, enforceable in accordance with their
terms, except as enforceability may be limited by the application of
bankruptcy, insolvency, moratorium, or other laws of general
application affecting the rights of creditors generally and by
judicial limitations on the right of specific performance and other
equitable remedies, and except as the enforceability of
indemnification or contribution provisions hereof may be limited by
federal or state securities laws. The Warrant Shares when issued in
accordance with the terms of this and the Underwriter's Warrants will
be validly issued, fully paid and nonassessable. A sufficient number
of shares of Common Stock has been reserved for issuance upon exercise
of the Underwriter's Warrants.
(xii) The Registration Statement has become and is effective
under the 1933 Act, the Prospectus has been filed as required by Rule
424(b), if necessary and, to the best knowledge of such counsel, no
stop orders suspending the effectiveness of the Registration Statement
have been issued and no proceedings for that purpose have been
instituted or are pending or contemplated under the 1933 Act. The
registration of the Company's securities on Form 8-A has become
effective under the Securities Exchange Act of 1934, as amended, and
no stop order suspending the effectiveness of such registration, and,
to such counsel's knowledge, no proceedings for that purpose have been
instituted or are pending by the Commission.
(xiii) To the best of such counsel's knowledge, there are no
material legal or governmental proceedings of a character required by
the 1933 Act and the Rules and Regulations to be described or referred
to in the Registration Statement or Prospectus that are not described
or referred to therein. All pending legal or governmental proceedings,
if any, to which the Company is a party or to which any of its
property is subject which are not described in the Registration
Statement and the Prospectus, including ordinary routine litigation
incidental to the business, are, considered in the aggregate, not
material to the Company.
19
(xiv) To the best of such counsel's knowledge, there are no
material legal or governmental proceedings of a character required by
the 1933 Act and the Rules and Regulations to be described or referred
to in the Registration Statement or Prospectus that are not described
or referred to therein. All pending legal or governmental proceedings,
if any, to which the Company is a party or to which any of its
property is subject which are not described in the Registration
Statement and the Prospectus, including ordinary routine litigation
incidental to the business, are, considered in the aggregate, not
material to the Company.
(xv) The Registration Statement, when it became effective, the
Prospectus and any amendments thereof or supplements thereto, (other
than the financial statements and supporting financial and statistical
data included or incorporated therein, as to which such counsel need
express no opinion) on the date of filing or the date thereof,
complied as to form in all material respects with the requirements of
the 1933 Act and the Rules and Regulations.
(xvi) This Agreement has been duly authorized, executed and
delivered by, and is a valid and binding agreement of the Company,
enforceable in accordance with its terms, except as enforceability may
be limited by the application of bankruptcy, insolvency, moratorium or
similar laws affecting the rights of creditors generally and judicial
limitations on the right of specific performance and except as the
enforceability of indemnification or contribution provisions hereof
may be limited by federal or state securities laws.
(xvii) To the best of such counsel's knowledge, the execution,
delivery and performance of this Agreement and the consummation of the
transactions described herein will not result in a violation of, or a
default under, the terms or provisions of (A) any material bond,
debenture, note, contract, lease, license, indenture, mortgage, deed
of trust, loan agreement, joint venture or other agreement or
instrument to which the Company is a party or by which the Company or
any of its properties are bound, or (B) any material law, order, rule,
regulation, writ, injunction, or decree known to such counsel of any
government, governmental agency or court having jurisdiction over the
Company or any of its properties.
In expressing the foregoing opinion, as to matters of fact relevant to
conclusions of law, counsel may rely, to the extent that they deem proper, upon
certificates of public officials and of the officers of the Company, provided
that copies of such officers' certificates are attached to the opinion.
In addition to the matters set forth above, such opinion shall also include
a statement to the effect that, although such counsel cannot guarantee the
accuracy, completeness or fairness of any of the statements contained in the
Registration Statement, Prospectus, or any amendment thereof or supplement
thereto in connection with such counsel's representation, investigation and due
inquiry of the Company in the preparation of the Registration Statement,
Prospectus and any amendment thereof or supplement thereto, nothing has come to
the attention of such counsel which causes them to believe that the Registration
Statement, Prospectus and any amendment thereof or supplement
20
thereto (other than the financial statements and supporting financial and
statistical data included or incorporated therein, as to which such counsel need
express no opinion) contains an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading; provided, however, that such opinion of counsel does not require any
statement concerning statements in, or omissions from, the Registration
Statement, Prospectus, or any amendment thereof or supplement thereto, which are
based upon and conform to written information furnished to the Company by any of
the Underwriters specifically for use in the preparation of the Registration
Statement, Prospectus, or any such amendment or supplement.
(e) The Representative shall have received from Maun & Simon, PLC, its
counsel, such opinion or opinions as the Underwriters may reasonably
require, dated as of each closing date and satisfactory in form and
substance to the Representative, with respect to the sufficiency of
corporate proceedings and other legal matters relating to this Agreement
and the transactions contemplated hereby, and the Company shall have
furnished to said counsel such documents as they may have requested for the
purpose of enabling them to pass upon such matters. In connection with such
opinion, as to matters of fact relevant to conclusions of law, such counsel
may rely, to the extent that they deem proper, upon representations or
certificates of public officials and of responsible officers of the
Company.
(f) The Representative and the Company shall have received letters,
dated the date hereof and as of each closing date, from ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
independent public accountants, substantially similar to the form set forth
in the Appendix A hereto.
(g) The Representative shall have received from the Company a
certificate, dated as of each closing date, of the principal executive
officer and the principal financial or accounting officer of the Company to
the effect that:
(i) The representations and warranties of the Company in this
Agreement are true and correct as if made on and as of each closing
date. The Company has complied with all the agreements and satisfied
all the conditions on its part to be performed or satisfied at, or
prior to, such date.
(ii) Neither the Registration Statement nor the Prospectus nor
any amendment thereof or supplement thereto included any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading, and, since the effective date of the Registration
Statement, there has occurred no event required to be set forth in an
amended or supplemented prospectus which has not been so set forth;
provided, however, that such certificate does not require any
representation concerning statements in, or omissions from, the
Registration Statement or Prospectus, or any amendment thereof or
supplement thereto, which are based upon and conform to written
information, as identified in Section 12 herein, furnished to the
Company by any
21
of the Underwriters specifically for use in the preparation of the
Registration Statement or the Prospectus, or any such amendment or
supplement.
(iii) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, and except
as contemplated or referred to in the Prospectus, no event has
occurred that should have been set forth in an amendment or supplement
to Registration Statement or the Prospectus which has not been so set
forth and the Company has not incurred any direct or contingent
liabilities or obligations material to the Company, or entered into
any material transactions, except liabilities, obligations or
transactions in the ordinary course of business, and there has not
been any change in the capital stock or long-term debt of the Company,
(including any capitalized lease obligations), any material increase
in the short-term debt of the Company, any material adverse change in
the financial position, net worth or results of operations of the
Company or declaration or payment of any dividend.
(iv) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, the Company
has not sustained any material loss of, or damage to, its properties,
whether or not insured.
(v) There are no material actions, suits or proceedings pending
before any court or governmental agency, authority or body, or, to the
best of their knowledge, threatened, to which the Company is a party
or of which the business or property of the Company is the subject.
(h) The Representative shall have received, dated as of each closing
date, from the Secretary of the Company a certificate of incumbency
certifying the names, titles and signatures of the officers authorized to
execute the resolutions of the Board of Trustees of the Company authorizing
and approving the execution, delivery and performance of this Agreement, a
copy of such resolutions to be attached to such certificate, certifying
that such resolutions and the organizational documents of the Company and
the Bylaws of the Company have been validly adopted and have not been
amended or modified.
(i) In addition, at each closing, the Company shall have delivered to
the Underwriters an opinion, satisfactory to the Underwriters, of either
▇▇▇▇▇ & ▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, dated as such respective Closing Date,
and satisfactory in form and substance to the Representative and its
counsel, to the effect that under the existing federal income tax laws and
regulations, assuming the Company acts as described in the "Federal Income
Tax Considerations" section of the Prospectus and the Company timely filed
the requisite elections, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ is of the
opinion that the Company has been organized in conformity with the
requirements for qualification as a REIT beginning with its taxable year
ending December 31, 1996, and its method of operation (as described in the
Prospectus and represented by management) will enable it to satisfy the
REIT Requirements (as defined in the Prospectus).
In expressing the foregoing opinion, as to matters of fact relevant to
conclusions of law, counsel may rely, to the extent that they deem proper,
upon certificates of public
22
officials and of the officers of the Company, provided that copies of such
officers' certificates are attached to the opinion.
In addition to the matters set forth above, such opinion shall also
include a statement to the effect that, although such counsel cannot
guarantee the accuracy, completeness or fairness of any of the statements
regarding intellectual property matters contained in the Registration
Statement, Prospectus, or any amendment thereof or supplement thereto in
connection with such counsel's representation of the Company in connection
with intellectual property matters and in preparation of the intellectual
property portions of the Registration Statement, Prospectus, or any
amendment thereof or supplement thereto, nothing has come to the attention
of such counsel which causes them to believe that the Intellectual property
portions of the Registration Statement, Prospectus, or any amendment
thereof or supplement thereto (other than the financial statements and
supporting financial and statistical data included or incorporated therein,
as to which such counsel need express no opinion) contains an untrue
statement of a material fact or omits to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading; provided,
however, that such opinion of counsel does not require any statement
concerning statements in, or omissions from, the Registration Statement,
Prospectus, or any amendment thereof or supplement thereto, which are based
upon and conform to written information furnished to the Company by the
Underwriters specifically for use in the preparation of the Registration
Statement, Prospectus, or any such amendment or supplement.
(j) The Representative shall have received a written agreement from
each of the officers and directors of the Company and certain other
shareholders of the Company determined by the Representative that such
person will not, without the prior written consent of the Representative
during the Lockup Period (i) sell, transfer or otherwise dispose of, or
agree to sell, transfer or otherwise dispose of any Shares of Common Stock
of the Company beneficially held by such person during the Lockup Period,
(ii) sell, transfer or otherwise dispose of or agree to sell, transfer or
otherwise dispose of any options, rights, warrants or other securities
exercisable or convertible into Shares of Common Stock of the Company
beneficially held by the officer or director during the Lockup Period, or
(iii) sell or grant, or agree to sell or grant, options, rights, warrants
or other securities exercisable or convertible into to any such Shares of
Common Stock; provided, however, that the foregoing does not prohibit gifts
to donees who agree to be bound by the restrictions set forth in the lockup
agreement or transfers by will or the laws of descent, and the Underwriters
will not unreasonably withhold consent to a sale of Shares of Common Stock
if necessary to pay federal or state taxes.
(k) The Company shall not have failed to have performed any of its
agreements herein contained and required to be performed at or prior to the
First Closing Date or the Second Closing Date, as the case may be.
(l) The Shares shall have been registered or qualified for sale or
exempt from such registration or qualification under the securities laws of
such jurisdictions as designated by the Underwriters such qualifications or
exemptions shall continue in effect to and including the First Closing Date
or the Second Closing Date, as the case may be.
23
(m) The Company shall have furnished to the Underwriters, dated as of
the date of the Closing Date, such further certificates and documents as
the Underwriters shall have reasonably required.
(n) All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably
satisfactory to the Underwriters and its legal counsel. All statements
contained in any certificate, letter, or other document delivered pursuant
hereto by, or on behalf of, the Company shall be deemed to constitute
representations and warranties of the Company.
(o) The Underwriters may waive in writing the performance of any one
or more of the conditions specified in this Section 4 or extend the time
for their performance.
(p) If any of the conditions specified in this Section 4 shall not
have been fulfilled when and as required by this Agreement to be fulfilled,
this Agreement and all obligations of the Underwriters hereunder may be
canceled at, or at any time prior to, each Closing Date by the
Representative. Any such cancellation shall be without liability of the
Underwriters to the Company and shall not relieve the Company of its
obligations under Section 3(g) hereof. Notice of such cancellation shall be
given to the Company at the address specified in Section 11 hereof in
writing, or by telegraph or telephone confirmed in writing.
5. Underwriters' Warrants. On the First Closing Date, the Company shall
sell and deliver to the Representative for $50 the Underwriters' Warrants, which
shall first become exercisable one year after the Effective Date and shall
remain exercisable for a period of four (4) years thereafter. The Underwriters'
Warrants shall be subject to certain transfer restrictions and shall be in
substantially the form filed as an exhibit to the Registration Statement and
attached as Appendix B hereto.
6. Indemnification.
(a) The Company hereby agrees to indemnify and hold harmless the
Underwriters and each person, if any, who controls the Underwriters within
the meaning of Section 15 of the 1933 Act against any losses, claims,
damages or liabilities, joint or several, to which the Underwriters or each
such controlling person may become subject, under the 1933 Act, the 1934
Act, the common law or otherwise, insofar as such losses, claims, damages
or liabilities (or judicial or governmental actions or proceedings in
respect thereof) arise out of, or are based upon, (i) any untrue statement
or alleged untrue statement of a material fact contained in the
Registration Statement or any amendment thereof, or the omission or alleged
omission to state in the Registration Statement or any amendment thereof a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; (ii) any untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Prospectus if used prior to
the Effective Date of the Registration Statement or in the Prospectus (as
amended or as supplemented, if the Company shall have filed with the SEC
any amendment thereof or supplement thereto),
24
or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; or (iii) any untrue statement or alleged untrue statement of a
material fact contained in any application or other statement executed by
the Company or based upon written information furnished by the Company
filed in any jurisdiction in order to qualify the Shares under, or exempt
the Shares or the sale thereof from qualification under, the securities
laws of such jurisdiction, or the omission or alleged omission to state in
such application or statement a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; and the Company will reimburse
the Underwriters, and each such controlling person for any legal or other
expenses reasonably incurred by the Underwriters, or controlling person
(subject to the limitation set forth in Section 6(c) hereof) in connection
with investigating or defending against any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable
in any such case to the extent that any such loss, claim, damage or
liability arises out of, or is based upon, an untrue statement, or alleged
untrue statement, omission or alleged omission, made in reliance upon and
in conformity with written information furnished to the Company by, or on
behalf of, the Underwriters specifically for use in the preparation of the
Registration Statement or any such post-effective amendment thereof, any
such Preliminary Prospectus or the Prospectus or any such amendment thereof
or supplement thereto, or in any application or other statement executed by
the Company or the Underwriters filed in any jurisdiction in order to
qualify the Shares under, or exempt the Shares or the sale thereof from
qualification under, the securities laws of such jurisdiction; and provided
further that the foregoing indemnity agreement is subject to the condition
that, insofar as it relates to any untrue statement, alleged untrue
statement, omission or alleged omission made in any Preliminary Prospectus
but eliminated or remedied in the Prospectus, such indemnity agreement
shall not inure to the benefit of the Underwriters if the person asserting
any loss, claim, damage or liability purchased the Shares from the
Underwriters which are the subject thereof (or to the benefit of any person
who controls the Underwriters), if a copy of the Prospectus was not sent or
given to such person with, or prior to, the written confirmation of the
sale of such Shares to such person. This indemnity agreement is in addition
to any liability which the Company may otherwise have.
(b) The Underwriters severally, but not jointly, agrees to indemnify
and hold harmless the Company, each of the Company's directors, each of the
Company's officers who has signed the Registration Statement and each
person who controls the Company within the meaning of Section 15 of the
1933 Act against any losses, claims, damages or liabilities to which the
Company or any such director, officer, or controlling person may become
subject, under the 1933 Act, the 1934 Act, the common law, or otherwise,
insofar as such losses, claims, damages, or liabilities (or judicial or
governmental actions or proceedings in respect thereof) arise out of, or
are based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment
thereof, or the omission or alleged omission to state in the Registration
Statement or any amendment thereof, a material fact required to be stated
therein or necessary to make the statements therein not misleading; (ii)
any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus if
25
used prior to the Effective Date of the Registration Statement or in the
Prospectus (as amended or as supplemented, if the Company shall have filed
with the SEC any amendment thereof or supplement thereto), or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading; or (iii) any
untrue statement or alleged untrue statement of a material fact contained
in any application or other statement executed by the Company or by the
Underwriters and filed in any jurisdiction in order to qualify the Shares
under, or exempt the Shares or the sale thereof from qualification under,
the securities laws of such jurisdiction, or the omission or alleged
omission to state in such application or statement a material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading; in each
case to the extent, but only the extent, that such untrue statement,
alleged untrue statement, omission or alleged omission, was made in
reliance upon and in conformity with written information furnished to the
Company by, or on behalf of, the Underwriters specifically for use in the
preparation of the Registration Statement or any such post effective
amendment thereof, any such Preliminary Prospectus or the Prospectus or any
such amendment thereof or supplement thereto, or in any application or
other statement executed by the Company or by the Underwriters and filed in
any jurisdiction; and the Underwriters will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer
or controlling person in connection with investigating or defending against
any such loss, claim, damage, liability or action. This indemnity agreement
is in addition to any liability which the Underwriters may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
7 of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against any indemnifying party
under this Section 7, notify in writing the indemnifying party of the
commencement thereof. The omission so to notify the indemnifying party will
not relieve it from any liability under this Section 7 as to the particular
item for which indemnification is then being sought, unless such omission
so to notify prejudices the indemnifying party's ability to defend such
action. In case any such action is brought against any indemnified party
and the indemnified party notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
with counsel who shall be reasonably satisfactory to such indemnified
party; and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying
party will not be liable to such indemnified party under this Section 7 for
any legal or other expenses subsequently incurred by such indemnified party
in connection with the defense thereof other than reasonable costs of
investigation; provided, however, that if, in the reasonable judgment of
the indemnified party, it is advisable for such parties and controlling
persons to be represented by separate counsel, any indemnified party shall
have the right to employ separate counsel to represent it and all other
parties and their controlling persons who may be subject to liability
arising out of any claim in respect of which indemnity may be sought by the
Underwriters against the Company or by the Company against the Underwriters
hereunder, in which event the fees and expenses of such separate counsel
shall
26
be borne by the indemnifying party and paid as incurred. Any such
indemnifying party shall not be liable to any such indemnified party on
account of any settlement of any claim or action effected without the prior
written consent of such indemnifying party.
7. Contribution.
(a) If the indemnification provided for in Section 7 is unavailable
under applicable law to any indemnified party in respect of any losses,
claims, damages or liabilities referred to therein, then each indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to
the amount paid or payable by such indemnified party as a result of such
losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and
the Underwriters 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 (i) above but also the relative fault of the Company
and the Underwriters in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The Company and the Underwriters
agree that contribution determined by per capita allocation would not be
equitable. The respective relative benefits received by the Company, on the
one hand, and the Underwriters, on the other hand, shall be deemed to be in
the same proportion (A) in the case of the Company, as the total price paid
to the Company for the Shares by the Underwriters (net of underwriting
discount received but before deducting expenses) bears to the aggregate
public offering price of the Shares, (B) in the case of the Underwriters,
as the aggregate underwriting discount received by them bears to the
aggregate public offering price of the Shares, in each case as reflected in
the Prospectus. The relative fault of the Company and the Underwriters
shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company or by the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement
or omission. The amount paid or payable by a party as a result of the
losses, claims, damages and liabilities referred to above shall be deemed
to include any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim.
Notwithstanding the provisions of this Section 8, the Underwriters shall
not be required to contribute any amount in excess of the amount by which
the total price at which the Shares underwritten by it were offered to the
public exceeds the amount of any damages which the Underwriters has
otherwise been required to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission in the Registration Statement,
any Preliminary Prospectus, the Prospectus or any amendment or supplement
thereto. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 8, each person who controls the Underwriters
within the meaning of the 1933 Act or the 1934 Act shall have the same
rights to contribution as the Underwriters, each person who controls the
Company within the meaning of the 1933 Act or the 1934 Act shall have the
same rights to contribution as the Company and each
27
officer of the Company who shall have signed the Registration Statement and
each director of the Company shall have the same rights to contribution as
the Company.
(b) Promptly after receipt by a party to this Agreement of notice of
the commencement of any action, suit or proceeding, such person will, if a
claim for contribution in respect thereof is to be made against another
party (the "Contributing Party"), notify the Contributing Party of the
commencement thereof, but the omission so to notify the Contributing Party
will not relieve the Contributing Party from any liability which it may
have to any party other than under this Section 8, unless such omission so
to notify prejudices the Contributing Party's ability to defend such
action. Any notice given pursuant to Section 7 hereof shall be deemed to be
like notice hereunder. In case any such action, suit or proceeding is
brought against any party, and such person notifies a Contributing Party of
the commencement thereof, the Contributing Party will be entitled to
participate therein with the notifying party and any other Contributing
Party similarly notified.
8. Effective Date of This Agreement and Termination.
(a) This Agreement shall become effective when the Underwriters
releases the initial public offering of the Firm Shares for sale to the
public. The Underwriters shall notify the Company immediately after any
action has been taken which causes this Agreement to become effective.
Until this Agreement is effective, it may be terminated by the Company or
the Underwriters by giving notice as hereinafter provided, except that the
provisions of Section 3(g) and Sections 6, 7 and 9 shall at all times be
effective. For purposes of this Agreement, the release of the initial
public offering of the Firm Shares for sale to the public shall be deemed
to have been made when the Underwriters releases, by facsimile or
otherwise, firm offers of the Firm Shares to securities dealers or release
for publication a newspaper advertisement relating to the Firm Shares,
whichever occurs first.
(b) Until the First Closing Date, this Agreement may be terminated by
the Underwriters, at its option, by giving notice to the Company, if (i)
the Company shall have sustained a loss by fire, flood, accident or other
calamity which is material with respect to the business of the Company; the
Company shall have become a party to material litigation, not disclosed in
the Registration Statement or the Prospectus; or the business or financial
condition of the Company shall have become the subject of any material
litigation, not disclosed in the Registration Statement or the Prospectus;
or there shall have been, since the respective dates as of which
information is given in the Registration Statement or the Prospectus, any
material adverse change in the general affairs, business, key personnel,
capitalization, financial position or net worth of the Company, whether or
not arising in the ordinary course of business, which loss or change, in
the reasonable judgment of the Underwriters, shall render it inadvisable to
proceed with the delivery of the Shares, whether or not such loss shall
have been insured; (ii) trading in securities generally on the New York
Stock Exchange, American Stock Exchange, Nasdaq National Market, Nasdaq
SmallCap Market or the over-the-counter market shall have been suspended or
minimum prices shall have been established on such exchange by the SEC or
by such exchanges or markets; (iii) a general banking moratorium shall have
been declared by federal, New York or Minnesota authorities; (iv)
28
there shall have been such a material adverse change in general economic,
monetary, political or financial conditions, or the effect of international
conditions on the financial markets in the United States shall be such
that, in the judgment of the Underwriters, makes it inadvisable to proceed
with the delivery of the Shares; (v) the enactment, publication, decree or
other promulgation of any federal or state statute, regulation, rule or
order of either of any court or other governmental authority which, in the
judgment of the Underwriters, materially and adversely affects or will
materially and adversely affect the business or operations of the Company;
(vi) there shall be a material outbreak of hostilities or material
escalation and deterioration in the political and military situation
between the United States and any foreign power, or a formal declaration of
war by the United States of America shall have occurred; (vii) the Company
shall have failed to comply with any of the provisions of this Agreement on
its part to be performed on or prior to such date or if any of the
conditions, agreements, representations or warranties of the Company shall
not have been fulfilled within the respective times provided for in this
Agreement; or (viii) the Company is no longer registered under the 1934
Act. Any such termination shall be without liability of any party to any
other party, except as provided in Sections 6 and 7 hereof; provided,
however, that the Company shall remain obligated to pay costs and expenses
to the extent provided in Section 3(g) hereof.
(c) If the Underwriters elects to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section 8, it
shall notify the Company promptly by telegram or telephone, confirmed by
letter sent to the address specified in Section 11 hereof. If the Company
shall elect to prevent this Agreement from becoming effective, it shall
notify the Underwriters promptly by telegram or telephone, confirmed by
letter sent to the address specified in Section 11 hereof.
9. Default of Underwriter. If any Underwriter or Underwriters default in
their obligation to purchase the Firm Shares hereunder and the aggregate amount
of Firm Shares which such defaulting Underwriter or Underwriters agreed but
failed to purchase does not exceed 10% of the total amount of Firm Shares, the
other Underwriters shall be obligated, severally, in proportion to their
respective commitments hereunder, to purchase the Firm Shares which such
defaulting Underwriter or Underwriters agreed but failed to purchase. If any
Underwriter or Underwriters so defaults and the aggregate amount of Firm Shares
with respect to which such default or defaults occur is more than 10% of the
total number of Firm Shares and arrangements satisfactory to the Representative
and the Company for purchase of such Firm Shares by other persons (who may
include one or more of the nondefaulting Underwriters, including the
Representative) are not made within 48 hours after such default, this Agreement
will terminate without liability on the part of any nondefaulting Underwriter or
the Company except for the provisions of Sections 6 and 7 hereof. In any such
case, either the Representative or the Company shall have the right to postpone
the Closing Date, but in no event for more than seven days, in order that any
required changes, not including a reduction in the number of Firm Shares, to the
Registration Statement and the Prospectus of any other documents or arrangements
may be effected. As used in this Agreement, the term "Underwriter" includes any
person substituted for an Underwriter under this Section 9. Nothing herein shall
relieve a defaulting Underwriter from liability for its default.
10. Survival of Indemnities, Contribution Agreements, Warranties and
Representations. The respective indemnity and contribution agreements of the
Company and
29
the Underwriters contained in Sections 6 and 7, respectively, the
representations and warranties of the Company set forth in Sections 1 hereof
respectively and the covenants of the Company set forth in Section 3 hereof
shall remain operative and in full force and effect, regardless of any
investigation made by, or on behalf of, the Underwriters, the Company, any of
its officers and directors, or any controlling person referred to in Sections 7
and 8, and shall survive the delivery of and payment for the Shares. The
aforesaid indemnity and contribution agreements shall also survive any
termination or cancellation of this Agreement. Any successor of any party or of
any such controlling person, or any legal representative of such controlling
person as the case may be, shall be entitled to the benefit of the respective
indemnity and contribution agreements.
11. Notices. All notices or communications hereunder, except as herein
otherwise specifically provided, shall be in writing and, if sent to
Underwriters or any of the Underwriters, shall be mailed, delivered or
telegraphed and confirmed, to ▇. ▇. ▇▇▇▇▇▇▇▇ & Company, One Financial Plaza, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇ ▇. ▇▇▇▇▇,
President, with a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq., Maun & Simon, PLC, ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
or, if sent to the Company, shall be mailed, delivered or telegraphed and
confirmed, to Wellington Properties Trust, ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (612) 826-6968. Attention: ▇▇▇▇▇ ▇▇▇▇ CEO.
12. Information Furnished by the Underwriters. The statements set forth in
the last paragraph on the cover page, the stabilization legend on the inside
front cover and the statements under the caption "Underwriting" in any
Preliminary Prospectus and in the Prospectus constitute the only written
information furnished by, or on behalf of, the Underwriters specifically for use
with reference to the Underwriters referred to in Section 1(b) and Section 6
hereof.
13. Parties. This Agreement shall inure to the benefit of and be binding
upon the Underwriters and the Company, their respective successors and assigns,
and the officers, directors and controlling persons referred to in Sections 7
and 8. Nothing expressed in this Agreement is intended or shall be construed to
give any person or corporation, other than the parties hereto, their respective
successors and assigns, and the controlling persons, officers and directors
referred to in Sections 7 and 8 any legal or equitable right, remedy, or claim
under, or in respect of, this Agreement or any provision herein contained, this
Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of the parties hereto and their
respective executors, administrators, successors, assigns and such controlling
persons, officers and directors, and for the benefit of no other person or
corporation. No purchaser of any Shares from the Underwriters shall be construed
a successor or assign merely by reason of such purchase.
14. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Minnesota.
15. Counterparts. This Agreement may be execute in any number of
counterparts, each of which when so executed shall constitute an original copy
hereof, but all of which together shall constitute one Agreement.
30
If the foregoing is in accordance with the Underwriters' understanding of
this agreement, kindly sign and return to the Company the enclosed counterpart
of this Agreement, whereupon it will become a binding agreement between the
Company and the Underwriters in accordance with its terms.
Very truly yours,
WELLINGTON PROPERTIES TRUST
By:________________________________________
Its:_____________________________________
Confirmed as of the date hereof
at Minneapolis, Minnesota
▇.▇. ▇▇▇▇▇▇▇▇ & COMPANY
By:________________________________
________________________________
Its:_______________________________
31
APPENDIX A
FORM OF COMFORT LETTER OF ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
(1) They are independent public accountants with respect to the Company
within the meaning of the Securities Act of 1933, as amended (the "1933 Act").
(2) In their opinion, the financial statements of the Company included in
the Registration Statement which are stated therein to have been examined by
them comply as to form in all material respects with the applicable accounting
requirements of the 1933 Act and the related published rules and regulations.
(3) On the basis of specified procedures (but not an audit in accordance
with generally accepted auditing standards), including inquiries of certain
officers of the Company responsible for financial and accounting matters as to
transactions and events subsequent to the date of the financial statements
included in the Prospectus, a reading of minutes of meetings of the stockholders
and directors of the Company since the date of the financial statements included
in the Prospectus and other procedures as specified in such letter, nothing came
to their attention which caused them to believe that (a) at a specified date not
more than five (5) days prior to the date thereof in the case of the first
letter and not more than two (2) business days prior to the date thereof in the
case of the second and third letters, there was any change in the capital stock,
long-term debt, or short-term debt (other than normal payments) of the Company,
or any material decrease in net current assets or stockholders' equity, as
compared with amounts shown on the latest balance sheet of the Company included
in the Registration Statement; or (b) for the period from the date of such
balance sheet to a date not more than five (5) days prior to the date thereof in
the case of the first letter and not more than two (2) business days prior to
the date thereof in the case of the second letter, there were any material
decreases in working capital, long-term debt or total stockholders' equity,
except for changes or decreases which the Prospectus discloses, have occurred or
may occur, or which are set forth in such letter.
(4) They have carried out specified procedures, which have been agreed to
by the Underwriters, with respect to certain information in the Prospectus
specified by the Underwriters, and on the basis of such procedures, they have
found such information to be in agreement with the accounting records of the
Company or with material derived from such records.
SCHEDULE I
Name of Underwriter Number of Firm Shares
------------------- ---------------------
1. ▇.▇. ▇▇▇▇▇▇▇▇ & Company
2. [Name]
3. [Name]
4. [Name]
5. [Name]
6. [Name]
7. [Name]
8. [Name]
9. [Name]
10. [Name]
11. [Name]
12. [Name]
13. [Name]
14. [Name]
15. [Name] ___________________
TOTAL
