1
2,500,000 SHARES
COMMON STOCK
($.01 PAR VALUE)
AGREEMENT AMONG UNDERWRITERS
____________________, 1997
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Incorporated
As Representatives of the Several Underwriters
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
1. UNDERWRITING AGREEMENT. We understand that Advanced
Communication Systems, Inc., a Delaware corporation (the "Company"), and
certain shareholders of the Company (the "Selling Shareholders"), propose to
enter into an underwriting agreement in substantially the form attached (the
"Underwriting Agreement") with you and other prospective underwriters
(including us) (collectively, the "Underwriters") providing for the several
purchase by the Underwriters (a) from the Company of 1,850,000 shares of its
Common Stock, $.01 par value, and (b) from the Selling Shareholders of 650,000
shares of Common Stock, $.01 par value, of the Company upon the terms stated in
the Underwriting Agreement (such 2,500,000 shares of Common Stock are herein
referred to as the "Firm Shares"), in which we will agree in accordance with
the terms thereof to purchase the number of Firm Shares set forth opposite our
name in Schedule II thereto. In addition, the Company and the Selling
Shareholders propose to grant to the Underwriters, upon the terms stated in the
Underwriting Agreement, the right to purchase up to an additional 375,000
shares of Common Stock (the "Option Shares"), identical to the Firm Shares, for
the sole purpose of covering over-allotments in the sale of the Firm Shares.
We will agree in accordance with the terms of the Underwriting Agreement to
purchase our proportionate share of the Option Shares which you determine to be
purchased. The Firm Shares and the Option Shares are collectively referred to
herein as the "Shares."
2. REGISTRATION STATEMENT AND PROSPECTUS. The Shares are more
particularly described in a registration statement (Registration No. 333-___)
filed with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"). Amendments to such
registration statement have been or are being filed, or a form of prospectus is
being filed pursuant to Rule 424(b) and Rule 430A under the Act, or a Term
Sheet or Abbreviated Term Sheet is being filed pursuant to Rule 424(b)(7) under
the Act, in which, with our consent hereby confirmed, we have been named as one
of the Underwriters of the
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Shares. A copy of the registration statement as filed and a copy of each
amendment as filed (excluding exhibits) have heretofore been delivered to us.
We confirm that we have examined the registration statement, including
amendments thereto, relating to the Shares, as filed with the Commission, that
we are willing to accept the responsibilities of an Underwriter under the Act
in respect of the registration statement, and we are willing to proceed with a
public offering of the Shares in the manner contemplated therein. The
registration statement and the related prospectus may be further amended, but
no such amendment or change shall release or affect our obligations hereunder
or under the Underwriting Agreement. As used herein, the terms "Registration
Statement," "Prospectus," "Preliminary Prospectus," "Term Sheet" and
"Abbreviated Term Sheet" shall have the same meanings as specified in the
Underwriting Agreement.
3. AUTHORITY OF ▇.▇. ▇▇▇▇▇▇▇ & SONS, INC. AND ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, INC. We hereby authorize you, acting on our behalf, as our
representatives (a) to complete, execute, and deliver the Underwriting
Agreement, to determine the public offering price of the Shares and the
underwriting discount with respect thereto and to make such variations, if any,
as in your judgment are appropriate and are not material, provided that the
respective amount of Shares set forth opposite our name in Schedule II thereto
shall not be increased without our consent, except as provided herein or in the
Underwriting Agreement, (b) to waive performance or satisfaction by the Company
or by the Selling Shareholders of obligations or conditions included in the
Underwriting Agreement if in your judgment such waiver will not have a material
adverse effect upon the interests of the Underwriters, and (c) to take such
actions as in your discretion may be necessary or advisable to carry out the
Underwriting Agreement, this Agreement, and the transactions for the accounts
of the several Underwriters contemplated thereby and hereby. We also authorize
you to determine all matters relating to the public advertisement of the
Shares.
4. PUBLIC OFFERING. We authorize you, with respect to any Shares
which we so agree to purchase, to reserve for sale, and on our behalf to sell,
to dealers selected by you (including you or any of the other Underwriters,
such dealers so selected being hereinafter called "Selected Dealers") and to
others all or part of our Shares as you may determine. Reservations for sales
to persons other than Selected Dealers shall be as nearly as practicable in
proportion to the respective underwriting obligations of the Underwriters,
unless you agree to a smaller proportion at the request of an Underwriter.
Reservations for sales to Selected Dealers need not be in such proportion. All
sales of reserved Shares shall be as nearly as practicable in proportion to the
respective reservations as calculated from day to day.
In your discretion, from time to time, you may add to the reserved
Shares any Shares retained by us remaining unsold, and you may upon our request
release to us any of our Shares reserved but not sold. Any Shares so released
shall not thereafter be deemed to have been reserved. Upon termination of this
Agreement, or prior thereto at your discretion, you shall deliver to our
account any of our Shares reserved but not sold and delivered, except that if
the aggregate of all reserved but unsold and undelivered Shares is less than
200,000 Shares, you are authorized to sell such Shares for the accounts of the
several Underwriters at such price or prices as you may determine.
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Sales of reserved Shares shall be made to Selected Dealers at the
public offering price less the Selected Dealers' Concession pursuant to the
Selected Dealer Agreement in substantially the form attached hereto, and to
others at the public offering price. Underwriters and Selected Dealers may
reallow a concession to other dealers as set forth in the Selected Dealer
Agreement.
After advice from you that the Shares are released for sale to the
public, we will offer to the public in conformity with the terms of the
offering set forth in the Prospectus such of our Shares as you advise us are
not reserved. We authorize you after the Shares are released for sale to the
public, in your discretion, to change the public offering price of the Shares
and the concession, and to buy Shares for our account from Selected Dealers at
the public offering price less such amount not in excess of the Selected
Dealers' Concession as you may determine.
Sales of Shares between Underwriters may be made with your prior
consent, or as you deem advisable for blue sky purposes.
We agree that we will not sell to any accounts over which we exercise
discretionary authority any Shares which we have agreed to purchase under the
Underwriting Agreement.
5. ADDITIONAL PROVISIONS REGARDING SALES. You may, in your
discretion, charge our account with an amount equal to the Selected Dealers'
Concession in respect of each Share purchased under the Underwriting Agreement
by you and not sold by you for our account (and each Share which you believe
has been substituted therefor) which may be delivered against a purchase
contract made by you for our account prior to the later of (a) the termination
of all of the provisions referred to in Section 10 hereof or (b) the covering
by you of any short position created by you for our account, or in lieu of such
charge, require us to repurchase on demand at the total cost thereof (including
commissions), plus transfer taxes, any such Share so delivered.
6. PAYMENT AND DELIVERY. At or before 9:00 a.m., New York City
time, on the Closing Date (as defined in the Underwriting Agreement) and on
each Option Closing Date (as defined in the Underwriting Agreement), we will
deliver to you at your office at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, a
certified or bank cashiers' check payable to your order, in clearing house
funds, in the amount equal to the initial offering price set forth in the
Prospectus less the Selected Dealers' Concession in respect of the number of
Firm Shares or Option Shares, as the case may be, to be purchased by us
pursuant to the Underwriting Agreement. We authorize you for our account to
make payment of the purchase price for the Shares to be purchased by us against
delivery to you of such Shares, and the difference between such price and the
amount of our check delivered to you therefor shall be credited to our account.
Unless we notify you at least two full business days prior to such Closing Date
to make other arrangements, you may, in your discretion, advise the Company and
the Selling Shareholders to prepare our certificates in our name. If you have
not received our funds as requested, you may in your discretion make such
payment on our behalf, in which event we will reimburse you promptly. Any such
payment by you shall not relieve us from any of our obligations hereunder or
under the Underwriting Agreement.
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We authorize you for our account to accept delivery of our Shares from
the Company and the Selling Shareholders and to hold such of our Shares as you
have reserved for sale to Selected Dealers and others and to deliver such
Shares against such sales. You will deliver to us our unreserved Shares as
promptly as practicable.
Notwithstanding the foregoing provisions of this Section 6, if you so
notify us, payment for and delivery of our Shares may be made through the
facilities of The Depository Trust Company, if we are a member, unless we have
otherwise notified you prior to a date to be specified by you, or, if we are
not a member, settlement may be made through a correspondent who is a member
pursuant to instructions we may send to you prior to such specified date.
As promptly as practicable after you receive payment for reserved
Shares sold for our account, you will remit to us the purchase price paid by us
for such Shares and credit or debit our account with the difference between the
sale price and such purchase price.
7. AUTHORITY TO BORROW. In connection with the transactions
contemplated in the Underwriting Agreement or this Agreement, we authorize you,
in your discretion, to advance your own funds for our account, charging current
interest rates, to arrange loans for our account and in connection therewith to
execute and deliver any notes or other instruments and hold or pledge as
security any of our Shares or any Common Stock of the Company purchased for our
account. Any lender may rely upon your instructions in all matters relating to
any such loan.
Any of our Shares and any Common Stock of the Company purchased for
our account held by you may from time to time be delivered to us for carrying
purposes, and any such securities will be delivered to you upon demand.
8. STABILIZATION AND OTHER MATTERS. We authorize you in your
discretion to make purchases and sales of the Common Stock of the Company for
our account in the open market or otherwise, for long or short account, on such
terms as you deem advisable and in arranging sales to over-allot. If you have
purchased Common Stock for stabilizing purposes prior to the execution of this
Agreement, such purchases shall be treated as having been made pursuant to the
foregoing authorization. We also authorize you, either before or after the
termination of the offering provisions of this Agreement, to cover any short
position incurred pursuant to this Section on such terms as you deem advisable.
All such purchases and sales and over-allotments shall be made for the accounts
of the several Underwriters as nearly as practicable in proportion to their
respective underwriting obligations. Our net commitment under this Section
(excluding any commitment incurred under the Underwriting Agreement upon
exercise of the right to purchase Option Shares) shall not, at the end of any
business day, exceed 15% of our maximum underwriting obligation. We will on
your demand take up and pay for at cost any Common Stock so purchased or sold
or over-allotted for our account, and, if any other Underwriter defaults in its
corresponding obligation, we will assume our proportionate share of such
obligation without relieving the defaulting Underwriter from liability. We
will be obligated in respect of purchases and sales made for our account
hereunder whether or not any proposed purchase of the Shares from the Company
and the Selling Shareholders is consummated. The
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existence of this provision is no assurance that the price of the Shares will
be stabilized or that, if stabilizing is commenced, it may not be discontinued
at any time.
We agree to advise you, from time to time upon your request, during
the term of this Agreement, of the number of Shares retained by us remaining
unsold, and will, upon your request, sell to you for the accounts of one or
more of the several Underwriters such number of such Shares as you may
designate at such prices, not less than the net price to Selected Dealers nor
more than the public offering price, as you may determine.
If you effect any stabilizing purchase pursuant to this Section 8, you
will notify us promptly of the date and time when the first stabilizing
purchase was effected and the date and time when stabilizing was terminated.
You will retain such information as is required to be retained by you as
"Manager" pursuant to Rule 17a-2 under the Securities Exchange Act of 1934, as
amended (the "1934 Act"). We agree that we will not effect any stabilizing
purchases without your express authorization, and, if any purchases are
effected, we agree to furnish to you not later than three business days
following the date upon which stabilization was commenced such information as
is required under Rule 17a-2(d).
With respect to the Underwriting Agreement, you are also authorized in
your discretion (a) to exercise the option therein as to all or any part of the
Option Shares, and to terminate such option in whole or in part prior to its
expiration, (b) to postpone the Closing Date and the Option Closing Date
referred to in the Underwriting Agreement, and any other time or date specified
therein, (c) to exercise any right of cancellation or termination, (d) to
arrange for the purchase by other persons (including yourselves or any other
Underwriter) of any Shares not taken up by any defaulting Underwriter, and (e)
to consent to such other changes in the Underwriting Agreement as in your
judgment do not materially adversely affect the substance of our rights and
obligations thereunder.
We further agree that (a) prior to the termination of this Agreement
we will not, directly or indirectly, bid for or purchase any Shares for our own
account, except as provided in this Agreement and in the Underwriting
Agreement, and (b) prior to the completion (as defined in Rule 10b-6 under the
▇▇▇▇ ▇▇▇) of our participation in this distribution, we will otherwise comply
with Rule 10b-6.
9. ALLOCATION OF EXPENSES AND SETTLEMENT. We authorize you to
charge our account with (a) all transfer taxes on Shares purchased by us
pursuant to the Underwriting Agreement and sold by you for our account, (b)
Selected Dealers' Concessions in connection with the purchase, marketing and
sale of the Shares for our account, and (c) our proportionate share (based upon
our underwriting obligation) of all other expenses incurred by you under this
Agreement and in connection with the purchase, carrying, sale and distribution
of the Shares. Your determination of the amount and allocation of such
expenses shall be conclusive. In the event of the default of any Underwriter
in carrying out its obligations hereunder, the expenses chargeable to such
Underwriter pursuant to this Agreement and not paid by it, as well as any
additional losses or expenses arising from such default, may be proportionately
charged by you against the other Underwriters not so defaulting (including such
other persons who purchase
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Shares upon a default by an Underwriter pursuant to Section 11 hereof),
without, however, relieving such defaulting Underwriter from its liability
therefor.
As soon as practicable after termination of this Agreement, the
accounts hereunder will be settled, but you may reserve from distribution such
amount as you deem necessary to cover possible additional expenses. You may at
any time make partial distributions of credit balances or call for payment of
debit balances. Any of our funds in your hands may be held with your general
funds without accountability for interest. Notwithstanding the termination of
this Agreement or any settlement, we will pay (a) our proportionate share
(based on our underwriting obligation) of all expenses and liabilities which
may be incurred by or for the accounts of the Underwriters, including any
liability based on the claim that the Underwriters constitute an association,
unincorporated business or other separate entity, and of any expenses incurred
by you or any other Underwriter with your approval in contesting any such claim
or liability, and (b) any transfer taxes paid after such settlement on account
of any sale or transfer for our account.
10. TERMINATION. The offering provisions of this Agreement shall
terminate 30 days from the date hereof unless extended by you. You may extend
said provisions for a period or periods not exceeding an additional 30 days in
the aggregate, provided that the Selected Dealer Agreements, if any, are
similarly extended. Whether extended or not, said provisions may be terminated
in whole or in part by notice from you.
11. DEFAULT BY UNDERWRITERS. Default by one or more Underwriters
in respect of their obligations hereunder or under the Underwriting Agreement
shall not release us from any of our obligations or in any way affect the
liability of any defaulting Underwriter to the other Underwriters for damages
resulting from such default. In case of such default by one or more
Underwriters, you are authorized to increase, pro rata with other
non-defaulting Underwriters, the number of Shares which we shall be obligated
to purchase pursuant to the Underwriting Agreement, provided that the aggregate
amount of all such increases for our account shall not exceed our pro rata
share of 200,000 Shares; and you are further authorized to arrange, but shall
not be obligated to arrange, for the purchase by other persons, who may include
yourselves or other Underwriters, of all or a portion of any aggregate amount
not taken up. In the event any such arrangements are made, the respective
numbers of Shares to be purchased by the non-defaulting Underwriters and by any
such other persons shall be taken as the basis for the underwriting obligations
under this Agreement.
12. POSITION OF ▇.▇. ▇▇▇▇▇▇▇ & SONS, INC. AND ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
INC. Except as otherwise specifically provided in this Agreement, you shall
have full authority to take such action as you may deem advisable in respect of
all matters pertaining to the Underwriting Agreement and this Agreement and in
connection with the purchase, carrying, sale, and distribution of the Shares
(including authority to terminate the Underwriting Agreement as provided
therein). You shall be under no liability to us for or in respect of the value
of the Shares or the validity or the form thereof, the Registration Statement,
any Preliminary Prospectus, the Prospectus, the Underwriting Agreement, or
other instruments executed by the Company, the Selling Shareholders or
others; or for or in respect of the issuance, transfer, or delivery of the
Shares; or for the performance by the Company, the Selling Shareholders or
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others of any agreement on its or their part; nor shall you be liable under any
of the provisions hereof or for any matters connected herewith, except for your
own want of good faith, for obligations expressly assumed by you in this
Agreement and for any liabilities imposed upon you by the Act. No obligations
on your part shall be implied or inferred herefrom. Authority with respect to
matters to be determined by you, or by you and the Company and/or the Selling
Shareholders, pursuant to the Underwriting Agreement, shall survive the
termination of this Agreement.
In taking all actions hereunder, except in the performance of your own
obligations hereunder and under the Underwriting Agreement, you shall act only
as the representative of each of the Underwriters. The commitments and
liabilities of each of the several Underwriters are several in accordance with
their respective purchase obligations and are not joint or joint and several.
Nothing contained herein shall constitute the Underwriters partners or render
any of them liable to make payments otherwise than as herein provided. If for
federal income tax purposes the Underwriters should be deemed to constitute a
partnership, then each Underwriter elects to be excluded from the application
of Subchapter K, Chapter 1, Subtitle A, of the Internal Revenue Code of 1986,
as amended, and agrees not to take any position inconsistent with such
election. Each Underwriter authorizes ▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc., in its
discretion, on behalf of such Underwriter, to execute such evidence of such
election as may be required by the Internal Revenue Service.
13. COMPENSATION TO ▇.▇. ▇▇▇▇▇▇▇ & SONS, INC. AND ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, INC. As compensation for your services in connection with the purchase
of the Shares and the management of the public offering of the Shares, we agree
to pay you and authorize you to charge our account with an amount equal to
$____ per share of the Shares which we have agreed to purchase pursuant to the
Underwriting Agreement.
14. INDEMNIFICATION AND FUTURE CLAIMS. Each Underwriter,
including you, agrees to indemnify, hold harmless and reimburse each other
Underwriter and each person, if any, who controls any other Underwriter within
the meaning of Section 15 of the Act, and any successor of any other
Underwriter, to the extent that, and upon the terms upon which, each
Underwriter will be obligated pursuant to the Underwriting Agreement to
indemnify, hold harmless and reimburse the Company, its directors, officers,
and controlling persons, and the Selling Shareholders therein specified.
In the event that at any time any person other than an Underwriter
asserts a claim against one or more of the Underwriters or against you as
representatives of the Underwriters arising out of an alleged untrue statement
or omission in the Registration Statement (or any amendment thereto) or in any
Preliminary Prospectus or the Prospectus (or any amendment or supplement
thereto) or relating to any transaction contemplated by this Agreement, we
authorize you to make such investigation, to retain such counsel for the
Underwriters and to take such action in the defense of such claim as you may
deem necessary or advisable. You may settle such claim with the approval of a
majority in interest (based upon underwriting obligations) of the Underwriters.
We will pay our proportionate share (based upon our underwriting obligation) of
all expenses incurred by you (including the fees and expenses of counsel for
the Underwriters) in
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investigating and defending against such claim and our proportionate share of
the aggregate liability incurred by all underwriters in respect of such claim
(after deducting any contribution or indemnification obtained pursuant to the
Underwriting Agreement, or otherwise, from persons other than Underwriters),
whether such liability is the result of a judgment against one or more of the
Underwriters or the result of any such settlement. There shall be credited
against any amount paid or payable by us pursuant to this paragraph any loss,
damage, liability or expense which is incurred by us as a result of any such
claim asserted against us, and if such loss, claim, damage, liability, or
expense is incurred by us as a result of any such claim against us, and if such
loss, claim, damage, liability, or expense is incurred by us subsequent to any
payment by us pursuant to this paragraph, appropriate provision shall be made
to effect such credit, by refund or otherwise. Any Underwriter may retain
separate counsel at its own expense. A claim against or liability incurred by
a person who controls an Underwriter shall be deemed to have been made against
or incurred by such Underwriter. In the event of default by any Underwriter in
respect of its obligations under this Section, the non-defaulting Underwriters
shall be obligated to pay the full amount thereof in the proportions that their
respective underwriting obligations bear to the underwriting obligations of all
non-defaulting Underwriters, without relieving such defaulting Underwriter of
its liability hereunder. Our agreements contained in this Section will remain
in full force and effect regardless of any investigation made by or on behalf
of such other Underwriter or controlling person and will survive the delivery
of and payment for the Shares and the termination of this Agreement and the
similar agreements entered into with the other Underwriters.
15. BLUE SKY AND OTHER MATTERS. You will not have any
responsibility with respect to the right of any Underwriter or other person to
sell the Shares in any jurisdiction notwithstanding any information you may
furnish in that connection. We authorize you to file a New York Further State
Notice, if required, and to make and carry out on our behalf any agreements
which you may deem necessary in order to procure registration or qualification
of any of the Shares in any jurisdiction, and we will at your request make such
payments, and furnish to you such information, as you may deem required by
reason of any such agreements.
We authorize you to file on behalf of the several Underwriters with
the National Association of Securities Dealers, Inc. (the "NASD") such
documents and information, if any, which are available or have been furnished
to you for filing pursuant to the applicable rules, statements, and
interpretations of the NASD.
16. TITLE TO SHARES. The Shares purchased by the respective
Underwriters shall remain the property of such Underwriters until sold and no
title to any such Shares shall in any event pass to you by virtue of any of the
provisions of this Agreement.
17. CAPITAL REQUIREMENTS. We confirm that the incurrence by us of
our obligations under this Agreement and under the Underwriting Agreement will
not place us in violation of Rule 15c3-1 under the 1934 Act or of any
applicable rules relating to capital requirements of any securities exchange or
association to which we are subject.
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18. LIABILITY FOR FUTURE CLAIMS. Neither any statement by you of
any credit or debit balance in our account nor any reservation from
distribution to cover possible additional expenses relating to the Shares will
constitute any representation by you as to the existence or nonexistence of
possible unforeseen expenses or liabilities of or charges against the several
Underwriters. Notwithstanding the distribution of any net credit balance to
us, we will be and remain liable for, and will pay on demand, (a) our
proportionate share (based upon our underwriting obligation) of all expenses
and liabilities which may be incurred by or for the accounts of the
Underwriters, including any liability which may be incurred by the Underwriters
or any of them based on the claim that the Underwriters constitute an
association, unincorporated business, partnership, or any separate entity, and
(b) any transfer taxes paid after such settlement on account of any sale or
transfer for our account.
19. ACKNOWLEDGMENT OF REGISTRATION STATEMENT, ETC. We hereby
confirm that we have examined the Registration Statement (including any
amendments or supplements thereto) and Prospectus relating to the Shares filed
with the Commission, that we are willing to accept the responsibilities of an
underwriter thereunder and that we are willing to proceed as therein
contemplated. We confirm that we have authorized you to advise the Company on
our behalf (a) as to the statements to be included in any Preliminary
Prospectus and in the Prospectus (including any supplement thereto) relating to
the Shares, insofar as they relate to us, and (b) that there is no information
about us required to be stated in said Registration Statement or said
Preliminary Prospectus or the Prospectus (including any supplement thereto)
other than as set forth in the Underwriters' Questionnaire previously delivered
by us to you and the Company. We understand that the aforementioned documents
are subject to further change and that we will be supplied with copies of any
amendment or amendments to the Registration Statement and of any amended
Prospectus promptly, if and when received by you, but the making of such
changes and amendments will not release us or affect our obligations hereunder
or under the Underwriting Agreement.
20. NOTICES AND GOVERNING LAW. Any notice from you to us shall be
mailed, telephoned, or telegraphed to us at our address as set forth in the
Underwriters' Questionnaire. Any notice from us to you shall be deemed to have
been duly given if mailed, telephoned or telegraphed to you at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Syndicate. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Missouri.
21. OTHER PROVISIONS. We represent that we are actually engaged
in the investment banking or securities business and that we are a member in
good standing of the NASD or, if we are not such a member, that we are a
foreign dealer not eligible for membership in the NASD and that we will not
offer or sell any Shares in, or to persons who are nationals or residents of,
the United States of America. In making sales of Shares, if we are such a
member, we agree to comply with all applicable rules of the NASD, including,
without limitation, the Interpretation of Rule 2110 of the NASD's Rules of
Conduct with respect to Free-Riding and Withholding (IM-2110-1) and Rule 2740
of such Rules, or if we are a foreign dealer, we agree to comply with such
Interpretation and Rules 2730, 2740 and 2750 of such Rules as though we were
such a member, and with Rule 2420 as that Rule applies to a non- member broker
or dealer in a foreign country.
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We confirm that you have heretofore delivered to us such number of copies of
the Prospectus as have been reasonably requested by us, and we further confirm
that we have complied and will comply with Rule 15c2-8 under the 1934 Act
concerning delivery of each Preliminary Prospectus and the Prospectus, and that
we will furnish to persons who receive a confirmation of sale (i) a copy of the
Prospectus filed pursuant to Rule 424(b) or Rule 424(c) under the Act or (ii)
if a Term Sheet or Abbreviated Term Sheet is used, a copy of the Term Sheet or
Abbreviated Term Sheet and the last Preliminary Prospectus filed with the
Commission prior to the time the Registration Statement became effective. We
are aware of our statutory responsibilities under the Act, and you are
authorized on our behalf to so advise the Commission.
22. COUNTERPARTS. This Agreement may be signed in any number of
counterparts which, taken together, shall constitute one and the same
instrument, and you may confirm the execution of such counterparts by facsimile
signature.
-----------------------------------
As Attorney-in-Fact for each of the
several Underwriters named in
Schedule II to the Underwriting
Agreement
Confirmed as of the date first above written.
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.,
As Representative of the Several
Underwriters
By:
---------------------------------
Name:
Title:
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Incorporated,
As Representative of the Several
Underwriters
By:
---------------------------------
Name:
Title:
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ADVANCED COMMUNICATION SYSTEMS, INC.
2,500,000 SHARES
COMMON STOCK
($.01 PAR VALUE)
SELECTED DEALER AGREEMENT
__________________, 1997
Underwriters represented by us have severally agreed to purchase from
the above-named company ("Company") and certain shareholders of the Company
(the "Selling Shareholders") the above shares of Common Stock ("Shares"). The
Shares are described in the enclosed Prospectus, the receipt of which you
hereby acknowledge.
1. OFFERING TO SELECTED DEALERS. The several Underwriters,
acting through us, are severally offering part of the Shares for sale to
certain dealers ("Selected Dealers"), as principals, subject to the terms and
conditions stated herein and in the Prospectus, at the public offering price
per Share set forth in the Prospectus, less the per Share concession set forth
in the Prospectus (such concession hereinafter referred to as the "Selected
Dealers' Concession"). Sales of Shares to you pursuant to such offering will
be evidenced by our written confirmation and will be on such terms and
conditions set forth therein and in the Prospectus. In purchasing Shares, you
will rely upon no statement whatsoever, written or oral, other than statements
in the Prospectus.
2. REOFFERING BY SELECTED DEALERS. We are advising you by
telegram of the method and terms of the offering. Acceptances of any reserved
Shares received at the office of ▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, after the time specified therefor in the
telegram and any order for additional Shares will be subject to rejection in
whole or in part. Subscription books may be closed by us at any time in our
discretion without notice and the right is reserved to reject any subscription
in whole or in part, but notification of allotments against and rejections of
subscriptions will be made as promptly as practicable.
We are advising you in such telegram of the release by us of the
Shares being sold by the Underwriters for public offering and of the public
offering price of the Shares. Upon receipt of such advice, the Shares
thereafter purchased by you hereunder are to be offered by you to the public at
the public offering price, subject to the terms thereof. You agree that in
selling Shares purchased hereunder you will comply with the applicable
requirements of the Securities Act of 1933, as amended, and the Securities
Exchange Act of 1934, as amended. Except as herein
12
otherwise provided, Shares shall not be offered or sold by you below the public
offering price before the termination of this Agreement, except that a
concession from such public offering price of not in excess of the per Share
amount set forth in the Prospectus may be allowed to dealers who are actually
engaged in the investment banking or securities business, who execute the
written agreement prescribed by Rule 2740(c) of the Rules of Conduct of the
National Association of Securities Dealers, Inc. ("NASD") and who are members
in good standing of the NASD or foreign dealers, not eligible for membership in
the NASD, who represent to you that they will promptly reoffer the Shares at
the public offering price and will abide by the conditions with respect to
foreign brokers and dealers set forth in the first paragraph of Section 4
hereof.
It is assumed that Shares sold by you will be effectively placed for
investment. If we contract for or purchase in the open market or otherwise for
the account of any Underwriter any Shares sold to you and not effectively
placed for investment, we may charge you the Selected Dealers' Concession
originally allowed you on the Shares so repurchased, and you agree to pay such
amount to us on demand. Shares so delivered to you against any such repurchase
need not be the identical Shares originally purchased by you.
You will advise us upon request of Shares purchased by you remaining
unsold, and we shall have the right to repurchase such unsold Shares on demand
at the public offering price less all or part of the Selected Dealers'
Concession.
3. PAYMENT AND DELIVERY. Payment for Shares purchased by you
shall be made by you on such dates and at such places as we advise you, by
certified or bank cashiers' check payable to the order of ▇.▇. ▇▇▇▇▇▇▇ & Sons,
Inc. in such clearing house funds as we advise, against delivery of such
Shares. Delivery instructions must be in our hands at the office of ▇.▇.
▇▇▇▇▇▇▇ & Sons, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇,
at such time as we request. Notwithstanding such provisions, if we so notify
you, payment for and delivery of Shares purchased by you hereunder may be made
through the facilities of the Depository Trust Company, if you are a member,
unless you have otherwise notified us prior to the date specified in our
telegram to you, or, if you are not a member, settlement may be made through a
correspondent who is a member pursuant to instructions which you will send to
us prior to such specified date.
The above payment shall be made at the public offering price, or if we
so advise you, at a net price equal to the public offering price less the
Selected Dealers' Concession. If payment is made by you at the public offering
price, the Selected Dealers' Concession payable to you hereunder shall be paid
promptly after the termination of this Agreement (or on such earlier date as we
may determine), except that such Concession may be withheld and cancelled, at
our discretion, as to Shares which we have repurchased as set forth in the
third paragraph of Section 2 hereof.
4. POSITION OF SELECTED DEALERS AND UNDERWRITERS. You represent
that you are actually engaged in the investment banking or securities business
and that you are a member in good standing of the NASD or that you are a
foreign dealer, not eligible for membership in the NASD, which agrees not to
offer or sell any Shares in, or to persons who are nationals or
13
residents of, the United States of America. In making sales of Shares, if you
are such a member, you agree to comply with all applicable rules of the NASD,
including, without limitation, the Interpretation of Rule 2110 of the NASD's
Rules of Conduct with respect to Free-Riding and Withholding (IM-2110-1) and
Rule 2740 of such Rules, or, if you are a foreign dealer, you agree to comply
with such Interpretation and Rules 2730, 2740 and 2750 of such Rules as though
you were such a member, and with Rule 2420 as that Rule applies to a non-
member broker or dealer in a foreign country. You also confirm that you have
complied and will comply with the prospectus delivery requirements of Rule
15c2-8 under the Securities Exchange Act of 1934, as amended, in accordance
with your prior undertaking to do so, and that you will furnish to persons who
receive a confirmation of sale a copy of the Prospectus.
You are not authorized to give any information or make any
representations other than as contained in the Prospectus, or to act as agent
for any Underwriter or us. Nothing shall constitute the Selected Dealers an
association, unincorporated business or other separate entity or partners with
the several Underwriters, with us, or with each other, but you shall be liable
for your proportionate share of any tax, liability or expense based on any
claim to the contrary. Neither we nor any Underwriter shall be under any
liability to you, except for obligations expressly assumed by us in this
Agreement, and no obligations on our part shall be implied or inferred
herefrom.
5. BLUE SKY MATTERS. We will not have any responsibility with
respect to the right of any dealer to sell the Shares in any jurisdiction,
notwithstanding any information we may furnish in that connection. We have
filed a New York Further State Notice, if required.
6. NOTICES. All communications from you to us shall be addressed
to ▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: Syndicate. Any notice from us to you shall be delivered,
mailed or telegraphed to you at the address to which this letter is mailed.
7. TERMINATION. This Agreement shall terminate 30 days after the
date hereof unless extended by us for a period or periods not exceeding an
additional 30 days in the aggregate, and, whether extended or not, may be
terminated by us at any time. Such termination shall not affect your
obligation to pay for any Shares purchased by you or any of the provisions of
Section 4 hereof.
Please confirm your agreement hereto by signing the duplicate copy of
this Agreement enclosed herewith and returning it to us at the address in
Section 6 above.
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
By:
------------------------------
Authorized Signatory
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Incorporated
By:
------------------------------
Authorized Signatory
14
______________________, 1997
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Incorporated
as Representatives of the Several Underwriters
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
We hereby confirm our order for Common Stock, $.01 par value, of
Advanced Communication Systems, Inc. (the "Shares") for such number of Shares
specified in our order and under the terms and conditions contained in your
written confirmation of our purchase and the foregoing Agreement.
We hereby confirm our agreement to all the terms and conditions stated
in the foregoing Agreement. We acknowledge receipt of the Prospectus relating
to the above Shares and we further state that in entering this order we have
relied upon the Prospectus and no other statement whatsoever, written or oral.
We confirm that we are actually engaged in the investment banking or securities
business and are a member in good standing of the NASD or that we are a foreign
dealer, not eligible for membership in the NASD, which agrees not to offer or
sell any Shares in, or to persons who are nationals or residents of, the United
States of America. We agree that in making sales of Shares, if we are such a
member, we will comply with all applicable rules of the NASD, including,
without limitation, the Interpretation of Rule 2110 of the NASD's Rules of
Conduct with respect to Free-Riding and Withholding (IM-2110-1) and Rule 2740
of such Rules, or, if we are a foreign dealer, we will comply with such
Interpretation and Rules 2730, 2740 and 2750 of such Rules as though we were
such a member, and with Rule 2420 as that Rule applies to a non- member broker
or dealer in a foreign country. Further, we confirm that we have complied and
will comply with the prospectus delivery requirements of Rule 15c2-8 under the
Securities Exchange Act of 1934, as amended, and that we will furnish to
persons who receive a confirmation of sale a copy of the Prospectus.
--------------------------------------
(Please print or type name of firm)
By:
-----------------------------------
(Authorized Representative)
Dated: , 1997
-----------------
15
▇▇▇▇ AND ▇▇▇▇
DRAFT
5/3/97
2,500,000 SHARES
COMMON STOCK
($.01 PAR VALUE)
UNDERWRITING AGREEMENT
_________________, 1997
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Incorporated
As Representatives of the Several Underwriters
c/o ▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
The undersigned, Advanced Communication Systems, Inc., a
Delaware corporation (the "Company") and the persons listed on Schedule I
hereto (the "Selling Shareholders"), hereby address you as the representatives
(the "Representatives") of each of the persons, firms and corporations listed
on Schedule II hereto (collectively, the "Underwriters") and hereby confirm
their agreement with the several Underwriters as follows:
- 1 -
16
1. DESCRIPTION OF SHARES. The Company proposes to issue
and sell to the Underwriters 1,850,000 shares of its Common Stock, par value
$.01 per share, and the Selling Shareholders propose to sell to the
Underwriters a total of 650,000 shares of the Company's Common Stock, par value
$.01 per share, as set forth on Schedule I hereto (such 2,500,000 shares of
Common Stock are herein referred to as the "Firm Shares"). Solely for the
purpose of covering over-allotments in the sale of the Firm Shares, the Company
further propose to grant to the Underwriters the right to purchase up to an
additional 375,000 Shares of Common Stock (the "Option Shares"), as provided in
Section 3 of this Agreement. The Firm Shares and the Option Shares are herein
sometimes referred to as the "Shares" and are more fully described in the
Prospectus hereinafter defined.
2. PURCHASE, SALE AND DELIVERY OF FIRM SHARES. On the
basis of the representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, the Company agrees and
each Selling Shareholder agrees, severally and not jointly, to sell to the
Underwriters, and each such Underwriter agrees, severally and not jointly, (a)
to purchase from the Company and from each of the Selling Shareholders, pro
rata, at a purchase price of $___ per share, the number of Firm Shares set
forth opposite the name of such Underwriter in Schedule II hereto and (b) to
purchase from the Company any additional number of Option Shares which such
Underwriter may become obligated to purchase pursuant to Section 3 hereof.
The Company and the Selling Shareholders will deliver
definitive certificates for the Firm Shares at the office of ▇.▇. ▇▇▇▇▇▇▇ &
Sons, Inc., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ("▇▇▇▇▇▇▇' Office"), or such
other place as you and the Company may mutually agree upon, for the accounts of
the Underwriters against payment to the Company and the Selling Shareholders of
the purchase price for the Firm Shares sold by them to the several Underwriters
by wire transfer or certified or bank cashiers' check in clearing house (next
day available) funds payable to the order of the Company and the Selling
Shareholders, respectively, and delivered to ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place as may be agreed upon between you
and the Company (the "Place of Closing"), at 10:00 a.m., St. Louis time, on
_____________, 1997, or at such other time and date not later than five full
business days
17
▇▇▇▇ AND ▇▇▇▇
DRAFT
5/3/97
thereafter as you and the Company may agree, such time and date of payment and
delivery being herein called the "Closing Date."
The certificates for the Firm Shares so to be delivered will
be made available to you for inspection at ▇▇▇▇▇▇▇' Office (or such other place
as you and the Company may mutually agree upon) at least one full business day
prior to the Closing Date and will be in such names and denominations as you
may request at least full business days prior to the Closing Date.
It is understood that an Underwriter, individually, may (but
shall not be obligated to) make payment on behalf of the other Underwriters
whose checks shall not have been received prior to the Closing Date for Shares
to be purchased by such Underwriter. Any such payment by an Underwriter shall
not relieve the other Underwriters of any of their obligations hereunder.
It is understood that the Underwriters propose to offer the
Shares to the public upon the terms and conditions set forth in the
Registration Statement hereinafter defined.
3. PURCHASE, SALE AND DELIVERY OF THE OPTION SHARES.
The Company hereby grants options to the Underwriters to purchase from it up to
375,000 Option Shares on the same terms and conditions as the Firm Shares;
provided, however, that such
- 3 -
18
options may be exercised only for the purpose of covering any over-allotments
which may be made by them in the sale of the Firm Shares. No Option Shares
shall be sold or delivered unless the Firm Shares previously have been, or
simultaneously are, sold and delivered.
The options are exercisable on behalf of the several
Underwriters by you, as Representatives, at any time, and from time to time,
before the expiration of 30 days from the date of this Agreement, for the
purchase of all or part of the Option Shares covered thereby, by notice given
by you to the Company in the manner provided in Section 13 hereof, setting
forth the number of Option Shares as to which the Underwriters are exercising
the options, and the date of delivery of said Option Shares, which date shall
not be more than five business days after such notice unless otherwise agreed
to by the parties. You may terminate the options at any time, as to any
unexercised portion thereof, by giving written notice to the Company to such
effect.
You, as Representatives, shall make such allocation of the
Option Shares among the Underwriters as may be required to eliminate purchases
of fractional Shares.
Delivery of the Option Shares with respect to which the
options shall have been exercised shall be made to or upon your order at
▇▇▇▇▇▇▇' Office (or at such other place as you and the Company may mutually
agree upon), against payment by you of the per share purchase price to the
Company by wire transfer or certified or bank cashier's check or checks,
payable in clearing house (next day available) funds. Such payment and
delivery shall be made at 10:00 a.m., St. Louis time, on the date designated in
the notice given by you as above provided for, unless some other date and time
are agreed upon, which date and time of payment and delivery are called the
"Option Closing Date." The certificates for the Option Shares so to be
delivered will be made available to you for inspection at ▇▇▇▇▇▇▇' Office at
least one full business day prior to the Option Closing Date and will be in
such names and denominations as you may request at least _____ full business
days prior to the Option Closing Date. On the Option Closing Date, the Company
shall provide the Underwriters with such representations, warranties, opinions
and covenants with respect to the Option Shares as are required to be delivered
on the Closing Date with respect to the Firm Shares.
19
▇▇▇▇ AND ▇▇▇▇
DRAFT
5/3/97
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE
COMPANY AND THE SELLING SHAREHOLDERS.
(a) The Company represents and warrants to and agrees with
each Underwriter that:
(i) A registration statement (Registration No.
333-_________) on Form S-1 with respect to the Shares,
including a preliminary prospectus, and such amendments to
such registration statement as may have been required to the
date of this Agreement, has been prepared by the Company
pursuant to and in conformity with the requirements of the
Securities Act of 1933, as amended (the "Act"), and the Rules
and Regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission")
thereunder and has been filed with the Commission under the
Act. Copies of such registration statement, including any
amendments thereto, each related preliminary prospectus
(meeting the requirements of Rule 430 or 430A of the Rules
and Regulations) contained therein, the exhibits, financial
statements and schedules have heretofore been delivered by
the Company to you. If such registration statement has not
become effective under the Act, a further amendment to such
registration statement, including a form of final prospectus,
necessary to permit such registration statement
- 5 -
20
to become effective will be filed promptly by the Company
with the Commission. If such registration statement has
become effective under the Act, a final prospectus containing
information permitted to be omitted at the time of
effectiveness by Rule 430A of the Rules and Regulations will
be filed promptly by the Company with the Commission in
accordance with Rule 424(b) of the Rules and Regulations. The
term "Registration Statement" as used herein means the
registration statement as amended at the time it becomes or
became effective under the Act (the "Effective Date"),
including financial statements and all exhibits and, if
applicable, the information deemed to be included by Rule
430A of the Rules and Regulations. The term "Prospectus" as
used herein means (i) the prospectus as first filed with the
Commission pursuant to Rule 424(b) of the Rules and
Regulations or, (ii) if no such filing is required, the form
of final prospectus included in the Registration Statement at
the Effective Date or (iii) if a Term Sheet or Abbreviated
Term Sheet (as such terms are defined in Rule 434(b) and
434(c), respectively, of the Rules and Regulations) is filed
with the Commission pursuant to Rule 424(b)(7) of the Rules
and Regulations, the Term Sheet or Abbreviated Term Sheet and
the last Preliminary Prospectus filed with the Commission
prior to the time the Registration Statement became
effective, taken together. The term "Preliminary Prospectus"
as used herein shall mean a preliminary prospectus as
contemplated by Rule 430 or 430A of the Rules and Regulations
included at any time in the Registration Statement.
(ii) The Commission has not issued, and is not
to the knowledge of the Company threatening to issue, an
order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus nor instituted proceedings for
that purpose. Each Preliminary Prospectus at its date of
issue, the Registration Statement and the Prospectus and any
amendments or supplements thereto contains or will contain,
as the case may be, all statements which are required to be
stated therein by, and in all material respects conform or
will conform, as the case may be, to the requirements of, the
Act and the Rules and Regulations. Neither the Registration
Statement nor any amendment thereto, as of the applicable
effective date, and neither the Prospectus nor any supplement
thereto contains or will contain, as the case
21
▇▇▇▇ AND ▇▇▇▇
DRAFT
5/3/97
may be, any untrue statement of a material fact or omits or
will omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; provided, however, that the Company makes no
representation or warranty as to information contained in or
omitted from the Registration Statement or the Prospectus, or
any such amendment or supplement, in reliance upon, and in
conformity with, written information furnished to the Company
by or on behalf of the Underwriters specifically for use in
the preparation thereof.
(iii) The filing of the Registration Statement
and the execution and delivery of this Agreement have been
duly authorized by the Board of Directors of the Company;
this Agreement constitutes a valid and legally binding
obligation of the Company enforceable in accordance with its
terms (except to the extent the enforceability of the
indemnification and contribution provisions of Section 7
hereof may be limited by public policy considerations as
expressed in the Act as construed by courts of competent
jurisdiction, and except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other
laws affecting creditors' rights generally and by general
principles of equity); the issue and sale of the Shares by
- 7 -
22
the Company and the performance of this Agreement and the
consummation of the transactions herein contemplated will not
result in a violation of the Company's articles of
incorporation or bylaws or result in a breach or violation of
any of the terms and provisions of, or constitute a default
under, or result in the creation or imposition of any lien,
charge or encumbrance upon any properties or assets of the
Company or its subsidiary under, any statute, or under any
indenture, mortgage, deed of trust, note, loan agreement,
sale and leaseback arrangement or other agreement or
instrument to which the Company or its subsidiary is a party
or by which they are bound or to which any of the properties
or assets of the Company or its subsidiary is subject, or any
order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Company or its
subsidiary or their properties, except to such extent as does
not materially adversely affect the business of the Company
and its subsidiary taken as a whole; no consent, approval,
authorization, order, registration or qualification of or
with any court or governmental agency or body is required for
the consummation of the transactions herein contemplated,
except such as may be required by the National Association of
Securities Dealers, Inc. (the "NASD") or under the Act or
Rules and Regulations or any state securities laws.
(iv) Except as described in the Prospectus,
neither the Company nor its subsidiary has sustained since the
date of the latest audited financial statements included in
the Prospectus any material loss or interference with its
business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree. Except as
contemplated in the Prospectus, subsequent to the respective
dates as of which information is given in the Registration
Statement and the Prospectus, the Company and its subsidiary
taken as a whole have not incurred any material liabilities or
material obligations, direct or contingent, other than in the
ordinary course of business, or entered into any material
transactions not in the ordinary course of business, and there
has not been any material change in the capital stock or
long-term debt of the Company and its subsidiary taken as a
whole or any material adverse change in the condition
(financial or
23
▇▇▇▇ AND ▇▇▇▇
DRAFT
5/3/97
other), net worth, business, affairs, management, prospects or
results of operations of the Company and its subsidiary taken
as a whole. The Company and its subsidiary have filed all
necessary federal, state and foreign income and franchise tax
returns and paid all taxes shown as due thereon; all tax
liabilities are adequately provided for on the books of the
Company and its subsidiary except to such extent as would not
materially adversely affect the business of the Company and
its subsidiary taken as a whole; the Company and its
subsidiary have made all necessary payroll tax payments and
are current and up-to-date as of the date of this Agreement;
and the Company and its subsidiary have no knowledge of any
tax proceeding or action pending or threatened against the
Company or its subsidiary which might materially adversely
affect their business or property.
(v) Except as described in the Prospectus,
there is not now pending or, to the knowledge of the Company
or the Selling Shareholders, threatened or contemplated, any
action, suit or proceeding to which the Company or its
subsidiary is a party before or by any court or public,
regulatory or governmental agency or body which might be
expected to result (individually or in the aggregate) in any
material adverse change in the condition (financial or other),
business or prospects of the Company and its
- 9 -
24
subsidiary taken as a whole, or might be expected to
materially and adversely affect (individually or in the
aggregate) the properties or assets thereof; and there are no
contracts or documents of the Company or its subsidiary which
would be required to be filed as exhibits to the Registration
Statement by the Act or by the Rules and Regulations which
have not been filed as exhibits to the Registration Statement.
(vi) The Company has duly and validly authorized
capital stock as described in the Prospectus; all outstanding
shares of Common Stock of the Company and the Shares conform,
or when issued will conform, to the description thereof in the
Registration Statement and the Prospectus and have been, or,
when issued and paid for will be, duly authorized, validly
issued, fully paid and nonassessable; and the issuance of the
Shares to be purchased from the Company hereunder is not
subject to preemptive rights.
(vii) The Company and its subsidiary have been
duly incorporated and are validly existing as corporations in
good standing under the laws of the states or other
jurisdictions in which they are incorporated, with full power
and authority (corporate and other) to own, lease and operate
their properties and conduct their businesses as described in
the Registration Statement; the Company and its subsidiary are
duly qualified to do business as foreign corporations in good
standing in each state or other jurisdiction in which their
ownership or leasing of property or conduct of business
legally requires such qualification, except where the failure
to be so qualified would not have a material adverse effect on
the ability of the Company and its subsidiary to conduct their
business as described in the Registration Statement; and the
outstanding shares of capital stock of the Company's
subsidiary have been duly authorized and validly issued, are
fully paid and nonassessable and are owned by the Company free
and clear of any mortgage, pledge, lien, encumbrance, charge
or adverse claim and are not the subject of any agreement or
understanding with any person; no options, warrants or other
rights to purchase, agreement or other obligations to issue or
other rights to convert any obligations into shares of capital
stock or ownership interests in the subsidiary are
25
▇▇▇▇ AND ▇▇▇▇
DRAFT
5/3/97
outstanding.
[(viii) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, the accounting firm which has
certified the financial statements filed with the Commission
as a part of the Registration Statement, is an independent
public accounting firm within the meaning of the Act and the
Rules and Regulations.]
(ix) The financial statements and schedules of the
Company, including the notes thereto, filed with and as a part
of the Registration Statement, are accurate in all material
respects and present fairly the consolidated financial
position of the Company as of the respective dates thereof and
the consolidated results of operations and statements of cash
flow for the respective periods covered thereby, all in
conformity with generally accepted accounting principles
except as otherwise disclosed in the Prospectus. The selected
financial data included in the Registration Statement and
Prospectus present fairly the information shown therein and
have been compiled on a basis consistent with that of the
audited financial statements in the Registration Statement and
Prospectus.
(x) Neither the Company nor its subsidiary is
in default with respect to any contract or agreement to which
- 11 -
26
it is a party; provided that this representation shall not
apply to defaults which in the aggregate are not materially
adverse to the condition, financial or other, or the business
or prospects of the Company and its subsidiary taken as a
whole.
(xi) Neither the Company nor its subsidiary is in
violation of any other laws, ordinances or governmental rules
or regulations to which it is subject, and neither the Company
nor its subsidiary has failed to obtain any other license,
permit, franchise, easement, consent, or other governmental
authorization necessary to the ownership, leasing and
operation of its properties or to the conduct of its business,
which violation or failure would materially adversely affect
the business, operations, affairs, properties, prospects,
profits or condition (financial or other) of the Company and
its subsidiary taken as a whole. Neither the Company nor its
subsidiary has, at any time during the past five years, (A)
made any unlawful contributions to any candidate for any
political office, or failed fully to disclose any contribution
in violation of law, or (B) made any payment to any state,
federal or foreign government official, or other person
charged with similar public or quasi-public duty (other than
payment required or permitted by applicable law).
(xii) Except as described in the Prospectus, the
Company and its subsidiary own or possess, or can acquire on
reasonable terms, adequate patents, patent licenses,
trademarks, service marks and trade names necessary to conduct
the business now operated by them, and neither the Company nor
its subsidiary has received any notice of infringement of or
conflict with asserted rights of others with respect to any
patents, patent licenses, trademarks, service marks or trade
names which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a material
adverse effect on the conduct of the business, operations,
financial condition or income of the Company and its
subsidiary taken as a whole.
(xiii) The Company and its subsidiary have good and
marketable title to all property owned by them, free and clear
of all liens, encumbrances, restrictions and defects except
such as are described in the Registration Statement
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or do not interfere with the use made and proposed to be made
of such property; and any property held under lease or
sublease by the Company or its subsidiary is held under valid,
subsisting and enforceable leases or subleases with such
exceptions as are not material and do not interfere with the
use made and proposed to be made of such property by the
Company and its subsidiary, and neither the Company nor its
subsidiary has any notice or knowledge of any material claim
of any sort which has been, or may be, asserted by anyone
adverse to the Company's or subsidiary's rights as lessee or
sublessee under any lease or sublease described above, or
affecting or questioning the Company's or its subsidiary's
rights to the continued possession of the leased or subleased
premises under any such lease or sublease in conflict with the
terms thereof.
(xiv) Except as described in the Prospectus,
there is no factual basis for any action, suit or other
proceeding involving the Company or its subsidiary or any of
their material assets for any failure of the Company or its
subsidiary, or any predecessor thereof, to comply with any
requirements of federal, state or local regulation relating to
air, water, solid waste management, hazardous or toxic
substances, or the protection of health or the environment.
Except as described in the Prospectus, none of the property
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28
owned or leased by the Company or its subsidiary is, to the
best knowledge of the Company, contaminated with any waste or
hazardous substances, and neither the Company nor its
subsidiary may be deemed an "owner or operator" of a
"facility" or "vessel" which owns, possesses, transports,
generates or disposes of a "hazardous substance" as those
terms are defined in Section 9601 of the Comprehensive
Environmental Response, Compensation and Liability Act of
1980, 42 U.S.C. Section 9601 et seq.
(xv) No labor disturbance exists with the
employees of the Company or its subsidiary or is imminent
which would have a material adverse effect on the Company and
its subsidiary taken as a whole.
(xvi) The Company has not taken and will not take,
directly or indirectly, any action designed to or which might
reasonably be expected to cause or result in stabilization or
manipulation of the price of the Company's Common Stock, and
the Company is not aware of any such action taken or to be
taken by affiliates of the Company.
(xvii) The Company is not an "investment company"
or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
(b) Each Selling Shareholder severally represents and
warrants to and agrees with each Underwriter and the Company that:
(i) All authorizations and consents necessary
for the execution and delivery by it of this Agreement and the
sale and delivery of the Shares to be sold by such Selling
Shareholder hereunder have been given and are in full force
and effect on the date hereof and will be in full force and
effect on the Closing Date (and, if applicable, the Option
Closing Date).
(ii) Such Selling Shareholder has, and on the
Closing Date (and, if applicable, the Option Closing Date)
will have good and valid title to the Shares to be sold by
such Selling Shareholder, free and clear of all liens,
mortgages, pledges, encumbrances, claims, equities and
security interests whatsoever, and will have, full right,
power and authority to enter into this Agreement and to sell,
assign,
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transfer and deliver the Shares to be sold by such Selling
Shareholder hereunder.
(iii) Upon delivery of and payment for such Shares
hereunder, the several Underwriters will acquire valid and
unencumbered title to such Shares to be sold by such Selling
Shareholder hereunder, free and clear of all liens, mortgages,
pledges, encumbrances, claims, equities and security interests
whatsoever.
(iv) The consummation by such Selling
Shareholder of the transactions contemplated herein and the
fulfillment by such Selling Shareholder of the terms hereof
will not result in a violation or breach of any terms or
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, note, loan agreement, sale and
leaseback arrangement or other agreement or instrument to
which such Selling Shareholder is a party, or of any order,
rule or regulation applicable to such Selling Shareholder of
any court or of any regulatory body of an administrative
agency or other governmental body having jurisdiction.
(v) Such Selling Shareholder has not taken and
will not take, directly or indirectly, any action designed to
or which might be reasonably expected to cause or result in
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30
stabilization or manipulation of the price of the Company's
Common Stock, and such Selling Shareholder is not aware of any
such action taken or to be taken by affiliates of such Selling
Shareholder.
(vi) When the Registration Statement becomes
effective and at all times subsequent thereto, such
information in the Registration Statement and Prospectus and
any amendments or supplements thereto as specifically refers
to such Selling Shareholder will not contain any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading.
(vii) Certificates in negotiable form
representing all of the Shares to be sold by such Selling
Shareholder hereunder have been placed in the custody of
__________________ (the "Custodian") under a Custody Agreement
(the "Custody Agreement"), duly executed and delivered by such
Selling Shareholder, with the Custodians having the authority
to deliver the Shares to be sold by such Selling Shareholder
hereunder, and that such Selling Shareholder has duly executed
and delivered a Power of Attorney (the "Power of Attorney")
appointing ______________ and _____________ as such Selling
Shareholder's attorneys-in-fact (the "Attorneys-in-Fact") with
the Attorneys-in-Fact having authority to execute and deliver
this Agreement on behalf of such Selling Shareholder, to
determine the purchase price to be paid by the Underwriters to
the Selling Shareholders as provided in Section 2, to
authorize the delivery of the Shares to be sold by it
hereunder and otherwise to act on behalf of such Selling
Shareholder in connection with the transactions contemplated
by this Agreement and such Custody Agreement.
(viii) The Shares represented by the certificates
held in custody for such Selling Shareholder under the Custody
Agreement are subject to the interests of the Underwriters
hereunder, and the arrangements made by such Selling
Shareholder for such custody, and the appointment by such
Selling Shareholder of the Custodians under the Custody
Agreement and of the Attorneys-in-Fact by the Power of
Attorney, are to that extent irrevocable.
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(ix) The obligations of such Selling Shareholders
hereunder shall not be terminated by operation of law, whether
by the death or incapacity of any individual Selling
Shareholder or by the occurrence of any other event, and if
any Selling Shareholder should die or become incapacitated, or
if any other such event should occur before the delivery of
the Shares hereunder, certificates representing the Shares
shall be delivered by or on behalf of each Selling Shareholder
in accordance with the terms and conditions of this Agreement
and of the Custody Agreement, and actions taken by the
Custodians pursuant to the Custody Agreement or by the
Attorneys-in-Fact pursuant to the Power of Attorney shall be
as valid as if such death, incapacity or other event had not
occurred, regardless of whether or not the Custodians or
Attorneys-in-Fact, or any of them, shall have received notice
of such death, incapacity or other event.
(x) Such Selling Shareholder is not prompted to
sell shares of Common Stock by any information concerning the
Company or its subsidiary which is not included in the
Registration Statement.
(c) Any certificate signed by any officer of the Company
and delivered to you or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company to each Underwriter as
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32
to the matters covered thereby; and any certificate signed by or on behalf of
the Selling Shareholders as such and delivered to you or to counsel for the
Underwriters shall be deemed a representation and warranty by the Selling
Shareholders to each Underwriter as to the matters covered thereby.
5. ADDITIONAL COVENANTS. The Company and, where
expressly indicated, the Selling Shareholders, covenant and agree with the
several Underwriters that:
(a) If the Registration Statement is not effective under
the Act, the Company will use its best efforts to cause the Registration
Statement to become effective as promptly as possible, and it will notify you,
promptly after it shall receive notice thereof, of the time when the
Registration Statement has become effective. The Company (i) will prepare and
timely file with the Commission under Rule 424(b) of the Rules and Regulations,
if required, a Prospectus containing information previously omitted at the time
of effectiveness of the Registration Statement in reliance on Rule 430A of the
Rules and Regulations or otherwise or a Term Sheet or Abbreviated Term Sheet,
as applicable; (ii) will not file any amendment to the Registration Statement
or supplement to the Prospectus of which the Underwriters shall not previously
have been advised and furnished with a copy or to which the Underwriters shall
have reasonably objected in writing or which is not in compliance with the
Rules and Regulations; and (iii) will promptly notify you after it shall have
received notice thereof of the time when any amendment to the Registration
Statement becomes effective or when any supplement to the Prospectus has been
filed.
(b) The Company will advise the Underwriters promptly,
after it shall receive notice or obtain knowledge thereof, of any request of
the Commission for amendment of the Registration Statement or for supplement to
the Prospectus or for any additional information, or of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or the use of the Prospectus or of the institution or threatening of
any proceedings for that purpose, and the Company will use its best efforts to
prevent the issuance of any such stop order preventing or suspending the use of
the Prospectus and to obtain as soon as possible the lifting thereof, if
issued.
(c) The Company will cooperate with the Underwriters and
their counsel in
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endeavoring to qualify the Shares for sale under the securities laws of such
jurisdictions as they may have designated and will make such applications, file
such documents, and furnish such information as may be necessary for that
purpose, provided the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction where it is not now so qualified or required to file such a
consent or to subject itself to taxation as doing business in any jurisdiction
where it is not now so taxed. The Company will, from time to time, file such
statements, reports, and other documents, as are or may be required to continue
such qualifications in effect for so long a period as the Underwriters may
reasonably request.
(d) The Company will deliver to, or upon the order of,
the Underwriters, without charge from time to time, as many copies of any
Preliminary Prospectus as they may reasonably request. The Company will
deliver to, or upon the order of, the Underwriters without charge as many
copies of the Prospectus, or as it thereafter may be amended or supplemented,
as they may from time to time reasonably request. The Company consents to the
use of such Prospectus by the Underwriters and by all dealers to whom the
Shares may be sold, both in connection with the offering or sale of the Shares
and for such other purposes and for such period of time thereafter as the
Prospectus is required by law to
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34
be delivered in connection with the offering or sale of the Shares. The
Company will deliver to the Underwriters at or before the Closing Date two
signed copies of the Registration Statement and all amendments thereto
including all exhibits filed therewith, and will deliver to the Underwriters
such number of copies of the Registration Statement, without exhibits, and of
all amendments thereto, as they may reasonably request.
(e) If, during the period in which a prospectus is
required by law to be delivered by an Underwriter or dealer, any event shall
occur as a result of which, in the judgment of the Company or in your judgment
or in the opinion of counsel for the Underwriters, it becomes necessary to
amend or supplement the Prospectus in order to make the statements therein, in
light of the circumstances existing at the time the Prospectus is delivered to
a purchaser, not misleading, or, if it is necessary at any time to amend or
supplement the Prospectus to comply with any law, the Company promptly will
prepare and file with the Commission an appropriate amendment to the
Registration Statement or supplement to the Prospectus so that the Prospectus
as so amended or supplemented will not, in the light of the circumstances when
it is so delivered, be misleading, or so that the Prospectus will comply with
law.
(f) The Company will make generally available to its
shareholders and will file as an exhibit in a report pursuant to the Securities
Exchange Act of 1934, as amended (the "1934 Act"), as soon as it is practicable
to do so, but in any event not later than 15 months after the effective date of
the Registration Statement, an earnings statement in reasonable detail,
covering a period of at least 12 consecutive months beginning after the
effective date of the Registration Statement, which earnings statement shall
satisfy the requirements of Section 11(a) of the Act and Rule 158 of the Rules
and Regulations and will advise the Underwriters in writing when such statement
has been so made available.
(g) The Company will, for a period of five years from the
Closing Date, deliver to the Underwriters at their principal executive offices
a reasonable number of copies of annual reports, quarterly reports, current
reports and copies of all other documents, reports and information furnished by
the Company to its shareholders or filed with any securities exchange pursuant
to the requirements of such exchange or with the Commission pursuant to the Act
or the 1934 Act. The Company will deliver to the
35
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DRAFT
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Underwriters similar reports with respect to any significant subsidiaries, as
that term is defined in the Rules and Regulations, which are not consolidated
in the Company's financial statements. Any report, document or other
information required to be furnished under this paragraph (g) shall be
furnished as soon as practicable after such report, document or information
becomes available.
(h) The Company will apply the proceeds from the sale of
the Shares as set forth in the description under "Use of Proceeds" in the
Prospectus, which description complies in all respects with the requirements of
Item 504 of Regulation S-K.
(i) The Company will supply you with copies of all
correspondence to and from, and all documents issued to and by, the Commission
in connection with the registration of the Shares under the Act.
(j) Prior to the Closing Date (and, if applicable, the
Option Closing Date), the Company will furnish to you, as soon as they have
been prepared, copies of any unaudited interim consolidated financial
statements of the Company and its subsidiaries for any periods subsequent to
the periods covered by the financial statements appearing in the Registration
Statement and the Prospectus.
(k) Prior to the Closing Date (and, if applicable, the
Option Closing Date),
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36
neither the Company nor any Selling Shareholder will issue any press releases
or other communications directly or indirectly and will hold no press
conferences with respect to the Company or its subsidiary, the financial
condition, results of operations, business, properties, assets or liabilities
of the Company or its subsidiary, or the offering of the Shares, without your
prior written consent.
(l) The Company will use its best efforts to obtain
approval for, and maintain the quotation of the Shares on, the National
Association of Securities Dealers, Inc. Automated Quotation/National Market
System (the "Nasdaq/NMS").
(m) For a period of 180 days from the Effective Date, the
Company will not, and will use its best efforts to cause its directors and
officers to not, directly or indirectly sell, contract to sell or otherwise
dispose of any shares of the Company's Common Stock, any securities
exchangeable for Common Stock or any other rights to acquire such shares
without your prior written consent, except for the Shares sold hereunder and
except for sales of shares of Common Stock to the Company's employees pursuant
to the exercise of options under the Company's stock option plan.
(n) For a period of 180 days from the Effective Date, the
Selling Shareholders will not directly or indirectly sell, contract to sell or
otherwise dispose of any shares of the Company's Common Stock or rights to
acquire such shares without your prior written consent, except for the Shares
sold hereunder.
(o) The Company and its subsidiary will maintain and
keep accurate books and records reflecting their assets and maintain internal
accounting controls which provide reasonable assurance that (1) transactions
are executed in accordance with management's authorization, (2) transactions
are recorded as necessary to permit the preparation of the Company's financial
statements and to maintain accountability for the assets of the Company and its
subsidiaries, (3) access to the assets of the Company and its subsidiary is
permitted only in accordance with management's authorization, and (4) the
recorded accounts of the assets of the Company and its subsidiary are compared
with existing assets at reasonable intervals.
6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several
obligations of the Underwriters to purchase and pay for the Shares, as provided
37
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DRAFT
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herein, shall be subject to the accuracy in all material respects, as of the
date hereof and as of the Closing Date (and, if applicable, the Option Closing
Date), of the representations and warranties of the Company and the Selling
Shareholders contained herein, to the performance in all material respects by
the Company and the Selling Shareholders of their covenants and obligations
hereunder, and to the following additional conditions:
(a) All filings required by Rule 424 and Rule 430A of the
Rules and Regulations shall have been made. No stop order suspending the
effectiveness of the Registration Statement, as amended from time to time,
shall have been issued and no proceeding for that purpose shall have been
initiated or, to the knowledge of the Company or any Underwriter, threatened or
contemplated by the Commission, and any request of the Commission for
additional information (to be included in the Registration Statement or the
Prospectus or otherwise) shall have been complied with to the reasonable
satisfaction of the Underwriters.
(b) No Underwriter shall have disclosed in writing to the
Company on or prior to the Closing Date (and, if applicable, the Option Closing
Date), that the Registration Statement or Prospectus or any amendment or
supplement thereto contains an untrue statement of fact which, in the opinion
of counsel to the Underwriters, is
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38
material, or omits to state a fact which, in the opinion of such counsel, is
material and is required to be stated therein or is necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(c) On the Closing Date (and, if applicable, the Option
Closing Date), you shall have received the opinion of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇
LLP ("▇▇▇▇▇▇ ▇▇▇▇"), counsel for the Company, addressed to you and dated the
Closing Date (and, if applicable, the Option Closing Date), to the effect
that:
(i) The Company and its subsidiary have been
duly incorporated and are validly existing as corporations in
good standing under the laws of the states or other
jurisdictions in which they are incorporated, with full power
and authority (corporate and other) to own, lease and operate
their properties and conduct their business as described in
the Registration Statement; the Company and its subsidiary are
duly qualified to do business as foreign corporations in good
standing in each state or other jurisdiction in which their
ownership or leasing of property or conduct of business
legally requires such qualification, except where the failure
to be so qualified would not have a material adverse effect on
the ability of the Company and its subsidiary to conduct their
business as described in the Registration Statement; and the
outstanding shares of capital stock of the Company's
subsidiary have been duly authorized and validly issued, are
fully paid and nonassessable and, to the knowledge of such
counsel after due inquiry, are owned by the Company free and
clear of any mortgage, pledge, lien, encumbrance, charge or
adverse claim and are not the subject of any agreement or
understanding with any person; no options, warrants or other
rights to purchase, agreement or other obligations to issue or
other rights to convert any obligations into shares of capital
stock or ownership interests in the subsidiary are
outstanding.
(ii) The Company has duly and validly
authorized capital stock as set forth under the heading
"Capitalization" in the Prospectus; all outstanding shares
of Common Stock of the Company and the Shares conform to the
description thereof in the Prospectus under the heading
"Description of Capital Stock", and the outstanding shares
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of Common Stock have been duly authorized and are validly
issued, fully paid and non-assessable; the Shares to be
sold by the Company have been duly authorized and, when
delivered and paid for in accordance with this Agreement, will
be validly issued, fully paid and non-assessable, and the
shareholders of the Company have no preemptive rights with
respect to the Shares.
(iii) Such counsel has been advised by the staff
of the Commission that the Registration Statement has become
effective under the Act and, to the knowledge of such counsel
after due inquiry, no stop order suspending the effectiveness
of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are
pending or contemplated under the Act.
(iv) The Registration Statement and the
Prospectus, and each amendment or supplement thereto, as of
their respective effective or issue date, comply as to form
and appear on their face to be appropriately responsive in all
material respects to the requirements of the Act and the
applicable rules and regulations (except that such counsel
need express no opinion as to the financial statements or
other financial data).
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40
(v) The descriptions in the Registration
Statement and Prospectus of contracts and other documents
filed as exhibits to the Registration Statement are accurate
in all material respects; all other material agreements
between the Company and third parties expressly referenced in
the Prospectus are legal, valid and binding obligations of the
Company.
(vi) No authorization, approval, consent,
order, registration or qualification of or with any court or
governmental body, authority or agency is required with
respect to the Company in connection with the transactions
contemplated by this Agreement, except such as may be required
under the Act or the Rules and Regulations or as may be
required by the NASD or under state securities laws in
connection with the purchase and distribution of the Shares by
the Underwriters.
(vii) The filing of the Registration Statement
has been duly authorized by the Board of Directors of the
Company. This Agreement has been duly authorized, executed
and delivered by the Company. The performance of this
Agreement and the consummation of the transactions herein
contemplated will not result in a violation of the Company's
articles of incorporation or bylaws or result in a breach or
violation of any of the terms and provisions of, or constitute
a default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any properties or assets
of the Company and its subsidiary under, any statute, or under
any indenture, mortgage, deed of trust, note, loan agreement,
sale and leaseback arrangement, or any other agreement or
instrument known to such counsel after due inquiry to which
the Company or its subsidiary is a party or by which they are
bound or to which any of the properties or assets of the
Company or its subsidiary are subject, or any order, rule or
regulation known to such counsel after due inquiry of any
court or governmental agency or body having jurisdiction over
the Company or its subsidiary or their properties, except, in
the case of any such violation, breach, default, creation or
imposition, to such extent as does not materially adversely
affect the business of the Company and its subsidiary taken as
a whole.
(viii) To the knowledge of such counsel after due
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inquiry, (A) there are no material (individually, or in the
aggregate) legal, governmental or regulatory proceedings
pending or threatened to which the Company or its subsidiary
is a party or of which the business or properties of the
Company or its subsidiary is the subject which are not
disclosed in the Registration Statement and Prospectus; (B)
there are no contracts or documents 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
which are not described or filed as required; and (C) there
are no statutes or regulations required to be described in the
Registration Statement or Prospectus which are not described
as required.
(ix) To the knowledge of such counsel after due
inquiry, the Company and its subsidiary hold all licenses,
certificates, permits and approvals from all state, federal
and other regulatory authorities, and have satisfied in all
material respects the requirements imposed by regulatory
bodies, administrative agencies or other governmental bodies,
agencies or officials, that are required for the Company and
its subsidiary lawfully to own, lease and operate its
properties and conduct its business as described in the
Prospectus, and, to the knowledge of such counsel after due
inquiry, each of the Company and its subsidiary is
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42
conducting its business in compliance in all material respects
with all of the laws, rules and regulations of each
jurisdiction in which it conducts its business.
(x) The statements made in the Registration
Statement under the captions "Dividend Policy",
"Capitalization", "Description of Capital Stock", and "Certain
Charter and Bylaw Provisions", to the extent that they
constitute summaries of documents referred to therein or
matters of law or legal conclusions, have been reviewed by
such counsel and are accurate summaries and fairly present the
information disclosed therein.
(xi) The Company is not an "investment company"
or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
Such counsel shall confirm that in the course of its duties in
connection with the preparation of the Registration Statement and Prospectus,
nothing came to such counsel's attention that would lead them to believe that
either the Registration Statement or Prospectus or any amendment or supplement
thereto (other than the financial statements or other financial data as to
which such counsel need express no opinion) contains any untrue statement of a
material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
In rendering the foregoing opinion, such counsel may rely,
provided that the opinion shall state that you and they are entitled to so
rely, (1) as to matters involving laws of any jurisdiction other than the
Commonwealth of Virginia, the General Corporation Law of the State of Delaware
or the United States, upon opinions addressed to the Underwriters of other
counsel satisfactory to them and ▇▇▇▇ and ▇▇▇▇ LLP ("▇▇▇▇ and ▇▇▇▇"), counsel
to the Underwriters, and (2) as to all matters of fact, upon certificates and
written statements of the executive officers of, and accountants for, the
Company.
(d) On the Closing Date (and, if applicable, the Option
Closing Date), you shall have received the opinion of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇
LLP, counsel to the Selling Shareholders, addressed to you and dated the
Closing Date (and, if applicable, the Option Closing Date),
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to the effect that:
(i) Each Selling Shareholder has duly
authorized, executed and delivered the Custody Agreement and
Power of Attorney, appointing __________________ as such
Selling Shareholder's Custodian with authority to take custody
of and deliver (a) the Shares as represented by certificates
on behalf of such Selling Shareholder in connection with the
transactions contemplated by this Agreement and (b) the
Custody Agreement, and appointing __________________ and
_____________ as such Selling Shareholder's attorneys-in-fact
with authority to execute and deliver this Agreement on behalf
of such Selling Shareholder and otherwise to act on behalf of
such Selling Shareholder in connection with the transactions
contemplated by this Agreement and the Power of Attorney.
(ii) This Agreement has been duly authorized,
executed and delivered on behalf of the Selling Shareholders,
and is a valid and legally binding obligation of the Selling
Shareholders enforceable in accordance with its terms (except
to the extent the enforceability of the indemnification
provisions of Section 7 hereof may be limited by public policy
considerations as expressed in the Act and as construed by
courts of competent jurisdiction and
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44
except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally).
(iii) Each Selling Shareholder has full legal
right, power and authority, and any approval required by law
(other than as required by the Act, the NASD and state
securities and Blue Sky Laws) to sell, assign, transfer and
deliver the Shares to be sold by such Selling Shareholder.
(iv) No consent, approval, authorization or
order of any court, or governmental agency or body is required
for consummation of the transactions contemplated by this
Agreement in connection with the Shares to be sold by each
Selling Shareholder hereunder except such as may be required
under the Act or the Rules and Regulations or as may be
required by the NASD or under state securities laws.
(v) Each Selling Shareholder has good and
valid title to the Shares being sold by such Selling
Shareholder hereunder, free and clear of all liens, mortgages,
pledges, encumbrances, claims, equities and security
interests, and has transferred to the Underwriters good and
valid title to the Shares being sold by such Selling
Shareholder on the Closing Date (and, if applicable, the
Option Closing Date), free and clear of all liens, mortgages,
pledges, encumbrances, claims, equities and security interests
whatsoever.
In rendering the foregoing opinion, such counsel may rely,
provided that the opinion shall state that you and they are entitled to so
rely, (1) as to matters involving laws of any jurisdiction other than the
Commonwealth of Virginia or the United States, upon opinions addressed to the
Underwriters of other counsel satisfactory to them and to ▇▇▇▇ and ▇▇▇▇, and
(2) as to all matters of fact, upon certificates and written statements of the
Selling Shareholders.
(e) You shall have received on the Closing Date (and, if
applicable, the Option Closing Date), from ▇▇▇▇ and ▇▇▇▇, counsel to the
Underwriters, such opinion or opinions, dated the Closing Date (and, if
applicable, the Option Closing Date) with respect to the incorporation of the
Company, the validity of the Shares, the Registration Statement, the Prospectus
and other related matters
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as you may reasonably require; the Company and Selling Shareholders shall have
furnished to such counsel such documents as they reasonably request for the
purpose of enabling them to pass on such matters.
(f) You shall have received at or prior to the Closing
Date from ▇▇▇▇ and ▇▇▇▇ a memorandum or memoranda, in form and substance
satisfactory to you, with respect to the qualification for offering and sale by
the Underwriters of the Shares under state securities or Blue Sky laws of such
jurisdictions as the Underwriters may have designated to the Company.
(g) On the business day immediately preceding the date of
this Agreement and on the Closing Date (and, if applicable, the Option Closing
Date), you shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, a letter or letters,
dated the date of this Agreement and the Closing Date (and, if applicable, the
Option Closing Date), respectively, in form and substance satisfactory to you,
confirming that they are independent public accountants with respect to the
Company within the meaning of the Act and the published Rules and Regulations,
and the answer to Item 509 of Regulation S-K set forth in the Registration
Statement is correct insofar as it relates to them, and stating to the effect
set forth in Schedule III hereto.
(h) Except as contemplated in the Prospectus, (i) neither
the Company nor
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46
its subsidiary shall have sustained since the date of the latest audited
financial statements included in the Prospectus any loss or interference with
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree; and (ii) subsequent to the respective dates as of
which information is given in the Registration Statement and the Prospectus,
neither the Company nor its subsidiary shall have incurred any liability or
obligation, direct or contingent, or entered into transactions, and there shall
not have been any change in the capital stock or long-term debt of the Company
and its subsidiaries or any change in the condition (financial or other), net
worth, business, affairs, management, prospects or results of operations of the
Company or its subsidiary, the effect of which, in any such case described in
clause (i) or (ii), is in your judgment so material or adverse as to make it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered on such Closing Date (and, if
applicable, the Option Closing Date) on the terms and in the manner
contemplated in the Prospectus.
(i) There shall not have occurred any of the following:
(i) a suspension or material limitation in trading in securities generally on
the New York Stock Exchange or the American Stock Exchange or the establishing
on such exchanges by the Commission or by such exchanges of minimum or maximum
prices which are not in force and effect on the date hereof; (ii) a general
moratorium on commercial banking activities declared by either federal or state
authorities; (iii) the outbreak or escalation of hostilities involving the
United States or the declaration by the United States of a national emergency
or war, if the effect of any such event specified in this clause (iii) in your
judgment makes it impracticable or inadvisable to proceed with the public
offering or the delivery of the Shares in the manner contemplated in the
Prospectus; (iv) any calamity or crisis, change in national, international or
world affairs, act of God, change in the international or domestic markets, or
change in the existing financial, political or economic conditions in the
United States or elsewhere, if the effect of any such event specified in this
clause (iv) makes it impracticable or inadvisable to proceed with the public
offering or the delivery of the Shares in the manner contemplated in the
Prospectus; or (v) the enactment, publication, decree, or other promulgation of
any federal or state statute, regulation, rule, or order of any court or other
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governmental authority, or the taking of any action by any federal, state or
local government or agency in respect of fiscal or monetary affairs, if the
effect of any such event specified in this clause (v) in your judgment makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares in the manner contemplated in the Prospectus.
(j) You shall have received certificates, dated the
Closing Date (and, if applicable, the Option Closing Date) and signed by the
President and the Chief Financial Officer of the Company stating that (i) they
have carefully examined the Registration Statement and the Prospectus as
amended or supplemented and nothing has come to their attention that would lead
them to believe that either the Registration Statement or the Prospectus, or
any amendment or supplement thereto as of their respective effective or issue
dates, contained, and the Prospectus as amended or supplemented at such Closing
Date, contains any untrue statement of a material fact, or omits to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and, that (ii) all representations and warranties made herein
by the Company are true and correct in all material respects at such Closing
Date, with the same effect as if made on and as of such Closing Date, and all
agreements herein to be performed by the Company on or prior to such Closing
Date have
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48
been duly performed in all material respects.
(k) The Company and each of the Selling Shareholders
shall not have failed, refused, or been unable, at or prior to the Closing Date
(and, if applicable, the Option Closing Date) to have performed in all material
respects any agreement on their part to be performed or any of the conditions
herein contained and required to be performed or satisfied by them at or prior
to such Closing Date.
(l) The Company and the Selling Shareholders shall have
furnished to you at the Closing Date (and, if applicable, the Option Closing
Date) such other certificates as you may have reasonably requested as to the
accuracy, on and as of such Closing Date, of the representations and warranties
of the Company and the Selling Shareholders herein and as to the performance by
the Company and the Selling Shareholders of their obligations hereunder.
(m) The Shares shall have been approved for trading upon
official notice of issuance on the Nasdaq/NMS.
All such opinions, certificates, letters and documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory to you and to ▇▇▇▇ and ▇▇▇▇, counsel for the several Underwriters.
The Company and Selling Shareholders will furnish you with such conformed
copies of such opinions, certificates, letters and documents as you may
request.
If any of the conditions specified above in this Section 6
shall not have been satisfied at or prior to the Closing Date (and, if
applicable, the Option Closing Date) or waived by you in writing, this
Agreement may be terminated by you on notice to the Company and the Selling
Shareholders.
7. INDEMNIFICATION. (a) The Company will indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of the Act, against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter or such controlling
person may become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, or in any blue sky
application or other
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document executed by the Company or based on any information furnished in
writing by the Company, filed in any jurisdiction in order to qualify any or
all of the Shares under the securities laws thereof ("Blue Sky Application"),
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; and will reimburse each Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by such Underwriter
or such controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in the
Registration Statement, such Preliminary Prospectus or the Prospectus, or such
amendment or supplement, or any Blue Sky Application in reliance upon and in
conformity with written information furnished to the Company by you or by any
Underwriter through you, specifically for use in the preparation thereof; and
provided, further, that if any Preliminary Prospectus or the Prospectus
contained any alleged untrue statement or allegedly omitted to state therein a
material fact required to be stated therein or necessary to make the statements
therein not
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50
misleading and such statement or omission shall have been corrected in a
revised Preliminary Prospectus or in the Prospectus or in an amended or
supplemented Prospectus, the Company shall not be liable to any Underwriter or
controlling person under this subsection (a) with respect to such alleged
untrue statement or alleged omission to the extent that any such loss, claim,
damage or liability of such Underwriter or controlling person results from the
fact that such Underwriter sold Shares to a person to whom there was not sent
or given, at or prior to the written confirmation of such sale, such revised
Preliminary Prospectus or Prospectus or amended or supplemented Prospectus.
This indemnity agreement shall be in addition to any liabilities which the
Company may otherwise have.
(b) Each Selling Shareholder will indemnify and hold
harmless each Underwriter and each person, if any, who controls any Underwriter
within the meaning of the Act, against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter or controlling person
may become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, or any Blue Sky Application
or arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements 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, such Preliminary
Prospectus or the Prospectus, or such amendment or supplement, or any Blue Sky
Application, in reliance upon and in conformity with written information
furnished to the Company or any Underwriter by such Selling Shareholder
specifically for use in the preparation thereof; and will reimburse any legal
or other expenses reasonably incurred by each Underwriter and each person, if
any, who controls any Underwriter within the meaning of the Act, in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity contained in this subsection (b)
with respect to any Preliminary Prospectus shall not inure to the benefit of
any Underwriter (or to the benefit of any person controlling such Underwriter)
in respect of any action or claim asserted by a
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person who purchased any Shares from such Underwriter, if, within the time
required by the Act such person was not sent or given a copy of the Prospectus,
as then amended or supplemented. This indemnity agreement shall be in addition
to any liabilities which the Selling Shareholders may otherwise have.
(c) Each Underwriter will indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed the
Registration Statement and, each person, if any, who controls the Company
within the meaning of the Act, and each Selling Shareholder, against any
losses, claims, damages or liabilities, joint or several, to which the Company
or any such director, officer or controlling person or any such Selling
Shareholder may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of
any material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, any amendment or supplement thereto, or any Blue
Sky Application or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or
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52
omission or alleged omission was made in the Registration Statement, such
Preliminary Prospectus or the Prospectus, such amendment or supplement, or any
Blue Sky Application in reliance upon and in conformity with written
information furnished to the Company by any such Underwriter specifically for
use in the preparation thereof; and will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer or controlling
person or any such Selling Shareholder in connection with investigating or
defending any such loss, claim, damage, liability or action. This indemnity
agreement shall be in addition to any liabilities which the Underwriters may
otherwise have.
(d) Any party which proposes to assert the right to be
indemnified under this Section 7 shall, within ten days after receipt of notice
of commencement of any action, suit or proceeding against such party in respect
of which a claim is to be made against an indemnifying party under this Section
7, notify each such indemnifying party of the commencement of such action, suit
or proceeding, enclosing a copy of all papers served, but the omission so to
notify such indemnifying party of any such action, suit or proceeding shall not
relieve such indemnifying party from any liability which it may have to any
indemnified party otherwise than under this Section 7. In case any such
action, suit or proceeding shall be brought against any indemnified party and
it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in, and, to the extent that
it shall wish, jointly with any other indemnifying party, similarly notified,
to assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses, other than reasonable costs of investigation, subsequently
incurred by such indemnified party in connection with the defense thereof. The
indemnified party shall have the right to employ its own counsel in any such
action, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the employment of counsel by such indemnified
party at the expense of the indemnifying party has been authorized by the
indemnifying party, (ii) the indemnified party shall have been advised by such
counsel in a written opinion that there may be a conflict of interest between
the indemnifying party and the indemnified party in the conduct of
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the defense, or certain aspects of the defense, of such action (in which case
the indemnifying party shall not have the right to direct the defense of such
action with respect to those matters or aspects of the defense on which a
conflict exists or may exist on behalf of the indemnified party) or (iii) the
indemnifying party shall not in fact have employed counsel to assume the
defense of such action, in any of which events such fees and expenses to the
extent applicable shall be borne by the indemnifying party. An indemnifying
party shall not be liable for any settlement of any action or claim effected
without its consent. Each indemnified party, as a condition of such indemnity,
shall cooperate in good faith with the indemnifying party in the defense of any
such action or claim.
(e) If the indemnification provided for in this Section 7
is for any reason, other than pursuant to the terms thereof, judicially
determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right to appeal) to be unavailable to an indemnified party under subsections
(a), (b) or (c) above in respect of any losses, claims, damages or liabilities
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54
(or actions in respect thereof) referred to therein, then each indemnifying
party shall, in lieu of indemnifying such indemnified party, contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, the Selling Shareholders and the Underwriters from the offering of the
Shares, provided, however, that for each of the Selling Shareholders, such
benefit shall include the amount paid, if any, to each such Selling Shareholder
from the proceeds from the offering (the "S Corporation Distribution"). If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault, as applicable, of the Company, the Selling Shareholders and the
Underwriters in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities (or actions in respect thereof), as
well as other relevant equitable considerations. The relative benefits
received by, as applicable, the Company, the Selling Shareholders and the
Underwriters shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Company
and the Selling Shareholders bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the
table on the cover page of the Prospectus, provided, however, that for each
Selling Shareholder, such proportion of the proceeds shall include the amount,
if any, paid to each such Selling Shareholder from the S Corporation
Distribution. The relative fault shall be determined by reference to, among
other things, whether the untrue statement of a material fact or the omission
or alleged omission to state a material fact relates to information supplied by
the Company, the Selling Shareholders or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, the Selling Shareholders and
the Underwriters agree that it would not be just and equitable if contributions
pursuant to this subsection (e) 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 above in this subsection (e). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this
subsection (e) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
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investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (e), no Underwriter shall be required to
contribute any amount in excess of the underwriting discounts and commissions
applicable to the Shares purchased by such Underwriter. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this subsection
(e) to contribute are several in proportion to their respective underwriting
obligations and not joint.
8. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties, and agreements of the Company and the Selling
Shareholders contained in Sections 7 and 11 herein or in certificates delivered
pursuant hereto, and the agreements of the Underwriters contained in Section 7
hereof, shall remain operative and in full force and effect regardless of any
termination or cancellation of this Agreement or any investigation made by or
on behalf of any Underwriter or any controlling person, the Company or any of
its officers, directors or any controlling persons, or the Selling
Shareholders, and shall survive delivery of the Shares to the Underwriters
hereunder.
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56
9. SUBSTITUTION OF UNDERWRITERS. (a) If any Underwriter
shall default in its obligation to purchase the Shares which it has agreed to
purchase hereunder, you may in your discretion arrange for you or another party
or other parties to purchase such Shares on the terms contained herein. If
within thirty-six hours after such default by any Underwriter you do not
arrange for the purchase of such Shares, then the Company and the Selling
Shareholders shall be entitled to a further period of thirty-six hours within
which to procure another party or parties reasonably satisfactory to you to
purchase such Shares on such terms. In the event that, within the respective
prescribed periods, you notify the Company and the Selling Shareholders that
you have so arranged for the purchase of such Shares, or the Company and the
Selling Shareholders notify you that they have so arranged for the purchase of
such Shares, you or the Company and the Selling Shareholders shall have the
right to postpone the Closing Date for a period of not more than seven days, in
order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in your opinion may thereby be
made necessary. The term "Underwriter" as used in this Agreement shall include
any persons substituted under this Section 9 with like effect as if such person
had originally been a party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters made by you
or the Company and the Selling Shareholders as provided in subsection (a)
above, the aggregate number of Shares which remains unpurchased does not exceed
one tenth of the total Shares to be sold on the Closing Date, then the Company
and the Selling Shareholders shall have the right to require each
non-defaulting Underwriter to purchase the Shares which such Underwriter agreed
to purchase hereunder and, in addition, to require each non-defaulting
Underwriter to purchase its pro rata share (based on the number of Shares which
such Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the
purchase of the
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Shares of a defaulting Underwriter or Underwriters made by you or the Company
and the Selling Shareholders as provided in subsection (a) above, the number of
Shares which remains unpurchased exceeds one tenth of the total Shares to be
sold on the Closing Date, or if the Company and the Selling Shareholders shall
not exercise the right described in subsection (b) above to require the
non-defaulting Underwriters to purchase Shares of the defaulting Underwriter or
Underwriters, then this Agreement shall thereupon terminate, without liability
on the part of any non-defaulting Underwriter or the Company and the Selling
Shareholders except for the expenses to be borne by the Company and the
Underwriters as provided in Section 11 hereof and the indemnity and
contribution agreements in Section 7 hereof; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
10. EFFECTIVE DATE AND TERMINATION. (a) This Agreement
shall become effective at 1:00 p.m., St. Louis time, on the first business day
following the effective date of the Registration Statement, or at such earlier
time after the effective date of the Registration Statement as you in your
discretion shall first release the Shares for offering to the public; provided,
however, that the provisions of Section 7 and 11 shall at all times be
effective. For the purposes of this Section 10(a), the Shares shall be deemed
to have been released to the public upon release by you of
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58
the publication of a newspaper advertisement relating to the Shares or upon
release of telegrams, facsimile transmissions or letters offering the Shares
for sale to securities dealers, whichever shall first occur.
(b) This Agreement may be terminated by you at any time
before it becomes effective in accordance with Section 10(a) by notice to the
Company and the Selling Shareholders; provided, however, that the provisions of
this Section 10 and of Section 7 and Section 11 hereof shall at all times be
effective. In the event of any termination of this Agreement pursuant to
Section 9 or this Section 10(b) hereof, the Company and the Selling
Shareholders shall not then be under any liability to any Underwriter except as
provided in Section 7 or Section 11 hereof.
(c) This Agreement may be terminated by you at any time
at or prior to the Closing Date by notice to the Company and the Selling
Shareholders if any condition specified in Section 6 hereof shall not have been
satisfied on or prior to the Closing Date. Any such termination shall be
without liability of any party to any other party except as provided in
Sections 7 and 11 hereof.
(d) This Agreement also may be terminated by you, by
notice to the Company and the Selling Shareholders, as to any obligation of
the Underwriters to purchase the Option Shares, if any condition specified in
Section 6 hereof shall not have been satisfied at or prior to the Option
Closing Date or as provided in Section 9 of this Agreement.
If you terminate this Agreement as provided in Sections 10(b),
10(c) or 10(d), you shall notify the Company and the Selling Shareholders by
telephone or telegram, confirmed by letter.
11. COSTS AND EXPENSES. The Company and the Selling
Shareholders will bear and pay the costs and expenses incident to the
registration of the Shares and public offering thereof, including, without
limitation, (a) the fees and expenses of the Company's accountants and the fees
and expenses of counsel for the Company, (b) the preparation, printing,
filing, delivery and shipping of the Registration Statement, each Preliminary
Prospectus, the Prospectus and any amendments or supplements thereto (except as
otherwise expressly provided in Section 5(d) hereof) and the printing, delivery
and shipping of this Agreement, the Agreement
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Among Underwriters, the Selected Dealer Agreement, Underwriters' Questionnaires
and Powers of Attorney and Blue Sky Memoranda, (c) the furnishing of copies of
such documents (except as otherwise expressly provided in Section 5(d) hereof)
to the Underwriters, (d) the registration or qualification of the Shares for
offering and sale under the securities laws of the various states, including
the reasonable fees and disbursements of Underwriters' counsel relating to such
registration or qualification, (e) the fees payable to the NASD and the
Commission in connection with their review of the proposed offering of the
Shares, (f) all printing and engraving costs related to preparation of the
certificates for the Shares, including transfer agent and registrar fees, (g)
all initial transfer taxes, if any, (h) all fees and expenses relating to the
authorization of the Shares for trading on Nasdaq/NMS, (i) all travel expenses,
including air fare and accommodation expenses, of representatives of the
Company in connection with the offering of the Shares and (j) all of the other
costs and expenses incident to the performance by the Company of the
registration and offering of the Shares; provided, however, that the
Underwriters will bear and pay the fees and expenses of the Underwriters'
counsel (other than fees and disbursements relating to the registration or
qualification of the Shares for offering and sale under the securities laws of
the various states), the Underwriters' out-of-pocket expenses, and any
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60
advertising costs and expenses incurred by the Underwriters incident to the
public offering of the Shares; and provided, further, that the Selling
Shareholders will bear and pay the fees and expenses of the Selling
Shareholders' counsel.
If this Agreement is terminated by you in accordance with the
provisions of Section 10(c), the Company shall reimburse the Underwriters for
all of their out-of-pocket expenses, including the reasonable fees and
disbursements of counsel to the Underwriters.
12. DEFAULT OF SELLING SHAREHOLDERS. Failure or refusal
by any of the Selling Shareholders to sell and deliver on the Closing Date the
Shares agreed to be sold and delivered by such Selling Shareholder shall in no
manner relieve the other Selling Shareholders or the Company of their
respective obligations under this Agreement. If any Selling Shareholder should
fail or refuse to sell and deliver his Shares, the remaining Selling
Shareholders shall have the right hereby granted to increase, pro rata or
otherwise, the number of Shares to be sold by them hereunder to the total
number of Shares to be sold by all Selling Shareholders as set forth in
Schedule I. If the remaining Selling Shareholders do not fully exercise the
right to increase the number of Shares to be sold by them, the Underwriters, at
your option, will have the right to elect to purchase or not to purchase the
Shares to be sold by the Company and the remaining Selling Shareholders. In
the event the Underwriters purchase the Shares of the Company and such other
Selling Shareholders pursuant to this Section 12, the Closing Date shall be
postponed for a period of not more than seven days in order that the
Registration Statement and Prospectus or other documents may be amended or
supplemented if and to the extent necessary under the provisions of the Act and
the Rules and Regulations or under the securities laws of any jurisdiction. If
the Underwriters determine not to purchase the Shares of the Company and the
other Selling Shareholders, if any, this Agreement shall terminate and neither
the Company nor the Underwriters nor any other Selling Shareholder shall be
under any obligation under this Agreement except as provided in Section 7
hereof and except for the obligation of the Company to pay for such expenses as
are set forth in Section 11 hereof. Nothing herein shall relieve a defaulting
Selling Shareholder from liability for his default or from liability under
Section 7 hereof or for expenses imposed by this Agreement upon such Selling
Shareholder.
61
▇▇▇▇ AND ▇▇▇▇
DRAFT
5/3/97
13. NOTICES. All notices or communications hereunder,
except as herein otherwise specifically provided, shall be in writing and if
sent to the Underwriters shall be mailed, delivered, sent by facsimile
transmission, or telegraphed and confirmed c/o ▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc. at ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Syndicate,
facsimile number (▇▇▇) ▇▇▇-▇▇▇▇, or if sent to the Company shall be mailed,
delivered, sent by facsimile transmission, or telegraphed and confirmed to the
Company at ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, facsimile number (▇▇▇) ▇▇▇-▇▇▇▇, or if sent to any Selling
Shareholder shall be mailed, delivered, sent by facsimile transmission or
telegraphed and confirmed to such Selling Shareholder, c/o the Attorney-in-Fact
at _______________. Notice to any Underwriter pursuant to Section 7 shall be
mailed, delivered, sent by facsimile transmission, or telegraphed and confirmed
to such Underwriter's address as it appears in the Underwriters' Questionnaire
furnished in connection with the offering of the Shares or as otherwise
furnished to the Company and the Selling Shareholder.
14. PARTIES. This Agreement shall inure to the benefit
of and be binding upon the Underwriters and the Selling Shareholders, and the
Company and their respective successors and assigns. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person, corporation or other entity, other
- 47 -
62
than the parties hereto and their respective successors and assigns and the
controlling persons, officers and directors referred to in Section 7, any legal
or equitable right, remedy or claim under or in respect of this Agreement or
any provision herein contained; this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of the parties hereto and their respective successors and assigns and
said controlling persons and said officers and directors, and for the benefit
of no other person, corporation or other entity. No purchaser of any of the
Shares from any Underwriter shall be construed a successor or assign by reason
merely of such purchase.
In all dealings with the Company and the Selling Shareholders
under this Agreement you shall act on behalf of each of the several
Underwriters, the Company, and the Selling Shareholders shall be entitled to
act and rely upon any statement, request, notice or agreement on behalf of the
Underwriters, made or given by you on behalf of the Underwriters, as if the
same shall have been made or given in writing by the Underwriters.
15. COUNTERPARTS. This Agreement may be executed by any
one or more of the parties hereto in any number of counterparts, each of which
shall be deemed to be an original, but all such counterparts shall together
constitute one and the same instrument.
16. PRONOUNS. Whenever a pronoun of any gender or number
is used herein, it shall, where appropriate, be deemed to include any other
gender and number.
17. APPLICABLE LAW. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Missouri.
63
▇▇▇▇ AND ▇▇▇▇
DRAFT
5/3/97
If the foregoing is in accordance with your understanding,
please so indicate in the space provided below for that purpose, whereupon this
letter shall constitute a binding agreement among the Company, each of the
Selling Shareholders and the Underwriters.
-----------------------------------
By:
--------------------------------
Title:
-----------------------------
Selling Shareholders Named in
Schedule I Hereto
By:
--------------------------------
Attorney-in-Fact
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64
Accepted in St. Louis,
Missouri as of the date
first above written, on
behalf of ourselves and each
of the several Underwriters
named in Schedule II hereto.
▇.▇. ▇▇▇▇▇▇▇ & SONS, INC.
By:
----------------------------
Title:
-------------------------
65
SCHEDULE I
Number of
Selling Shareholders Firm Shares
-------------------- -----------
▇▇▇▇▇▇ ▇. and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------
Total 650,000
- 1 -
66
SCHEDULE II
Name Number of Shares
---- ----------------
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc. ..............
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Incorporated ......
---------
Total ................................... 2,500,000
- 1 -
67
SCHEDULE III
Pursuant to Section 6(g) of the Underwriting Agreement, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public
accountants with respect to the Company and its subsidiary within the meaning
of the Act and the applicable Rules and Regulations thereunder.
(ii) In their opinion, the financial statements
and any supplementary financial information and schedules audited (and, if
applicable, prospective financial statements and/or pro forma financial
information examined) by them and included in the Prospectus or the
Registration Statement comply as to form in all material respects with the
applicable accounting requirements of the Act and the applicable Rules and
Regulations thereunder; and, if applicable, they have made a review in
accordance with standards established by the American Institute of Certified
Public Accountants of the unaudited consolidated interim financial statements,
selected financial data, pro forma financial information, prospective financial
statements and/or condensed financial statements derived from audited financial
statements of the Company for the periods specified in such letter, as
indicated in their reports thereon, copies of which have been furnished to the
Representatives of the Underwriters (the "Representatives").
(iii) On the basis of limited procedures, not
constituting an audit in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, performing the procedures specified by the AICPA
for a review of interim financial information as discussed in SAS No. 71,
Interim Financial Information, on the latest available interim financial
statements of the Company and its subsidiary, inspection of the minute books of
the Company and its subsidiary since the date of the latest audited financial
statements included in the
68
Prospectus, inquiries of officials of the Company and its subsidiary
responsible for financial and accounting matters and such other inquiries and
procedures as may be specified in such letter, nothing came to their attention
that caused them to believe that:
(A) any material modifications should be made to
the unaudited statements of consolidated income, statements of
consolidated financial position and statements of consolidated
cash flows included in the Prospectus for them to be in
conformity with generally accepted accounting principles, or
the unaudited statements of consolidated income, statements of
consolidated financial position and statements of consolidated
cash flows included in the Prospectus do not comply as to form
in all material respects with the applicable accounting
requirements of the Act and the related published Rules and
Regulations thereunder.
(B) any other unaudited income statement
data and balance sheet items included in the
Prospectus do not agree with the corresponding items
in the unaudited consolidated financial statements
from which such data and items were derived, and any
such unaudited data and items were not determined on
a basis substantially consistent with the basis for
the corresponding amounts in the audited consolidated
financial statements included in the Prospectus.
(C) the unaudited financial statements which were
not included in the Prospectus but from which were derived any
unaudited condensed financial statements referred to in Clause
(A) and any unaudited income statement data and balance sheet
items included in the Prospectus and referred to in Clause (B)
were not determined on a basis substantially consistent with
the basis for the audited consolidated financial statements
included in the Prospectus.
(D) any unaudited pro forma consolidated
condensed financial statements included in the
Prospectus do not comply as to form in all material
respects with the applicable accounting requirements
of the Act and the published rules and regulations
thereunder or the pro forma adjustments have not been
69
properly applied to the historical amounts in the
compilation of those statements.
(E) as of a specified date not more than five
days prior to the date of such letter, there have been any
changes in the consolidated capital stock or any increase in
the consolidated long-term debt of the Company and its
subsidiaries, or any decreases in consolidated working
capital, net current assets or net assets or other items
specified by the Representative, or any changes in any items
specified by the Representative, in each case as compared with
amounts shown in the latest balance sheet included in the
Prospectus, except in each case for changes, increases or
decreases which the Prospectus discloses have occurred or may
occur or which are described in such letter.
(F) for the period from the date of the
latest financial statements included in the
Prospectus to the specified date referred to in
Clause (E) there were any decreases in consolidated
net revenues or operating profit or the total or per
share amounts of consolidated net income or any other
changes in any other items specified by the
Representative, in each case as compared with the
comparable period of the preceding year and with any
other period of corresponding length specified by the
Representative, except in each case for changes,
decreases or increases which the Prospectus discloses
have occurred or may occur or which are described in
such letter.
(iv) In addition to the audit referred to in their
report(s) included in the Prospectus and the limited procedures, inspection of
minute books, inquiries and other procedures referred to in paragraph (iii)
above, they have carried out certain specified procedures, not constituting an
audit in accordance with generally accepted auditing standards, with respect to
certain amounts, percentages and financial information specified by the
Representatives, which are derived from the general accounting records of the
Company and its subsidiary for
70
the periods covered by their reports and any interim or other periods since the
latest period covered by their reports, which appear in the Prospectus, or in
Part II of, or in exhibits and schedules to, the Registration Statement
specified by the Representative, and have compared certain of such amounts,
percentages and financial information with the accounting records of the
Company and its subsidiaries and have found them to be in agreement.