EXHIBIT 1.1
2,200,000 SHARES
▇▇▇▇ GROUP, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
__________, 1998
CRUTTENDEN ▇▇▇▇ INCORPORATED
JOSEPHTHAL & CO. INC.
AS REPRESENTATIVES OF THE UNDERWRITERS
c/o Cruttenden ▇▇▇▇ Incorporated
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
▇▇▇▇ Group, Inc., a Delaware corporation (the "Company"), proposes to
issue and sell 2,200,000 shares of the Common Stock, $.01 par value, of the
Company (the "Common Stock") to the underwriters named in SCHEDULE I hereto
(the "Underwriters") for whom you are acting as the representatives (the
"Representatives"). Such 2,200,000 shares of Common Stock are hereinafter
referred to as the "Firm Shares." The Company has agreed to grant to the
Underwriters an option (the "Option") to purchase up to an additional 330,000
shares of Common Stock (the "Option Shares") on the terms and for the
purposes set forth in SECTION 1(b) hereof. The Company has also agreed to
sell to the Representatives a Warrant (the "Warrant") to purchase 220,000
shares of Common Stock (the "Warrant Shares") on the terms and for the
purposes set forth in SECTION 1(c) hereof. The Firm Shares, the Option
Shares and the Warrant Shares are hereinafter collectively referred to as the
"Shares."
The Company hereby confirms its agreements with each of the Underwriters
as follows:
1. AGREEMENT TO SELL AND PURCHASE.
(a) The Company hereby agrees to sell to each Underwriter, and upon the
basis of the representations, warranties and agreements of the Company herein
contained and subject to all the terms and conditions of this agreement (this
"Agreement"), each Underwriter agrees, severally and not jointly, to purchase
from the Company, at a price of $____ per share, that number of Firm Shares
(rounded up or down as determined by you in your discretion, in order to avoid
fractions of a share) obtained by multiplying the number of Firm Shares to be
sold by the Company by a fraction the numerator of which is the number of Firm
Shares set forth opposite the name of each Underwriter in SCHEDULE I hereto (or
such number of Firm Shares increased as set forth in SECTION 7 hereof) and the
denominator of which is the total number of Firm Shares.
The difference of $0.__ per Firm Share between the initial public offering
price and the price at which the Company will sell the Firm Shares to the
Underwriter is the "Underwriting Discount."
(b) Subject to all the terms and conditions of this Agreement, the
Company hereby grants the Option to the Underwriters to purchase, severally
and not jointly, up to 330,000 Option Shares from the Company at the same
price per share as the Underwriters shall pay for the Firm Shares. The
Option may be exercised only to cover overallotments in the sale of the Firm
Shares by the Underwriters and may be exercised in whole or in part at any
time (but not more than once) on or before the 30th day after the date of
this Agreement upon notice (the "Option Shares Notice") by the
Representatives. Such notice shall set forth (i) the aggregate number of
Option Shares as to which the Underwriters are exercising the Option, (ii)
the names and denominations in which the certificates for the Option Shares
are to be registered and (iii) the time, date and place at which such
certificates will be delivered (which time and date may be simultaneous with,
but not earlier than, the Closing Date; and in such case the term "Closing
Date" shall refer to the time and date of delivery of certificates for the
Firm Shares and the Option Shares). Such time and date of delivery, if
subsequent to the Closing Date, is called the "Option Closing Date" and shall
be determined by the Representatives and shall not be earlier than three nor
later than five full business days after delivery of such notice of exercise.
If any Option Shares are to be purchased, each Underwriter agrees, severally
and not jointly, to purchase the number of Option Shares (subject to such
adjustments to eliminate fractional shares as the Representatives may
determine) that bears the same proportion to the total number of Option
Shares to be purchased as the number of Firm Shares set forth on SCHEDULE I
opposite the name of such Underwriter bears to the total number of Firm
Shares. The Representatives may cancel the Option at any time prior to its
expiration by giving written notice of such cancellation to the Company.
(c) Subject to all the terms and conditions of this Agreement, the
Company hereby sells the Warrant to the Representatives to purchase,
severally and not jointly, the Warrant Shares from the Company at a price
per share equal to 120% of the initial public offering price per share. The
Warrant shall be allocated among the Representatives in the amount designated
by them on the Closing Date. On the Closing Date, the Company shall issue a
Warrant, in such denominations as shall be designated by the Representatives,
in the form attached hereto as EXHIBIT A.
2. DELIVERY AND PAYMENT.
(a) Delivery of the Firm Shares shall be made by the Company to the
Underwriters at the offices of Cruttenden ▇▇▇▇ Incorporated, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (or such other place as may be agreed to
by the Company and the Representatives) at 9:00 a.m. Eastern Standard Time on
___________________, or such other time and date not later than 1:30 p.m.
Eastern Standard Time on _________________________, as the Representatives
shall designate by notice to the Company against payment of the purchase
price by wire transfer in accordance with the Company's written wire
instructions (the time and date of such closing is herein referred to as the
"Closing Date").
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(b) To the extent the Option is exercised, delivery of the Option
Shares by the Company to the Representatives against payment by the
Representatives to the Company (in the manner specified above) will take
place at the offices specified above for the Closing Date at the time and
date (which may be the Closing Date) specified in the Option Shares Notice.
(c) Certificates evidencing the Shares to be issued and sold by the
Company shall be in definitive form and shall be registered in such names and
in such denominations as the Representatives shall request at least two
business days prior to the Closing Date or the Option Closing Date, as the
case may be, by written notice to the Company. For the purpose of expediting
the checking and packaging of certificates for such Shares, the Company
agrees to make such certificates available for inspection at least 24 hours
prior to the Closing Date, the Option Closing Date or the Warrant Closing
Date, as the case may be.
(d) The cost of original issue tax stamps, if any, in connection with
the issuance and delivery of that number of the Shares to be issued and sold
by the Company to the Underwriters shall be borne by the Company. The
Company will pay and hold harmless each Underwriter and any subsequent holder
of such Shares from any and all liabilities with respect to or resulting from
any failure or delay in paying Federal and state stamp and other transfer
taxes, if any, which may be payable or determined to be payable in connection
with the original issuance or sale to such Underwriter of such Shares.
(e) It is understood that the Representatives have been authorized, for
their own accounts and the accounts of the several Underwriters, to accept
delivery of and receipt for, and make payment of the purchase price for, the
Firm Shares and any Option Shares the Underwriters have agreed to purchase.
Cruttenden ▇▇▇▇ Incorporated, individually and not as the Representatives of
the Underwriters, may (but, other than as provided in SECTION 7, shall not be
obligated to) make payment for any Shares to be purchased by any Underwriter
whose funds shall not have been received by the Representatives by the
Closing Date or the Option Closing Date, as the case may be, for the account
of such Underwriter, but any such payment shall not relieve such Underwriter
from any of its obligations under this Agreement.
(f) Not later than 12:00 p.m. on the second business day following the
date the Shares are released by the Underwriters for sale to the public, the
Company shall deliver or cause to be delivered copies of the Prospectus in
such quantities and at such places as the Representatives shall request.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents, warrants and covenants to each of the
Underwriters that:
(a) The Company meets the requirements for use of Form S-1 and a
registration statement (Registration No. 333-51523) on Form S-1 relating to
the Firm Shares and Option Shares, including a Preliminary Prospectus (as
defined below) and such amendments to such registration statement as may have
been required to the date of this Agreement, has been prepared by the Company
in compliance with the provisions of the Securities Act of 1933, as
3
amended (the "Securities Act"), and the rules and regulations (collectively
referred to as the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder, and has been filed with the
Commission. Such registration statement, as amended, including the financial
statements, exhibits and schedules thereto, in the form in which it was
declared effective by the Commission under the Securities Act, including any
information deemed to be a part thereof at the time of effectiveness pursuant
to Rule 430A or Rule 434 under the Securities Act, is called the
"Registration Statement." Any Registration Statement filed by the Company
pursuant to Rule 462(b) under the Securities Act is called the "Rule 462(b)
Registration Statement," and from and after the date and time of filing of
the Rule 462(b) Registration Statement the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. The prospectus, in the
form first used by the Underwriters to confirm sales of the Shares, is called
the "Prospectus." All references in this Agreement to the Registration
Statement, the Rule 462(b) Registration Statement, the Preliminary Prospectus
or the Prospectus, or any amendments or supplements to any of the foregoing,
shall include any copy thereof filed with the Commission pursuant to its
Electronic Data Gathering and Retrieval System ("▇▇▇▇▇"). The term
"Preliminary Prospectus" as used herein means a preliminary prospectus as
contemplated by Rule 430 or Rule 430A of the Rules and Regulations included
at any time as part of the Registration Statement. Copies of the
Registration Statement and of each related Preliminary Prospectus have been
delivered to the Underwriters. The Registration Statement and any Rule
462(b) Registration Statement have been declared effective by the Commission
under the Securities Act. The Company has complied with all requests of the
Commission for additional or supplemental information.
(b) No stop order or orders suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement is in
effect, and no proceedings for that purpose have been commenced or are
pending before or are contemplated by the Commission or any state securities
commission or other regulatory authority. Each Preliminary Prospectus and
the Prospectus when filed complied in all material respects with all
applicable provisions of the Securities Act and the Rules and Regulations and
will contain all material information required to be included therein. Each
of the Registration Statement, the Rule 462(b) Registration Statement and any
post-effective amendment thereto, at the time it became effective and during
the period ending on the later of the Closing Date or, if applicable, the
Option Closing Date, complied and will comply in all material respects with
the Securities Act and the Rules and Regulations and 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 not misleading. The Prospectus, as amended or supplemented, as of
its date and during the period ending on such day, as in the opinion of
counsel for the Underwriters, the Prospectus is no longer required by law to
be delivered in connection with sales by an Underwriter or dealer (the
"Prospectus Delivery Period"), did not and will not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The foregoing representations and
warranties in this SECTION 3(b) do not apply to any statements or omissions
made in reliance on and in conformity with information relating to the
Underwriters furnished in writing to the Company by the Representatives
specifically for inclusion in the Registration Statement or Prospectus or any
amendment or supplement thereto. The Company acknowledges
4
that the statements set forth in the last paragraph on the cover page of the
Prospectus and under the heading "Underwriting" in the Prospectus constitute
the only information relating to the Underwriters furnished in writing to the
Company by the Representatives specifically for inclusion in the Registration
Statement. The Company has delivered to the Representatives one complete
manually signed copy of the Registration Statement and of each consent and
certificate of experts filed as a part thereof, and conformed copies of the
Registration Statement (without exhibits), the Preliminary Prospectus and the
Prospectus, as amended or supplemented, in such quantities and at such places
as the Representatives have reasonably requested for each of the
Underwriters. The Company has not distributed and will not distribute, prior
to the later of the Option Closing Date and the completion of the
Underwriters distribution of the Shares, any offering material in connection
with the offering and sale of the Shares, other than the Preliminary
Prospectus, the Prospectus or the Registration Statement and any other
material permitted under the Securities Act and the Rules and Regulations.
(c) The authorized, issued and outstanding capital stock of the Company
is as set forth in the Prospectus under the caption "Capitalization" (other
than for subsequent issuances, if any, pursuant to employee benefit plans
described in the Prospectus or upon exercise of outstanding options or
warrants described in the Prospectus). The Common Stock (including the
Shares) conforms in all material respects to the description thereof
contained in the Prospectus. All of the issued and outstanding shares of
Common Stock have been duly authorized and validly issued, are fully paid and
nonassessable and have been issued in compliance with federal and state
securities laws. None of the outstanding shares of Common Stock were issued
in violation of any preemptive rights, rights of first refusal or other
similar rights to subscribe for or purchase securities of the Company. There
are no authorized or outstanding options, warrants, preemptive rights, rights
of first refusal or other rights to purchase, or equity or debt securities
convertible into or exchangeable or exercisable for, any capital stock of the
Company or any of its subsidiaries other than those accurately described in
the Prospectus.
(d) The Shares to be issued and sold by the Company to the Underwriters
hereunder have been duly and validly authorized and, when issued and
delivered against payment therefor as provided herein, will be duly and
validly issued, fully paid and nonassessable and will conform to the
description thereof contained in the Prospectus; the certificates evidencing
the Shares will comply with all applicable requirements of Delaware law; and
none of the Shares will be issued or sold in violation of any preemptive
rights of shareholders of the Company.
(e) All of the outstanding shares of capital stock of the Company's
subsidiaries have been duly authorized and validly issued and are fully paid
and nonassessable, and are owned by the Company free and clear of any and all
liens, charges, encumbrances or claims.
(f) The consolidated financial statements and schedules included in the
Registration Statement or the Prospectus present fairly the financial
condition and the stockholders' equity of the Company as of the respective
dates thereof and the consolidated statements of operations and cash flows of
the Company for the respective periods covered thereby, all in conformity
with generally accepted accounting principles applied on a consistent basis
throughout the entire period involved, except as otherwise disclosed in the
Prospectus. No other financial statements
5
or schedules of the Company are required by the Securities Act or the Rules
and Regulations to be included in the Registration Statement or the
Prospectus. The financial data set forth in the Prospectus under the
captions "Prospectus Summary--Summary Consolidated and Pro Forma Financial
Data," "Capitalization" and "Selected Consolidated Financial Data" fairly
present the information set forth therein on a basis consistent with that of
the audited financial statements contained in the Registration Statement.
McGladrey & ▇▇▇▇▇▇, LLP, independent auditors (the "Accountants"), who have
reported on such financial statements and schedules, are independent
accountants with respect to the Company as required by the Securities Act and
the Rules and Regulations. The Company maintains a system of accounting
controls sufficient to provide reasonable assurances that: (i) transactions
are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access
to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(g) Subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus and prior to the Closing
Date and, if later, the Option Closing Date, except as set forth in or
contemplated by the Registration Statement and the Prospectus, (i) there has
not been and will not have been any change in the capitalization of the
Company, (ii) the Company has not and will not have paid or declared any
dividends or other distributions of any kind on any class of its capital
stock, and (iii) there has been no material adverse change, or any
development that could reasonably be expected to result in a material adverse
change, in the condition, financial or otherwise, or in the earnings,
business, operations or prospects, whether or not arising from transactions
in the ordinary course of business of the Company and its subsidiaries,
considered as one entity (any such change is herein called a "Material
Adverse Change"). During the Prospectus Delivery Period, neither the Company
nor any of its subsidiaries will engage in any action (including without
limitation the execution of any letter of intent for the consummation of any
material acquisition) that will require a post-effective amendment to the
Registration Statement or an amending supplement to the Prospectus unless
prior to or contemporaneously with the consummation of such action the
Company first prepares and files an amendment to the Registration Statement
and supplemental Prospectus satisfying the requirements of the Act and the
Rules and Regulations thereunder.
(h) Neither the Company nor any of its subsidiaries are, and none of
them intend to conduct their business in a manner in which they would become,
an "investment company" or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company," or a company
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended.
(i) Except as set forth in the Registration Statement and Prospectus,
there are no legal or governmental actions, suits or proceedings pending or,
to the best of the Company's knowledge, threatened (i) against or affecting
the Company or any of its subsidiaries, (ii) which has as the subject thereof
any officer or director of, or property owned or leased by, the Company
6
or any of its subsidiaries or (iii) relating to environmental or
discrimination matters, where in any such case (A) there is a reasonable
possibility that such action, suit or proceeding might be determined
adversely to the Company or such subsidiary and (B) any such action, suit or
proceeding, if so determined adversely, would reasonably be expected to
result in a Material Adverse Change or adversely affect the consummation of
the transactions contemplated by this Agreement. No material labor dispute
with the employees of the Company or any of its subsidiaries exists or, to
the best of the Company's knowledge, is threatened or imminent.
(j) The Company and its subsidiaries have (i) all governmental
licenses, permits, consents, orders, approvals and other authorizations
necessary to carry on their business as contemplated in the Prospectus, (ii)
complied in all material respects with all laws, regulations and orders
applicable to them or their business and (iii) performed in all material
respects their obligations required to be performed by them thereunder.
(k) Neither the Company nor any of its subsidiaries is in default under
any contract or other instrument to which it is a party or by which any of
its property is bound or affected, except defaults which singly or in the
aggregate have not and will not result in a Material Adverse Change. To the
best knowledge of the Company, no other party under any contract or other
instrument to which it or its subsidiaries is a party is in default in any
material respect thereunder. Neither the Company nor any of its subsidiaries
is in violation of any provision of its respective articles or certificate of
incorporation or bylaws.
(l) Neither the Company nor any of its subsidiaries is aware of any
event or circumstance which, but for the giving of notice or the lapse of
time or both, would constitute an event of default under any material
agreement or instrument for borrowed money or any guarantee of any material
agreement or instrument for borrowed money to which the Company or any of its
subsidiaries or any of the respective properties or assets of the Company or
its subsidiaries are subject.
(m) The Company and its subsidiaries own or possess sufficient
trademarks, trade names, patent rights, copyrights, licenses, approvals,
trade secrets and other similar rights (collectively, "Intellectual Property
Rights") reasonably necessary to conduct their businesses as now conducted.
Neither the Company nor any of its subsidiaries has received any notice of
infringement or conflict with asserted Intellectual Property Rights of
others, which infringement or conflict, if the subject of an unfavorable
decision, would result in a Material Adverse Change.
(n) Except as would not, individually or in the aggregate, result in a
Material Adverse Change (i) neither the Company nor any subsidiaries is in
violation of any federal, state, local or foreign law or regulation relating
to pollution or protection of human health or the environment (including,
without limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or wildlife, including without limitation, laws and
regulations relating to emissions, discharges, releases or threatened
releases of chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum and petroleum products (collectively,
"Materials of Environmental Concern"), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of
7
Environmental Concern (collectively, "Environmental Laws"), which violation
includes, but is not limited to, noncompliance with any permits or other
governmental authorizations required for the operation of the business of the
Company or any of its subsidiaries under applicable Environmental Laws, or
noncompliance with the terms and conditions thereof, nor has the Company or
any of its subsidiaries received any written communication, whether from a
governmental authority, citizens group, employee or otherwise, that alleges
that the Company or any of its subsidiaries is in violation of any
Environmental Law; (ii) there is no claim, action or cause of action filed
with a court or governmental authority, no investigation with respect to
which the Company or any of its subsidiaries has received written notice, and
no written notice by any person or entity alleging potential liability for
investigatory costs, cleanup costs, governmental responses costs, natural
resources damages, property damages, personal injuries, attorneys' fees or
penalties arising out of, based on or resulting from the presence, or release
into the environment, of any Material of Environmental Concern at any
location owned, leased or operated by the Company or any of its subsidiaries,
now or in the past (collectively, "Environmental Claims"), pending or, to the
best of the Company's knowledge, threatened against the Company or any of its
subsidiaries or any person or entity whose liability for any Environmental
Claim the Company or any of its subsidiaries has retained or assumed either
contractually or by operation of law; and (iii) to the best of the Company's
knowledge, there are no past or present actions, activities, circumstances,
conditions, events or incidents, including, without limitation, the release,
emission, discharge, presence or disposal of any Material of Environmental
Concern, that reasonably could result in a violation of any Environmental Law
or form the basis of a potential Environmental Claim against the Company or
any of its subsidiaries against any person or entity whose liability for any
Environmental Claim the Company or any of its subsidiaries has retained or
assumed either contractually or by operation of law.
(o) No consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body is required for
the consummation by the Company of the transactions contemplated hereby and
by the filing of the Registration Statement, except such as have been
obtained or made by the Company and are in full force and effect under the
Securities Act, and such as may be required under state securities or Blue
Sky laws or the Bylaws and rules of the National Association of Securities
Dealers, Inc. (the "NASD") in connection with the purchase and distribution
by the Underwriters of the Shares.
(p) The Company has full corporate power and authority to enter into
this Agreement. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding agreement of the
Company and is enforceable against the Company in accordance with the terms
hereof. The performance of this Agreement and the consummation of the
transactions contemplated hereby will not result in the creation or
imposition of any lien, charge or encumbrance upon any of the assets of the
Company or its subsidiaries pursuant to the terms or provisions of, or result
in a breach or violation of any of the terms or provisions of, or constitute
a default under, or give any other party a right to terminate any of its
obligations under, or result in the acceleration of any obligation under, the
respective articles or certificate of incorporation or bylaws of the Company
or its subsidiaries, any indenture, mortgage, deed of trust, voting trust
agreement, loan agreement, bond, debenture, note agreement or other evidence
of indebtedness, lease, contract or other agreement or instrument to
8
which the Company or any of its subsidiaries is a party or by which the
Company, any of its subsidiaries or any of their properties are bound or
affected, or violate or conflict with any judgment, ruling, decree, order,
statute, rule or regulation of any court or other governmental agency or body
applicable to the business or properties of the Company or any of its
subsidiaries.
(q) The Company is duly incorporated and validly existing in good
standing as a corporation under the laws of the State of Delaware, and each
of the Company's subsidiaries is duly incorporated and validly existing as a
corporation under the laws of the jurisdiction of its incorporation. Each of
the Company and its subsidiaries has full power and authority (corporate and
other) to conduct all the activities conducted by it, to own or lease all the
assets owned or leased by it and to conduct its business as described in the
Registration Statement and the Prospectus. Each of the Company and its
subsidiaries is duly qualified and in good standing as a foreign corporation
in each jurisdiction in which it owns or leases real property or transacts
business requiring such qualification and in which the failure to so qualify
would result in a Material Adverse Change. Except as disclosed in the
Registration Statement, the Company does not own, directly or indirectly, any
shares of stock or any other equity or long-term debt securities of any
corporation or have any equity interest in any firm, partnership, joint
venture, association or other entity. Complete and correct copies of the
respective articles or certificate of incorporation and bylaws of the Company
and each of its subsidiaries and all amendments thereto have been delivered
to the Representatives, and no changes therein will be made subsequent to the
date hereof and prior to the Closing Date or, if later, the Option Closing
Date.
(r) The Company, or its subsidiaries, has good and marketable title to
all properties and assets described in the Prospectus as owned by it or them,
free and clear of all liens, charges, encumbrances or restrictions, except
such as are described in the Prospectus or are not material to the business
of the Company or its subsidiaries. The Company, or its subsidiaries, has
valid, subsisting and enforceable leases for the properties described in the
Prospectus as leased by it or them, with such exceptions as are not material
and do not materially interfere with the use made and proposed to be made of
such properties by the Company or its subsidiaries, and neither the Company
nor any of its subsidiaries, as applicable, is in default in any material
respects of any terms or provisions of any leases.
(s) The Company and its subsidiaries have filed all necessary federal,
state and foreign tax returns that are required to be filed by them and have
paid all taxes shown on such returns and on all assessments received by them
to the extent such taxes have become due, other than any which the Company or
its subsidiaries is contesting in good faith. All taxes with respect to
which the Company and its subsidiaries are obligated have been paid or
adequate accruals have been set up to cover any such taxes. The Company has
no knowledge of any material tax deficiency which has been assessed or
threatened against the Company or any of its subsidiaries. The Company has
made adequate charges and accruals in the financial statements included in
the Prospectus in respect of all federal, state and foreign income and
franchise taxes for all periods as to which the tax liability of the Company
has not been finally determined.
(t) The Company and its subsidiaries maintain insurance of such types and
in such amounts as are generally deemed adequate and customary for their
businesses. The Company
9
has no reason to believe that it or any subsidiary will not be able (i) to
renew their existing insurance coverage as and when such policies expire or
(ii) to obtain comparable coverage from similar institutions as may be
necessary or appropriate to conduct their business as now conducted and at a
cost that would not result in a Material Adverse Change. Neither the Company
nor any subsidiaries has been denied any insurance coverage which it has
sought or for which it has applied.
(u) With respect to any "employee benefit plan" (as defined under the
Employee Retirement Income Security Act of 1974, as amended, and the
regulations and published interpretations thereunder (collectively, "ERISA")
established or maintained by the Company, its subsidiaries or their "ERISA
Affiliates" (as defined below)), no event has occurred and, to the best
knowledge of the Company, there exists no condition or set of circumstances,
in connection with which the Company could be subject to any liability under
the terms of any such "employee benefit plan." "ERISA Affiliate" means, with
respect to the Company, any member of any group of organizations described in
Sections 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986, as
amended, and the regulations and published interpretations thereunder (the
"Code") of which the Company is a member. No "reportable event" (as defined
under ERISA) has occurred or is reasonably expected to occur with respect to
any "employee benefit plan" established or maintained by the Company or any
of its ERISA Affiliates. No "employee benefit plan" established or
maintained by the Company or any of its ERISA Affiliates, if such "employee
benefit plan" were terminated, would have any "amount of unfunded benefit
liabilities" (as defined under ERISA). Neither the Company, its subsidiaries
nor any of their ERISA Affiliates has incurred or reasonably expects to incur
any liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "employee benefit plan" or (ii) Sections 412, 4971, 4975
or 4980B of the Code. Each "employee benefit plan" established or maintained
by the Company, its subsidiaries or any of their ERISA Affiliates that is
intended to be qualified under Section 401(a) of the Code is so qualified and
nothing has occurred, whether by action or failure to act, and to the best
knowledge of the Company, there exists no condition or set of circumstances,
which would cause the loss of such qualification.
(v) There is no document or contract of a character required to be
described in the Registration Statement or the Prospectus or to be filed as
an exhibit to the Registration Statement that is not described or filed as
required.
(w) No statement, representation, warranty or covenant made by the
Company in this Agreement or made in any certificate or document required by
this Agreement to be delivered to the Underwriters was or will be, when made,
inaccurate, untrue or incorrect in any material respect.
(x) Neither the Company nor any of its directors, officers or
controlling persons has taken, directly or indirectly, any action designed,
or which might reasonably be expected, to cause or result, under the Act or
otherwise, in, or which has constituted, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Shares or the Common Stock.
10
(y) No holder of securities of the Company has any right that, if
exercised, would require the Company to cause such securities to be included
in the Registration Statement.
(z) The Shares have been approved for trading, subject to notice that
the Registration Statement has been declared effective, on the Nasdaq
National Market.
(aa) Other than as contemplated by this Agreement, there is no broker,
finder or other party that is entitled to receive from the Company any
brokerage or finder's fee or other fee or commission as a result of any of
the transactions contemplated by this Agreement.
(bb) There are no business relationships or related-party transactions
involving the Company or any subsidiaries or any other person required to be
described in the Prospectus which have not been described as required.
(cc) Neither the Company nor any subsidiaries nor, to the best of the
Company's knowledge, any employee or agent of the Company or any
subsidiaries, has made any contribution or other payment to any official of,
or candidate for, any federal, state or foreign office in violation of any
law or of the character required to be disclosed in the Prospectus
4. CERTAIN AGREEMENTS OF THE COMPANY.
The Company agrees with each of the Underwriters as follows:
(a) The Company will not, either prior to the Effective Date or
thereafter during such period as the Prospectus is required by law to be
delivered in connection with sales of the Shares by an Underwriter or dealer,
file any amendment or supplement to the Registration Statement or the
Prospectus, unless a copy thereof shall first have been submitted to the
Representatives and made available to the Underwriters within a reasonable
period of time prior to the filing thereof and the Underwriters shall not
have objected thereto in good faith.
(b) The Company will notify the Representatives promptly, and will
confirm such advice in writing, (A) of the receipt of any comments of, or
requests for additional or supplemental information from, the Commission, (B)
of the filing of the Prospectus pursuant to Rule 424 or Rule 434 under the
Securities Act, (C) of the time and date that any post-effective amendment to
the Registration Statement becomes effective, (D) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose or the threat
thereof, (E) of the happening of any event during the Prospectus Delivery
Period that in the judgment of the Company makes any statement made in the
Registration Statement or the Prospectus untrue in any material respect or
that requires the making of any changes in the Registration Statement or the
Prospectus in order to make any such statements made therein, in light of the
circumstances in which they are made, not misleading and (F) of receipt by
the Company or any representatives or attorney of the Company of any other
communication from the Commission relating to the Company, the Registration
Statement or any post-effective amendment thereto, any Preliminary Prospectus
or the Prospectus. If at any time the Commission shall issue any order
suspending the effectiveness
11
of the Registration Statement, the Company will make every reasonable effort
to obtain the withdrawal of such order at the earliest possible moment. If
the Company has omitted any information from the Registration Statement
pursuant to Rule 430A of the Rules and Regulations, the Company will use its
best efforts to comply with the provisions of and make all requisite filings
with the Commission pursuant to Rules 424(b), 430A and 434, as applicable,
and will notify the Representatives promptly of all such filings.
(c) The Company will furnish to the Representatives, without charge,
copies of the executed signature pages of the Registration Statement and of
any post-effective amendment thereto, including financial statements and
schedules, and all exhibits thereto, and such number of conformed copies of
the Registration Statement, with or without exhibits, and any supplement or
amendment thereto, as the Representatives shall reasonably request.
(d) The Company will comply with all the provisions of any undertakings
contained in the Registration Statement.
(e) Prior to the Effective Date, and thereafter during the Prospectus
Delivery Period, the Company will deliver to the Representatives, without
charge, as many copies of the Preliminary Prospectus and the Prospectus or
any amendment or supplement thereto as the Representatives may reasonably
request. The Company consents to the use of the Preliminary Prospectus and
the Prospectus, or any amendment or supplement thereto, by the Underwriters
and by all dealers to whom the Shares may be sold, both in connection with
the initial offering or sale of the Shares and for any period of time
thereafter during the Prospectus Delivery Period. If during such period of
time any event shall occur, as a result of which the Preliminary Prospectus
or the Prospectus, as then amended or supplemented, would include an untrue
statement of a material fact or omit to state a material fact necessary in
order to make any statement therein, in the light of the circumstances under
which it was made, not misleading, or it is necessary to supplement or amend
the Preliminary Prospectus or the Prospectus to comply with law, the Company
will forthwith prepare and duly file with the Commission an appropriate
supplement or amendment thereto, and will deliver to the Representatives,
without charge, such number of copies thereof as the Representatives may
reasonably request.
(f) The Company shall cooperate with the Representatives and counsel
for the Underwriters to qualify or register the Shares for sale under (or
obtain exemptions from the application of) state securities or blue sky laws
and Canadian provincial securities laws of those jurisdictions designated by
the Representatives, shall comply with such laws and shall continue such
qualifications, registrations and exemptions in effect so long as required
for the distribution of the Shares. The Company shall not be required to
qualify as a foreign corporation or to take any action that would subject it
to general service of process in any such jurisdiction where it is not
presently qualified or where it would be subject to taxation as a foreign
corporation. The Company will advise the Representatives promptly of the
suspension of the qualification or registration of (or any such exemption
relating to) the Shares for offering, sale or trading in any jurisdiction or
any initiation or threat of any proceeding for any such purpose, and in the
event of the issuance of any order suspending such qualification,
registration or exemption, the Company shall use its best efforts to obtain
the withdrawal thereof at the earliest possible moment.
12
(g) During the period of five years commencing on the Effective Date,
the Company will furnish to the Representatives and make available to the
Underwriters, upon request, copies of such financial statements and other
periodic and special reports as the Company may from time to time distribute
generally to the holders of any class of its capital stock, and will furnish
to the Representatives and make available to the Underwriters, upon request,
a copy of each annual or other report it shall be required to file with the
Commission.
(h) The Company will make generally available to holders of its
securities as soon as may be practicable but in no event later than the last
day of the fifteenth full calendar month following the calendar quarter in
which the Effective Date falls, an earnings statement (which need not be
audited but shall be in reasonable detail) for a period of 12 months ended
commencing after the Effective Date, and satisfying the provisions of Section
11(a) of the Securities Act.
(i) Whether or not the transactions contemplated by this Agreement are
consummated or this Agreement is terminated, the Company will pay, or
reimburse if paid by the Underwriters, all costs and expenses incident to the
performance of the obligations of the Company under this Agreement, including
but not limited to costs and expenses of or relating to (A) the preparation,
printing and filing of the Registration Statement and exhibits thereto, each
Preliminary Prospectus, the Prospectus and any amendment or supplement to the
Registration Statement or the Prospectus, (B) the preparation and delivery of
certificates representing the Shares, (C) the printing of this Agreement and
any and all ancillary underwriting documents, (D) furnishing (including costs
of shipping and distributing) such copies of the Registration Statement, the
Prospectus and any Preliminary Prospectus, and all amendments and supplements
thereto, as may be requested for use in connection with the offering and sale
of the Shares by the Underwriters or by dealers to whom Shares may be sold,
(E) all fees and expenses associated with filing to list and listing Shares
on the Nasdaq National Market, (F) the filing fees incident to the NASD's
review and approval of the Underwriters participation in the offering and the
distribution of the Shares, (G) the registration or qualification of the
Shares for offer and sale under the securities or Blue Sky laws of each state
and the provincial securities laws of Canada, (H) the fees and disbursements
of counsel for the Underwriters in connection with state Blue Sky and NASD
filings (to a maximum of $12,500), (I) the fees and expenses of the Company's
counsel, accountants and other advisors, (J) the transfer agent for the
Shares, (K) all necessary issue and transfer and other stamp taxes in
connection with the issuance and sale of the Shares to the Underwriters, and
(L) any and all travel, lodging and informational meeting expenses for
Company personnel associated with the IPO and the selling process.
(j) The Company further agrees that, in addition to the costs and
expenses payable pursuant to subsection (i) of this Section 4, it will pay to
the Underwriters on the Closing Date by certified or bank cashiers check or,
at the election of the Underwriters, by deduction from the proceeds of the
offering contemplated herein a non-accountable expense allowance equal to
three quarters of one percent (.75%) of the aggregate price to the public of
the Firm Shares, none of which has been paid to date. In the event the
Underwriters elect to exercise the over-allotment option described in Section
1(b) hereof, the Company agrees to pay to the Underwriters on the Option
Closing Date (by certified or bank cashiers check or, at the Representative's
election, by deduction from the proceeds of the offering) a non-accountable
expense allowance equal to three quarters of one percent (.75%) of the
aggregate price to the public of the Option Shares.
(k) If Cruttenden ▇▇▇▇ is ready, willing and able to effectuate the
offering of the Common Stock as described in the Prospectus, but the Company
elects not to reasonably proceed, the Company will reimburse Cruttenden ▇▇▇▇
for up to $100,000 of its out-of pocket expenses, including up to $75,000 of
the fees and expenses of its counsel.
(l) The Company will not at any time, directly or indirectly, take any
action designed, or which might reasonably be expected, to cause or result
in, or which will constitute,
13
stabilization or manipulation of the price of the Common Stock to facilitate
the sale or resale of any of the Shares.
(m) The Company will apply the net proceeds from the offering and sale
of the Shares to be sold by the Company in the manner set forth in the
Prospectus under "Use of Proceeds."
(n) During the period of 180 days commencing at the Closing Date, the
Company will not, without the Representatives' prior written consent, grant
options or warrants to purchase shares of Common Stock at a price less than
the fair market value price or issue any securities convertible into shares
of Common Stock at a conversion price less than the fair market value price
or grant any stock purchase rights at a price less than such price designated
in the Company's stock purchase plan as in effect as of the date of this
Agreement, other than as may occur under the terms of the Company's employee
and director stock option and stock purchase plans as described in the
Prospectus.
(o) The Company will not, and will cause each of its existing record
and beneficial holders of of Common Stock to enter into agreements with the
Underwriters to the effect that they will not for a period of 180 days after
the Effective Date, without the prior written consent of Cruttenden ▇▇▇▇
Incorporated, sell, contract to sell or otherwise dispose of any shares of
Common Stock or rights to acquire such shares (other than sales by the
Company pursuant to employee and director stock option and stock purchase
plans or other employee incentive compensation arrangements or in connection
with the acquisition by the Company or its subsidiaries of technologies,
product lines or businesses); provided that the recipients of shares in
connection with a bona fide acquisition describe above agree in writing that
they will not sell, contract to sell or otherwise dispose of any such shares
of Common Stock for a period of 180 days after the Effective Date.
(p) The Company will use all reasonable efforts to comply with, or
cause to be complied with, the conditions precedent to the several
obligations of the Underwriters in SECTION 5 hereof.
(q) The Company shall register the Common Stock under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and shall use its best
efforts to maintain such registration for so long as such registration shall
be required.
5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS.
The obligations of the several Underwriters to purchase and pay for the
Shares as provided herein on the Closing Date and, with respect to the Option
Shares, the Option Closing Date, shall be subject to the accuracy of the
representations and warranties on the part of the Company set forth in
SECTION 3 hereof as of the date hereof and as of the Closing Date as though
then made and, with respect to the Option Shares, as of the Option Closing
Date as though then made, to the timely performance by the Company of its
covenants and other obligations hereunder, and to each of the following
additional conditions:
(a) Notification that the Registration Statement has become effective
shall be
14
received by the Representatives not later than 10:00 a.m., Charlotte, North
Carolina time, on the first full business day after the Effective Date or at
such later date and time as shall be consented to in writing by the
Representatives and all filings required by Rule 424, Rule 430A and Rule 434
of the Rules and Regulations shall have been made.
(b) (i) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall be
pending or threatened by the Commission, (ii) no order suspending the
effectiveness of the Registration Statement or the qualification or
registration of the Shares under the securities or Blue Sky laws of any
jurisdiction shall be in effect and no proceeding for such purpose shall be
pending before or threatened or contemplated by the Commission or the
authorities of any such jurisdiction, (iii) any request for additional
information on the part of the staff of the Commission or any such
authorities shall have been complied with to the satisfaction of the staff of
the Commission or such authorities and (iv) after the date hereof no
amendment or supplement to the Registration Statement or the Prospectus shall
have been filed unless a copy thereof was first submitted to the
Representatives and made available to the Underwriters and the Underwriters
did not object thereto in good faith, and the Representatives shall have
received certificates, dated the Closing Date and, with respect to the Option
Shares, the Option Closing Date and signed by the Chief Executive Officer or
the Chairman of the Board of Directors of the Company and the Chief Financial
Officer of the Company (who may, as to proceedings threatened, rely upon the
best of their information and belief), to the effect of clauses (i), (ii) and
(iii) hereof.
The NASD shall have raised no objection to the fairness and
reasonableness of the underwriting terms and arrangements
(c) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, (i) there shall not have been a
Material Adverse Change, and there shall have been no material transaction,
contract or agreement entered into by the Company or any of its subsidiaries
other than in the ordinary course of business, in each case other than as set
forth in or contemplated by the Registration Statement and the Prospectus,
and (ii) the Company shall not have sustained any material loss or
interference with its business or properties from fire, explosion, flood or
other casualty, whether or not covered by insurance, or from any labor
dispute or any court or legislative or other governmental action, order or
decree, which is not set forth in the Registration Statement and the
Prospectus, if in the Representatives' judgment any such development is so
material as to make it impracticable or inadvisable to consummate the sale
and delivery of the Shares by the Underwriters at the public offering price.
(d) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there shall have been no
litigation or other proceeding instituted or threatened against the Company,
its subsidiaries or any of the Company's officers or directors in their
capacities as such, before or by any Federal, state or local court,
commission, regulatory body, administrative agency or other governmental
body, domestic or foreign, in which litigation or proceeding an unfavorable
ruling, decision or finding could result in a Material Adverse Change.
15
(e) Each of the representations and warranties of the Company contained
herein shall be true and correct in all material respects at the Closing Date
and, with respect to the Option Shares, at the Option Closing Date, as if made
at the Closing Date and, with respect to the Option Shares, at the Option
Closing Date, and all covenants and agreements herein contained to be performed
on the part of the Company and all conditions herein contained to be fulfilled
or complied with by the Company at or prior to the Closing Date and, with
respect to the Option Shares, at or prior to the Option Closing Date, shall have
been duly performed, fulfilled or complied with in all material respects.
(f) The Representatives shall have received an opinion, dated the Closing
Date and, with respect to the Option Shares, the Option Closing Date, and
satisfactory in form and substance to the Representatives' counsel, from
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP, counsel to the Company, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation under the laws of the State of Delaware.
(ii) The Company has corporate power and authority to own, lease
and operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under this Agreement.
(iii) The authorized, issued and outstanding capital stock of the
Company (including the Common Stock) conform to the descriptions thereof set
forth in the Prospectus. All of the outstanding shares of Common Stock have
been duly authorized and validly issued, are fully paid and nonassessable and,
to the best of such counsel's knowledge, have been issued in compliance with the
registration and qualification requirements of federal and state securities
laws. The form of certificate used to evidence the Common Stock is in due and
proper form and complies with all applicable requirements of the charter and
by-laws of the Company and the General Corporation Law of the State of Delaware.
(iv) 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 rights to indemnification
thereunder may be limited by applicable law and except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or affecting creditors' rights generally or
by general equitable principles.
(v) The Shares to be purchased by the Underwriters from the
Company have been duly authorized for issuance and sale pursuant to this
Agreement and, when issued and delivered by the Company pursuant to this
Agreement against payment and receipt by the Company of the consideration set
forth therein, will be validly issued, fully paid and nonassessable.
(vi) The Registration Statement and the Rule 462(b) Registration
Statement, if any, has been declared effective by the Commission under the
Securities Act. To such counsel's
16
knowledge, no stop order suspending the effectiveness of either of the
Registration Statement or the Rule 462(b) Registration Statement, if any, has
been issued under the Securities Act and no proceedings for such purpose have
been instituted or are pending or are contemplated or threatened by the
Commission. Any required filing of the Prospectus and any supplement thereto
pursuant to Rule 424(b) under the Securities Act has been made in the manner
and within the time period required by such Rule 424(b).
(vii) The Registration Statement, including any 424(b)
Registration Statement, the Prospectus and each amendment or supplement to
the Registration Statement and the Prospectus, as of their respective
effective or issue dates (other than the financial statements and supporting
schedules and other financial data included therein or in exhibits to or
excluded from the Registration Statement, as to which no opinion need be
rendered) comply as to form in all material respects with the applicable
requirements of the Securities Act.
(viii) The Shares have been approved for listing on the Nasdaq
National Market.
(ix) The statements (i) in the Prospectus under the captions "Risk
Factors--Shares Eligible for Future Sale," "Risk Factors--Possible Issuance of
Preferred Stock; Anti-Takeover Provisions," "Management--Limitation of Liability
and Indemnification of Officers and Directors," "Description of Capital Stock,"
"Shares Eligible for Future Sale," and (ii) in Item 14 and Item 15 of the
Registration Statement, insofar as such statements constitute matters of law,
summaries of legal matters, the Company's charter or by-law provisions,
documents or legal proceedings, or legal conclusions, has been reviewed by such
counsel and fairly present and summarize, in all material respects, the matters
referred to therein.
(x) The description of the Company's stock option, stock bonus and
other stock plans or arrangements set forth in the Prospectus is accurate.
(xi) To the knowledge of such counsel without any independent
investigation, there are no legal or governmental actions, suits or proceedings
pending or threatened which are required to be disclosed in the Registration
Statement, other than those disclosed therein.
(xii) To the knowledge of such counsel, there are no indentures,
mortgages, loans or credit agreements, notes, contracts, franchises, leases or
other instruments to which the Company or any of its subsidiaries is a party or
by which it or any of them may be bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject (each, an "Existing
Instrument"), required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto other than those described or
referred to therein or filed or incorporated by reference as exhibits thereto;
and the descriptions thereof and references thereto are correct in all material
respects.
(xiii) No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental authority or
agency, is required for the Company's execution, delivery and performance of
this Agreement and consummation of the transactions contemplated thereby and by
the Prospectus, except as required under the Securities Act, applicable state
securities or Blue Sky laws and from the NASD.
17
(xiv) The execution and delivery of this Agreement by the
Company and the performance by the Company of its obligations thereunder
(other than performance by the Company of its obligations under the
indemnification section of this Agreement, as to which no opinion need be
rendered) (i) have been duly authorized by all necessary corporate action on
the part of the Company; (ii) will not result in any violation of the
provisions of the charter or by-laws of the Company or any subsidiary; (iii)
will not constitute a breach of, or 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 any material Existing Instrument; or (iv) to the
knowledge of such counsel, will not result in any violation of any law,
administrative regulation or administrative or court decree applicable to the
Company or any subsidiary.
(xv) The Company is not, and after receipt of payment for the
Shares will not be, an "investment company" within the meaning of the
Investment Company Act.
(xvi) To the knowledge of such counsel, there are no persons with
registration or other similar rights to have any equity or debt securities
registered for sale under the Registration Statement or included in the offering
contemplated by this Agreement, except for such rights as have been duly waived.
(xvii) To the knowledge of such counsel, based upon a certificate
of an appropriate officer of the Company as to matters of fact, neither the
Company nor any subsidiary is in violation of its charter or by-laws or any law,
administrative regulation or administrative or court decree applicable to the
Company or is in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any material Existing Instrument,
except in each such case for such violations or defaults as would not,
individually or in the aggregate, result in a Material Adverse Change.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company,
representatives of the independent public or certified public accountants for
the Company, representatives of the Underwriters and with counsel for the
Underwriters at which the contents of the Registration Statement and the
Prospectus, and any supplements or amendments thereto, and related matters were
discussed and, based on such counsel's participation in the above mentioned
conferences, review of the documents described above, their understanding of
applicable law and the experience they have gained in their practice under the
Act, such counsel shall advise the Underwriters that although such counsel
cannot guarantee the accuracy, completeness or fairness of any of the statements
contained in the Registration Statement or the Prospectus, in connection with
such counsel's representation, investigation, and due inquiry of the Company in
the preparation of the Registration Statement and Prospectus, nothing has come
to such counsel's attention which causes them to believe that the Registration
Statement or Prospectus (except as to the financial statements, schedules and
other financial and statistical information contained therein, as to which such
counsel expresses no comment), as of the effective date of the Registration
Statement, contained 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
18
circumstances in which they were made, not misleading.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the General
Corporation Law of the State of Delaware or the federal law of the United
States, to the extent they deem proper and specified in such opinion, upon the
opinion (which shall be dated the Closing Date or the Option Closing Date, as
the case may be, shall be satisfactory in form and substance to the
Underwriters, shall expressly state that the Underwriters may rely on such
opinion as if it were addressed to them and shall be furnished to the
Representatives) of other counsel of good standing whom they believe to be
reliable and who are satisfactory to counsel for the Underwriters; PROVIDED,
HOWEVER, that such counsel shall further state that they believe that they and
the Underwriters are justified in relying upon such opinion of other counsel,
and (B) as to matters of fact, to the extent they deem proper, on certificates
of responsible officers of the Company and public officials.
(g) The Representatives shall have received an opinion, dated the Closing
Date and, with respect to the Option Shares, the Option Closing Date, and
satisfactory in form and substance to the Representatives' counsel, from ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ and Associates, counsel to the Company, to the effect that:
(i) Each significant subsidiary (as defined in Rule 405 under the
Securities Act) has been duly incorporated and is validly existing as a
corporation under the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus.
(ii) All of the issued and outstanding capital stock of each such
significant subsidiary has been duly authorized and validly issued, is fully
paid and nonassessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance or, to the best knowledge of such counsel, any pending or threatened
claim.
(iii) The description of the Company's stock option, stock bonus
and other stock plans or arrangements set forth in the Prospectus is accurate.
(iv) No stockholder of the Company or any other person has any
preemptive right, right of first refusal or other similar right to subscribe for
or purchase securities of the Company arising (i) by operation of the charter or
by-laws of the Company or the General Corporation Law of the State of Delaware
or (ii) to the best knowledge of such counsel, otherwise.
(v) To the knowledge of such counsel, there are no legal or
governmental actions, suits or proceedings pending or threatened which are
required to be disclosed in the Registration Statement, other than those
disclosed therein.
(vi) To the knowledge of such counsel, there are no persons with
registration or other similar rights to have any equity or debt securities
registered for sale under the Registration Statement or included in the offering
contemplated by this Agreement, except for
19
such rights as have been duly waived.
(vii) To the knowledge of such counsel, based upon a certificate
of an appropriate officer of the Company as to matters of fact, neither the
Company nor any subsidiary is in violation of its charter or by-laws or any law,
administrative regulation or administrative or court decree applicable to the
Company or is in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any material Existing Instrument,
except in each such case for such violations or defaults as would not,
individually or in the aggregate, result in a Material Adverse Change.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the General
Corporation Law of the State of Delaware or the federal law of the United
States, to the extent they deem proper and specified in such opinion, upon the
opinion (which shall be dated the Closing Date or the Option Closing Date, as
the case may be, shall be satisfactory in form and substance to the
Underwriters, shall expressly state that the Underwriters may rely on such
opinion as if it were addressed to them and shall be furnished to the
Representatives) of other counsel of good standing whom they believe to be
reliable and who are satisfactory to counsel for the Underwriters; PROVIDED,
HOWEVER, that such counsel shall further state that they believe that they and
the Underwriters are justified in relying upon such opinion of other counsel,
and (B) as to matters of fact, to the extent they deem proper, on certificates
of responsible officers of the Company and public officials.
(h) The Representatives shall have received an opinion, dated the Closing
Date and, with respect to the Option Shares, the Option Closing Date, from
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., as the Underwriters' counsel, with respect to
the Registration Statement, the Prospectus and this Agreement, which opinion
shall be satisfactory in all respects to the Representatives, and the Company
shall have furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
(i) On the date hereof, the Representatives shall have received from
McGladrey & ▇▇▇▇▇▇, LLP a letter dated the date hereof addressed to the
Underwriters, in form and substance satisfactory to the Representatives,
containing statements and information of the type ordinarily included in
accountant's "comfort letters" to underwriters, delivered according to Statement
of Auditing Standards No. 72 (or any successor bulletin), with respect to the
audited and unaudited financial statements and certain financial information
contained in the Registration Statement and the Prospectus (and the
Representatives shall have received additional conformed copies of such
accountants' letter for each of the several Underwriters).
(j) The Representatives shall have received, concurrently with the
execution and delivery of this Agreement and at the Closing Date with respect to
the Firm Shares and, with respect to the Option Shares, the Option Closing Date,
a certificate, dated the date of its delivery, signed by each of the Chief
Executive Officer and the Chief Financial Officer of the Company, and in form
and substance satisfactory to the Representatives, to the effect that:
(i) The Registration Statement has become effective, and no order
suspending the effectiveness of the Registration Statement has been issued
and to the best knowledge of the
20
respective signers no proceeding for that purpose has been initiated or is
threatened by the Commission;
(ii) Each signer of such certificate has carefully examined the
Registration Statement and the Prospectus and (A) as of the date of such
certificate, such documents are true and correct in all material respects and
do not omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not untrue or misleading
and (B) in the case of the certificate delivered at the Closing Date and,
with respect to the Option Shares, the Option Closing Date, since the
Effective Date no event has occurred as a result of which it is necessary to
amend or supplement the Prospectus in order to make the statements therein
not untrue or misleading in any material respect;
(iii) Each of the representations and warranties of the Company
contained in this Agreement were, when originally made, and are, at the time
such certificate is delivered, true and correct in all material respects; and
(iv) Each of the covenants required herein to be performed by the
Company on or prior to the delivery of such certificate has been duly, timely
and fully performed and each condition herein required to be complied with by
the Company on or prior to the date of such certificate has been duly, timely
and fully complied with in all material respects.
(k) The Shares shall be qualified for sale (or exempt from such
qualification) in such states as the Representatives may reasonably request, and
any such necessary qualification shall be in effect and not subject to any stop
order or other proceeding on the Closing Date and the Option Closing Date.
(l) Prior to the Closing Date, the Shares shall have been duly authorized
for trading on the Nasdaq National Market.
(m) The Company shall have furnished to the Representatives such
certificates, in addition to those specifically mentioned herein, as the
Representatives may have reasonably requested as to the accuracy and
completeness at the Closing Date and, with respect to the Option Shares, the
Option Closing Date of any statement in the Registration Statement or the
Prospectus as to the accuracy at the Closing Date and, with respect to the
Option Shares, the Option Closing Date of the representations and warranties of
the Company herein, as to the performance by the Company of its obligations
hereunder, or as to the fulfillment of the conditions concurrent and precedent
to the Underwriters' obligations hereunder.
(n) On the date hereof, the Company shall have furnished to the
Representatives an agreement in the form of EXHIBIT B hereto from each existing
stockholder and beneficial owner of Common Stock (as defined and determined
according to Rule 13d-3 under the Exchange Act, except that a one hundred eighty
day period shall be used rather than the sixty day period set forth therein),
and such agreements shall be in full force and effect on each of the Closing
Date and the Option Closing Date.
(o) On or before each of the Closing Date and the Option Closing Date,
the
21
Representatives and counsel for the Underwriters shall have received such
information, documents and opinions as they may reasonably require for the
purposes of enabling them to pass upon the issuance and sale of the Shares as
contemplated herein, or in order to evidence the accuracy of any of the
representations and warranties, or the satisfaction of any of the conditions or
agreements, herein contained.
If any condition specified in this SECTION 5 is not satisfied when and as
required to be satisfied, this Agreement may be terminated by the
Representatives by notice to the Company at any time on or prior to the Closing
Date and, with respect to the Option Shares, at any time prior to the Option
Closing Date. Any such termination shall be without liability on the part of
any party to any other party, except that the provisions of SECTIONS 4(i), 4(j),
6 AND 7 shall at all times be effective and shall survive such termination.
6. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each Underwriter,
its officers and employees, and each person, if any, who controls any
Underwriter within the meaning of the Securities Act and the Exchange Act
against any loss, claim, damage, liability or expense to which such
Underwriter or such controlling person may become subject, under the
Securities Act, the Exchange Act or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Company), insofar as such loss, claim, damage, liability or expense (or
actions in respect thereof as contemplated below) arises out of or is based
(i) upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, or any amendment thereto, including
any information deemed to be a part thereof pursuant to Rule 430A or Rule 434
under the Securities Act, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the
statements therein not misleading; or (ii) upon any untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus or the Prospectus (or any amendment or supplement thereto) if used
within the Prospectus Delivery Period and as amended or supplemented, or the
omission or alleged omission therefrom of a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; or (iii) in whole or in part upon any
inaccuracy in the representations and warranties of the Company contained
herein; or (iv) in whole or in part upon any failure of the Company to
perform its obligations hereunder or under law (including the fees and
disbursements of counsel) as such expenses are reasonably incurred by such
Underwriter or such controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; PROVIDED, HOWEVER, that the foregoing indemnity
agreement shall not apply to any loss, claim, damage, liability or expense to
the extent, but only to the extent, arising out of or based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the
Company by the Representatives expressly for use in the Registration
Statement, any Preliminary Prospectus or the Prospectus (or any amendment or
supplement thereto); and provided, further, that with respect to any
Preliminary Prospectus, the foregoing indemnity agreement shall not inure to
the benefit of any Underwriter from whom the person asserting any
22
loss, claim, damage, liability or expense purchased Shares, or any person
controlling such Underwriter, if copies of the Prospectus were timely
delivered to the Underwriter pursuant to this Agreement and a copy of the
Prospectus (as then amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) was not sent or given by or
on behalf of such Underwriter to such person, if required by law so to have
been delivered, at or prior to the written confirmation of the sale of the
Shares to such person, and if the Prospectus (as so amended or supplemented)
would have cured the defect giving rise to such loss, claim, damage,
liability or expense. The indemnity agreement set forth in this SECTION 6(a)
shall be in addition to any liabilities that the Company may otherwise have.
(b) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement and each person, if any, who controls the
Company within the meaning of the Securities Act or the Exchange Act, against
any loss, claim, damage, liability or expense to which the Company, or any such
director, officer or controlling person may become subject, under the Securities
Act, the Exchange Act, or other federal or state statutory law or regulation, or
at common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of such Underwriter), insofar as
such loss, claim, damage, liability or expense (or actions in respect thereof as
contemplated below) arises out of or is based upon any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or arises out of or is based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in the Registration Statement, any Preliminary
Prospectus, the Prospectus (or any amendment or supplement thereto), in reliance
upon and in conformity with written information furnished to the Company by the
Representatives expressly for use therein; and to reimburse the Company, or any
such director, officer or controlling person for any legal and other expense as
such expenses are reasonably incurred by the Company, or any such director,
officer or controlling person in connection with investigating, defending,
settling, compromising or paying any such loss, claim, damage, liability,
expense or action. The Company hereby acknowledges that the only information
that the Underwriters have furnished to the Company expressly for use in the
Registration Statement, any Preliminary Prospectus or the Prospectus (or any
amendment or supplement thereto) are the statements set forth (A) as the last
paragraph on the outside front cover page of the Prospectus, (B) as the last
paragraph on the inside front cover page of the Prospectus concerning
stabilization by the Underwriters and (C) in the table in the first paragraph
and as the second, seventh and eighth paragraphs under the caption
"Underwriting" in the Prospectus; and the Underwriters confirm that such
statements are correct. The indemnity agreement set forth in this SECTION 6(b)
shall be in addition to any liabilities that each Underwriter may otherwise
have.
(c) Promptly after receipt by an indemnified party under this SECTION 6 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
SECTION 6, notify the indemnifying party in
23
writing of the commencement thereof, but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have
to any indemnified party for contribution or otherwise than under the
indemnity agreement contained in this SECTION 6 or to the extent it is not
prejudiced as a proximate result of such failure. In case any such action is
brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it shall elect,
jointly with all other indemnifying parties similarly notified, by written
notice delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense thereof
with counsel reasonably satisfactory to such indemnified party; PROVIDED,
HOWEVER, if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have
reasonably concluded that a conflict may arise between the positions of the
indemnifying party and the indemnified party in conducting the defense of any
such action or that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available
to the indemnifying party, the indemnified party or parties shall have the
right to select separate counsel to assume such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of such indemnifying party's election so to
assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party
under this SECTION 6 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that
the indemnifying party shall not be liable for the expenses of more than one
separate counsel (together with local counsel), approved by the indemnifying
party (Cruttenden ▇▇▇▇ Incorporated in the case of SECTION 6(b) and SECTION
6(e)), representing the indemnified parties who are parties to such action)
or (ii) the indemnifying party shall not have employed counsel satisfactory
to the indemnified party to represent the indemnified party within a
reasonable time after notice of commencement of the action, in each of which
cases the fees and expenses of counsel shall be at the expense of the
indemnifying party.
(d) The indemnifying party under this SECTION 6 shall not be liable for
any settlement of any proceeding effected without its written consent, provided
that such consent shall not be unreasonably withheld; but, if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party against any loss, claim, damage,
liability or expense by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement, compromise or consent to the entry of judgment in any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity was or could have been sought
hereunder by such indemnified party, unless such settlement, compromise or
consent includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such action, suit or
proceeding.
(e) If the indemnification provided for in SECTION 6 is for any reason
held to be unavailable to or otherwise insufficient to hold harmless an
indemnified party in respect of any
24
losses, claims, damages, liabilities or expenses referred to therein, then
each indemnifying party shall contribute to the aggregate amount paid or
payable by such indemnified party, as incurred, as a result of any losses,
claims, damages, liabilities or expenses referred to therein (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Underwriters, on the other hand, from the
offering of the Shares pursuant to this Agreement 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,
on the one hand, and the Underwriters, on the other hand, in connection with
the statements or omissions or inaccuracies in the representations and
warranties herein which resulted in such losses, claims, damages, liabilities
or expenses, as well as any other relevant equitable considerations. The
relative benefits received by the Company, on the one hand, and the
Underwriters, on the other hand, in connection with the offering of the
Shares pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Shares pursuant to this Agreement (before deducting expenses) received by the
Company, and the total underwriting discount received by the Underwriters, in
each case as set forth on the front cover page of the Prospectus bear to the
aggregate initial public offering price of the Shares as set forth on such
cover. The relative fault of the Company, on the one hand, and the
Underwriters, on the other hand, shall be determined by reference to, among
other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact or any
such inaccurate or alleged inaccurate representation or warranty relates to
information supplied by the Company, on the one hand, or the Underwriters, on
the other hand, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in SECTION 6(c), any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim. The provisions set forth in SECTION 6(c) with
respect to notice of commencement of any action shall apply if a claim for
contribution is to be made under this SECTION 6(e); PROVIDED, HOWEVER, that no
additional notice shall be required with respect to any action for which notice
has been given under SECTION 6(c) for purposes of indemnification.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this SECTION 6 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in this SECTION 6.
Notwithstanding the provisions of this SECTION 6, no Underwriter shall be
required to contribute any amount in excess of the underwriting commissions
received by such Underwriter in connection with the Shares underwritten by it
and distributed to the public. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
SECTION 6 are
25
several, and not joint, in proportion to their respective underwriting
commitments as set forth opposite their names in SCHEDULE I.
(h) The obligations of the Company under this SECTION 6 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Securities Act; and the obligations of the
Underwriters under this SECTION 6 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company and to each
person, if any, who controls the Company within the meaning of the Securities
Act.
7. DEFAULT OF UNDERWRITERS.
If any Underwriter defaults in its obligation to purchase Shares hereunder
and if the total number of Shares that such defaulting Underwriter agreed but
failed to purchase is ten percent or less of the total number of Shares to be
sold hereunder, the non-defaulting Underwriters shall be obligated severally and
not jointly to purchase (in the respective proportions which the number of
Shares set forth opposite the name of each non-defaulting Underwriter in
Schedule I hereto bears to the total number of Shares set forth opposite the
names of all the non-defaulting Underwriters or in such other proportions as the
Representatives may specify), the Shares that such defaulting Underwriter or
Underwriters agreed but failed to purchase. If any Underwriter so defaults and
the total number of Shares with respect to which such default or defaults occur
is more than ten percent of the total number of Shares to be sold hereunder, and
arrangements satisfactory to the other Underwriters and the Company for the
purchase of such Shares by other persons (who may include the non-defaulting
Underwriters) are not made within 36 hours after such default, this Agreement,
insofar as it relates to the sale of the Shares, will terminate without
liability on the part of the non-defaulting Underwriters or the Company except
for (i) the provisions of SECTION 6 hereof, and (ii) the expenses to be paid or
reimbursed by the Company pursuant to SECTION 4(i) hereof. As used in this
Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this SECTION 7. In any such case, the Representatives shall
have the right to postpone the Closing Date or the Option Closing Date, as the
case may be, but in no event longer then seven (7) days, in order that the
required changes, if any, in the Registration Statement and Prospectus or in any
other documents or agreements may be made. Nothing herein shall relieve a
defaulting Underwriter from liability for its default hereunder.
8. SURVIVAL CLAUSE.
The respective representations, warranties, agreements, covenants,
indemnities and other statements of the Company and its officers and the
Underwriters set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement shall remain in full force and effect,
regardless of (i) any investigation made by or on behalf of the Company, any of
its officers or directors, or any Underwriter or any controlling person of an
Underwriter, (ii) any termination of this Agreement and (iii) delivery of and
payment for the Shares.
9. TERMINATION.
26
(a) The Underwriters' obligations under this Agreement may be terminated
at any time on or prior to the Closing Date (or, with respect to the Option
Shares, on or prior to the Option Closing Date), by notice to the Company from
the Representatives, without liability on the part of the Underwriters to the
Company, if, prior to delivery and payment for the Shares (or the Option Shares,
as the case may be), in the Representatives' sole judgment:
(i) there shall have occurred any Materially Adverse Change; or
the Company shall have sustained a loss by strike, fire, flood, earthquake,
accident or other calamity of such character as in the judgment of the
Representatives may interfere materially with the conduct of the business and
operations of the Company regardless of whether or not such loss shall have
been insured;
(ii) the Company shall have failed or been unable to comply with
any of the terms or provisions of this Agreement to be performed by it within
the respective times herein provided for, unless compliance therewith or
performance thereof shall have been expressly waived by the Representative in
writing;
(iii) trading in any of the equity securities of the Company shall
have been suspended by the Commission, by an exchange that lists the Shares
or by the Nasdaq National Market;
(iv) trading in securities generally on the New York Stock
Exchange, the Nasdaq National Market or in the over-the-counter market shall
have been suspended or limited or minimum or maximum prices shall have been
generally established on such exchange or market, or additional material
governmental restrictions, not in force on the date of this Agreement, shall
have been imposed upon trading in securities generally by such exchanges or
markets or by order of the Commission or any court or other governmental
authority;
(v) a general banking moratorium shall have been declared by
either Federal, New York, Delaware or North Carolina state authorities; or
(vi) any outbreak or material escalation of hostilities or
declaration by the United States of a national emergency or war or other
calamity or crisis shall have occurred the effect of any of which is such as
to make it, in the Representatives' sole, reasonable judgment, impracticable
or inadvisable to market the Shares on the terms and in the manner
contemplated by the Prospectus.
(b) Any termination of this Agreement pursuant to this SECTION 9 shall be
without liability of any character (including, but not limited to, loss of
anticipated profits or consequential damages) on the part of any party thereto,
except that the Company shall remain obligated to pay the costs and expenses
provided in SECTION 4(i) hereof and the Company and the Underwriters shall
remain obligated under SECTION 6 hereof.
10. MISCELLANEOUS.
27
(a) Notice given pursuant to any of the provisions of this Agreement shall
be in writing and, unless otherwise specified, shall be mailed, delivered or
telecopied
(i) if to the Company:
▇▇▇▇ Group, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
with a copy to:
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(ii) if to the Underwriters:
Cruttenden ▇▇▇▇ Incorporated
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Finance Department
Josephthal & Co. Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Finance Department
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
1600 Atlanta Financial Center
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇ III, Esq.
(b) This Agreement has been and is made solely for the benefit of the
Underwriters and the Company and of the controlling persons, directors and
officers referred to in SECTION 6 hereof, and their respective successors and
assigns, and no other person shall acquire or have any right under or by virtue
of this Agreement. The term "successors and assigns" as used in this Agreement
shall not include a purchaser, as such purchaser, of Shares from the
Underwriters.
(c) This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware.
(d) This Agreement may be signed in two or more counterparts with the same
effect as if the signatures thereto and hereto were upon the same instrument.
28
(e) In case any provision in this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
(f) The Company and the Underwriters each hereby irrevocably waive, to the
extent permissible under applicable law, any right they may have to a trial by
jury in respect of any claim based upon or arising out of this Agreement or the
transactions contemplated hereby.
29
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the Underwriters.
Very truly yours,
▇▇▇▇ GROUP, INC.
By:________________________________
▇▇▇▇▇▇▇ ▇. Dirk, Chairman and
Chief Executive Officer
Confirmed as of the date first above mentioned:
CRUTTENDEN ▇▇▇▇ INCORPORATED
(for themselves and as Representatives of the Underwriters named in
Schedule I hereto)
By: Cruttenden ▇▇▇▇ Incorporated
By:_______________________________
30
SCHEDULE I
No. of Shares
Underwriters to be Purchased
---------------------------- ---------------
Cruttenden ▇▇▇▇ Incorporated
TOTAL 2,200,000
31
EXHIBIT A
FORM OF WARRANT
See Exhibit 1.2.
32
EXHIBIT B
FORM OF LOCK-UP AGREEMENT
33
LOCK-UP AGREEMENT (180 DAY)
CRUTTENDEN ▇▇▇▇ INCORPORATED
JOSEPHTHAL & CO. INC.
AS REPRESENTATIVES OF THE UNDERWRITERS
c/o Cruttenden ▇▇▇▇ Incorporated
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
RE: ▇▇▇▇ Group, Inc. (the "Company")
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain shares
of Common Stock of the Company ("Common Stock") or securities convertible
into or exchangeable or exercisable for Common Stock. The Company proposes
to carry out a public offering of Common Stock (the "Offering") for which you
will act as the representatives (the "Representatives") of the underwriters.
The undersigned recognizes that the Offering will be of benefit to the
undersigned and will benefit the Company by, among other things, raising
additional capital for its operations. The undersigned acknowledges that you
and the other underwriters are relying on the representations and agreements
of the undersigned contained in this letter in carrying out the Offering and
in entering into underwriting arrangements with the Company with respect to
the Offering.
In consideration of the foregoing, the undersigned hereby agrees that
the undersigned will not, without the prior written consent of
Cruttenden ▇▇▇▇ Incorporated (which consent may be withheld in its
sole discretion), directly or indirectly, sell, offer, contract or grant any
option to sell (including without limitation any short sale), pledge,
transfer, establish an open "put equivalent position" within the meaning of
Rule 16a-1(h) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or otherwise dispose of any shares of Common Stock, options
or warrants to acquire shares of Common Stock, or securities exchangeable or
exercisable for or convertible into shares of Common Stock currently or
hereafter owned either of record or beneficially (as defined in Rule 13d-3
under the Exchange Act) by the undersigned, or publicly announce the
undersigned's intention to do any of the foregoing, for a period commencing
on the date hereof and continuing through the close of trading on the date
180 days after the date of the prospectus first used by the underwriters to
confirm sales of the Common Stock in the Offering, otherwise than (i) as a
bona fide gift or gifts, provided the donee or donees thereof agree to be
bound by this Lock-Up Agreement or (ii) as a distribution to limited partners
or shareholders of the undersigned, provided that the distributees thereof
agree in writing to be bound by the terms of this Lock-Up Agreement. The
undersigned also agrees and consents to the entry of stop transfer
instructions with the Company's transfer agent and registrar against the
transfer of shares of Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock held by the undersigned except
in compliance with the foregoing restrictions.
This Agreement is irrevocable and will be binding on the undersigned and
the respective successors, heirs, personal representatives, and assigns of the
undersigned.
Dated: ______________________, 1998 _____________________________________
Printed Name of Holder
By: ________________________________
Signature
_____________________________________
Printed Name of Person Signing (AND
INDICATE CAPACITY OF PERSON SIGNING IF
SIGNING AS CUSTODIAN, TRUSTEE, OR ON
BEHALF OF AN ENTITY)
2