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EXHIBIT 1.1
2,525,000 Shares
Common Stock
($.01 Par Value)
UNDERWRITING AGREEMENT
_________________, 1998
X.X. Xxxxxxx & Sons, Inc.
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated
Xxxxx & Xxxxxxxxxxxx, Inc.
As Representatives of the Several Underwriters
c/o X.X. Xxxxxxx & Sons, Inc.
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
The undersigned, Advanced Communication Systems, Inc., a Delaware
corporation (the "Company") and the persons listed on Schedule I hereto (the
"Selling Stockholders"), 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. Description of Shares. The Company proposes to issue and sell
to the Underwriters 2,000,000 shares of its Common Stock, par value $.01 per
share, and the Selling Stockholders propose to sell to the Underwriters a total
of 525,000 shares of the Company's Common Stock, par value $.01 per share, as
set forth on Schedule I hereto (such 2,525,000 shares of Common Stock are
herein referred to as the "Firm Shares"). Solely for the purpose of covering
overallotments in the sale of the Firm Shares, the Company further proposes to
grant to the Underwriters the right to purchase up to an additional 378,750
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
Stockholder 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 Stockholders, 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.
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The Company and the Selling Stockholders will deliver definitive
certificates for the Firm Shares at the office of X.X. Xxxxxxx & Sons, Inc.,
00 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx ("Xxxxxxx' 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 Stockholders 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
Stockholders, respectively, and delivered to Xxx Xxxxx Xxxxxxxxx Xxxxxx, Xx.
Xxxxx, Xxxxxxxx 00000, 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
__________-, 1998, or at such other time and date not later than three full
business days 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 Xxxxxxx' 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 two 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 378,750
Option Shares on the same terms and conditions as the Firm Shares; provided,
however, that such options may be exercised only for the purpose of covering
any overallotments 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
three business days after such notice unless otherwise
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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 Xxxxxxx' 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 Xxxxxxx' 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 two 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.
4. Representations, Warranties and Agreements of the Company and
the Selling Stockholders.
(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
to become effective will be filed promptly by the Company with the
Commission. If such registration statement has become effective under
the Act,
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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 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
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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 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 subsidiaries 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 subsidiaries is a party or by
which they are bound or to which any of the properties or assets of
the Company or its subsidiaries is subject, or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Company or its subsidiaries or their properties,
except to such extent as does not materially adversely affect the
business of the Company and its subsidiaries 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 subsidiaries have 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 subsidiaries 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 subsidiaries taken as a
whole or any material adverse change in the condition (financial or
other), net worth, business, affairs, management, prospects or results
of operations of the Company and its subsidiaries taken as a whole.
The Company and its subsidiaries 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 subsidiaries except to such extent
as would not materially adversely affect the business of the
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Company and its subsidiaries taken as a whole; the Company and its
subsidiaries 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 subsidiaries have no knowledge of any tax proceeding
or action pending or threatened against the Company or its
subsidiaries 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
Stockholders, threatened or contemplated, any action, suit or
proceeding to which the Company or its subsidiaries 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 subsidiaries 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
subsidiaries 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 subsidiaries 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
subsidiaries 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 subsidiaries to conduct their business as
described in the Registration Statement; and the outstanding shares of
capital stock of the Company's subsidiaries have been duly authorized
and validly issued, are fullypaid 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
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other rights to convert any obligations into shares of capital stock
or ownership interests in the subsidiaries are outstanding.
(viii) Xxxxxx Xxxxxxxx LLP, an accounting firm which has
certified certain of 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) Xxxxxx Xxxxxx & Company LLC, an accounting firm which
has certified certain of 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.
(x) Failes & Associates, an accounting firm which has
certified certain of 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.
(xi) 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 applied on a consistent basis throughout the periods
involved 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.
(xii) Neither the Company nor any of its subsidiaries is in
default with respect to any contract or agreement to which 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 subsidiaries taken as a whole.
(xiii) Neither the Company nor any of its subsidiaries is in
violation of any other laws, ordinances or governmental rules or
regulations to which it is subject, and neither the Company nor any of
its subsidiaries 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 subsidiaries taken as a
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whole. Neither the Company nor any of its subsidiaries 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).
(xiv) Except as described in the Prospectus, the Company
and its subsidiaries 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 any of its subsidiaries 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 subsidiaries
taken as a whole.
(xv) The Company and its subsidiaries 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 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 any of its subsidiaries
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 subsidiaries, and neither the Company nor any of its subsidiaries
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
its subsidiaries' rights as lessee or sublessee under any lease or
sublease described above, or affecting or questioning the Company's or
its subsidiaries' rights to the continued possession of the leased or
subleased premises under any such lease or sublease in conflict with
the terms thereof.
(xvi) Except as described in the Prospectus, there is no
factual basis for any action, suit or other proceeding involving the
Company or its subsidiaries or any of their material assets for any
failure of the Company or its subsidiaries, 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 owned or
leased by the Company or its subsidiaries is, to the best knowledge of
the Company, contaminated with any waste or hazardous substances, and
neither the Company nor its subsidiaries 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
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terms are defined in Section 9601 of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. 9601 et
seq.
(xvii) No labor disturbance exists with the employees of the
Company or its subsidiaries or is imminent which would have a material
adverse effect on the Company and its subsidiaries taken as a whole.
(xviii) 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.
(xiv) 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.
(xx) The Company has filed with the Commission, on a
timely basis, all documents required to have been filed by the Company
pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act") or the rules and regulations of the Commission
thereunder. Each such document, when filed with the Commission,
conformed in all material respects to the requirements thereunder, and
did not 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 light of the circumstances under which
they were made, not misleading.
(b) Each Selling Stockholder 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 Stockholder
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 Stockholder 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 Stockholder, 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,
transfer and deliver the Shares to be sold by such Selling Stockholder
hereunder.
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(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
Stockholder hereunder, free and clear of all liens, mortgages,
pledges, encumbrances, claims, equities and security interests
whatsoever.
(iv) The consummation by such Selling Stockholder of the
transactions contemplated herein and the fulfillment by such Selling
Stockholder 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 Stockholder is a party, or of any order, rule or regulation
applicable to such Selling Stockholder of any court or of any
regulatory body of an administrative agency or other governmental body
having jurisdiction.
(v) Such Selling Stockholder 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 stabilization or
manipulation of the price of the Company's Common Stock, and such
Selling Stockholder is not aware of any such action taken or to be
taken by affiliates of such Selling Stockholder.
(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 Stockholder 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 Stockholder hereunder have been
placed in the custody of Continental Stock Transfer & Trust Company
(the "Custodian") under a Custody Agreement (the "Custody Agreement"),
duly executed and delivered by such Selling Stockholder, with the
Custodians having the authority to deliver the Shares to be sold by
such Selling Stockholder hereunder, and that such Selling Stockholder
has duly executed and delivered a Power of Attorney (the "Power of
Attorney") appointing Xxxxxx X. Xxxxxxxx, Dev Ganesan and
_____________, any two of whom may act, as such Selling Stockholder'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 Stockholder, to determine the purchase price to be paid
by the Underwriters to the Selling Stockholders 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 Stockholder in
connection with the transactions contemplated by this Agreement and
such Custody Agreement.
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(viii) The Shares represented by the certificates held in
custody for such Selling Stockholder under the Custody Agreement are
subject to the interests of the Underwriters hereunder, and the
arrangements made by such Selling Stockholder for such custody, and
the appointment by such Selling Stockholder of the Custodians under
the Custody Agreement and of the Attorneys-in-Fact by the Power of
Attorney, are to that extent irrevocable.
(ix) The obligations of such Selling Stockholders
hereunder shall not be terminated by operation of law, whether by the
death or incapacity of any individual Selling Stockholder or by the
occurrence of any other event, and if any Selling Stockholder 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
Stockholder 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 Stockholder is not prompted to sell
shares of Common Stock by any information concerning the Company or
its subsidiaries 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 to the
matters covered thereby; and any certificate signed by or on behalf of the
Selling Stockholders as such and delivered to you or to counsel for the
Underwriters shall be deemed a representation and warranty by the Selling
Stockholders to each Underwriter as to the matters covered thereby.
5. Additional Covenants. The Company and, where expressly
indicated, the Selling Stockholders, 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
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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 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 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
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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 stockholders
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 stockholders 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 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.
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(k) Prior to the Closing Date (and, if applicable, the Option
Closing Date), neither the Company nor any Selling Stockholder will issue any
press releases or other communications directly or indirectly and will hold no
press conferences with respect to the Company or its subsidiaries, the
financial condition, results of operations, business, properties, assets or
liabilities of the Company or its subsidiaries, or the offering of the Shares,
without your prior written consent.
(l) The Company will use its best efforts to obtain approval for
the listing of the Shares to be sold by the Company hereunder, and to maintain
the quotation of the Company's shares, on the Nasdaq National Market.
(m) For a period of 180 days from the date of the Prospectus, 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 by the Company in Permitted
Issuances. For purposes of the foregoing, a "Permitted Issuance" shall mean
any sale or issuance by the Company (i) pursuant to the Company's 1997 Stock
Incentive Plan or Employee Stock Purchase Plan, both described in the
Prospectus, (ii) pursuant to the exercise of options referred to in the
Prospectus, (iii) in an issuance pursuant to a registration statement under the
Securities Act in connection with an acquisition in which the recipients of
such Common Stock or Securities agree that such Common Stock or Securities may
not be transferred or sold by them during the period ending 180 days from the
date of the Prospectus without your prior written consent or (iv) in a private
placement or other unregistered issuance in connection with an acquisition in
which the recipients of such Common Stock or securities agree that 80% of such
Common Stock or securities may not be transferred or sold by them during the
period ending 180 days from the date of the Prospectus without your prior
written consent.
(n) For a period of 180 days from the date of the Prospectus, the
Selling Stockholders 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 subsidiaries 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 subsidiaries is
permitted only in accordance with management's authorization, and (4) the
recorded accounts of the assets of the Company and its subsidiaries 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
herein, shall be subject to the accuracy in all material respects, as of the
date hereof and as of the Closing Date
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(and, if applicable, the Option Closing Date), of the representations and
warranties of the Company and the Selling Stockholders contained herein, to the
performance in all material respects by the Company and the Selling
Stockholders 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 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 Venable, Xxxxxxx and Xxxxxx, LLP
("Venable"), 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 subsidiaries 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
subsidiaries 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 subsidiaries to conduct their business as
described in the Registration Statement; and the outstanding shares of
capital stock of the Company's subsidiaries have been duly authorized
and validly issued and, to the knowledge of such counsel, 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; to the knowledge of such counsel, no
options, warrants or other rights to purchase, agreement or other
obligations to issue or other rights to convert any obligations into
shares of
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capital stock or ownership interests in the subsidiaries 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
of Common Stock have been duly authorized and are validly issued,
fully paid and nonassessable; 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
nonassessable, and the stockholders of the Company have no preemptive
rights with respect to the Shares pursuant to the Company's articles
of incorporation or bylaws or the Delaware General Corporation Law
statute or, to the knowledge of such counsel, otherwise.
(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 are 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, the notes thereto
or the financial statement schedule, other financial data or
statistical data derived from any of the foregoing).
(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.
(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
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authorized, executed and delivered by the Company. The performance of
this Agreement and the consummation of the transactions herein
contemplated will not (A) result in a violation of the Company's
articles of incorporation or bylaws or (B) to the knowledge of such
counsel, 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 subsidiaries under, any
statute, or under any indenture, mortgage, deed of trust, note, loan
agreement, sale and leaseback arrangement, or any other agreement or
instrument to which the Company or its subsidiaries is a party or by
which they are bound or to which any of the properties or assets of
the Company or its subsidiaries are subject, or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Company or its subsidiaries 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 subsidiaries taken as a whole.
(viii) To the knowledge of such counsel, (A) there are no
material (individually, or in the aggregate) legal, governmental or
regulatory proceedings pending or threatened to which the Company or
its subsidiaries is a party or of which the business or properties of
the Company or its subsidiaries 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, the Company and its
subsidiaries 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 subsidiaries lawfully to own, lease and operate its properties and
conduct its business as described in the Prospectus, and each of the
Company and its subsidiaries is 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 "Capitalization", "Management-Stockholders
Agreement," "Management-Employment Agreement," "Management-Stock Plans
and Agreements," "Management-Indemnification Arrangements", "Certain
Transactions-Termination Agreements," "Certain Transactions-Fairfax
Communications Ltd.," "Description
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of Capital Stock" and "Shares Eligible for Future Sale," 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, the notes thereto or the
financial statement schedule, other financial data or statistical data derived
from any of the foregoing, 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 governed by the General Corporation Law statute of the State of
Delaware or 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 Xxxx and Xxxx LLP ("Xxxx and Xxxx"),
counsel to the Underwriters (2) as to matters governed by the laws of the
United Kingdom, upon opinions of the auditors for the Company's subsidiary
satisfactory to them and Xxxx and Xxxx and (3) 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 Venable, counsel to the Selling
Stockholders, addressed to you and dated the Closing Date (and, if applicable,
the Option Closing Date), to the effect that:
(i) Each Selling Stockholder has duly authorized,
executed and delivered the Custody Agreement and Power of Attorney,
(a) appointing Continental Stock Transfer & Trust Company as such
Selling Stockholder's Custodian with authority to take custody of and
deliver the Shares as represented by certificates on behalf of such
Selling Stockholder in connection with the transactions contemplated
by this Agreement and the Custody Agreement, and (b) appointing Xxxxxx
X. Xxxxxxxx, Dev Ganesan and __________, any two of whom may act, as
such Selling Stockholder's attorneys-in-fact with authority to execute
and deliver this Agreement on behalf of such Selling Stockholder and
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otherwise to act on behalf of such Selling Stockholder in connection
with the transactions contemplated by this Agreement and the Power of
Attorney.
(ii) This Agreement has been duly executed and delivered
on behalf of the Selling Stockholders.
(iii) To such counsel's knowledge, each Selling Stockholder
has full legal right 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 Stockholder.
(iv) To such counsel's knowledge, 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
Stockholder 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) To such counsel's knowledge, each Selling Stockholder
has good and valid title to the Shares being sold by such Selling
Stockholder hereunder, free and clear of all liens, mortgages,
pledges, encumbrances, claims, equities and security interests;
(vi) Upon delivery of the Shares to be sold by each
Selling Stockholder pursuant to this Agreement and payment therefor as
contemplated herein, and assuming that the Underwriters purchase such
Shares in good faith and without notice of an adverse claim, each
Selling Stockholder will have transferred to the Underwriters good and
valid title to the Shares being sold by such Selling Stockholder on
the 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 governed by the General Corporation Law statute of the State of
Delaware or 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 Xxxx and Xxxx and (2) as to all
matters of fact, upon certificates and written statements of the Selling
Stockholders.
(e) You shall have received on the Closing Date (and, if
applicable, the Option Closing Date), from Xxxx and Xxxx LLP, 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 as you may reasonably require; the
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Company and Selling Stockholders 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
Xxxx and Xxxx LLP 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 Xxxxxx Xxxxxxxx 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) 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 Xxxxxx Xxxxxx & Company LLC, 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.
(i) 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 Failes & Associates, 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.
(j) Except as contemplated in the Prospectus, (i) neither the
Company nor its subsidiaries 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
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dates as of which information is given in the Registration Statement and the
Prospectus, neither the Company nor its subsidiaries 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 subsidiaries, 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.
(k) 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
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.
(l) 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,
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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 been duly
performed in all material respects.
(m) The Company and each of the Selling Stockholders 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.
(n) The Company and the Selling Stockholders 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 Stockholders herein and as to the performance by the
Company and the Selling Stockholders of their obligations hereunder.
(m) The Nasdaq National Market shall have approved the
Company's Application for Listing of Additional Shares.
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 Xxxx and Xxxx, counsel for the several Underwriters. The Company
and Selling Stockholders 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 Stockholders.
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 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
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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 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 Stockholder 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 Stockholder 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
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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 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 Stockholders 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 Stockholder, 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 Stockholder 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 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 Stockholder 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
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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 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 (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 Stockholders and the Underwriters from the offering of the Shares. 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 Stockholders 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 Stockholders 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 Stockholders bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the
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table on the cover page of the Prospectus. 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 Stockholders 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 Stockholders 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
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
Stockholders 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
Stockholders, and shall survive delivery of the Shares to the Underwriters
hereunder.
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
Stockholders 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 Stockholders that
you have so arranged for the purchase of such Shares, or the Company and the
Selling Stockholders notify you that they have so arranged for the purchase of
such Shares, you or the Company and the Selling Stockholders 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
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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 Stockholders 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 Stockholders 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 Shares of a defaulting Underwriter or Underwriters made by you or the
Company and the Selling Stockholders 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
Stockholders 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 Stockholders 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 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
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Stockholders; 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 Stockholders 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 Stockholders
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 Stockholders, 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 Stockholders by
telephone or telegram, confirmed by letter.
11. Costs and Expenses. The Company and the Selling Stockholders
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 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 the
Nasdaq National Market, (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
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(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
advertising costs and expenses incurred by the Underwriters incident to the
public offering of the Shares; and provided, further, that the Selling
Stockholders will bear and pay the fees and expenses of the Selling
Stockholders' 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 Stockholders. Failure or refusal by any of
the Selling Stockholders to sell and deliver on the Closing Date the Shares
agreed to be sold and delivered by such Selling Stockholder shall in no manner
relieve the other Selling Stockholders or the Company of their respective
obligations under this Agreement. If any Selling Stockholder should fail or
refuse to sell and deliver his Shares, the remaining Selling Stockholders 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 Stockholders as set forth in Schedule I. If the remaining Selling
Stockholders 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 Stockholders. In the event the Underwriters purchase the
Shares of the Company and such other Selling Stockholders 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 Stockholders, if any, this
Agreement shall terminate and neither the Company nor the Underwriters nor any
other Selling Stockholder 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 Stockholder from liability
for his default or from liability under Section 7 hereof or for expenses
imposed by this Agreement upon such Selling Stockholder.
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 X.X. Xxxxxxx & Sons, Inc. at Xxx Xxxxx Xxxxxxxxx
Xxxxxx, Xx. Xxxxx, Xxxxxxxx 00000, Attention: Syndicate, facsimile number (314)
289-7387, or if sent to the Company shall be mailed, delivered, sent by
facsimile transmission, or telegraphed and confirmed to the
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Company at 00000 Xxx Xxxxxxx Xxxxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention:
Xxxxxx X. Xxxxxxxx, facsimile number (000) 000-0000, or if sent to any Selling
Stockholder shall be mailed, delivered, sent by facsimile transmission or
telegraphed and confirmed to such Selling Stockholder, c/o the
Attorneys-in-Fact at c/o the Company, 00000 Xxx Xxxxxxx, Xxxxxxx, Xxxxxxxx
00000. 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 Stockholder.
14. Parties. This Agreement shall inure to the benefit of and be
binding upon the Underwriters and the Selling Stockholders, 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 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.
A In all dealings with the Company and the Selling Stockholders under
this Agreement you shall act on behalf of each of the several Underwriters, the
Company, and the Selling Stockholders 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 Uderwriters.
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.
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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
Stockholders and the Underwriters.
ADVANCED COMMUNICATIONS SYSTEMS, INC.
By:
--------------------------------
Title:
----------------------------
Selling Stockholders Named in Schedule I Hereto
By:
--------------------------------
Attorney-in-Fact
By:
------------------------------
Attorney-in-Fact
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.
X.X. XXXXXXX & SONS, INC.
By:
----------------------------
Title:
------------------------
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SCHEDULE I
Number of
Selling Stockholders Firm Shares
TOTAL
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SCHEDULE II
Name Number of Shares
X.X. Xxxxxxx & Sons, Inc.
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated
Xxxxx & Xxxxxxxxxxxx, Inc
TOTAL
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SCHEDULE III
Pursuant to Section 6(g), (h) and (i) of the Underwriting Agreement,
Xxxxxx Xxxxxxxx LLP ("AA"), Xxxxxx Xxxxxx & Company, LLC and Failes &
Associates each shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants
with respect to the Company and its subsidiaries 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) In the case of AA only, 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 subsidiaries, inspection of
the minute books of the Company and its subsidiaries since the date of the
latest audited financial statements included in the Prospectus, inquiries of
officials of the Company and its subsidiaries 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
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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 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, and
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(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 subsidiaries for 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.
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