EXHIBIT 1.1
THERMOVIEW INDUSTRIES, INC.
COMMON STOCK
(PAR VALUE $.001 PER SHARE)
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UNDERWRITING AGREEMENT
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________________, 1999
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates, Inc.
EBI Securities Corporation
As representatives of the several
Underwriters named in SCHEDULE I hereto,
c/o ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
ThermoView Industries, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and
sell to the Underwriters named in SCHEDULE I hereto (the "Underwriters") an
aggregate of 1,200,000 shares and, at the election of the Underwriters, up
to 180,000 additional shares of Common Stock, par value $.001 per share
("Stock") of the Company. The aggregate of 1,200,000 shares to be sold by
the Company is herein called the "Firm Shares" and the aggregate of 180,000
additional shares to be sold by the Company is herein called the "Optional
Shares." The Firm Shares and the Optional Shares that the Underwriters elect
to purchase pursuant to Section 2 hereof are herein collectively called the
"Shares." The Shares, the Representatives' Warrants (as that term is defined
in Section 7(k) herein) and the shares of Stock issuable pursuant to the
exercise of the Representatives' Warrants are herein collectively called the
"Securities."
1. The Company represents and warrants to, and agrees with, each
of the Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-84571)
(the "Initial Registration Statement") in respect of the Shares has been filed
with the Securities and Exchange Commission (the "Commission"); such Initial
Registration Statement and any post-effective
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amendment thereto, each in the form heretofore delivered to you, and,
excluding exhibits thereto, to you for each of the other Underwriters, have
been declared effective by the Commission in such form; other than a
registration statement, if any, increasing the size of the offering (a "Rule
462(b) Registration Statement"), filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended (the "Act"), which became effective upon
filing, no other document with respect to the Initial Registration Statement
has heretofore been filed with the Commission, except for the registration
statement on Form 8-A filed pursuant to the Securities Exchange Act of 1934,
as amended (the "Exchange Act"); and no stop order suspending the
effectiveness of such Initial Registration Statement, any post-effective
amendment thereto, or the Rule 462(b) Registration Statement, if any, has
been issued and no proceeding for that purpose has been initiated or
threatened by the Commission (any preliminary prospectus included in such
Initial Registration Statement or filed with the Commission pursuant to Rule
424(a) of the rules and regulations of the Commission under the Act, is
hereinafter called a "Preliminary Prospectus"); the various parts of the
Initial Registration Statement and the Rule 462(b) Registration Statement, if
any, including all exhibits thereto and including the information contained
in the form of final prospectus filed with the Commission pursuant to Rule
424(b) under the Act in accordance with Section 5(a) hereof and deemed by
virtue of Rule 430A under the Act to be part of the registration statement at
the time it was declared effective, each as amended at the time such part of
the Initial Registration Statement became effective, or such part of the Rule
462(b) Registration Statement, if any, became or hereafter becomes effective,
are hereinafter collectively called the "Registration Statement"; and such
final prospectus, in the form first filed pursuant to Rule 424(b) under the
Act, is hereinafter called the "Prospectus";
(b) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material respects to
the requirements of the Act and the rules and regulations of the Commission
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 the light of the circumstances under which they were
made, not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter through Southwest Securities, Inc. expressly for use therein;
(c) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of the Act
and the rules and regulations of the Commission thereunder and do not and will
not, as of the applicable effective date as to the Registration Statement and
any amendment thereto and as of the applicable filing date as to the Prospectus
and any amendment or supplement thereto, 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 not misleading; provided, however, that
this representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in
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writing to the Company by an Underwriter through Southwest Securities, Inc.
expressly for use therein;
(d) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements included in
the Prospectus any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus; and, since the respective
dates as of which information is given in the Registration Statement and the
Prospectus, there has not been any change in the capital stock, short-term debt
or long-term debt of the Company or any of its subsidiaries or any material
adverse change, or any development involving a prospective material adverse
change, in or affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the Prospectus;
(e) The Company and its subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the Company
and its subsidiaries, in each case free and clear of all liens, encumbrances and
defects except such as are described in the Prospectus or such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and its
subsidiaries; and any real property and buildings held under lease by the
Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company and its subsidiaries;
(f) The Company and each of its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation, with power and authority (corporate
and other) to own its properties and conduct its business as described in the
Prospectus, and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any business so
as to require such qualification, or is subject to no material liability or
disability by reason of failure to be so qualified in any such jurisdiction;
(g) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued are fully paid and
non-assessable, are not subject to any preemptive or similar rights and conform
to the description of the Stock contained in the Prospectus; all of the issued
shares of capital stock of each subsidiary of the Company have been duly and
validly authorized and issued, are fully paid and non-assessable and are owned
directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims except as described in the Prospectus and there
are no outstanding subscriptions, rights warrants, options, calls,
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convertible securities, commitments of sale or liens granted or issued by the
Company or any of its subsidiaries relating to or entitling any person to
purchase or otherwise to acquire any shares or capital stock of the Company
or any of its subsidiaries, except as otherwise disclosed in the Prospectus
and there are no outstanding subscriptions, rights warrants, options calls,
convertible securities, commitments of sale or liens granted or issued by the
Company or any of its subsidiaries relating to or entitling any person to
purchase or otherwise to acquire any shares of capital stock of the Company
or any of its subsidiaries, except as otherwise disclosed in the Prospectus;
(h) The unissued Shares to be issued and sold by the Company
to the Underwriters hereunder have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will be duly
and validly issued and fully paid and non-assessable. The Representatives'
Warrants will be exercisable for Stock of the Company in accordance with the
terms of the Representatives' Warrants and at the price therein provided. The
shares of Common Stock have been duly authorized and reserved for issuance upon
such exercise and such shares, when issued upon such exercise in accordance with
the terms of the Representatives' Warrants and when the exercise price is paid,
shall be duly authorized, validly issued, fully paid and non-assessable. The
Shares and the Representatives' Warrants will conform to all statements related
thereto in the Prospectus. The certificates evidencing the Shares are in valid
and proper legal form.
(i) This Agreement and the Representatives' Warrants have been
duly and validly authorized, executed and delivered by the Company, as
applicable, and assuming due execution by the other party or parties hereto and
thereto, constitute valid and binding obligations of the Company enforceable
against the Company in accordance with their respective terms, except as rights
to indemnity and contribution hereunder may be limited by applicable law and
except as enforceability may be limited by bankruptcy, insolvency or other laws
affecting the rights of creditors generally or by general equitable principles.
The issue and sale of the Securities and the compliance by the Company with all
of the provisions of this Agreement and the Representatives' Warrants and the
consummation of the transactions herein and therein contemplated will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the Company
or any of its subsidiaries is subject, except for any such conflict, breach,
violation or default which would not have a material adverse effect on the
Company and it subsidiaries taken as a whole, nor will such action result in any
violation of the provisions of the Certificate of Incorporation or By-laws of
the Company or any statute or any order, rule or regulation of any court or
government agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties; and no consent, approval,
authorization, order, registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the Securities
or the consummation by the
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Company of the transactions contemplated by this Agreement and the
Representatives' Warrants, except the registration under the Act of the
Shares and such consents, approvals, authorizations, registrations or
qualifications as may be required under state or foreign securities or Blue
Sky laws in connection with the purchase and distribution of the Shares by
the Underwriters;
(j) Neither the Company nor any of its subsidiaries is in
violation of its Certificate of Incorporation or By-laws or in default in the
performance or observance of any material obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust, loan agreement,
lease or other agreement or instrument to which it is a party or by which it or
any of its properties may be bound;
(k) The statements set forth in the Prospectus under the
caption "Description of Capital Stock," insofar as they purport to constitute a
summary of the terms of the Stock, and under the caption "Underwriting," insofar
as they purport to describe the provisions of the laws and documents referred to
therein, are accurate, complete and fair in all material respects;
(l) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of its
subsidiaries is the subject which, if determined adversely to the Company or any
of its subsidiaries, would individually or in the aggregate have a material
adverse effect on the current or future financial position, stockholders' equity
or results of operations of the Company and its subsidiaries taken as a whole;
and, to the best of the Company's knowledge, no such proceedings are threatened
or contemplated by governmental authorities or threatened by others;
(m) The Company is not and, after giving effect to the
offering and sale of the Shares, will not be an "investment company" or an
entity "controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act");
(n) Neither the Company nor any of its affiliates does
business with the government of Cuba or with any person or affiliate located in
Cuba within the meaning of Section 517.075, Florida Statutes;
(o) Ernst & Young, LLP, who have audited certain financial
statements of the Company and its subsidiaries, are independent accountants as
required by the Act and the rules and regulations of the Commission thereunder;
(p) The consolidated financial statements included in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto), together with related schedules and notes, present fairly the
consolidated financial position, results of operations and changes in financial
position of the Company and its subsidiaries on the basis stated therein at the
respective dates or for the respective periods to which they apply, except as
otherwise stated
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in the Registration Statement; such statements and related schedules and
notes have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved, except as
disclosed therein; the supporting schedules, if any, included in the
Registration Statement present fairly in accordance with generally accepted
accounting principles the information required to be stated therein; and the
other financial and statistical information and data set forth in the
Registration and the Prospectus (and any amendment or supplement thereto)
are, in all material respects, accurately presented and prepared on a basis
consistent with such financial statements and the books and records of the
Company;
(q) The Company has no subsidiaries other than those
listed in Exhibit 21.1 of the Registration Agreement;
(r) Other than as set forth in the Prospectus, the Company and
each of its subsidiaries have obtained all material environmental permits,
licenses and other authorizations required by Federal, state and local law in
order to conduct their businesses as described in the Prospectus; the operations
of the Company and each of its subsidiaries are at all times, and all times have
been, in compliance with all federal, regional, state county or local laws,
statutes, ordinances decisional law, rules, regulations, codes, orders, decrees,
directives and judgements relating to public health or safety, pollution, damage
to or protection of the environment or hazardous or toxic materials, pollutants
or contaminants ("Environmental Laws") then applicable to the business of the
Company or its subsidiaries or any real property owned or leased by the Company
or its subsidiaries, except where the failure to be in compliance would not have
a material adverse effect on the financial position, stockholders' equity or
results of operations of the Company and its subsidiaries taken as a whole; and,
except as described in the Prospectus, the Company has not received any notice
that it, or any of the real property owned or leased by it; (A) is in violation
of the requirements of any Environmental Laws; (B) is the subject of any suit,
claim, proceeding, demand, order, investigation or request or demand for
information arising under any Environmental Laws; or (C) has actual or potential
liability under any Environmental Laws;
(s) The Company and each of its subsidiaries have all
licenses, franchises, permits, authorizations, approvals and orders and other
concessions of and from all governmental or regulatory authorities that are
necessary to own or lease their properties and conduct their businesses as
described in the Prospectus, except for such licenses, franchises, permits,
authorizations, approvals and orders the failure to obtain which will not,
individually or in the aggregate, have a material adverse effect on the
financial position, stockholders' equity, results of operations or financial
prospects of the Company or its subsidiaries taken as a whole;
(t) The Company and each of its subsidiaries is conducting
business in compliance with all applicable statutes, rules, regulations,
standards, guides and orders administered or issued by any governmental or
regulatory authority in the jurisdictions in which it is conducting business,
except where the failure to be so in compliance would not have a
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material adverse effect on the financial position, stockholders' equity,
results of operations or financial prospects of the Company or its
subsidiaries taken as a whole;
(u) Except as set forth in the Prospectus, no person has any
right to require the Company to register any securities under the Act;
(v) The Company and each of its subsidiaries carries, or is
covered by, insurance as is customary for companies similarly situated and
engaged in similar businesses in similar industries. The Company and each of its
subsidiaries have no reason to believe that it will not be able to renew
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurance as may be necessary to continue its
business;
(w) No labor disturbances by employees of the Company exists
or, to the knowledge of the Company, is imminent which might be expected to have
a material adverse effect on the business, financial condition, results of
operations or prospects of the Company;
(x) All of the software products developed, licensed and/or
marketed or distributed by the Company or any of its subsidiaries, and to its
knowledge, after due investigation all of the software products used by the
Company, are Year 2000 Compliant (as defined below). "Year 2000 Compliant"
means, as applied to a software product, that: (A) such software product will
operate and correctly store, represent and process (including sort) all dates
(including single and multi-century formulas and leap year calculations), such
that errors will not occur when the date being used is in the Year 2000, or in a
year preceding or following the Year 2000; (B) such software product has been
written and tested to support numeric and date transitions from the twentieth
century to the twenty-first century, and back (including without limitation all
calculations, aging, reporting, printing, displays reversals, disaster and vital
records recoveries) without error, corruption or impact to current and/or future
operations; and (C) such software product will function without error or
interruption related to any date information, specifically including errors or
interruptions from functions which may involve date information from more than
one century, in each case except where the same could not reasonably be expected
to have a material adverse effect on the financial position, stockholders'
equity or results of operations of the Company and its subsidiaries taken as a
whole;
(y) There are no contracts or other documents which are
required to be described in the Prospectus or to be filed as exhibits to the
Initial Registration Statement by the Act which are not so filed. All such
contracts and other documents have been duly authorized, executed and delivered
by the Company or such subsidiary and are enforceable against the Company or
such subsidiary in accordance with the terms thereof except as enforceability
may be limited by bankruptcy, insolvency or other laws affecting the rights of
creditors generally or by general equitable principles;
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(z) The Company and each of its subsidiaries owns, or
possesses adequate rights to use, all material trademarks, service marks, trade
names, trademark registrations, service ▇▇▇▇ registrations, domain names and
copyrights necessary for the conduct of its business and has no reason to
believe that the conduct of its business will conflict with, and has not
received any notice of any claim of conflict with any such rights or others
except as would not have a material adverse effect on the business, financial
condition, results of operations or prospects of the Company or its
subsidiaries; and, to the best of the Company's knowledge after reasonable
investigation, neither the Company nor any of its subsidiaries have infringed or
are infringing any trademarks, service marks, trade names, trademark
registrations, service ▇▇▇▇ registrations, domain names or copyrights, which
infringement could reasonably be expected to have a material adverse effect on
the business, financial condition, results of operations or prospects of the
Company or its subsidiaries;
(aa) Except as disclosed in the Prospectus, the Company and
its subsidiaries have filed all necessary federal, state and foreign income and
franchise tax returns and have paid all taxes shown as due thereon; and there is
no tax deficiency which has been or to the knowledge of the Company might be
asserted against the Company or its subsidiaries which has not been adequately
reserved for on the Company or subsidiaries' balance sheets;
(bb) The Company and each of its subsidiaries have not,
directly or indirectly, at any time (i) made any contributions to any candidate
for foreign political office, or if made, failed to disclose fully any such
contribution made in violation of law, or (ii) made any payment to any state,
federal or foreign governmental officer or official, or other person charged
with similar public or quasi-public duties, other than payments or contributions
required or allowed by applicable law. The Company and each of its subsidiaries'
internal accounting controls and procedures are sufficient to cause the Company
and each of its subsidiaries to comply in all material respects with the Foreign
Corrupt Practices Act of 1977, as amended;
(cc) The Company has not taken and will not take, directly or
indirectly, any action designed to cause or result in, or which has constituted
or which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the Shares or to facilitate the sale or resale of
the Shares;
(dd) Except for this Agreement and other agreements with the
Representatives, the Company has not entered into any agreement pursuant to
which any person is entitled either directly or indirectly to compensation from
the Company for services as a finder in connection with the proposed public
offering;
(ee) The Company and each of its subsidiaries maintain a
system of internal accounting controls that, taken as a whole, are sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
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conformity with generally accepted accounting principles and to maintain asset
accountability; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences;
(ff) To the Company's knowledge, there are no affiliations or
associations between any member of the National Association of Securities
Dealers, Inc. ("NASD") and any of the Company's officers, directors or 5% or
greater security holders, except as set forth in the Registration Statement; and
(gg) The Company does not know of any facts which may
adversely affect its earnings, prospects or business which have not been fully
disclosed in the Prospectus.
2. Subject to the terms and conditions herein set forth, (a)
the Company agrees to sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company,
at a purchase price per share of $________, the number of Firm Shares (to be
adjusted by you so as to eliminate fractional shares) determined by
multiplying the aggregate number of Firm Shares to be sold by the Company by
a fraction, the numerator of which is the aggregate number of Firm Shares to
be purchased by such Underwriter as set forth opposite the name of such
Underwriter in SCHEDULE I hereto and the denominator of which is the
aggregate number of Firm Shares to be purchased by all the Underwriters from
the Company hereunder and (b) in the event and to the extent that the
Underwriters shall exercise the election to purchase Optional Shares as
provided below, the Company agrees to issue and sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not jointly,
to purchase from the Company, at the purchase price per share set forth in
clause (a) of this Section 2, that portion of the number of Optional Shares
as to which such election shall have been exercised (to be adjusted by you so
as to eliminate fractional shares) determined by multiplying such number of
Optional Shares by a fraction the numerator of which is the maximum number of
Optional Shares which such Underwriter is entitled to purchase as set forth
opposite the name of such Underwriter in SCHEDULE I hereto and the
denominator of which is the maximum number of the Optional Shares that all of
the Underwriters are entitled to purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase
at their election up to __________ Optional Shares, at the purchase price per
share set forth in the paragraph above, for the sole purpose of covering
overallotments in the sale of the Firm Shares. Any such election to purchase
Optional Shares may be exercised only by written notice from you to the
Company, given within a period of 60 calendar days after the date of this
Agreement and setting forth the aggregate number of Optional Shares to be
purchased and the date on which such Optional Shares are to be delivered, as
determined by you but in no event earlier than the First Time of Delivery (as
defined in Section 4 hereof) or, unless you and the Company otherwise agree
in writing, earlier than two or later than ten business days after the date
of such notice.
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3. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates, Inc. may request in writing upon at
least 48 hours' prior notice to the Company shall be delivered by or on
behalf of the Company to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates, Inc., for the account
of such Underwriter, against payment by or on behalf of such Underwriter of
the purchase price therefor by wire transfer of immediately available funds
to the Company. The Company will cause the certificates representing the
Shares to be made available for checking and packaging at least 24 hours
prior to the Time of Delivery (as defined below) with respect thereto at the
office of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates, Inc., ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Designated Office"). The time and date
of such delivery and payment shall be, with respect to the Firm Shares, 9:00
a.m., Eastern Standard time, on ___________ __, 1999 or such other time and
date as ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates, Inc. and the Company may agree upon in
writing, and with respect to the Optional Shares, 9:00 a.m., Eastern Standard
time, on the date specified by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates, Inc. in the
written notice given by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates, Inc. of the
Underwriters' election to purchase such Optional Shares, or such other time
and date as ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates, Inc. and the Company may agree upon
in writing. Such time and date for delivery of the Firm Shares is herein
called the "First Time of Delivery," such time and date for delivery of the
Optional Shares, if not the First Time of Delivery, is herein called the
"Second Time of Delivery," and each such time and date for delivery is herein
called a "Time of Delivery."
(b) The documents to be delivered at each Time of Delivery
by or on behalf of the parties hereto pursuant to Section 7 hereof, including
the cross-receipt for the Shares and any additional documents requested by
the Underwriters pursuant to Section 7(i) hereof, will be delivered at the
offices of _________________________ (the "Closing Location"), and the Shares
will be delivered at the Designated Office, all at each Time of Delivery. A
meeting will be held at the Closing Location at _____ p.m., Eastern Standard
time, on the Business Day next preceding each Time of Delivery, at which
meeting the final drafts of the documents to be delivered pursuant to the
preceding sentence will be available for review by the parties hereto. For
the purposes of this Section 4, "Business Day" shall mean each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on which banking
institutions in the United States are generally authorized or obligated by
law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to
file such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier time
as may be required by Rule 430A(a)(3) under the Act; to make no
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further amendment or any supplement to the Registration Statement or
Prospectus which you object promptly after reasonable notice thereof; to
advise you, promptly after it receives notice thereof, of the time when any
amendment to the Registration Statement has been filed or becomes effective
or any supplement to the Prospectus or any amended Prospectus has been filed
and to furnish you copies thereof; to advise you, promptly after it receives
notice thereof, of the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or
Prospectus, of the suspension of the qualification of the Shares for offering
or sale in any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the Commission for the
amending or supplementing of the Registration Statement or Prospectus or for
additional information; and, in the event of the issuance of any stop order
or of any order preventing or suspending the use of any Preliminary
Prospectus or Prospectus or suspending any such qualification, promptly to
use its reasonable best efforts to obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as you may reasonably request and to
comply with such laws so as to permit the continuance of sales and dealings
therein in such jurisdictions for as long as may be necessary to complete the
distribution of the Shares, provided that in connection therewith the Company
shall not be required to qualify as a foreign corporation, to submit to
taxation, or to file a general consent to service of process in any
jurisdiction;
(c) Prior to 9:00 a.m., Eastern Standard time, on the
Business Day next succeeding the date of this Agreement to furnish the
Underwriters with copies of the Prospectus in such quantities as you may
reasonably request, and, if the delivery of a prospectus is required at any
time prior to the expiration of nine months after the time of the issue of
the Prospectus in connection with the offering or sale of the Shares and if
at such time any events shall have occurred as a result of which the
Prospectus as then amended or supplemented would include an untrue statement
of a material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made when such Prospectus is delivered, not misleading, or, if for
any other reason it shall be necessary during such same period to amend or
supplement the Prospectus in order to comply with the Act, to notify you and
upon your request to prepare and furnish without charge to each Underwriter
and to any dealer in securities as many copies as you may reasonably request
of an amended Prospectus or a supplement to the Prospectus which will correct
such statement or omission or effect such compliance, and in case any
Underwriter is required to deliver a prospectus in connection with sales of
any of the Shares at any time nine months or more after the time of issue of
the Prospectus, upon your request but at the expense of such Underwriter, to
prepare and deliver to such Underwriter as many copies as you may request of
an amended or supplemented Prospectus complying with Section 10(a)(3) of the
Act;
11
(d) If the Company elects to rely upon Rule 462(b), the
Company shall file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) by 10:00 p.m., Washington, D.C. time, on the date of
this Agreement, and the Company shall at the time of filing either pay to the
Commission the filing fee for the Rule 462(b) Registration Statement or give
irrevocable instructions for the payment of such fee pursuant to Rule 111(b)
under the Act;
(e) To make generally available to its securityholders as soon
as practicable, but in any event not later than 18 months after the effective
date of the Registration Statement (as defined in Rule 158(c)) under the Act, an
earnings statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Act and the rules and regulations
thereunder of the Commission (including, at the option of the Company, Rule
158);
(f) During the period beginning from the date hereof and
continuing to and including the date 180 days after the date of the Prospectus,
not to (A) offer, pledge, sell, contract to sell or otherwise dispose of,
directly or indirectly, except as provided hereunder, the Stock or any
securities of the Company that are substantially similar to the Shares,
including but not limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive, Stock or any such
substantially similar securities, without your prior written consent (other than
pursuant to employee stock option and restricted stock plans existing on, or
upon the conversion, exchange or exercise of convertible, exchangeable or
exercisable securities outstanding as of, the date of this Agreement), or (B)
enter into any swap or other arrangement that transfers all or a portion of the
economic consequences associated with the ownership of any Stock, without your
prior written consent, except (i) to the Underwriters pursuant to this Agreement
for issuances of capital stock by the Company in connection with potential
future acquisitions provided that the shares issuable pursuant to any such
acquisitions shall not be transferrable prior to the end of the 180-day period
and (ii) intra-family transfers or transfers to trusts for estate planning
purposes;
(g) To furnish to its stockholders as soon as practicable
after the end of each fiscal year an annual report (including a balance sheet
and statements of income, stockholders' equity and cash flow of the Company and
its consolidated subsidiaries certified by independent public accountants) and,
as soon as practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the effective date
of the Registration Statement), consolidated summary financial information of
the Company and its subsidiaries for such quarter in reasonable detail;
(h) During a period of five years from the effective date of
the Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to stockholders, and deliver to
you (i) as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company is listed; and (ii)
such
12
additional information concerning the business and financial condition of
the Company as you may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of the
Company and its subsidiaries are consolidated in reports furnished to its
stockholders generally or to the Commission);
(i) To use the net proceeds received by it from the sale of
the Shares pursuant to this Agreement in the manner specified in the Prospectus
under the caption "Use of Proceeds;"
(j) To use its best efforts to list for quotation, subject to
notice of issuance, the Shares on Nasdaq and to maintain the listing of the
Shares for a period of three years after the date of this Agreement;
(k) To file with the Commission such information on Form 10-Q
or Form 10-K as may be required by Rule 463 under the Act;
(l) The Company will comply with the Act, the rules and
regulations and the Exchange Act and the rules and regulations thereunder in
connection with the offering and issuance of the Shares;
(m) The Company will, promptly upon your request, prepare and
file with the Commission any amendments or supplements to the Registration
Statement, preliminary Prospectus or Prospectus and take any other action, which
in the opinion of Freshman, Marantz, Orlanski, ▇▇▇▇▇▇ & ▇▇▇▇▇, counsel to you
may be reasonably necessary or advisable in connection with the distribution of
the Shares and will use its best efforts to cause the same to become effective
as promptly as possible;
(n) The Company represents that it has not taken, and agrees
that it will not take, directly or indirectly, any action designed to or which
has constituted or which might reasonably be expected to cause or result in the
stabilization or manipulation of the price of the Shares or to facilitate the
sale or resale of the Securities;
(o) Except in connection with acquisitions or pursuant to the
exercise of warrants and options outstanding prior to the First Time of
Delivery, during the period of the offering, and for a period of six months from
the First Time of Delivery, the Company will not purchase any shares of capital
stock of the Company, without your prior written consent, which consent may be
withheld in your sole discretion;
(p) The Company shall retain an investor relations firm
acceptable to you, and shall continue to retain such firm, or any alternate firm
acceptable to you, for a minimum period of twelve (12) months;
13
(q) The Company will reserve and keep available that maximum
number of its authorized but unissued securities which are issuable upon
exercise of the Representatives' Warrants outstanding from time to time;
(r) The Company shall deliver to you, at the Company's
expense, three (3) bound volumes in form and content acceptable to you,
containing the Registration Statement and all exhibits filed therewith, and all
amendments thereto, and all other material correspondence, filings, certificates
and other documents filed and/or delivered in connection with this offering. The
Company shall use its best efforts to deliver such volumes within six (6) months
of the First Closing Date;
(s) Current Company management, as disclosed in the
Prospectus, will continue in place after the date of the Prospectus for a
reasonable period of time; and
(t) The Company shall have acquired a reasonable amount of
Director and Officer Liability Insurance (provided that such insurance can be
obtained at a reasonable cost as determined by the Company and the
Representatives) from a responsible insurer, all satisfactory to the
Representatives; and
6. (a) The Company covenants and agrees with the several Underwriters
that, except as provided below, the Company will pay or cause to be paid the
following: (i) the fees, disbursements and expenses of the Company's counsel and
accountants in connection with the registration of the Shares under the Act, the
purchase, sale and delivery of the Shares and all other expenses in connection
with the preparation, printing and filing of the Registration Statement, any
Preliminary Prospectus and the Prospectus and amendments and supplements thereto
and the mailing and delivering of copies thereof to the Underwriters and
dealers; (ii) the cost of printing or producing any Agreement among
Underwriters, this Agreement, the Blue Sky Memorandum, closing documents
(including any compilations thereof) and any other documents in connection with
the offering, purchase, sale and delivery of the Shares; (iii) all expenses in
connection with the qualification of the Shares for offering and sale under
state securities laws as provided in Section 5(b) hereof, including the fees and
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky survey; (iv) all fees and
expenses in connection with listing the Shares on Nasdaq; (v) the filing fees
incident to, and the fees and disbursements of counsel for the Underwriters in
connection with, securing any required review by the National Association of
Securities Dealers, Inc. of the terms of the sale of the Shares; (vi) the cost
of preparing stock certificates; (vii) the cost and charges of any transfer
agent or registrar; (viii) costs of any luncheons, functions, special expenses
and all road show costs and expenses, the expenses of Company due diligence
meetings, travel thereto and presentations, (but not of any Underwriter or
Underwriter's counsel in connection therewith); (ix) DTC Tracking Service; (x)
the cost of preparing bound volumes; (xi) the expense of placing one or more
"tombstone" advertisements in the national edition of the Wall Street Journal as
directed by you and such other expenses for advertising undertaken at the
Company's request,
14
including graphic slide costs; and (xii) all other costs and expenses
incident to the performance of its obligations hereunder which are not
otherwise specifically provided for in this Section. In addition, the Company
shall also pay for a background search of its officers and management, and if
so requested by you, the expense of the preparation of an Internet-based road
show. The Company shall pay any and all taxes (including any transfer,
franchise, capital stock or other tax imposed by any jurisdiction) on sales
to the Underwriters hereunder. It is understood that except as provided in
this Section, and Sections 8 and 11 hereof, the Underwriters will pay all of
their own costs and expenses, including the fees of their counsel, stock
transfer taxes on resale of any of the Shares by them and any advertising
expenses connected with any offers they may make.
(b) In addition to the foregoing expenses, the Company shall
at the First Time of Delivery pay to you the balance of a non-accountable
expense allowance of 3.0% of the gross proceeds of the offering, of which a
portion has been paid. In the event the over-allotment option is exercised in
part or in full, the Company shall pay to you at the Second Time of Delivery an
additional amount equal to 3.0% of the gross proceeds received upon exercise of
the over-allotment option. In the event the transactions contemplated hereby are
not consummated for any reason, the Company shall be liable for your actual
accountable out-of-pocket expenses (with credit given to the amount heretofore
paid), including legal fees. If the contemplated transactions are not
consummated by reason of breach by the Company of this Agreement or of any
representation, warranty, covenant or condition contained herein, the Company
shall be liable for your accountable out-of-pocket expenses.
(c) No person is entitled either directly or indirectly to
compensation from the Company, from any Underwriter or from any other person for
services as a finder in connection with the proposed offering, and the Company
agrees to indemnify and hold harmless each Underwriter, and the Underwriters
agree to indemnify and hold harmless, severally and not jointly, the Company
from and against any losses, claims, damages or liabilities, joint or several
(which shall, for all purposes of this Agreement, include, but not be limited
to, all reasonable costs of defense and investigation and all reasonable
attorneys' fees), to which the indemnified party may become subject insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon the claim of any person (other than an employee
of the party claiming indemnity) or entity that he or it is entitled to a
finder's fee in connection with the proposed offering by reason of such person's
or entity's influence or prior contact with the indemnifying party.
7. The obligations of the Underwriters hereunder, as to the Shares to
be delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company herein are, at and as of such Time of Delivery, true and correct,
the condition that the Company shall have performed all of its and their
obligations hereunder theretofore to be performed and the following additional
conditions:
15
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for such
filing by the rules and regulations under the Act and in accordance with Section
5(a) hereof; if the Company has elected to rely upon Rule 462(b), the Rule
462(b) Registration Statement shall have become effective by 10:00 p.m.,
Washington, D.C. time, on the date of this Agreement; no stop order suspending
the effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction.
(b) Freshman, Marantz, Orlanski, ▇▇▇▇▇▇ & ▇▇▇▇▇, counsel for
the Underwriters, shall have furnished to you their written opinion or opinions,
dated such Time of Delivery, with respect to the matters covered in paragraphs
(i), (ii), (vii), (xi) and (xx) of subsection (c) below as well as such other
related matters as you may reasonably request, and such counsel shall have
received such papers and information as they may reasonably request to enable
them to pass upon such matters.
(c) ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Company, shall have
furnished to you their written opinion, dated such Time of Delivery, in form and
substance satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the State of Delaware, with corporate power and authority to own its
properties and conduct its business as described in the Prospectus;
(ii) The Company has an authorized capitalization as
set forth in the Prospectus, and all of the issued shares of capital
stock of the Company (including the Shares being delivered at such Time
of Delivery) have been duly and validly authorized and issued and are
fully paid and non-assessable and not subject to any preemptive or
similar rights; and the Shares and Representatives' Warrants conform to
all statements related thereto contained in the Prospectus. A
sufficient number of shares of Stock has been reserved for issuance
upon exercise of the Representatives' Warrants;
(iii) The certificates evidencing the Shares are in
valid and proper legal form; the Representatives' Warrants will be
exercisable for shares of Stock of the Company in accordance with the
terms of the Representatives' Warrants and at the price therein
provided for; the shares of Stock of the Company issuable upon exercise
of the Representatives' Warrants have been duly authorized and reserved
for issuance upon such exercise, and such shares, when issued upon such
exercise in accordance with the terms of the Representatives' Warrants
and when the price is paid shall be fully paid and non-assessable;
16
(iv) The Company has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties, or conducts any business so as to require such
qualification, or is subject to no material liability or disability by
reason of failure to be so qualified in any such jurisdiction (such
counsel being entitled to rely in respect of the opinion in this clause
upon opinions of local counsel and/or certificates of Secretaries of
State or other appropriate public officials and in respect of matters
of fact upon certificates of officers of the Company, provided that
such counsel shall state that they believe that both you and such
counsel are justified in relying upon such opinions and certificates
and that such counsel furnishes such opinions and certificates to the
representatives);
(v) Each subsidiary of the Company listed on Exhibit
A has been duly incorporated and is validly existing as a corporation
in good standing under the laws of its jurisdiction of incorporation
and is in good standing under the laws of each other jurisdiction in
which it owns or leases properties, or conducts any business so as to
require such qualification, or is subject to no material liability or
disability by reason of failure to be so qualified in any such
jurisdiction; and all of the issued shares of capital stock of each
such subsidiary have been duly and validly authorized and issued, are
fully paid and non-assessable, and are owned directly or indirectly by
the Company, free and clear of all liens, encumbrances, equities or
claims, other than those described in the Prospectus (such counsel
being entitled to rely in respect of the opinion in this clause upon
opinions of local counsel and certificates of Secretaries of State or
other appropriate public officials and in respect of matters of fact
upon certificates of officers of the Company or its subsidiaries,
provided that such counsel shall state that they believe that both you
and they are justified in relying upon such opinions and certificates
and that such counsel furnishes such opinions and certificates to you);
(vi) To the best of such counsel's knowledge and
other than as set forth in the Prospectus, there are no legal,
regulatory or governmental proceedings pending to which the Company or
any of its subsidiaries is a party or of which any property of the
Company or any of its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries, would individually
or in the aggregate have a material adverse effect on the current or
future consolidated financial position, stockholders' equity or results
of operations of the Company and its subsidiaries taken as a whole, or
would have a material adverse effect on the power or ability of the
Company to perform its obligations under this Agreement and the
Representatives' Warrants or to consummate the transactions
contemplated thereby or by the Registration Statement; and, to the best
of such counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
17
(vii) This Agreement and the Representatives'
Warrants have been duly authorized, executed and delivered by the
Company, and assuming due execution and delivery of this Agreement by
you, and of the Representatives' Warrants, all of such agreements are,
or when duly executed will be, the valid and legally binding
obligations of the Company except as enforceability may be limited by
bankruptcy, insolvency, moratorium or other laws affecting the rights
of creditors, or by general equitable principles; provided that no
opinion need be expressed as to the enforceability of the indemnity
provisions or the contribution provisions contained in Section 8;
(viii) The issue and sale to you of the Securities
being delivered at such Time of Delivery to be sold by the Company and
the compliance by the Company with all of the provisions of this
Agreement and the Representatives' Warrants and the consummation of the
transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument known to such counsel
to which the Company or any of its subsidiaries is a party or by which
the Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is
subject, nor will such action result in any violation of the provisions
of the Certificate of Incorporation or By-laws of the Company or any
statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties;
(ix) No consent, approval, authorization, order,
registration or qualification of or with any such court or governmental
agency or body is required to be obtained by or on behalf of the
Company for the issue and sale of the Securities or the consummation by
the Company of the transactions contemplated by this Agreement or the
Representatives' Warrants, except the registration under the Act of the
Shares, and such consents, approvals, authorizations, registrations or
qualifications as may be required under state or foreign securities or
Blue Sky laws in connection with the purchase and distribution of the
Shares by the Underwriters;
(x) Neither the Company nor any of its subsidiaries
is in violation of its Certificate of Incorporation or By-laws or in
default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any indenture, mortgage,
deed of trust, loan agreement, lease or other agreement or instrument
known to such counsel to which it is a party or by which it or any of
its properties may be bound;
(xi) The statements set forth in the Prospectus under
the caption "Description of Capital Stock," insofar as they purport to
constitute a summary of the terms of the Stock and under the caption
"Underwriting," insofar as they purport to
18
summarize the provisions of the laws and documents referred to
therein, are accurate summaries in all material respects;
(xii) The Company is not an "investment company" or
an entity "controlled" by an "investment company", as such terms are
defined in the Investment Company Act;
(xiii) Other than those contemplated by the
Representatives' Warrants or which have been waived at such Time of
Delivery, there are no persons with registration or similar rights to
have any securities of the Company registered pursuant to the
Registration Statement;
(xiv) To the best of such counsel's knowledge, the
Company and each of its subsidiaries have obtained all environmental
permits, licenses and other authorizations required by federal, state
and local law in order to conduct their businesses except as described
in the Prospectus; the Company and each of its subsidiaries are
conducting their businesses in compliance with such permits, licenses
and authorizations and with applicable environmental laws, except where
the failure to be in compliance would not have a material adverse
effect on the financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, taken as a whole, and,
except as described in the Prospectus, the Company is not in violation
of any Federal or state law or regulation relating to the storage,
handling, disposal, release or transportation of hazardous or toxic
materials;
(xv) The Registration Statement has become effective
under the Act, and to such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement is in
effect, no proceedings for that purpose have been instituted or are
pending before, or threatened by, the Commission and the Registration
Statement and the Prospectus (except, in the case of both the
Registration Statement and any amendment thereto, and the Prospectus
and any supplement thereto for the financial statements and notes and
schedules thereto, and other financial information or statistical data
contained therein, or omitted therefrom, as to which such counsel need
express no opinion) comply as to form in all material respects with the
applicable requirements of the Act and the rules and regulations;
(xvi) All descriptions in the Registration Statement
and the Prospectus, and any amendment or supplement thereto, of
contracts, plans, options and other documents are accurate and fairly
present the information required to be shown, and such counsel is
familiar with all contracts and other documents referred to in the
Registration Statement and the Prospectus and any such amendment or
supplement, or filed as exhibits to the Registration Statement, and
such counsel does not know of any contracts or
19
documents of a character required to be summarized or described
therein or to be filed as exhibits thereto which are not so
summarized, described or filed;
(xvii) To the best knowledge of such counsel, the
Company and its subsidiaries are not (A) in default (or, with notice or
lapse of time or both, would be in default) in the performance or
observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, deed of trust, loan
agreement, note, lease, license, franchise agreement authorization,
permit, certificate or other agreement or instrument to which it is a
party or by which it may be bound, or to which any of its respective
assets or properties is subject, or (B) in violation of any law,
statute, judgment, decree, order, rule or regulation of any domestic or
foreign court with jurisdiction over the Company or its subsidiaries or
the Company's or its subsidiaries' assets or properties, or other
governmental or regulatory authority, agency or other body other than
such defaults or violations which, individually or in the aggregate,
could not reasonably be expected to have or result in, in the case of
clause (A) or (B), a material adverse effect on the business,
properties or financial condition of the Company;
(xviii) To the best knowledge of such counsel, the
Company and its subsidiaries have obtained all consents, approvals,
orders, certificates, licenses, permits, franchises and other
authorizations of and from, and has made all declarations and filings
with, all governmental and regulatory authorities, all self-regulatory
organizations and all courts and other tribunals necessary to own,
lease, license and use their respective properties and assets and to
conduct their respective businesses in the manner described in the
Registration Statement, except to the extent that the failure to so
obtain or file, individually or in the aggregate, could not reasonable
be expected to have a material adverse effect on the business,
properties or financial condition of the Company;
(xix) The statements set forth in the Registration
Statement under the headings "Risk Factors --We Are Subject to Various
Government Regulations" and "Business -- Government Regulation,"
insofar as such statements constitute a summary of statutes, rules,
regulations, legal matters, documents or proceedings referred to
therein, provide a fair summary of such statutes, rules, regulations,
legal matters, documents and proceedings and the information with
respect thereto; and
(xx) The Registration Statement and the Prospectus
and any further amendments and supplements thereto made by the Company
prior to such Time of Delivery (other than the financial statements and
related schedules and financial and statistical data therein, as to
which such counsel need express no opinion) comply as to form in all
material respects with the requirements of the Act and the rules and
regulations thereunder; although they do not assume any responsibility
for the accuracy, completeness or fairness of the statements contained
in the Registration Statement or Prospectus, except for those referred
to in the opinion in paragraph (x) of this subsection
20
(c), they have no reason to believe that, as of its effective date,
the Registration Statement or any further amendment thereto made by
the Company prior to such Time of Delivery (other than the financial
statements and related schedules and financial and statistical data
therein, as to which such counsel need express no opinion) contained
an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading or that, as of its date, the
Prospectus or any further amendment or supplement thereto made by
the Company prior to such Time of Delivery (other than the financial
statements and related schedules and financial and statistical data
therein, as to which such counsel need express no opinion) contained
an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading or
that, as of such Time of Delivery, either the Registration Statement
or the Prospectus or any further amendment or supplement thereto
made by the Company prior to such Time of Delivery (other than the
financial statements and related schedules therein, as to which such
counsel need express no opinion) contains an untrue statement of a
material fact or omits to state a material fact necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading; and they do not know of any
amendment to the Registration Statement required to be filed or of
any contracts or other documents of a character required to be filed
as an exhibit to the Registration Statement or required to be
described in the Registration Statement or the Prospectus which are
not filed or described as required.
In rendering such opinion, such counsel may state that
they express no opinion as to the laws of any jurisdiction other than the
laws of the State of Kentucky (excluding conflict of law rules), the General
Corporation Law of the State of Delaware, and the federal laws of the United
States.
(d) On the date of the Prospectus at a time prior to the
execution of this Agreement, at 9:00 a.m., Eastern Standard time, on the
effective date of any post-effective amendment to the Registration Statement
filed subsequent to the date of this Agreement and also at each Time of
Delivery, Ernst & Young, LLP shall have furnished to you a letter or letters,
dated the respective dates of delivery thereof, in form and substance
satisfactory to you, to the effect set forth in Annex I hereto.
(e) (i) Neither the Company nor any of 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, otherwise
than as set forth or contemplated in the Prospectus, and (ii) since the
respective dates as of which information is given in the Prospectus there shall
not have been any change in the capital stock, short-term debt or long-term debt
of the Company or any of its subsidiaries or any change, or any development
involving a prospective change, in or affecting the general affairs,
21
management, financial position, stockholders' equity or results of operations
of the Company and its subsidiaries, otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any such case
described in clause (i) or (ii), is in the judgment of the representative(s)
so material and adverse as to make it impracticable or inadvisable to proceed
with the public offering or the delivery of the Shares being delivered at
such Time of Delivery on the terms and in the manner contemplated in the
Prospectus.
(f) On or after the date hereof 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, the American Stock Exchange
or Nasdaq; (ii) a suspension or material limitation in trading in the Company's
securities; (iii) a general moratorium on commercial banking activities declared
by either Federal or New York or Texas state authorities; or (iv) 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 (iv) in the judgment of the representative(s)
makes it impracticable or inadvisable to proceed with the public offering or
delivery of the Shares being delivered at such Time of Delivery on the terms and
in the manner contemplated in the Prospectus.
(g) The Shares to be sold by the Company at such Time of
Delivery shall have been duly listed, subject to notice of issuance, for
quotation on Nasdaq.
(h) The Company has obtained and delivered to the Underwriters
executed copies of an agreement from those persons named on SCHEDULE II hereto
to the effect set forth in Subsection 1(b)(iv) hereof in form and substance
satisfactory to you.
(i) The Company shall have furnished or caused to be furnished
to you at such Time of Delivery certificates of officers of the Company
satisfactory to you as to the accuracy of the representations and warranties of
the Company herein at and as of such Time of Delivery, as to the performance by
the Company of all of its obligations hereunder to be performed at or prior to
such Time of Delivery, and as to such other matters as you may reasonably
request, and the Company shall have furnished or caused to be furnished
certificates as to the matters set forth in subsections (a) and (e) of this
Section and as to such other matters as you may reasonably request;
(j) The Company shall have complied with the provisions of
Section 5(c) hereof with respect to the furnishing of prospectuses on the
Business Day next succeeding the date of this Agreement; and
(k) The Company shall have executed, delivered and issued to
you, for a consideration of $____ and upon the terms and conditions set forth
therein, the Common Stock Purchase Warrants pursuant to and in the form of the
Warrant Agreements executed and delivered concurrently herewith to purchase ___
shares of Stock (collectively, the
22
"Representatives' Warrants"). In the event of conflict in the terms of this
Agreement and the Representatives' Warrants, the language of the
Representatives' Warrants shall control.
8. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter 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 any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that (i) 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 any Preliminary Prospectus, 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 any Underwriter through Southwest Securities, Inc. expressly for use
therein and (ii) that the foregoing indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of any Underwriter who
failed to deliver a Prospectus, as amended or supplemented, (so long as the
Prospectus and any amendment or supplement thereto was provided by the Company
to the several Underwriters in the requisite quantity and on a timely basis to
permit proper delivery on or prior to the First Time of Delivery) to the person
asserting any losses, claims, damages, liabilities or judgments caused by any
untrue statement or alleged untrue statement of a material fact contained in
such preliminary prospectus, or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, if such material misstatement or omission
or alleged material misstatement or omission was cured in the Prospectus, as so
amended or supplemented, and such Prospectus was required by law to be delivered
at or prior to the written confirmation of sale to such person.
(b) Each Underwriter will indemnify and hold harmless the
Company against any losses, claims, damages or liabilities to which the Company
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 any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein 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 any
Preliminary Prospectus, the Registration Statement or the Prospectus or any
23
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through you
expressly for use therein; and will reimburse the Company for any legal or
other expenses reasonably incurred by the Company in connection with
investigating or defending any such action or claim as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against an
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action 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 therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
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 under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall 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 on the one hand and the Underwriters
on the other from the offering of the Shares. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required under
subsection (e) above, 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 of the Company on the one hand and the Underwriters on the other in
connection with the
24
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company on
the one hand and the Underwriters on the other shall be deemed to be in the
same proportion as the total net proceeds from the offering of the Shares
(before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters with
respect to the Shares, in each case as set forth in the table on the cover
page of the Prospectus. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or the
Underwriters on the other and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be just
and equitable if contributions pursuant to this subsection (d) 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 (d). 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 (d) 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 (d), no Underwriter shall
be required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. 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 (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Company under this Section 8 shall
be in addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who controls
any Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company (including any
person who, with his or her consent, is named in the Registration Statement as
about to become a director of the Company) and to each person, if any, who
controls the Company within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase
the Shares which it has agreed to purchase hereunder at the Time of Delivery,
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 36 hours after
such default by any Underwriter you do not arrange for the
25
purchase of such Shares, then the Company shall be entitled to a further
period of 36 hours within which to procure another party or other parties
satisfactory to you to purchase such Shares on such terms. In the event that,
within the respective prescribed periods, you notify the Company that you
have so arranged for the purchase of such Shares, or the Company notify you
that they have so arranged for the purchase of such Shares, you or the
Company shall have the right to postpone such Time of Delivery for a period
of not more than seven days, in order to effect whatever changes may thereby
be made necessary in the Registration Statement or the Prospectus, or in any
other documents or arrangements, and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus which in your
opinion may thereby be made necessary. The term "Underwriter" as used in this
Agreement shall include any person substituted under this Section 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 by you and
the Company as provided in subsection (a) above, the aggregate number of such
Shares which remains unpurchased does not exceed one-eleventh of the aggregate
number of all the Shares to be purchased at such Time of Delivery, then the
Company shall have the right to require each non-defaulting Underwriter to
purchase the number of Shares which such Underwriter agreed to purchase
hereunder at such Time of Delivery 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 by you and
the Company as provided in subsection (a) above, the aggregate number of such
Shares which remains unpurchased exceeds one-eleventh of the aggregate number of
all the Shares to be purchased at such Time of Delivery, or if the Company shall
not exercise the right described in subsection (b) above to require
non-defaulting Underwriters to purchase Shares of a defaulting Underwriter or
Underwriters, then this Agreement or, with respect to the Second Time of
Delivery, the obligations of the Underwriters to purchase and of the Company to
sell the Optional Shares shall thereupon terminate, without liability on the
part of any non-defaulting Underwriter or the Company, except for the expenses
to be borne by the Company and the Underwriters as provided in Section 6 hereof
and the indemnity and contribution agreements in Section 8 hereof; but nothing
herein shall relieve a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Underwriters, as set forth
in this Agreement or made by or on behalf of them, respectively, pursuant to
this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company,
or any
26
officer or director or controlling person of the Company, and shall survive
delivery of and payment for the Shares.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
the Company shall then not be under any liability to any Underwriter except as
provided in Section 6 and Section 8 hereof; but, if for any other reason any
Shares are not delivered by or on behalf of the Company as provided herein, the
Company will reimburse the Underwriters through you for all out-of-pocket
expenses approved in writing by you, including fees and disbursements of
counsel, reasonably incurred by the Underwriters in making preparations for the
purchase, sale and delivery of the Shares not so delivered, but the Company
shall then be under no further liability to any Underwriter in respect of the
Shares not so delivered except as provided in Section 6 and Section 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Southwest Securities, Inc. or EBI Securities
Corporation on behalf of you as the representatives.
All statements, requests, notices, and agreements hereunder
shall be in writing, and if to the Underwriters shall be delivered or sent by
mail, telex or facsimile transmission to you as the representatives in care
of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates, Inc. at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Syndicate Department; and if to
the Company shall be delivered or sent by mail, telex or facsimile
transmission to the address of the Company set forth in the Registration
Statement, Attention: President; provided, however, that any notice to an
Underwriter pursuant to Section 8(d) hereof shall be delivered or sent by
mail, telex or facsimile transmission to such Underwriter at its address set
forth in its Underwriters' Questionnaire or telex constituting such
Questionnaire, which address will be supplied to the Company by you upon
request. Any such statements, requests, notices or agreements shall take
effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company and, to the extent provided in
Sections 8 and 10 hereof, the officers and directors of the Company and each
person who controls the Company, or any Underwriter, and their respective heirs,
executors, administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement. No purchaser of
any of the Shares from any Underwriter shall be deemed a successor or assign by
reason merely of such purchase.
14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is not open for business.
27
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF FLORIDA.
16. 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.
If the foregoing is in accordance with your understanding, please sign
and return to us one counterpart hereof for the Company and for each of the
representatives plus one counterpart hereof for each counsel, and upon the
acceptance hereof by you, on behalf of each of the Underwriters, this letter and
such acceptance hereof shall constitute a binding agreement among each of the
Underwriters and the Company. It is understood that your acceptance of this
letter on behalf of each of the Underwriters is pursuant to the authority set
forth in a form of Agreement among Underwriters, the form of which shall be
submitted to the Company for examination, upon request, but without warranty on
your part as to the authority of the signers thereof.
Very truly yours,
THERMOVIEW INDUSTRIES, INC.
By: ______________________________________
Name:
Title:
Accepted as of the date hereof:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ASSOCIATES, INC.
EBI SECURITIES CORPORATION
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates, Inc.
On behalf of each of the Underwriters
28
By: ________________________________
Name:
Title:
29
SCHEDULE I
------------------------------------------------------------------------------------------------------------------
NUMBER OF OPTIONAL
SHARES TO BE PURCHASED
TOTAL NUMBER OF FIRM IF MAXIMUM OPTION
UNDERWRITER SHARES TO BE PURCHASED EXERCISED
------------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Associates, Inc. ................................. 000,000 000,000
------------------------------------------------------------------------------------------------------------------
EBI Securities Corporation................................ 000,000 000,000
------------------------------------------------------------------------------------------------------------------
--------- ---------
------------------------------------------------------------------------------------------------------------------
Total................................................ 1,200,000 180,000
----------- ---------
----------- ---------
------------------------------------------------------------------------------------------------------------------
I-1
SCHEDULE II
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, III
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
R. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
II-1
▇▇▇▇▇ ▇▇▇▇▇▇▇
Sim ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇, III
III-1
ANNEX I
FORM OF COMFORT LETTER
Pursuant to Section 7(e) of the Underwriting Agreement, the accountants
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 published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
financial forecasts 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 related published 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, financial forecasts 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) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus as indicated in their reports thereon,
copies of which have been separately furnished to the Representatives,
and on the basis of specified procedures including inquiries of
officials of the Company who have responsibility for financial and
accounting matters regarding whether the unaudited condensed
consolidated financial statements referred to in paragraph (vi)(A)(i)
below comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published rules and
regulations, nothing came to their attention that caused them to
believe that the unaudited condensed consolidated financial statements
do not comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published rules and
regulations;
(iv) The unaudited selected financial information with respect
to the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the
Prospectus agrees with the corresponding amounts
AI-1
(after restatements where applicable) in the audited consolidated
financial statements for such five fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K
and on the basis of limited procedures specified in such letter nothing
came to their attention as a result of the foregoing procedures that
caused them to believe that this information does not conform in all
material respects with the disclosure requirements of Items 301, 302,
402 and 503(d), respectively, of Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of 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) (i) the unaudited consolidated statements of
income, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus do not
comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published
rules and regulations, or (ii) any material modifications
should be made to the unaudited condensed consolidated
statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the
Prospectus for them to be in conformity with generally
accepted accounting principles;
(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;
AI-2
(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 (other than issuances of
capital stock upon exercise of options and stock appreciation
rights, upon earn-outs of performance shares and upon
conversions of convertible securities, in each case which were
outstanding on the date of the latest financial statements
included in the Prospectus) or any increase in the
consolidated long-term debt of the Company and its
subsidiaries, or any decreases in consolidated net current
assets or net assets or other items specified by the
Representatives, or any increases in any items specified by
the Representatives, 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; and
(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
other items specified by the Representatives, or any increases
in any items specified by the Representatives, in each case as
compared with the comparable period of the preceding year and
with any other period of corresponding length specified by the
Representatives, except in each case for decreases or
increases which the Prospectus discloses have occurred or may
occur or which are described in such letter; and
(vii) In addition to the examination 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 paragraphs (iii) and (vi) 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, which appear in the Prospectus, or in Part II of,
or in exhibits and schedules to, the Registration Statement specified
by the Representatives, 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.
AI-3
