[FBW Letterhead]
Exhibit 1.2
___________, 1998
Xxxxxxx Holdings, Inc.
World Trade Center - Baltimore
000 Xxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
The Xxxxxxx Co.
World Trade Center - Baltimore
000 Xxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Re: Agreement to Act as "Qualified Independent Underwriter"
Ladies and Gentlemen:
You have advised us that Xxxxxxx Holdings, Inc. (the "Company"), a
Maryland corporation, has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form SB-2 (Reg. No.
333-43487), relating to the offering by the Company of up to 1,000,000 shares
of the common stock, par value $.001 per share, of the Company (the "Common
Stock" or the "Shares").
The Company intends to engage The Xxxxxxx Co. (sometimes referred to
herein as the "Underwriter") to sell the Common Stock to the public on a
best-efforts basis (the "Offering"). The Underwriter will not purchase the
Shares from the Company but rather will act on an agency basis pursuant to an
Underwriting Agreement to be entered into by the Company and the Underwriter
(the "Underwriting Agreement").
We understand that, as a member of the National Association of
Securities Dealers, Inc. ("NASD"), the Underwriter may participate in the
Offering only if the price at which the Common Stock is to be offered to the
public is no higher than the price recommended by a "Qualified Independent
Underwriter" (as such term is defined in Rule 2720(b)(15) of the NASD Conduct
Rules) and such Qualified Independent Underwriter participates in the
preparation of the registration statement and prospectus relating to the
Offering and exercises the usual standards of due diligence with respect
thereto. This Agreement describes the terms on which Xxxxxx Xxxxx Xxxxx,
Incorporated ("FBW") agrees to serve as a Qualified Independent Underwriter
in connection with the Offering. In connection with the services to be
provided by FBW hereunder and based upon the representations and warranties
of, and subject to the performance of the covenants by, the Company herein
set forth and FBW's satisfaction with the results of its due diligence
review, FBW agrees to deliver to the Company and the Underwriter, and file
with the NASD, a letter (the "Letter"), substantially in the form of Appendix
A hereto, on the date the Registration Statement (as hereinafter defined) is
first declared effective by the Commission (the "Effective Date") or, if the
Offering is
Xxxxxxx Holdings, Inc.
The Xxxxxxx Co.
________________, 1998
Page 2
not priced on the Effective Date, on the date of the pricing of the Offering
(the "Pricing Date"). As a condition to the delivery of the Letter, the
Registration Statement and each amendment thereto will include any revisions
that in the reasonable judgment of FBW and its legal counsel are required to
enable FBW to deliver the Letter.
As herein used, the term "Registration Statement" means the registration
statement on Form SB-2 (including the related prospectuses, financial
statements, exhibits, schedules and all other documents filed as parts
thereof or incorporated therein) for the registration of the Common Stock
under the Securities Act of 1933, as amended (the "Securities Act"), in the
form declared effective, filed with the Commission and any amendments
thereto. The term "Prospectus" means the prospectus, including any
preliminary or final prospectus (including the form of prospectus first filed
with the Commission pursuant to Rule 424(b) or 430A under the Securities Act
after the Registration Statement with respect to such Offering becomes
effective or, if no such filing is required, each prospectus in the form
included in the Registration Statement with respect to such Offering at the
time it is first declared effective), and any amendment or supplement
thereto, to be used in connection with the Offering.
1. NASD Requirement. FBW hereby confirms its agreement to act in
connection with the Offering as a "Qualified Independent Underwriter" within
the meaning of Rule 2720 of the NASD Conduct Rules and represents that FBW
satisfies or will satisfy at the times designated in Rule 2720(b)(15) the
requirements set forth therein.
2. Consent. FBW hereby consents to be named in the Registration
Statement and Prospectus with respect to the Offering as having acted as the
Qualified Independent Underwriter and to the filing of this Agreement as an
exhibit to the Registration Statement. All references to FBW in the
Registration Statement or Prospectus or in any other filing, report,
document, release or other communication prepared, issued or transmitted in
connection with the Offering by the Company or the Underwriter or any entity
controlling, controlled by or under common control with, or by any of them,
shall be subject to FBW's prior consent with respect to location, form and
substance. FBW's obligation to act as a Qualified Independent Underwriter
hereunder shall terminate if the Company shall breach in any material respect
any representation, warranty or covenant hereunder and such breach shall not
be cured within ten days of written notice thereof to the Company.
3. Fees and Expenses. The Company agrees to pay FBW a fee equal to
the greater of $100,000 or 30% of the aggregate underwriting discount of 7.0%
for each share of Common Stock sold in the Offering (the "Fee") for its
services hereunder, which shall be payable on each date on which payment for
and delivery of any of the Shares are made (each a "Closing Date"). The
Company also agrees to reimburse FBW for all reasonable out-of-pocket
expenses, including all reasonable fees and expenses of FBW's counsel
(including accrued expenses), incurred by FBW in connection with this
Agreement and the Offering. If, for whatever reason, it is determined that
the Offering shall not commence or will not be consummated, FBW shall be
entitled to be paid in full for the above-mentioned expenses, including fees
and expenses of counsel, promptly following such determination, and shall
continue to be entitled to any amount payable to FBW under Section 7 hereof.
Xxxxxxx Holdings, Inc.
The Xxxxxxx Co.
________________, 1998
Page 3
4. Representations, Warranties and Covenants of the Company. The
Company represents and warrants to FBW that:
(a) Prior to the date of this Agreement, The Xxxxxxx Co. became a
subsidiary of the Company hereinafter sometimes referred to as the
"Subsidiary") pursuant to a reorganization transaction (the "Reorganization")
that is fully described in the Information Statement of The Xxxxxxx Co.
pertaining to its annual meeting of stockholders held December 22, 1997, the
plan of merger included therein as an exhibit and the articles of merger
filed with the Maryland State Department of Assessments and Taxation on
December 29, 1997 (the "Reorganization Documents"). The Reorganization
Documents have been provided to FBW and FBW hereby acknowledges receipt
thereof. The Reorganization was conducted in accordance with all applicable
Federal and state laws and regulations, was duly authorized, approved and
adopted by all requisite corporate action of all constituent corporations,
and [TAX REPRESENTATION TO FOLLOW].
(b) Prior to the date of this Agreement, each of Xxxxxxx Capital
Management, Inc. ("CCM") and The Xxxxxxx Insurance Agency Incorporated
("CIA") became a wholly-owned subsidiary of a separate wholly-owned holding
company subsidiary of The Xxxxxxx Co. pursuant to a reorganization
transaction (the "Subsidiary Reorganization"). The Subsidiary Reorganization
was accomplished as follows: (i) The Xxxxxxx Co. caused two Maryland
corporations, Xxxxxxx Insurance Holdings, Inc. ("CIH") and Xxxxxxx Capital
Holdings, Inc. ("CCH") to be organized; (ii) The Xxxxxxx Co. transferred all
of the outstanding equity securities of CCM to CCH in exchange for the
issuance of shares of common stock of CCH; and (iii) The Xxxxxxx Co.
transferred all of the outstanding equity securities of CIA to CIH in
exchange for the issuance of shares of common stock of CIH. The Subsidiary
Reorganization was conducted in accordance with all applicable Federal and
state laws and regulations, was duly authorized, approved and adopted by all
requisite corporate action of all constituent corporations and
[TAX REPRESENTATION TO FOLLOW].
(c) The Company has an authorized capitalization as set forth in
the Prospectus under the caption "Capitalization;" the outstanding shares of
capital stock of the Company and the Subsidiary, have been duly and validly
authorized and issued and are fully paid and non-assessable; except as
disclosed in the Prospectus, there are no outstanding (i) securities or
obligations of the Company or the Subsidiary convertible into or exchangeable
for any capital stock of the Company or any such Subsidiary, (ii) warrants,
rights or options to subscribe for or purchase from the Company or any such
Subsidiary any such capital stock or any such convertible or exchangeable
securities or obligations, or (iii) obligations of the Company or any such
Subsidiary to issue any shares of capital stock, any such convertible or
exchangeable securities or obligations, or any such warrants, rights or
options;
(d) the Company and the Subsidiary each has been duly incorporated
and is validly existing as a corporation in good standing under the laws of
its respective jurisdiction of incorporation with full corporate power and
authority to own its respective properties and to conduct its respective
business as described in the Registration Statement and the Prospectus;
Xxxxxxx Holdings, Inc.
The Xxxxxxx Co.
________________, 1998
Page 4
(e) the Company and the Subsidiary are duly qualified or licensed
by each jurisdiction in which they conduct their respective businesses and in
which the failure, individually or in the aggregate, to be so qualified or
licensed could reasonably be expected to have a material adverse effect on
the assets, operations, business, prospects or condition (financial or
otherwise) of the Company and the Subsidiary taken as a whole, and the
Company and the Subsidiary are duly qualified, and are in good standing, in
each jurisdiction in which they own or lease real property or maintain an
office and in which such qualification is necessary, except where,
individually or in the aggregate, the failure to be so qualified and in good
standing would not have a material adverse effect on the assets, operations,
business, prospects or condition (financial or otherwise) of the Company and
the Subsidiary taken as a whole; except as disclosed in the Prospectus, the
Subsidiary is not prohibited or restricted, directly or indirectly, from
paying dividends to the Company, or from making any other distribution with
respect to such Subsidiary's capital stock or from paying the Company any
loans or advances to such Subsidiary from the Company or from transferring
the Subsidiary's property or assets to the Company;
(f) the Company and the Subsidiary are in compliance with all
applicable federal, state, local and foreign laws, rules and regulations,
including, without limitation, the Securities Act, the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), the Investment Company Act of
1940, as amended (the "Investment Company Act"), the Investment Advisers Act
of 1940, as amended, and the regulations promulgated thereunder
(collectively, the "Securities Laws"), orders, decrees and judgments,
including those relating to transactions with affiliates, except where,
individually or in the aggregate, the failure to be in compliance in a
material respect therewith would not have a material adverse effect on the
assets, operations, business, prospects or condition (financial or otherwise)
of the Company and the Subsidiary taken as a whole;
(g) neither the Company nor the Subsidiary is in breach of, or in
default under, nor has any event occurred which with giving of notice, lapse
of time, or both would constitute a breach of, or default under, its
respective articles of incorporation or charter or by-laws or in the
performance or observance of any obligation, agreement, covenant or condition
contained in any license, indenture, mortgage, deed of trust, loan or credit
agreement or other agreement or instrument to which the Company or the
Subsidiary is a party or by which any of them or their respective properties
is bound, except for such breaches or defaults which, individually or in the
aggregate, would not have a material adverse effect on the assets,
operations, business, prospects or condition (financial or otherwise) of the
Company and the Subsidiary taken as a whole, and the execution, delivery and
performance of this Agreement and the Underwriting Agreement, and
consummation of the transactions contemplated hereby and thereby will not
result in the creation or imposition of any lien, charge, claim or
encumbrance upon any property or asset of the Company or the Subsidiary, or
conflict with, or result in any breach of, or constitute a default under, or
constitute an event which with giving of notice, lapse of time, or both would
constitute a breach of, or default under, (i) any provision of the articles
of incorporation or charter or by-laws of the Company or the Subsidiary, or
(ii) any provision of any license, indenture, mortgage, deed of trust, loan
or credit agreement or other agreement or instrument to which the Company or
the Subsidiary is a party or by which either of them or their respective
properties may be bound or affected, or (iii) any federal, state, local or
foreign law, regulation or rule, including, without limitation, the
Securities Laws, or any decree, judgment or order
Xxxxxxx Holdings, Inc.
The Xxxxxxx Co.
________________, 1998
Page 5
applicable to the Company or the Subsidiary, except in the case of this
clause (iii) for such breaches or defaults which, individually or in the
aggregate, would not have a material adverse effect on the assets,
operations, business, prospects or condition (financial or otherwise) of the
Company and the Subsidiary taken as a whole;
(h) this Agreement has been duly authorized, executed and
delivered by the Company and is a legal, valid and binding agreement of the
Company enforceable against the Company in accordance with its terms, except
as may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally, and by general principles
of equity, and except to the extent that the indemnification and contribution
provisions of Section 7 hereof may be limited by federal or state securities
laws and public policy considerations in respect thereof;
(i) no approval, authorization, consent or order of or filing with
any federal, state or local governmental or regulatory commission, board,
body, authority or agency is required in connection with the execution,
delivery and performance of this Agreement and the Underwriting Agreement,
the consummation of the transactions contemplated hereby and thereby, or the
sale and delivery of the Shares by the Company as contemplated hereby other
than (i) such as have been obtained, or will have been obtained at each
Closing Date under the Securities Act, (ii) such approvals as have been
obtained in connection with the approval of the quotation of the Shares on
the Nasdaq SmallCap Market (the "SmallCap Market") and (iii) any necessary
qualification under the securities or blue sky laws of the various
jurisdictions in which the Shares are being offered through the Underwriter;
(j) each of the Company and the Subsidiary has all necessary
licenses, authorizations, consents and approvals and has made all necessary
filings required under any federal, state, local and foreign law, regulation
and rule, including, without limitation, the Securities Laws, and has
obtained all necessary authorizations, consents and approvals from other
persons, required in order to conduct their respective businesses as
described in the Prospectus, except to the extent that any failure to have
any such licenses, authorizations, consents or approvals, to make any such
filings or to obtain any such authorizations, consents or approvals would
not, individually or in the aggregate, have a material adverse effect on the
assets, operations, business, prospects or condition (financial or otherwise)
of the Company and the Subsidiary taken as a whole; neither the Company nor
the Subsidiary is in violation of, in default under, or has received any
notice regarding a possible violation, default or revocation of any such
license, authorization, consent or approval applicable to the Company or the
Subsidiary, the effect of which, individually or in the aggregate, could be
material and adverse to the assets, operations, business, prospects or
condition (financial or otherwise) of the Company and the Subsidiary taken as
a whole; and no such license, authorization, consent or approval contains a
materially burdensome restriction that is not adequately disclosed in the
Registration Statement and the Prospectus;
(k) each of the Registration Statement and any Rule 462(b)
Registration Statement has become effective under the Securities Act and no
stop order suspending the effectiveness of the Registration Statement or any
Rule 462(b) Registration Statement has been issued under the Securities Act
and no proceedings for that purpose have been instituted or are pending or,
to the knowledge of the
Xxxxxxx Holdings, Inc.
The Xxxxxxx Co.
________________, 1998
Page 6
Company, are threatened by the Commission, and any request on the part of the
Commission for additional information has been complied with;
(l) the Preliminary Prospectus and the Registration Statement
comply and the Prospectus and any further amendments or supplements thereto
will, when they have become effective or are filed with the Commission, as
the case may be, comply in all material respects with the requirements of the
Securities Act and the Securities Act Regulations; the Registration Statement
did not, and any amendment thereto will not, in each case as of the
applicable effective date, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; and the Preliminary Prospectus does not, and
the Prospectus or any amendment or supplement thereto will not, as of the
applicable filing date and at each Closing Date contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the Company makes no warranty or representation with respect to any
statement contained in the Registration Statement or the Prospectus in
reliance upon and in conformity with the information concerning FBW and
furnished in writing by or on behalf of FBW to the Company expressly for use
in the Registration Statement or the Prospectus (that information being
limited to that described in Section 7(e) hereof);
(m) the Preliminary Prospectus was and the Prospectus delivered to
the Underwriter for use in connection with the Offering will be identical in
all material respects to the versions of the Preliminary Prospectus and the
Prospectus created to be transmitted to the Commission for filing via the
Electronic Data Gathering Analysis and Retrieval System ("XXXXX"), except to
the extent permitted by Regulation S-T;
(n) all legal or governmental proceedings, contracts or documents
of a character required to be filed as exhibits to the Registration Statement
or to be summarized or described in the Prospectus have been so filed,
summarized or described as required and any such summaries or descriptions
present fairly the information required to be shown;
(o) there are no actions, suits, proceedings, inquiries or
investigations pending or, to the Company's knowledge, threatened against the
Company or the Subsidiary or any of their respective officers or directors or
to which the properties, assets or rights of either entity are subject, at
law or in equity, before or by any federal, state, local or foreign court,
governmental or regulatory commission, board, body, authority, arbitration
panel or agency which, individually or in the aggregate, could result in a
judgment, decree, award or order having a material adverse effect on the
assets, operations, business, prospects or condition (financial or otherwise)
of the Company and the Subsidiary taken as a whole;
(p) the financial statements, including the notes thereto,
included in the Registration Statement and the Prospectus present fairly the
consolidated financial position of the Company and the Subsidiary as of the
dates indicated and the consolidated results of operations and changes in
stockholders' equity and cash flows of the Company and the Subsidiary for the
periods specified; such
Xxxxxxx Holdings, Inc.
The Xxxxxxx Co.
________________, 1998
Page 7
financial statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis during the periods
involved (except as indicated in the notes thereto); the financial statement
schedules included in the Registration Statement and the amounts in the
Prospectus under the captions "Prospectus Summary -- Summary Financial Data,"
"Capitalization," "Dilution" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" fairly present the information
shown therein and have been compiled on a basis consistent with the financial
statements included in the Registration Statement and the Prospectus;
(q) Xxxxxx Xxxxxxxx LLP, whose reports on the consolidated
financial statements of the Company and the Subsidiary are filed with the
Commission as part of the Registration Statement and Prospectus, are and were
during the periods covered by their reports independent public accountants as
required by the Securities Act and the Securities Act Regulations;
(r) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as may be
otherwise stated in the Registration Statement or the Prospectus, there has
not been (i) any material adverse change, in the assets, liabilities,
capital, operations, business or condition (financial or otherwise), present
or prospective, of the Company and the Subsidiary taken as a whole, whether
or not arising in the ordinary course of business, (ii) any transaction,
which is material to the Company and the Subsidiary taken as a whole,
contemplated or entered into by the Company or the Subsidiary, (iii) any
obligation, contingent or otherwise, directly or indirectly incurred by the
Company or the Subsidiary, which is material to the Company and the
Subsidiary taken as a whole or (iv) any dividend or distribution of any kind
declared, paid or made by the Company or the Subsidiary on any class of
capital stock;
(s) the Company is not, and upon the sale of the Shares as herein
contemplated will not be, an investment company which is required to register
under the Investment Company Act;
(t) the Shares will conform in all material respects to the
description thereof contained in the Registration Statement and the
Prospectus;
(u) except as disclosed in the Prospectus, there are no persons
with registration or other similar rights to have any equity securities
registered pursuant to the Registration Statement or otherwise registered by
the Company under the Securities Act;
(v) the Shares have been duly authorized and, when the Shares have
been issued and duly delivered against payment therefor as contemplated by
the Underwriting Agreement and the Prospectus, the Shares will be validly
issued, fully paid and nonassessable, free and clear of any pledge, lien,
encumbrance, security interest, mortgage or other claim whatsoever, and the
issuance and sale of the Shares by the Company is not subject to preemptive
or other similar rights arising by operation of law, under the articles of
incorporation or by-laws of the Company, under any agreement to which the
Company or the Subsidiary is a party, or otherwise;
Xxxxxxx Holdings, Inc.
The Xxxxxxx Co.
________________, 1998
Page 8
(w) the Company has not taken, and will not take, directly or
indirectly, any action which is designed to or which has constituted or which
might reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Shares;
(x) any certificate signed by any officer of the Company or the
Subsidiary delivered to FBW or to counsel for FBW pursuant to or in
connection with this Agreement shall be deemed a representation and warranty
by the Company to each of FBW and its counsel as to the matters covered
thereby;
(y) the form of certificate used to evidence the Common Stock
complies in all material respects with all applicable statutory requirements,
with any applicable requirements of the articles of incorporation and by-laws
of the Company, and with the requirements of the SmallCap Market;
(z) in connection with the Offering, the Company has not offered
and will not offer its Common Stock or any other securities convertible into
or exchangeable or exercisable for Common Stock in a manner in violation of
the Securities Act;
(aa) except as disclosed in the Prospectus, the Company has not
incurred any liability for any finder's fees or similar payments in
connection with the transactions herein contemplated; and
(bb) The Company, the Subsidiary and their predecessors have filed
all necessary federal, state and foreign income and franchise tax returns
that they were required to file and have paid all taxes shown as due thereon
(including, but not limited to, all penalties, interest and other additions
thereto), except for failures to file or pay which would not, individually or
in the aggregate, have a material adverse effect on the assets, operations,
business, prospects or condition (financial or otherwise) of the Company and
the Subsidiary taken as a whole. All such tax returns were correct and
complete in all material respects. All tax liabilities are adequately
provided for on the books of the Company and the Subsidiary, except to such
extent as would not, individually or in the aggregate, have a material
adverse affect on the assets, operations, business, prospects or condition
(financial or otherwise) of the Company and the Subsidiary taken as a whole.
The Company, the Subsidiary and their predecessors have made all necessary
payroll and employment tax payments and are current and up-to-date with
respect to such tax payments as of the date of this Agreement, except where
failure to make any such payment would not, individually or in the aggregate,
have a material adverse affect on the assets, operations, business, prospects
or condition (financial or otherwise) of the Company and the Subsidiary taken
as a whole. The Company and the Subsidiary have no knowledge of any tax
proceedings or other action pending or threatened against the Company or the
Subsidiary which, individually or in the aggregate, could have a material
adverse affect on the assets, operations, business, prospects or condition
(financial or otherwise) of the Company and the Subsidiary taken as a whole.
Xxxxxxx Holdings, Inc.
The Xxxxxxx Co.
________________, 1998
Page 9
5. Certain Covenants of the Company. The Company hereby covenants and
agrees with FBW that:
(a) The Company will furnish such information as may be required
and otherwise to cooperate in qualifying the Shares for offering and sale
under the securities or blue sky laws of such states as the Underwriter may
designate and to maintain such qualifications in effect as long as required
for the distribution of the Shares, provided that the Company shall not be
required to qualify as a foreign corporation or to consent to the service of
process under the laws of any such state (except for service of process with
respect to the offering and sale of the Shares).
(b) The Company will prepare immediately an amended Prospectus in
a form approved by FBW and the Underwriter and file or transmit for filing
such Prospectus with the Commission in accordance with Rule 430A and to
furnish promptly to the Underwriter as many copies of the Prospectus (or of
the Prospectus as amended or supplemented if the Company shall have made any
amendments or supplements thereto after the effective date of the
Registration Statement) as the Underwriter may reasonably request for the
purposes contemplated by the Securities Act Regulations, which Prospectus and
any amendments or supplements thereto furnished to the Underwriter will be
identical to the version created to be transmitted to the Commission for
filing via XXXXX, except to the extent permitted by Regulation S-T.
(c) The Company will advise FBW promptly, confirming such advice
in writing, of (i) the receipt of any comments from, or any request by, the
Commission for amendments or supplements to the Registration Statement or the
Prospectus or for additional information with respect thereto, or (ii) the
issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or of any order preventing or suspending the use
of any Preliminary Prospectus or the Prospectus, or of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, or of
the initiation or threatening of any proceedings for any of such purposes.
The Company will make every reasonable effort to obtain the lifting or
removal of such order as soon as possible. The Company will advise FBW
promptly of any proposal to amend or supplement the Registration Statement or
the Prospectus and will file no such amendment or supplement to which FBW has
reasonably objected in writing.
(d) The Company will advise FBW promptly of the happening of any
event known to the Company within the time during which a Prospectus relating
to the Shares is required to be delivered under the Securities Act
Regulations which, in the judgment of the Company, would require the making
of any change in the Prospectus then being used so that the Prospectus would
not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and, during such time, the Company will prepare and
furnish, at the Company's expense, to FBW promptly such amendments or
supplements to such Prospectus as may be necessary to reflect any such change
and to furnish to FBW a copy of such proposed amendment or supplement before
filing any such amendment or supplement with the Commission.
Xxxxxxx Holdings, Inc.
The Xxxxxxx Co.
________________, 1998
Page 10
(e) The Company will furnish promptly to FBW a signed copy of the
Registration Statement, as initially filed with the Commission, and of all
amendments or supplements thereto (including all exhibits filed therewith or
incorporated by reference therein) and such number of conformed copies of the
foregoing as FBW may reasonably request.
(f) The Company will furnish to FBW, not less than one business
day before filing with the Commission subsequent to the effective date of the
Registration Statement and during the period referred to in paragraph (d)
above, a copy of any document proposed to be filed with the Commission
pursuant to Section 13, 14, or 15(d) of the Exchange Act.
(g) The Company will apply the net proceeds of the sale of the
Shares in accordance with its statements under the caption "Use of Proceeds"
in the Prospectus.
(h) The Company will make generally available to its security
holders as soon as practicable, but in any event not later than the end of
the fiscal quarter first occurring after the first anniversary of the
effective date of the Registration Statement, an earnings statement complying
with the provisions of Section 11(a) of the Securities Act (in form, at the
option of the Company, complying with the provisions of Rule 158 of the
Securities Act Regulations) covering a period of 12 months beginning after
the effective date of the Registration Statement.
(i) The Company will use its best efforts to effect and maintain
the quotation of the Shares on the SmallCap Market and to file with the
SmallCap Market all documents and notices required of companies that have
securities included for quotation on the SmallCap Market.
(j) At no time prior to the completion of the Offering will the
Company issue any press releases or other communications directly or
indirectly and will hold no press conferences with respect to the Company or
the Subsidiary, on the financial condition, results of operations, business,
properties, assets or liabilities of the Company or the Subsidiary, or the
Offering of the Shares, without the prior written consent of FBW.
(k) Prior to the Initial Closing, the Company will effect a
spin-off transaction pursuant to which the outstanding equity securities of
CCH and CIH will be distributed to the then existing stockholders of the
Company (the "Spin-off"). The Spin-off will be conducted in accordance with
all applicable Federal and state laws and regulations, will be duly
authorized, approved and adopted by all requisite corporate action of all
constituent corporations and [TAX COVENANT TO FOLLOW].
6. Conditions of FBW's Obligations:
The obligations of FBW hereunder are subject to the accuracy of the
representations and warranties on the part of the Company in all material
respects on the date hereof and on each Closing Date, the performance by the
Company of its obligations hereunder in all material respects and to the
following further conditions:
Xxxxxxx Holdings, Inc.
The Xxxxxxx Co.
________________, 1998
Page 11
(a) The Company shall furnish to FBW on the date hereof and on
each Closing Date an opinion of Xxxxxxx, Xxxxxxx and Xxxxxx, LLP, counsel for
the Company, addressed to FBW and dated as of each such Closing Date, and in
a form reasonably satisfactory to Xxxxxxxxx, Xxxxxx & Xxxxxxx L.L.P., counsel
for FBW, stating that:
(i) the Reorganization was duly authorized, approved and adopted
by all requisite corporate action of all constituent corporations, and [TAX
OPINION TO FOLLOW].
(ii) the Subsidiary Reorganization was duly authorized, approved
and adopted by all requisite corporate action of all constituent
corporations, and [TAX OPINION TO FOLLOW].
(iii) the Company has an authorized capitalization as set forth
in the Prospectus under the caption "Capitalization;" the outstanding
shares of capital stock of the Company and the Subsidiary have been duly
and validly authorized and issued and are fully paid and non-assessable;
except as disclosed in the Prospectus, to such counsel's knowledge, there
are no outstanding (A) securities or obligations of the Company or the
Subsidiary convertible into or exchangeable for any capital stock of the
Company or any such Subsidiary, (B) warrants, rights or options to
subscribe for or purchase from the Company or any such Subsidiary any such
capital stock or any such convertible or exchangeable securities or
obligations, or (C) obligations of the Company or any such Subsidiary to
issue any shares of capital stock, any such convertible or exchangeable
securities or obligations, or any such warrants, rights or options;
(iv) the Company and the Subsidiary each has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its respective jurisdiction of incorporation with full
corporate power and authority to own its respective properties and to
conduct its respective business as described in the Registration Statement
and the Prospectus and, in the case of the Company, to execute and deliver
this Agreement and the Underwriting Agreement;
(v) the execution, delivery and performance of this Agreement
and the Underwriting Agreement by the Company and the consummation by the
Company of the transactions contemplated under this Agreement or the
Underwriting Agreement, as the case may be, do not and will not (A)
conflict with, or result in any breach of, or constitute a default under,
or constitute an event which with giving of notice, lapse of time, or both
would constitute a breach of or default under, (I) any provisions of the
articles of incorporation, charter or by-laws of the Company or the
Subsidiary, (II) to the best of such counsel's knowledge, any provision of
any material license, indenture, mortgage, deed of trust, loan or credit
agreement or other agreement or instrument to which the Company or
Xxxxxxx Holdings, Inc.
The Xxxxxxx Co.
________________, 1998
Page 12
the Subsidiary is a party or by which either of them or their respective
properties may be bound or affected, or (III) to the best of such
counsel's knowledge, any law or regulation, including, without
limitation, the Securities Laws, or any decree, judgment or order
applicable to the Company or the Subsidiary, except in the case of
clause (II) for such conflicts, breaches or defaults which, individually
or in the aggregate, would not have a material adverse effect on the
assets, operations, business, prospects or condition (financial or
otherwise) of the Company and the Subsidiary taken as a whole; or (B) to
such counsel's knowledge, result in the creation or imposition of any
lien, charge, claim or encumbrance upon any property or assets of the
Company or the Subsidiary;
(vi) to such counsel's knowledge, no approval, authorization,
consent or order of or filing with any federal or state governmental or
regulatory commission, board, body, authority or agency is required in
connection with the execution, delivery and performance of this Agreement
and the Underwriting Agreement, the consummation of the transactions
contemplated hereby and thereby, the sale and delivery of the Shares by the
Company as contemplated hereby other than such as have been obtained or
made under the Securities Act, and except that such counsel need express no
opinion as to any necessary qualification under the rules of the NASD or
the state securities or blue sky laws of the various jurisdictions in which
the Shares are being offered by the Underwriter;
(vii) the Company is not, and upon the sale of the Shares as
herein contemplated will not be, an investment company required to be
registered under the Investment Company Act;
(viii) the Shares have been duly authorized and, when the Shares
have been issued and duly delivered against payment therefor as
contemplated by the Underwriting Agreement, the Shares will be validly
issued, fully paid and nonassessable, free and clear of any pledge, lien,
encumbrance, security interest, mortgage or other claim whatsoever;
(ix) the issuance and sale of the Shares by the Company is not
subject to preemptive or other similar rights arising by operation of law,
under the articles of incorporation or by-laws of the Company, under any
agreement known to such counsel to which the Company or the Subsidiary is a
party or, to the best of such counsel's knowledge, otherwise;
(x) the form of certificate used to evidence the Common Stock
complies in all material respects with all applicable statutory
requirements, with any applicable requirements of the articles of
incorporation and by-laws of the Company and the requirements of the
SmallCap Market;
Xxxxxxx Holdings, Inc.
The Xxxxxxx Co.
________________, 1998
Page 13
(xi) the Registration Statement has become effective under the
Securities Act and no stop order suspending the effectiveness of the
Registration Statement has been issued and, to the best of such counsel's
knowledge, no proceedings with respect thereto have been commenced or
threatened;
(xii) as of the Effective Date, the Registration Statement and
the Prospectus (except as to the financial statements and other financial
and statistical data contained in such Registration Statement or
Prospectus, as to which such counsel need express no opinion) complied as
to form in all material respects with the requirements of the Securities
Act and the Securities Act Regulations;
(xiii) the statements under the captions "Capitalization," "Risk
Factors -- Regulatory Risks," "Business -- Government Regulation," "Certain
Transactions," "Description of Capital Stock," and "Shares Eligible for
Future Sale," in the Registration Statement and the Prospectus, insofar as
such statements constitute a summary of the legal matters referred to
therein, constitute accurate summaries thereof in all material respects;
and
(xiv) except as set forth in the Prospectus, to the best of
such counsel's knowledge, there are no material legal or governmental
proceedings pending or threatened against, or involving the properties of
the Company or the Subsidiary required to be disclosed in the Prospectus;
provided that for this purpose such counsel need not regard any litigation
or governmental proceedings to be "threatened" unless the potential
litigant or governmental authority has manifested to the Company or the
Subsidiary, or to their management, a present intention to initiate such
proceedings.
(xv) to such counsel's knowledge, there are no contracts or
documents of a character which are required to be filed as exhibits to the
Registration Statement or to be described or summarized in the Prospectus
which have not been so filed, summarized or described.
In addition, such counsel shall state that they have participated in the
preparation of the Prospectus and the Registration Statement and in
conferences with officers and other representatives of the Company and
representatives of the independent public accountants for the Company and
with FBW at which the contents of the Prospectus and the Registration
Statement and related matters were discussed and, although such counsel is
not passing upon and does not assume responsibility for the accuracy,
completeness or fairness of the statements contained in the Prospectus and
the Registration Statement and have not made any independent investigation or
verification thereof, nothing has come to their attention during the course
of such participation that leads them to believe that at the time the
Registration Statement became effective, the Prospectus and the Registration
Statement (other than the financial statements and schedules and other
financial and statistical data and information included therein or omitted
therefrom, as to which they need express no opinion) contained or contains an
untrue statement
Xxxxxxx Holdings, Inc.
The Xxxxxxx Co.
________________, 1998
Page 14
of a material fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) In addition to the items set forth in paragraph (a) of this
Section 6, the opinion of Xxxxxxx, Xxxxxxx & Xxxxxx, LLP delivered on the
Initial Closing Date shall state that the Spin-off was duly authorized,
approved and adopted by all requisite corporate action of all constituent
corporations, and [TAX OPINION TO FOLLOW].
(c) FBW shall have received, on each of the date hereof and each
Closing Date, a letter dated the date hereof or such Closing Date, as the
case may be, in form and substance satisfactory to FBW, from Xxxxxx Xxxxxxxx
LLP, independent public accountants, confirming that they are independent
public accountants within the meaning of the Securities Act and the
Securities Act Regulations and stating that in their opinion the financial
statements examined by them and included in the Registration Statement comply
in form in all material respects with the applicable accounting requirements
of the Securities Act and the Securities Act Regulations; and containing the
information and statements of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements
and certain financial information contained in the Registration Statement and
the Prospectus.
(d) No amendment or supplement to the Registration Statement or
the Prospectus shall have been filed to which FBW has objected in writing.
(e) Prior to the completion of the Offering (i) no stop order
suspending the effectiveness of the Registration Statement or any order
preventing or suspending the use of any Preliminary Prospectus or the
Prospectus shall have been issued by the Commission, (ii) no suspension of
the qualification of the Shares for offering or sale in any jurisdiction
shall have occurred, and no proceeding for such suspension shall have been
initiated or threatened; and (ii) the Registration Statement and the
Prospectus shall not contain an untrue statement of material fact or omit to
state a material fact, individually or in the aggregate, 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.
(f) Between the time of execution of this Agreement and each
Closing Date (i) no material and unfavorable change in the assets,
operations, business, prospects or condition (financial or otherwise) of the
Company and the Subsidiary taken as a whole shall have occurred or become
known (whether or not arising in the ordinary course of business), and (ii)
no transaction which is material and unfavorable to the Company shall have
been entered into by the Company or the Subsidiary.
(g) On the Effective Date, the Underwriting Agreement shall have
been entered into and delivered by all required parties.
(h) On each Closing Date, all filings required to have been made
pursuant to Rules 424 or 430A under the Securities Act have been made.
Xxxxxxx Holdings, Inc.
The Xxxxxxx Co.
________________, 1998
Page 15
(i) On the Initial Closing Date, the Shares shall have been
approved for listing upon notice of issuance on the SmallCap Market.
(j) The NASD shall not have raised any objection with respect to
the fairness and reasonableness of the underwriting terms and arrangements.
(k) FBW shall have received a letter from Xxxxxx X. Xxxxxxx, Xx.,
in form and substance satisfactory to FBW, confirming his agreement that for
a period of 12 months commencing on the Effective Date he will not sell any
shares of Common Stock, or any securities convertible into or exchangeable
for any shares of Common Stock, or any option, warrant or other right to
acquire any shares of Common Stock, or publicly announce any intention to do
any of the foregoing, without the prior written consent of FBW, which consent
may be withheld in their sole discretion.
(l) The Company shall, on the date hereof and at each Closing
Date, deliver to FBW a certificate of its president and its chief financial
officer to the effect that, to each of such officer's knowledge, the
representations and warranties of the Company set forth in this Agreement and
the conditions set forth in paragraphs (d) through (i) inclusive of this
Section 6 have been met and are true and correct as of such date.
(m) The Company shall have furnished to FBW such other documents
and certificates as to the accuracy and completeness of any statement in the
Registration Statement and the Prospectus, the representations, warranties
and statements of the Company contained herein, and the performance by the
Company of the covenants contained herein, and the fulfillment of any
conditions contained herein or therein, as of each Closing Date as FBW may
reasonably request.
(n) The Company shall have performed such of its obligations under
this Agreement as are to be performed by the terms hereof at or before each
Closing Date.
7. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless FBW and its
directors, officers and each person, if any, who controls FBW within the
meaning of Section 15 of the 1933 Act or Section 20 of the Securities
Exchange Act of 1934, as amended (the ''Exchange Act"), from and against any
and all losses, claims, damages, liabilities and judgments (including,
without limitation, any legal or other expenses incurred in connection with
investigating or defending any matter, including any action, that could give
rise to any such losses, claims, damages, liabilities or judgments and any
amount paid in settlement of, any action, suit or proceeding commenced or any
claim asserted), to which FBW may become subject under the 1933 Act, the
Exchange Act or other Federal or state statutory law or regulation, at common
law or otherwise, related to, based upon or arising out of (i) an untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any preliminary prospectus (unless corrected in the Prospectus),
or the omission or alleged omission to state therein a material fact required
to be stated therein or necessary
Xxxxxxx Holdings, Inc.
The Xxxxxxx Co.
________________, 1998
Page 16
to make the statements therein not misleading, (ii) any breach or alleged
breach by the Company of its representations, warranties and agreements
contained in this Agreement or (iii) FBW's performance of its duties under
this Agreement; provided, however, that the Company will have no obligation
under this Section 7(a) to the extent that any such loss, claim, damage,
liability or action pursuant to clause (iii) above shall have been determined
in a final judgment of a court of competent jurisdiction to have been due to
the willful misconduct or gross negligence of FBW.
FBW agrees to indemnify and hold harmless the Company, its directors and
officers, and each person, if any, who controls the Company within the
meaning of either Section 15 of the 1933 Act or Section 20 of the Exchange
Act to the same extent as the foregoing indemnity from the Company to FBW,
but only with respect to (i) any breach or alleged breach by FBW of its
representations, warranties and agreements contained in this Agreement or
(ii) information relating to FBW furnished in writing by FBW expressly for
use in the Registration Statement, the Prospectus, or any amendment or
supplement thereto, or any preliminary prospectus; provided, however, that
the foregoing indemnity by FBW shall not apply to any untrue statement or
omission contained in any preliminary prospectus which is not contained in
the Prospectus.
(b) In case any action shall be commenced involving any person in
respect of which indemnity may be sought under this Section 7, such person
shall promptly notify each indemnifying party in writing and such
indemnifying party shall assume the defense thereof, including the employment
of counsel reasonably satisfactory to such indemnified party, and the payment
of all fees and expenses of such counsel, as incurred. Any indemnified party
shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the employment
of such counsel by such indemnified party shall have been specifically
authorized in writing by the indemnifying parties, (ii) the indemnifying
party shall have failed to assume the defense of such action or employ
counsel reasonably satisfactory to the indemnified party, or (iii) the named
parties to any such action (including any impleaded parties) include both the
indemnified party and the indemnifying party, and the indemnified party shall
have been advised by such counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the indemnifying party (in which case the indemnifying party
shall not have the right to assume the defense of such action on behalf of
the indemnified party). In any such case, the indemnifying party shall not,
in connection with any one action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more
than one separate firm of attorneys (in addition to any local counsel) for
all indemnified parties and all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by FBW, in the
case of parties indemnified pursuant to the first paragraph of Section 7(a),
and by the Company, in the case of the parties indemnified pursuant to the
second paragraph of Section 7(a). The indemnifying party shall indemnify and
hold harmless the indemnified party from and against any and all losses,
claims, damages, liabilities and judgments by reason of any settlement of any
action (i) effected with its written consent or (ii) effected without its
written consent if the settlement is entered into more than twenty business
days after the indemnifying party shall have received a request from the
indemnified party for reimbursement for the fees and expense of counsel
Xxxxxxx Holdings, Inc.
The Xxxxxxx Co.
________________, 1998
Page 17
(in any case where such fees and expenses are at the expense of the
indemnifying party) and, prior to the date of such settlement, the
indemnifying party shall have failed to comply with such reimbursement
request. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement or compromise of, or consent to
the entry of judgment with respect to, any pending or threatened action in
respect of which the indemnified party is or could have been a party and
indemnity or contribution may be or could have been sought hereunder by the
indemnified party, unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
on claims that are or could have been the subject matter of such action and
(ii) does not include a statement as to or an admission of fault, culpability
or a failure to act, by or on behalf of the indemnified party.
(c) To the extent the indemnification provided for in Section 7(a)
is unavailable to, or insufficient to hold harmless any indemnified party
under Section 7(a), in respect of any loss, claim, damage, liability or
judgment referred to therein, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims,
damages, liabilities and judgments (i) in such proportion as is appropriate
to reflect the relative benefits received by the Company, on the one hand,
and FBW, on the other, from the Offering or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, or if the indemnified
party failed to give the notice required under Section 7(b), in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company,
on the one hand, and FBW, on the other, in connection with FBW's activities
under this Agreement or the statements or omissions that resulted in such
losses, claims, damages, liabilities or judgments, as well as any other
relevant equitable considerations. The relative benefits received by the
Company, on the one hand, and FBW, on the other, shall be deemed to be in the
same proportion as the total net proceeds from the Offering (after deducting
expenses) bear to the total fee paid to FBW pursuant to Section 3. The
relative fault of the Company, on the one hand, and of FBW, on the other,
shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company or by FBW, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and FBW agree that it would not be just and equitable if
contribution pursuant to this Section 7(c) were determined by pro rata
allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities or judgments referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any
matter, including any action that could have given rise to such losses,
claims, damages, liabilities or judgments. Notwithstanding the provisions of
this Section 7, FBW shall not be required to contribute any amount in excess
of the amount by which the fee paid to FBW pursuant to Section 3 exceeds the
amount of any damages FBW has otherwise been required to pay by reason of
such activities under this Agreement or such untrue or alleged untrue
statement or omission or
Xxxxxxx Holdings, Inc.
The Xxxxxxx Co.
________________, 1998
Page 18
alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(d) The remedies provided for in this Section 7 are not exclusive
and shall not limit any rights or remedies which may otherwise be available
to any indemnified party at law or in equity.
(e) The statements with respect to FBW in the fourth paragraph
under the caption "Plan of Distribution" in the Prospectus constitute the
only information furnished to the Company in writing on behalf of FBW
expressly for use in the Registration Statement, the Prospectus or any
amendment or supplement thereto, or any preliminary prospectus.
(f) The indemnity and contribution agreements contained in this
Section 7, and the covenants, representations and warranties of the Company
in this Agreement, shall remain operative and in full force and effect
regardless of (i) any investigation made by FBW or on its behalf or by or on
behalf of any person who controls FBW or (ii) any termination of this
Agreement or the Offering.
8. Successors and Assigns. The benefits of this Agreement shall inure
to the respective successors and assigns of the parties hereto and the
obligations and liabilities assumed in this Agreement by the parties hereto
shall be binding upon their respective successors and assigns.
9. Amendments and Waivers. The provisions of this Agreement may not
be amended, modified or supplemented unless the Company, the Underwriter and
FBW consent in writing to such amendment, modification or supplement.
10. Notice. Whenever notice is required to be given pursuant to this
Agreement, such notice shall be in writing and shall be delivered by hand or
by commercial messenger service or mailed by first class mail, postage
prepaid, addressed (a) if to FBW, at 000 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx
00000, Attention: Xxxxxx X. Xxxx, (b) if to the Company or the Underwriter,
at the address on the first page of this Agreement, Attention: Xxxxxx X.
Xxxxxxx, Xx., or such other address as to which any party shall notify the
other parties hereto in writing.
11. Governing Law. This Agreement shall be construed (both as to
validity and performance) and enforced in accordance with and governed by the
laws of the State of Maryland applicable to agreements made and to be
performed wholly within such jurisdiction. The Company and FBW irrevocably
consent to the service of any complaint, summons, notice or other process
relating to any such action or proceeding by delivery thereof to it in the
manner provided for in Section 9 hereof.
12. Counterparts. This Agreement may be signed in two or more
counterparts with the same force and effect as if the signatures thereto and
hereto were upon the same instrument.
Xxxxxxx Holdings, Inc.
The Xxxxxxx Co.
________________, 1998
Page 19
13. Termination. This Agreement will terminate on the Termination
Date, except that the provisions of Section 7 hereof, shall survive the
termination of this Agreement.
14. Entire Agreement. This Agreement constitutes the entire agreement
of the parties to this Agreement and supersedes all prior written or oral and
all contemporaneous oral agreements, understandings and negotiations with
respect to the subject matter hereof and thereof.
If the above terms are in accordance with your understanding of our
agreement, please sign the enclosed copy of this Agreement and return such
copy to us.
Very truly yours,
XXXXXX XXXXX XXXXX INCORPORATED
By:
---------------------------
CONFIRMED AND AGREED TO AS OF
THE DATE FIRST ABOVE WRITTEN:
XXXXXXX HOLDINGS, INC.
By:
-----------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: President
THE XXXXXXX CO.
By:
-----------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: President
[FBW Letterhead]
APPENDIX A
_______________, 1998
Xxxxxxx Holdings, Inc.
World Trade Center - Baltimore
000 Xxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
The Xxxxxxx Co.
World Trade Center - Baltimore
000 Xxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Re: Qualified Independent Underwriter
Ladies and Gentlemen:
You have advised us that Xxxxxxx Holdings, Inc. (the "Company"), a
Maryland corporation, has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form SB-2 (Registration No.
333-43487), relating to the offering by the Company of up to 1,000,000 common
stock, par value $.001 per share, of the Company (the "Common Stock" or the
"Shares"). It is anticipated that The Xxxxxxx Co. (the "Underwriter") will
act as an Underwriter of the Company in the sale of the Shares to the public
on a best efforts, minimum/maximum basis.
We understand that, as a member of the National Association of
Securities Dealers, Inc. (the "NASD"), the Underwriter may participate in the
Offering only if the price of each Share offered to the public is no higher
than the price recommended by a "Qualified Independent Underwriter."
Pursuant to a letter agreement, dated ______, 1998, among the Company, the
Underwriter and us (the "QIU Agreement"), we have been retained as a
"Qualified Independent Underwriter" (as such term is defined in Rule
2720(b)(15) of the NASD Conduct Rules) to recommend to you the maximum price
for the Shares to be sold to the public.
We have participated in the preparation of the Registration Statement
and the Prospectus (as such terms are defined in the QIU Agreement) with
respect to the Offering, and have exercised the usual standards of due
diligence with respect thereto. Assuming that the Offering is commenced on
_______, 1998, and further assuming compliance by the Corporation and the
Underwriter with their representations,
Xxxxxxx Holdings, Inc.
The Xxxxxxx Co.
________________, 1998
Page 2
warranties and covenants in Sections 4 and 5 of the QIU Agreement, we
recommend that the price of the Shares be no higher than $______.
Very truly yours,
XXXXXX XXXXX XXXXX INCORPORATED
By:
---------------------------
Xxxxxx X. Xxxx
Senior Vice President
AGREED TO AND ACCEPTED:
THE XXXXXXX CO.
By:
--------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: President
XXXXXXX HOLDINGS, INC.
By:
--------------------------------
Name: Xxxxxx X. Xxxxxxx, Xx.
Title: President
