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EXHIBIT 1.1
[Draft: 09/26/00]
2,400,000 SHARES
EMPIRE FINANCIAL HOLDING COMPANY
COMMON STOCK
UNDERWRITING AGREEMENT
September __, 2000
WACHOVIA SECURITIES, INC.
As representative of the several
Underwriters named in Schedule I hereto,
c/o Wachovia Securities, Inc.
IJL Financial Center
201 North Tryon Street
Charlotte, North Carolina 28202
Ladies and Gentlemen:
Empire Financial Holding Company (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 2,400,000 shares of
common stock, par value $.01 per share (the "Common Stock"), of the Company (the
"Firm Shares"), and, at the election of the Underwriters, subject to the terms
and conditions stated herein, to sell to the Underwriters up to 360,000
additional shares of Common Stock (the "Optional Shares") solely to cover
overallotments, if any (the Firm Shares and the Optional Shares that the
Underwriters elect to purchase pursuant to Section 1 hereof are collectively
called the "Shares").
The Company also proposes to issue and sell to you for your own account and
not on behalf of the Underwriters, a warrant (the "Representative's Warrant")
exerciseable for the purchase of up to 175,050 shares of Common Stock as further
described in Section 1(c) hereof. The shares of Common Stock issuable upon the
exercise of the Representative's Warrant are referred to collectively as the
"Warrant Securities."
The Shares and the Warrant Securities are sometimes referred to
collectively as the "Securities." The Securities are more fully described in
the Registration Statement and Prospectus referred to below.
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1. PURCHASE AND SALE OF SHARES.
(a) Subject to the terms and conditions herein set forth, (i) the Company
agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agree, severally and not jointly, to purchase from the Company the
number of Firm Shares set opposite the name of such Underwriter in Schedule 1
hereto, at a purchase price of $__________ per share, and (ii) in the event and
to the extent that the Underwriters shall exercise the option to purchase
Optional Shares as provided below, the Company agrees to issue and to sell to
each of the Underwriters, and each of the Underwriters agree, severally and not
jointly, to purchase from the Company, at a purchase price of $_______ per
share, 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 that 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.
(b) The Company hereby grants to the Underwriters the right to purchase at
its election in whole or in part from time to time up to 360,000 Optional
Shares, at the purchase price of $______ per share for the sole purpose of
covering over-allotments in the sale of Firm Shares. Any such election to
purchase Optional Shares may be exercised by written notice from you to the
Company, given from time to time within a period of 30 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 the Optional Shares are to be delivered,
as determined by you but in no event earlier than the First Time of Delivery (as
hereinafter defined) 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.
In the event you elect to purchase all or a portion of the Optional Shares, the
Company agrees to furnish or cause to be furnished to you the certificates,
letters and opinions, and to satisfy all conditions set forth in Section 7
hereof at each Subsequent Time of Delivery (as hereinafter defined).
(c) At the First Time of Delivery, the Company shall issue and sell to the
Representative and the Representative shall purchase, at a purchase price of
$100.00 and for other good and valuable consideration, the Representative's
Warrant, substantially in the form attached hereto as Exhibit A. The
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Representative's Warrant shall be exerciseable for a period of four years
commencing one year from the effective date of the Registration Statement at an
initial exercise price equal to $_______ [120% of the initial public offering
price of the Firm Shares.] The aggregate number of shares of Common Stock
subject to the Representative's Warrant shall equal 175,050. The
Representative's Warrant will be restricted from sale, transfer, assignment or
hypothecation for a period of 12 months after the effective date of the
Registration Statement, except to the Representative, the Underwriters or
members of the selling group or their respective officers or partners.
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2. OFFERING BY THE UNDERWRITERS. Upon the authorization by you of the
release of the Shares, the several Underwriters propose to offer the Shares for
sale upon the terms and conditions disclosed in the Prospectus.
3. DELIVERY OF SHARES; CLOSING. Certificates in definitive form for the
Shares to be purchased by each Underwriter hereunder, and in such denominations
and registered in such names as the Representative may request upon at least 48
hours prior notice to the Company shall be delivered by or on behalf of the
Company to you for your account against payment by you of the purchase price
therefor by wire transfer of immediately available funds to an account
designated by the Company. The closing of the sale and purchase of the Shares
shall be held at the offices of Smith, Anderson, Blount, Dorsett, Mitchell &
Jernigan, L.L.P., 2500 First Union Capitol Center, Raleigh, North Carolina
27601. The time and date of such delivery and payment shall be, with respect
to the Firm Shares, at 10:00 a.m., Charlotte, North Carolina time, on the 3rd
(or if the Firm Shares are priced, as contemplated by Rule 15c6-1(c) under the
Exchange Act, after 4:30 p.m., Washington, D.C. time, the 4th) full business
day after the execution of this Agreement or at such other legally permissible
time and date as you and the Company may agree upon in writing, and, with
respect to the Optional Shares, at 10:00 a.m., Charlotte, North Carolina time,
on the date specified by you in the written notice given by you of the
Underwriters' election to purchase all or part of such optional shares, or at
such other time and date as you 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 a "Subsequent Time of
Delivery," and each such time and date for delivery is herein called a "Time of
Delivery." The Company will make such certificates available for checking and
packaging at least 24 hours prior to each Time of Delivery at your office at the
address set forth above or such other location designated by you to the Company.
If the Representative so elects, delivery of the Firm Shares and the Optional
Shares, if any, may be made by credit through full fast transfer to the accounts
at the Depositary Trust Company designated by the Representative.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to, and agrees with each of the Underwriters that:
(1) A registration statement on Form S-1 with respect to the
Securities, has been filed by the Company with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended
(the "Securities Act"). Copies of the registration statement and any
amendments thereto, including any post-effective amendments, have been
delivered by the Company to you, and have been declared effective by the
Commission in such form. No other document with respect to the
registration statement or any post effective amendment thereto has been
filed with the Commission; and no stop order suspending the effectiveness
of the registration statement has been issued and no proceeding for that
purpose has been instituted or threatened by the Commission. Any
preliminary prospectus included in the registration statement or filed with
the Commission pursuant to Rule 424 of the Rules and Regulations of the
Commission under the Securities Act (the "Rules and Regulations"), is
herein called a
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"Preliminary Prospectus." The various parts of such registration statement,
including the prospectus, Part II, all financial schedules and exhibits
thereto, and including the information contained in the form of final
prospectus filed with the Commission pursuant to Rule 424(b) under the
Securities Act, and deemed by virtue of Rule 430A under the Securities Act
to be part of the registration statement at the time it was declared
effective, as amended at the time such part became effective, are herein
called collectively the "Registration Statement," and the final prospectus,
in the form first filed pursuant to Rule 424(b), is herein called the
"Prospectus."
(2) No order preventing or suspending the use of any Prospectus,
including any Preliminary Prospectus, has been issued and no proceeding for
that purpose has been instituted or threatened by the Commission or the
securities authority of any state or other jurisdiction. No stop order
suspending the effectiveness of the Registration Statement or any part
thereof has been issued and no proceeding for that purpose has been
instituted or threatened or, to the best knowledge of the Company,
contemplated by the Commission or the securities authority of any state or
other jurisdiction.
(3) Each Prospectus filed as part of the Registration Statement as
originally filed or as part of any amendment thereto complied when so filed
in all material respects with the requirements applicable to it under the
Securities Act and the Rules and Regulations and none of such documents
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; and any further amendment or supplement
thereto, when such documents become effective or are filed with the
Commission, as the case may be, will conform in all material respects to
the requirements of the Securities Act, and the Rules and Regulations and
will not contain an untrue statement of 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
writing to the Company by an Underwriter through Wachovia Securities, Inc.
(the "Representative") expressly for use therein. When the Registration
Statement or any amendment thereto was declared effective, and at each Time
of Delivery (as hereinafter defined), it (i) contained all statements
required to be stated therein in accordance with, and complied or will
comply in all material respects with the requirements of the Securities Act
and the Rules and Regulations and (ii) did not include any untrue statement
of a material fact or omit to state any material fact necessary in order to
make the statements therein not misleading. When the Prospectus or any
amendment or supplement thereto is filed with the Commission pursuant to
Rule 424(b) (or, if the Prospectus or such amendment or supplement is not
required to be so filed, when the Registration Statement or the amendment
thereto containing such amendment or supplement to the Prospectus was or is
declared effective) and at each Time of Delivery, the Prospectus, as
amended or supplemented at any such time (i) contained or will contain all
statements required to be stated therein in accordance with, and complied
or will comply in all material respects with the requirements of, the
Securities Act and the
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Rules and Regulations and (ii) did not or will not include any untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The conditions for use of a
registration statement on Form S-1 set forth in the General Instructions to
Form S-1 have been satisfied with respect to the Company, the transactions
contemplated herein and in the Registration Statement.
(4) The descriptions in the Registration Statement and the Prospectus
of statutes, rules, regulations, legal and governmental proceedings or
contracts and other documents that are required to be so described are
accurate and fairly present the information required to be shown; and there
are no statutes, rules, regulations or legal or governmental proceedings
required to be described in the Registration Statement or the Prospectus
that are not described as required and no contracts or documents of a
character that are required to be described in the Registration Statement
or the Prospectus or to be filed as exhibits to the Registration Statement
that are not described and filed as required.
(5) Each of the Company and its Subsidiaries (as defined in Section
16 hereof) has been duly incorporated, is validly existing as a corporation
in good standing under the laws of the jurisdiction of its organization,
and has (and will have) full power and authority to own or lease its
properties and conduct its business as described in the Prospectus, and is
duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which the character of the business
conducted by it or the location of the properties owned or leased by it
makes such qualification necessary. The Company has full power and
authority to enter into this Agreement and to perform its obligations
hereunder. Each of the Company and its Subsidiaries (i) has obtained any
and all necessary authorizations, approvals, orders, licenses,
certificates, franchises and permits of and from all foreign and domestic
governmental or regulatory officials and bodies (including, without
limitation, those having jurisdiction over the activities of brokers and
dealers), to own or lease its properties and conduct its business as
described in the Prospectus and (ii) is and has been doing business in
compliance with all such authorizations, approvals, orders, licenses,
certificates, franchises, permits and all foreign, federal, state and local
laws, rules and regulations, (including, without limitation, timely filing
of all Financial and Operational Combined Uniform Single Reports required
to be filed with the Securities and Exchange Commission), and has not
received any notice of proceedings relating to the revocation or
modification of any such authorization, approval, order, license,
certificate, franchise or permit which, if the subject of an unfavorable
decision, ruling or finding, would, in the aggregate, have a material
adverse effect on stockholders' equity in, or the condition (financial or
otherwise), earnings, business prospects or properties of, the Company and
its Subsidiaries, taken as a whole. The disclosures in the Registration
Statement concerning the effects of foreign, federal, state and local laws,
rules and regulations on each of the Company's and the Subsidiaries'
business as currently conducted and as contemplated are correct in all
material respects and do not omit to state a material fact necessary to
make the statements contained therein not misleading in light of the
circumstances in which they were made.
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(6) The capitalization of the Company is as disclosed under the
caption "Capitalization" in the Prospectus. All of the issued shares of
capital stock of the Company have been duly authorized and validly issued,
are fully paid and nonassessable and conform to the description of the
capital stock under the caption "Description of Capital Stock" contained in
the Prospectus. None of the issued shares of capital stock of the Company
has been issued or is owned or held in violation of any preemptive or
similar rights, and no person or entity (including any holder of
outstanding shares of capital stock of the Company or any Subsidiary) has
any preemptive or other rights to subscribe for any of the Securities. The
Subsidiaries listed on Schedule II hereto are the only Subsidiaries of the
Company. All of the outstanding shares of capital stock of each Subsidiary
of the Company have been duly authorized and validly issued, are fully paid
and nonassessable and are owned directly or indirectly by the Company, free
and clear of any claim, lien, encumbrance or security interest.
(7) Except as disclosed in the Prospectus, there are no outstanding
(i) securities or obligations of the Company or any Subsidiary convertible
into or exchangeable for any capital stock of the Company or any
Subsidiary, (ii) warrants, rights or options to subscribe for or purchase
from the Company or any Subsidiary any such capital stock or any such
convertible or exchangeable securities or obligations, or (iii) obligations
of the Company or any Subsidiary to issue any shares of capital stock, any
such convertible or exchangeable securities or obligations, or any such
warrants, rights or options.
(8) Since the date as of which information is given in the
Prospectus, neither the Company nor any Subsidiary has sustained 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
disclosed in or contemplated by the Prospectus.
(9) Since the date as of which information is given in the
Prospectus, (i) neither the Company nor any Subsidiary has incurred any
liabilities or obligations, direct or contingent, or entered into any
transactions, not in the ordinary course of business, that are material to
the Company or such Subsidiary, (ii) the Company has not purchased any of
its outstanding capital stock or declared, paid or otherwise made any
dividend or distribution of any kind on its capital stock, (iii) there has
not been any change in the capital stock, long-term debt or short-term debt
of the Company or any Subsidiary, and (iv) there has not been any material
adverse change, or any development involving a prospective material adverse
change, in or affecting the financial position, general affairs,
management, business or prospects of the Company or any Subsidiary, in each
case other than as disclosed in or contemplated by the Prospectus.
(10) The consolidated financial statements of the Company, together
with related notes and schedules as set forth in the Registration
Statement, conform to the
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requirements of the Securities Act and the Rules and Regulations. Such
financial statements fairly present the consolidated financial position,
the results of the operations and changes in financial position of the
entities purported to be shown thereby at the dates or for the periods
indicated and have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis for the periods
indicated and all adjustments necessary for a fair presentation of the
results for such periods have been made. The Company and its Subsidiaries
have no material contingent obligations which are not disclosed in the
Company's financial statements which are included in the Registration
Statement. The financial, operating and statistical data set forth in the
Prospectus under the captions "Summary Consolidated Financial Information"
and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" fairly present, when read in conjunction with the
Company's financial statements and the related notes and schedules and on
the basis stated in the Registration Statement, the information set forth
therein. The accountants whose reports are included in the Registration
Statement, are independent accountants as required by the Securities Act
and the Rules and Regulations.
(11) The Shares to be sold by the Company hereunder have been duly
authorized and, when issued and delivered against payment therefor as
provided herein, will be validly issued and fully paid and nonassessable
and will conform to the description of the Common Stock contained in the
Prospectus; and all corporate action required to be taken for the
authorization, issuance and sale of the Shares has been validly taken. The
Underwriters will receive good and marketable title to the Shares to be
issued and delivered hereunder, free and clear of all liens, encumbrances,
claims, security interests, restrictions, shareholders' agreements and
voting trusts whatsoever. The certificates evidencing the Shares will be
in due and proper form and will comply with all applicable legal
requirements.
(12) The issuance and sale of the Representative's Warrant has been
duly authorized and, when issued, paid for and delivered, the
Representative's Warrant will constitute a valid and binding obligation of
the Company enforceable as to the Company in accordance with its terms.
The Representative's Warrant will not be subject to preemptive rights of
any shareholder of the Company. The Warrant Securities have been duly
reserved for issuance upon exercise of the Representative's Warrant. The
Representative's Warrant conforms to the description thereof contained in
the Registration Statement and Prospectus.
(13) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the
Company to file a registration statement under the Securities Act with
respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or any
securities being registered pursuant to any other registration statement
filed by the Company under the Securities Act.
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(14) Neither the Company nor any Subsidiary is: (i) in violation of
its Articles of Incorporation, Bylaws or other governing instruments; or
(ii) in default under any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which the Company or
any Subsidiary is a party or to which any of their respective properties or
assets are subject, except, in the case of clause (ii) above, where such
default would not have a material adverse effect on either the Company or
any Subsidiary.
(15) The issue and sale of the Shares, the execution, delivery and
performance of this Agreement and the consummation of the transactions
herein contemplated will not give rise to a right to terminate or
accelerate any payment due under or conflict with, or (with or without the
giving of notice or the passage of time or both) 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, lease or
other agreement or instrument to which the Company or any Subsidiary is a
party or to which any of their respective properties or assets is subject,
nor will such action conflict with or violate any provision of the Articles
of Incorporation, Bylaws or other governing instruments of the Company or
any Subsidiary, or any statute, rule or regulation or any order, judgment
or decree of any court or governmental agency or body having jurisdiction
over the Company or any Subsidiary or any of their respective properties or
assets.
(16) Neither the Company nor any Subsidiary owns any real property and
the Company and each Subsidiary has good title to all personal property
owned by them, in each case free and clear of all liens, security
interests, pledges, charges, encumbrances, mortgages and defects, except
such as are disclosed in the Prospectus or such as do not materially and
adversely interfere with the operations of the Company or any Subsidiary;
and any real and personal property and buildings held under lease by the
Company or any Subsidiary are held under valid, subsisting and enforceable
leases, with such exceptions as are disclosed in the Prospectus or are not
material and do not interfere with the operations of the Company or any
Subsidiary.
(17) No consent, approval, authorization, order or declaration of or
from, or registration, qualification or filing with, any court or
governmental agency or body or third party is required for the issue and
sale of the Securities or the consummation of the transactions contemplated
by this Agreement, except the registration of the Shares and the Warrant
Securities under the Securities Act and such as may be required by the
National Association of Securities Dealers, Inc. (the "NASD") and under
state securities or blue sky laws in connection with the offer, sale and
distribution of the Securities by the Underwriters.
(18) Other than as disclosed in the Prospectus, there is no
litigation, arbitration, claim, proceeding (formal or informal) or
investigation pending or, to the knowledge of any director or executive
officer of the Company, threatened (or any reasonable basis
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therefor) in which the Company or any Subsidiary is a party or of which any
of their respective properties or assets are the subject which, if
determined adversely to the Company or any Subsidiary, would individually
or in the aggregate have a material adverse effect on the financial
position, general affairs, management, business or prospects of the Company
or any Subsidiary.
(19) This Agreement and the Representative's Warrant have each been
duly authorized, executed and delivered by the Company and constitute the
valid and binding agreement of the Company enforceable against the Company
in accordance with their respective terms subject, as to enforcement, to
applicable bankruptcy, insolvency, reorganization and moratorium laws and
other laws relating to or affecting the enforcement of creditors' rights
generally and to general equitable principles, and except as the
enforceability of rights to indemnity and contribution under this Agreement
may be limited under applicable securities laws or the public policy
underlying such laws.
(20) Neither the Company nor any of its officers, directors or
affiliates has (i) taken, directly or indirectly, any action designed to
cause or result in, or that has constituted or might reasonably be expected
to constitute, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Securities
or (ii) since the filing of the Registration Statement (A) sold, bid for,
purchased or paid anyone any compensation for soliciting purchases of, the
Securities or (B) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.
(21) None of the Company, any Subsidiary, nor, to the knowledge of the
Company, any director or executive officer, agent, employee or other person
acting on behalf of the Company or any Subsidiary has (i) used or
authorized the use of, any corporate or other funds for unlawful payments,
or contributions, (ii) made unlawful expenditures relating to political
activity to government officials, or (iii) established or maintained any
unlawful or unrecorded funds in violation of any federal, state, or local
law or regulation, including Section 30A of the Securities Exchange Act of
1934, as amended (the "Exchange Act"). None of the Company, any
Subsidiary, nor, to the knowledge of the Company, any director or executive
officer of the Company or any Subsidiary has accepted or received any
unlawful contributions or payments.
(22) The Company has obtained for the benefit of the Company and the
Underwriters from each of its directors, executive officers and holders of
five percent or more of the Common Stock, a written agreement (the "Lockup
Agreements") that for a period of 180 days from the date of the Prospectus
such director, officer or shareholder will not, without your prior written
consent, offer, pledge, sell, contract to sell, grant any option for the
sale of, or otherwise dispose of (or announce any offer, pledge, sale,
grant of an option to purchase or other disposition), directly or
indirectly, any shares of Common Stock or securities convertible into, or
exercisable or exchangeable for, shares of Common Stock.
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(23) The Company and each Subsidiary have each filed or caused to be
filed, within the times (as extended) and manners prescribed by law, all
federal, state, local and foreign tax returns, elections and tax reports
which are required to be filed by, or with respect to, the Company and each
Subsidiary, including a valid election to be treated as an S corporation in
accordance with the provisions of Section 1362(a) of the Internal Revenue
Code, and has qualified, and continues to qualify as an S corporation,
since 1995. All federal, state, local and foreign income, profits,
franchise, sales, use, occupancy, excise and other taxes and assessments
(including interest and penalties) payable by or due from the Company have
been fully paid or adequately disclosed and fully provided for in the books
and financial statements of the Company. The federal income tax liability
of the Company has been determined for all fiscal years to and including
the fiscal year ended December 31, 1998. No examination of any tax return
of the Company or any Subsidiary is currently in progress, and no basis for
any assessment exists. There are no outstanding agreements or waivers
extending the statutory period of limitation applicable to any tax return
of the Company or any Subsidiary.
(24) The Company is not, nor will it become as a result of
transactions contemplated hereby, and does not intend to conduct its
business in a manner that would cause it to become an "investment company"
or a company "controlled" by an "investment company" within the meaning of
the Investment Company Act of 1940.
(25) The Company and its Subsidiaries own and possess all right, title
and interest in and to, or have duly licensed or otherwise lawfully
acquired from third parties enforceable rights to use, all trademarks,
trademark applications, service marks, trade names and other rights to
inventions, know-how, patents, copyrights, copyright applications,
licenses, proprietary information and other intellectual property necessary
to conduct the business now operated by them as described in the Prospectus
and have not received any notice of infringement of or conflict with
asserted rights of others with respect to any intellectual property rights
that, if determined adversely to the Company or any of its Subsidiaries,
would individually or in the aggregate have a material adverse effect on
the condition (financial or other), business or results of operations of
the Company and its Subsidiaries.
(26) There is no document or contract of a character required to be
described in the Registration Statement or Prospectus or to be filed as an
exhibit to the Registration Statement which is not described or filed as
required. Each agreement listed in the Exhibits to the Registration
Statement or incorporated by reference therein is in full force and effect
and is valid and enforceable against the Company or its Subsidiaries in
accordance with its terms in all material respects, assuming the due
authorization, execution and delivery thereof by each of the other parties
thereto. Neither the Company nor its Subsidiaries, nor to the Company's
knowledge, any other party is in default in the observance or performance
of any term or obligation to be performed by it under any such agreement,
and no event has occurred which with notice or lapse of time or both
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would constitute such a default, in any such case which default or event
would have a material adverse effect on the business, results of
operations, or financial condition of the Company and its Subsidiary. No
default exists, and, to the Company's knowledge, no event has occurred
which with notice or lapse of time or both would constitute a default, in
the due performance and observance of any term or obligation, by the
Company or any of its Subsidiaries of any other agreement or instrument to
which the Company or any such Subsidiary is a party or by which it or its
properties or business may be bound or affected which default or event
would have a material adverse effect on the business, results of operations
or financial condition of the Company and its Subsidiaries. No transaction
has occurred between or among the Company or any Subsidiary and any of its
officers or directors or any affiliate or affiliates of any such officer or
director that is required to be described in and is not described in the
Registration Statement and the Prospectus.
(27) The Company and its Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurances 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 conformity with generally
accepted accounting principles and to maintain accountability for assets,
(iii) access to assets is permitted only in accordance with management's
general or specific authorization, and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(28) The Company and its Subsidiaries maintain insurance of the types
and in the amounts generally deemed adequate for its business, including,
but not limited to, directors' and officers' insurance, insurance covering
real and personal property owned or leased by the Company and its
Subsidiaries against theft, damage, destruction, acts of vandalism and all
other risks customarily insured against, all of which insurance is in full
force and effect. The Company has not been refused any insurance coverage
sought or applied for, and the Company has no reason to believe that it
will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not materially
adversely affect the business, business prospects, properties, condition
(financial or otherwise) or results of operations of the Company or its
Subsidiaries.
(29) The Company has entered into employment agreements with Kevin M.
Gagne and Richard L. Goble in the forms filed as Exhibits 10.2 and 10.3,
respectively, to the Registration Statement and purchased term key-man
insurance on the lives of Messrs. Gagne and Goble in the amount of
$1,000,000, which policy shall not expire earlier than one year from the
date hereof and of which the Company is and shall at all times be the sole
beneficiary.
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(30) The Company has generally enjoyed a satisfactory employer-
employee relationship with its employees and is in compliance in all
material respects with all federal, state and local laws and regulations
respecting the employment of its employees and employment practices, terms
and conditions of employment and wages and hours relating thereto. There
are no pending investigations involving the Company by the U.S. Department
of Labor, or any other governmental agency responsible for the enforcement
of such federal, state or local laws and regulations. There is no unfair
labor practice charge or complaint against the Company pending before the
National Labor Regulations Board or any strike, picketing, boycott,
dispute, slowdown or stoppage pending or threatened against or involving
the Company or any predecessor entity, and none has ever occurred. The
Company has never been a party to nor are any of its employees subject to,
any collective bargaining agreement. No representation question exists
respecting the employees of the Company and no collective bargaining
agreement or modification thereof is currently being negotiated by the
Company.
(31) Other than as set forth in the Registration Statement, neither
the Company nor any Subsidiary maintains, sponsors nor contributes to any
program or arrangement that is an "employee pension benefit plan," an
"employee welfare benefit plan," or a "multiemployer plan" as such terms
are defined in Sections 3(2), 3(1) and 3(37), respectively, of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") ("ERISA
Plans"). Neither the Company nor any Subsidiary has, and has not at any
time, maintained or contributed to a "defined benefit plan", as defined in
Section 3(35) of ERISA. No ERISA Plan (or any trust created thereunder)
has engaged in a "prohibited transaction" within the meaning of Section 406
of ERISA or Section 4975 of the Code, which could subject the Company or
any Subsidiary to any material tax or penalty on prohibited transactions
and which has not adequately been corrected. Each ERISA Plan is in
compliance with all material reporting, disclosure and other requirements
of the Code and ERISA as they relate to any such ERISA Plan. Determination
letters have been received from the Internal Revenue Service with respect
to each ERISA Plan which is intended to comply with Section 401(a) of the
Code, stating that such ERISA Plan and the attendant trust are qualified
thereunder. The Company has never completely or partially withdrawn from a
"multiemployer plan".
(32) The Company and its Subsidiaries (i) are in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment of
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not, singly or in
the aggregate, have a material adverse effect on the Company and its
Subsidiaries, taken as a whole.
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(33) The Company has complied with all provisions of Florida law and
statutes relating to doing business with the Government of Cuba or with any
person or affiliate located in Cuba.
(34) Except as described in the Prospectus, neither the Company nor
any of its affiliates has incurred any liability for any finder's fees or
similar payments in connection with the transactions herein contemplated.
(35) The Company has provided to Smith Anderson, counsel to the
several underwriters ("Underwriters' Counsel"), all material agreements,
certificates, correspondence and other documents and information requested
by such counsel pursuant to its Preliminary Due Diligence Request List
dated January 24, 2000 and any subsequent requests.
5. COVENANTS OF THE COMPANY. The Company covenants and agrees with the
Underwriters:
(1) The Company shall comply with the provisions of and make all
requisite filings with the Commission pursuant to and in accordance with
Rule 430A and subparagraph (1) (or, if applicable and if consented to by
you, subparagraph (4)) of Rule 424(b) not later than the earlier of (i) the
Commission's close of business on the second business day following the
execution and delivery of this Agreement or (ii) the date on which the
Prospectus is first used after the Registration Statement is declared
effective. The Company will advise you promptly of any such filing
pursuant to Rules 430A or 424(b).
(2) The Company will not file with the Commission the Prospectus or
any amendment or supplement to the Prospectus or any amendment to the
Registration Statement unless you have received a reasonable period of time
to review any such proposed amendment or supplement and consented to the
filing thereof and will use its best efforts to cause any such amendment to
the Registration Statement to be declared effective as promptly as
possible. Upon the request of the Representative or counsel for the
Representative, the Company will promptly prepare and file with the
Commission, in accordance with the Rules and Regulations, any amendments to
the Registration Statement or amendments or supplements to the Prospectus
that may be necessary or advisable in connection with the distribution of
the Shares by the Underwriters and will use its best efforts to cause any
such amendment to the Registration Statement to be declared effective as
promptly as possible. If required, the Company will file any amendment or
supplement to the Prospectus with the Commission in the manner and within
the time period required by Rule 424(b) under the Securities Act. The
Company will advise the Representative, promptly after receiving notice
thereof, of the time when the Registration Statement or any amendment
thereto has been filed or declared effective
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or the Prospectus or any amendment or supplement thereto has been filed and
will provide evidence to the Representative of each such filing or
effectiveness.
(3) The Company will advise you promptly after receiving notice or
obtaining knowledge of (i) the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or any part
thereof or any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto, (ii)
the suspension of the qualification of the Shares for offer or sale in any
jurisdiction or of the initiation or threatening of any proceeding for any
such purpose, or (iii) any request made by the Commission or any securities
authority of any other jurisdiction for amending the Registration
Statement, for amending or supplementing the Prospectus or for additional
information. The Company will use its best efforts to prevent the
issuance of any such stop order and, if any such stop order is issued, to
obtain the withdrawal thereof as promptly as possible.
(4) If during the period in which a prospectus is required by law to
be delivered by an Underwriter or dealer, any events shall have occurred as
a result of which, in the judgment of the Company or the opinion of the
Underwriters, 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 light of the
circumstances under which they were made, not misleading, or if for any
reason it is necessary during such same period to amend or supplement the
Prospectus to comply with the Securities Act or the Rules and Regulations
or any law, the Company will promptly notify you and upon your request (but
at the Company's expense) prepare and file with the Commission and any
state or other governmental securities commissions in jurisdictions where
the Shares have been sold by the Underwriters, an amendment or supplement
to the Prospectus that corrects such statement or omission or effects such
compliance and will furnish without charge to each Underwriter and to any
dealer in securities, as many copies of such amended or supplemented
Prospectus as you may from time to time reasonably request. Neither your
consent to, nor the Underwriter's delivery of, any such amendment or
supplement shall constitute a waiver of any of the conditions set forth in
Section 7.
(5) The Company promptly from time to time will take such action as
you may reasonably request to qualify the Shares for offering and sale
under the securities or blue sky laws of such jurisdictions as you may
reasonably request and will continue such qualifications in effect 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 or to file a general consent to service of
process in any jurisdiction. In the event that the qualification of the
Shares in any jurisdiction is suspended, the Company shall so advise the
Representative promptly in writing.
(6) The Company will deliver to, or upon the order of, the
Representative, from time to time, as many copies of the Preliminary
Prospectus as the Representative
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<PAGE>
may reasonably request. The Company will deliver to, or upon the order of,
the Representative, during the period when delivery of a Prospectus is
required under the Securities Act, as many copies of the Prospectus in
final form, or as thereafter amended or supplemented, as the Representative
may reasonably request. The Company will deliver to the Representative at
or before the Time of Delivery, four signed copies of the Registration
Statement and all amendments thereto including all exhibits filed
therewith, and will deliver to the Representative such number of copies of
the Registration Statement (including such number of copies of the exhibits
filed therewith that may be reasonably requested), and of all amendments
thereto, as the Representative may reasonably request.
(7) The Company will, from time to time, after the effective date of
the Registration Statement, file with the Commission such reports as are
required by the Securities Act, the Exchange Act and the Rules and
Regulations, and shall also file with foreign, state and other governmental
securities commissions in jurisdictions where the Shares have been sold by
the Underwriters such reports as are required to be filed by the securities
acts and the regulations of those jurisdictions.
(8) As soon as practicable, but in any event not later than the last
day of the thirteenth month after the effective date of the Registration
Statement, the Company will make generally available to its security
holders an earnings statement (which need not be audited) in reasonable
detail covering a period of at least 12 consecutive months beginning after
the effective date of the Registration Statement, complying with Section
11(a) of the Securities Act and the Rules and Regulations and will advise
you in writing when such statement has been so made available.
(9) The Company will, for a period of three years from the Time of
Delivery, deliver to the Representative copies of annual reports and copies
of all other documents, reports and information furnished by the Company to
its shareholders or filed with the NASD or any securities exchange pursuant
to the requirements of such exchange or with the Commission pursuant to the
Securities Act or the Exchange Act. The Company will deliver to the
Representative similar reports with respect to significant subsidiaries, as
that term is defined in the Rules and Regulations, which are not
consolidated in the Company's financial statements.
(10) During the period beginning from the date hereof and continuing
to and including the date 180 days after the date of the Prospectus, the
Company will not, without your prior written consent, offer, pledge, issue,
sell, contract to sell, grant any option for the sale of, or otherwise
dispose of (or announce any offer, pledge, sale, grant of an option to
purchase or other disposition), directly or indirectly, any shares of
Common Stock or securities convertible into, exercisable or exchangeable
for, shares of Common Stock, except as provided in Section 1 and except as
described in the Prospectus.
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<PAGE>
(11) Neither the Company nor any of its officers, directors or
affiliates will (i) take, directly or indirectly, prior to the closing of
the purchase and sale of the Shares, any action designed to cause or to
result in, or that might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of any of the Shares, (ii) sell, bid for,
purchase or pay anyone any compensation for soliciting purchases of, the
Shares or (iii) pay or agree to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.
(12) The Company will apply the net proceeds from the offering in the
manner set forth under the heading "Use of Proceeds" in the Prospectus, and
will timely report such use of proceeds pursuant to Item 701 of Regulation
S-K in its periodic reports filed pursuant to Section 13(a) and 15(d) of
the Exchange Act in accordance with Rule 463 of the Securities Act or any
successor provision.
(13) If at any time during the 60-day period after the Registration
Statement becomes effective, any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in your reasonable
opinion the market price of the Common Stock has been or is likely to be
materially affected (regardless of whether such rumor, publication or event
necessitates a supplement to or amendment of the Prospectus) and after
written notice from you advising the Company to the effect set forth above,
the Company agrees to forthwith prepare, consult with you concerning the
substance of, and disseminate a press release or other public statement,
reasonably satisfactory to you, responding to or commenting on such rumor,
publication or event.
(14) The Company will cooperate with the Underwriters to cause the
Shares to be quoted on the Nasdaq National Market at each Time of Delivery
and for at least one year from the date hereof.
(15) If the Company elects to rely on Rule 462(b), the Company shall
both file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) and pay the applicable fees in accordance with
Rule 111 of the Securities Act by the earlier of (i) 10:00 p.m. Charlotte,
North Carolina time, on the date of this Agreement, and (ii) the time that
confirmations are given or sent, as specified by Rule 462(b)(2).
(16) The Company will, concurrently with the effective date of the
Registration Statement, register the class of equity securities of which
the Shares are a part under Section 12(g) of the Exchange Act and the
Company will use its best efforts to maintain the registration for at least
one year after the effective date.
(17) The Company shall retain Continental Stock Transfer & Trust
Company as its transfer agent for the Common Stock (or such other transfer
agent which is reasonably acceptable to the Representative), for a period
of three years following the effective date. In addition, for a period of
three years following the effective date, the
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<PAGE>
Company, at its expense, shall cause its transfer agent to provide the
Representative, if so requested in writing, with copies of the Company's
daily transfer sheets and, when requested by the Representative, a current
list of the Company's securityholders, including a list of the beneficial
owners held by a depository trust company and other nominees.
(18) For a period of three years after the effective date, the Company
shall continue to retain PricewaterhouseCoopers LLP (or such other
nationally recognized accounting firm as is acceptable to the
Representative) as the Company's independent public accountants.
(19) For a period of 25 days following the effective date, the Company
will not issue press releases or engage in any other publicity without the
Representative's prior written consent, other than normal and customary
releases issued in the ordinary course of the Company's business or those
releases required by law.
6. EXPENSES. The Company will pay all costs and expenses incident to the
performance of its obligations under this Agreement, whether or not the
transactions contemplated hereby are consummated or this Agreement is terminated
pursuant to Section 10 hereof, including without limitation all costs and
expenses incident to (i) the fees, disbursements and expenses of the Company's
counsel and accountants in connection with the registration of the Shares under
the Securities Act and all other expenses in connection with the preparation,
printing and filing of the Registration Statement (including all amendments
thereto), any Preliminary Prospectus, the Prospectus and any amendments and
supplements thereto, this Agreement and any blue sky memoranda; (ii) the
delivery of copies of the foregoing documents to the Underwriters; (iii) the
filing fees of the Commission and the National Association of Securities
Dealers, Inc. relating to the Shares; (iv) the preparation, issuance and
delivery to the Underwriters of any certificates evidencing the Shares,
including transfer agent's and registrar's fees; (v) the qualification of the
Shares for offering and sale under state securities and blue sky laws, including
filing fees and fees and disbursements of counsel for the Underwriters relating
thereto; (vi) any expenses of listing the Shares on the Nasdaq National Market;
(vii) any expenses for travel, lodging and meals incurred by the Company and any
of its officers, directors and employees in connection with any meetings with
prospective investors in the Shares. It is understood, however, that, except as
provided in this Section, Section 8 and Section 10 hereof, the Underwriters will
pay all of their own costs and expenses, including the fees of their counsel
(other than those related to qualification of the Shares under state securities
or blue sky laws), stock transfer taxes on resale of any of the Shares by them,
and any advertising expenses relating to the offer and sale of the Shares.
7. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations of
the Underwriters hereunder to purchase and pay for the Securities to be
delivered at each Time of Delivery shall be subject, in their discretion, to the
accuracy of the representations and warranties of the Company contained herein
as of the date hereof and as of such Time of Delivery, to the accuracy of the
statements of Company officers made pursuant to
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the provisions hereof, to the performance by the Company of its covenants and
agreements hereunder, and to the following additional conditions precedent:
(1) The Registration Statement as amended to date shall have become
effective prior to the execution of this Agreement or at such later date
and/or time as shall have been consented to by you in writing. The
Prospectus and any amendment or supplement thereto shall have been filed
with the Commission pursuant to Rule 424(b) within the applicable time
period prescribed for such filing and in accordance with Section 5(a) of
this Agreement; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and no
proceedings for that purpose shall have been instituted, threatened or, to
the knowledge of the Company and the Representative, contemplated by the
Commission; and all requests for additional information on the part of the
Commission shall have been complied with to your satisfaction.
(2) Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P.,
counsel for the Underwriters, shall have furnished to you such opinion or
opinions, dated such Time of Delivery, with respect to the incorporation of
the Company, the validity of the Shares being delivered at such Time of
Delivery, the Registration Statement, the Prospectus, and other related
matters as you may reasonably request and which are customary, and the
Company shall have furnished to such counsel such documents as they request
for the purpose of enabling them to pass upon such matters.
(3) You shall have received an opinion, dated such Time of Delivery,
of Greenberg Traurig, P.A., counsel for the Company substantially in the
form attached hereto as Exhibit B.
(4) You shall have received from Sweeney, Gates & Co. and
PricewaterhouseCoopers LLP, letters dated, respectively, the date of this
Agreement and the effective date of the most recently filed post-effective
amendment to the Registration Statement and also at each Time of Delivery,
in form and substance satisfactory to you, containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information contained in the Registration Statement and
the Prospectus. At a minimum such "comfort letter" shall confirm that each
of Sweeney, Gates & Co. and PricewaterhouseCoopers LLP are independent
accountants within the meaning of the Securities Act and stating in effect
that:
(1) it is their opinion that the audited financial statements
and supporting schedules of the Company included in the
Registration Statement and the Prospectus comply as to form in
all material respects with the applicable accounting requirements
of the Securities Act and the Rules and Regulations and that the
Representative may rely upon their opinion with
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<PAGE>
respect to such financial statements and supporting schedules
included in the Registration Statement;
(2) they have compared specified dollar amounts, numbers of
shares, number of active customer accounts, total customer
trades, total customer assets, average trades per day,
percentages of revenues and earnings, number of employees,
statements and other financial information pertaining to the
Company or its Subsidiaries set forth in the Prospectus (where,
for purposes of this paragraph only the term "Prospectus"
includes any supplement thereto at the date of the letter), in
each case to the extent that such amounts, numbers, percentages,
statements and information may be derived from the general
accounting records, including work sheets, of the Company with
the results obtained from the application of specified readings,
inquiries and other appropriate procedures (which procedures do
not constitute an examination in accordance with generally
accepted auditing standards) set forth in the letter and found
them to be in agreement; and
(3) statements as to such other matters incident to the
transaction contemplated hereby as the Representative may
request, including with respect to comfort on unaudited financial
statements of the Company that are included in the Prospectus.
(5) You shall have received on each Time of Delivery a certificate or
certificates of the Co-Chief Executive Officers of the Company to the
effect that:
(a) the representations and warranties of the Company in Section
4 of this Agreement are true and correct, as if made at and as of the
First Time of Delivery or the Subsequent Time of Delivery, as the case
may be, and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied
at or prior to the Time of Delivery and as to such other matters as
you may reasonably request;
(b) no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for that
purpose have been initiated or are pending, or to their knowledge,
contemplated under the Securities Act;
(c) all filings required by Rule 424 and Rule 430A of the Rules
and Regulations have been made;
(d) they have carefully examined the Registration Statement and
the Prospectus, and any amendments or supplements thereto, and in his
opinion, such documents do not include any untrue statement of a
material fact or omit to state
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any material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances
under which they were made; and
(e) since the effective date of the Registration Statement,
there has occurred no event required to be set forth in an amendment
or supplement to the Registration Statement or the Prospectus which
has not been so set forth.
(6) Since the date of the latest audited financial statements
included in the Prospectus, neither the Company nor any Subsidiary shall
have sustained (i) any loss or interference with their respective
businesses from fire, explosion, flood, hurricane 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 disclosed in or
contemplated by the Prospectus, or (ii) any change, or any development
involving a prospective change (including without limitation a change in
management or control of the Company), in or affecting the position
(financial or otherwise), results of operations, net worth or business
prospects of the Company and any subsidiary, otherwise than as disclosed in
or contemplated by the Prospectus (including any amendment), the effect of
which, in either such case, is in your judgment so material and adverse as
to make it impracticable or inadvisable to proceed with the purchase, sale
and delivery of the Shares being delivered at such Time of Delivery as
contemplated by the Registration Statement, as amended as of the date
hereof.
(7) Subsequent to the date hereof there shall not have occurred any
of the following: (i) any suspension or limitation in trading in securities
generally on the New York Stock Exchange or the over-the-counter market
(other than normal market breaks or cooling periods), or any setting of
minimum prices for trading on such exchange, or if trading in any
securities of the Company has been suspended by the Commission, or
limitations on prices for trading (other than limitations on hours or
numbers of days of trading) have been fixed, or maximum ranges for prices
for securities have been required, by the Nasdaq National Market or the
NASD or by order of the Commission or any other governmental authority;
(ii) a moratorium on commercial banking activities in New York declared by
either federal or state authorities; (iii) neither Kevin M. Gagne nor
Richard L. Goble is serving the Company in his respective present
capacities; or (iv) any major outbreak or major escalation of hostilities
involving the United States, declaration by the United States of a national
emergency (other than with respect to natural disasters) or war or any
other national or international calamity or emergency or any material
adverse change in general economic, political or financial conditions if
the effect of any such event specified in this clause (iv) in your judgment
makes it impracticable or inadvisable to proceed with the purchase, sale
and delivery of the Shares being delivered at such Time of Delivery as
contemplated by the Registration Statement.
(8) The Shares shall be approved for quotation on the Nasdaq National
Market when issued.
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(9) The Representative shall have received the Lockup Agreements as
described in Section 4(22).
(10) You shall have been furnished such additional documents and
certificates as you may reasonably request.
(11) The NASD shall have indicated that it has no objection to the
underwriting arrangements pertaining to the offer or sale of the
Securities.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory in form
and substance to you and to counsel for the Underwriters. The Company
shall furnish you with such conformed copies of such opinions,
certificates, letters and other documents as you shall reasonably request.
8. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to
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 Securities Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon: (i) any untrue statement or alleged untrue statement made by the
Company in Section 4 of this Agreement; (ii) any untrue statement or alleged
untrue statement of any material fact contained in (A) the Registration
Statement or any amendment thereto, any Preliminary Prospectus or the Prospectus
or any amendment or supplement thereto, or (B) any application or other
document, or any amendment or supplement thereto, executed by the Company or
based upon written information furnished by or on behalf of the Company filed in
any jurisdiction in order to qualify the Shares under the securities or blue sky
laws thereof or filed with the Commission or any securities association or
securities exchange (each an "Application"); or (iii) the omission or alleged
omission to state in the Registration Statement or any amendment thereto, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto,
or any Application, 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, defending against or appearing as a third-party
witness in connection with any such loss, claim, damage, liability or action;
provided, however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or action arises out of or
is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement or any amendment thereto,
any Preliminary Prospectus, the Prospectus or any amendment or supplement
thereto or any Application in reliance upon and in conformity with written
information furnished to the Company by any Underwriter. The Company will not,
without the prior written consent of each Underwriter, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim, action,
suit or proceeding (or related cause of action or portion thereof) in respect of
which indemnification may be sought hereunder (whether or not such Underwriter
is a
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party to such claim, action, suit or proceeding), unless such settlement,
compromise or consent includes an unconditional release of such Underwriter from
all liability arising out of such claim, action, suit or proceeding or related
cause of action or portion thereof.
(b) Each Underwriter agrees severally, but not jointly, to indemnify and
hold harmless the Company and its officers, directors, agents, representatives
and affiliates against any losses, claims, damages or liabilities to which the
Company or its officers, directors, agents, representatives and affiliates may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or any amendment thereto, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto or
any Application or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein 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 reliance upon and in
conformity with written information furnished to the Company by the Underwriter
through the Representative 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 loss, claim, damage,
liability or action; provided, however, that the obligation of each Underwriter
to indemnify the Company (including any officer, director, agent, representative
or affiliate thereof) shall be limited to the net proceeds received by the
Company from such Underwriter.
(c) Promptly after receipt by an indemnified party under subsection (a)
and (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 the
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); provided, however, that if the defendants in any such action included
the indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be one or more legal defenses available
to it or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnifying party shall not have
the right to assume the defense of such action on behalf of such indemnified
party and such indemnified party shall have the right to select separate counsel
to defend such action on behalf of such indemnified party. After such notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof and approval by such indemnified party of counsel
appointed to defend such action, the indemnifying party will not be liable to
such indemnified party under this Section 8 for any legal or other expenses,
other than reasonable costs of investigation,
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subsequently incurred by such indemnified party in connection with the defense
thereof, unless (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the next preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, which separate counsel shall be designated by the
Representative in the case of indemnity arising under paragraph (a) of this
Section 8) or (ii) the indemnifying party has authorized the employment of
counsel for the indemnified party at the expense of the indemnifying party.
Nothing in this Section 8(c) shall preclude an indemnified party from
participating at its own expense in the defense of any such action so assumed by
the indemnifying 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 Underwriter 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 (c) 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 Underwriter on the other in connection with the statements or omissions that
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 Underwriter on the
other shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company bear to
the total underwriting discounts, and commissions received by the Underwriters.
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 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), the Underwriter shall not 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
23
<PAGE>
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 Securities 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. Each party entitled to contribution agrees that upon
the service of a summons or other initial legal process upon it in any action
instituted against it in respect of which contribution may be sought, it shall
promptly give written notice of such service to the party or parties from whom
contribution may be sought, but the omission so to notify such party or parties
of any such service shall not relieve the party from whom contribution may be
sought from any obligation it may have hereunder or otherwise (except as
specifically provided in subsection (c) hereof). No party shall be liable for
contribution with respect to any action, suit, proceeding or claim settled
without its written consent.
(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 Securities Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company and to each person, if
any, who controls the Company within the meaning of the Securities Act.
9. DEFAULT OF UNDERWRITERS. (a) If any Underwriter defaults in its
obligation to purchase Shares at a 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 purchase of such Shares, 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 notifies you that it has so arranged for the purchase of such
Shares, you or the Company shall have the right to postpone a Time of Delivery
for a period of not more than 7 days in order to effect whatever change is made
necessary thereby 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 that in your opinion
may thereby be made necessary. The cost of preparing, printing and filing any
such amendments shall be paid for by the Underwriters. The term "Underwriter" as
used in this Agreement shall include any person substituted under this Section
with 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-
24
<PAGE>
eleventh of the aggregate number of 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.
10. TERMINATION. (a) This Agreement may be terminated with respect
to the Shares or any Optional Shares in the sole discretion of the
Representative by notice to the Company given prior to the First Time of
Delivery or any Subsequent Time of Delivery, respectively, in the event that (i)
any condition to the obligations of the Underwriters set forth in Section 7
hereof has not been satisfied, or (ii) the Company shall have failed, refused or
been unable to deliver the Securities or to perform all obligations and satisfy
all conditions on its part to be performed or satisfied hereunder at or prior to
such Time of Delivery, in either case other than by reason of a default by any
of the Underwriters. If this Agreement is terminated pursuant to this Section
10(a), the Company will reimburse the Underwriters upon demand for all out-of-
pocket expenses (including counsel fees and disbursements) that shall have been
incurred by it in connection with the proposed purchase and sale of the 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 Section 9(a), the aggregate number of such Shares which remain
unpurchased exceeds one-eleventh of the aggregate number of Shares to be
purchased at such Time of Delivery, or if the Company shall not exercise the
right described in Section 9(b) to require non-defaulting Underwriters to
purchase Shares of a defaulting Underwriter or Underwriters, then this Agreement
(or, with respect to a Subsequent Time of Delivery, the obligations of the
Underwriters to purchase and of the Company to sell the Optional Shares)
thereupon will terminate, without liability on the part of any nonfaulting
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.
11. SURVIVAL. The respective indemnities, agreements,
representations, warranties and other statements of the Company, its officers
and the 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 the Underwriter or any controlling person
referred to in Section 8(e) or the Company, or any officer or director or
controlling person of the Company referred to in Section 8(e), and shall survive
delivery of and payment for the Shares. The respective agreements, covenants,
indemnities and other statements set forth in Sections 6, 8 and 13 hereof shall
remain in full force and effect, regardless of any termination or cancellation
of this Agreement.
25
<PAGE>
12. NOTICES. All communications hereunder shall be in writing and,
if sent to the Underwriter, shall be mailed, delivered or telecopied and
confirmed in writing to Wachovia Securities, Inc., IJL Financial Center, 201
North Tryon Street, Charlotte, North Carolina 28202, Attention: Corporate
Finance Department and if sent to the Company, shall be mailed, delivered or
telecopied and confirmed in writing to the Company at Empire Financial Holding
Company, 1385 West State Road 434, Longwood, Florida 32750, Attention: Kevin M.
Gagne and Richard L. Goble, Co-Chief Executive Officers.
13. REPRESENTATIVE. You will act for the several Underwriters in
connection with the transactions contemplated by this Agreement, and any action
under this Agreement taken by you will be binding upon all the Underwriters.
14. BINDING EFFECT. This Agreement shall be binding upon, and inure
solely to the benefit of, each Underwriter and the Company and to the extent
provided in Sections 8 and 10 hereof, the officers and directors and controlling
persons referred to therein 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 the Underwriters shall be deemed a successor or assign by reason
merely of such purchase.
15. DEFINITION OF SUBSIDIARY. For purposes of this Agreement,
"Subsidiary" has the meaning set forth in Rule 405 under the Securities Act.
16. QUALIFIED INDEPENDENT UNDERWRITER. The Company hereby confirms
that at its request the Representative has without compensation acted as a
"Qualified Independent Underwriter" (in such capacity, the "QIU") within the
meaning of Conduct Rule 2720 of the NASD in connection with the offering of the
Securities. The Company will indemnify and hold harmless the QIU against all
losses, claims, damages or liabilities, join or several, to which the QIU may
become subject, under the Securities Act or otherwise, insofar as such losses,
claims or liabilities (or actions in respect thereof) arise out of or are based
upon the QIU's acting (or alleged failing to act) as such "qualified independent
underwriter" and will reimburse the QIU for any legal or other expenses
reasonably incurred by the QIU in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are incurred. To
its knowledge, the Representative has satisfied all of the provisions of Conduct
Rule 2720 of the NASD with respect to its acting as the QIU.
17. INFORMATION FURNISHED BY UNDERWRITERS. The statements set forth
under the caption "Underwriting" in the Prospectus, constitute the only written
information furnished by or on behalf of any Underwriter referred to in
paragraph 3 in Section 1 hereof and in paragraphs (a) and (b) in Section 8
hereof.
18. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of North Carolina without giving effect
to any provisions regarding conflicts of laws.
26
<PAGE>
19. COUNTERPARTS. This Agreement may be executed by any one or more of
the parties hereto in any number of counterparts, each of which shall be deemed
to be an original, but all such counterparts shall together constitute one and
the same instrument.
27
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us one of the counterparts hereof, and upon the
acceptance hereof by Wachovia Securities, Inc., this letter will constitute a
binding agreement among the Underwriters and the Company.
Very truly yours,
EMPIRE FINANCIAL HOLDING COMPANY
By:
-----------------------------------------------
Name:
Title:
WACHOVIA SECURITIES, INC.
By:
-------------------------
Name:
Title:
28
<PAGE>
SCHEDULE I
EMPIRE FINANCIAL HOLDING COMPANY
2,400,000 SHARES
COMMON STOCK
<TABLE>
<CAPTION>
NUMBER OF
OPTIONAL SHARES
TOTAL NUMBER OF TO BE PURCHASED
FIRM SHARES TO IF MAXIMUM
UNDERWRITER BE PURCHASED OPTION EXERCISED
----------- ------------ ----------------
<S> <C> <C>
Wachovia Securities, Inc. -- --
Keefe, Bruyette & Woods, Inc.
Empire Financial Group, Inc.
Total 2,400,000 360,000
-----
</TABLE>
<PAGE>
SCHEDULE II
Subsidiaries of the Company
---------------------------
Empire Financial Group, Inc.
Advantage Trading Group, Inc.
Empire Investment Advisors, Inc.
<PAGE>
EXHIBIT A
Form of Representative's Warrant
--------------------------------
<PAGE>
EXHIBIT B
Form of Company Counsel Legal Opinion
-------------------------------------
The Representative shall have at each Time of Delivery from Greenberg
Traurig, P.A., counsel to the Company, an opinion addressed to the
Representative and dated as of such Time of Delivery, and stating in effect
that:
(i) Each of the Company and its Subsidiaries has been duly organized and
is validly existing as a corporation in good standing under the laws of the
jurisdiction of its organization, with full corporate power and authority to own
or lease its properties and conduct its business as described in the Prospectus,
and is duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which the character of the business
conducted by it or the location of the properties owned or leased by it makes
such qualification necessary.
(ii) The authorized, issued and outstanding Common Stock of the Company
as of __________,___ is as set forth under the caption "Capitalization" in the
Prospectus, and the Common Stock conforms to the description thereof contained
under the caption "Description of Common Stock" in the Prospectus. The
outstanding shares of Common Stock have been, and the Shares and Warrant
Securities, upon issuance and delivery and payment therefor in the manner herein
described, will be, duly authorized, validly issued, fully paid and
nonassessable. There are no preemptive or other rights to subscribe for or to
purchase, or any restriction upon the voting or transfer of, any shares of
Common Stock pursuant to the Company's articles of incorporation, bylaws, other
governing documents or any agreement or other instrument known to such counsel
to which the Company or any of its Subsidiaries is a party or by which any of
them is bound; and to the best of such counsel's knowledge, neither the filing
of the Registration Statement nor the offering or sale of the Securities as
contemplated by this Agreement gives rise to any rights, other than those which
have been waived or satisfied, for or relating to the registration of any shares
of Common Stock. To the best of such counsel's knowledge, except as disclosed in
the Registration Statement and the Prospectus, there is no outstanding option,
warrant or other right calling for the issuance of any share of stock of the
Company or any securities convertible into, exercisable for or exchangeable for
stock of the Company.
(iii) All issued and outstanding securities of each Subsidiary have been
duly authorized and validly issued and are fully paid and nonassessable; the
holders thereof have, to such counsel's knowledge, no rights of rescission with
respect thereto, and are not subject to personal liability by reason of being
holders of such Subsidiaries' securities; and none of such securities were
issued in violation of the preemptive rights of any holders of any security of
the Company; all outstanding shares of capital stock of the Subsidiaries are
owned by the Company either directly or through wholly owned subsidiaries free
and clear of any perfected security interest and, to the knowledge of such
counsel, after due inquiry, any other security interest, claim, lien or
encumbrance.
<PAGE>
(iv) Neither the Company nor any of its Subsidiaries is, or with the
giving of notice or lapse of time or both would be, in violation of or in
default under, nor will the execution or delivery hereof or consummation of the
transactions contemplated hereby result in a violation of, or constitute a
default under, the articles of incorporation, bylaws or other governing
documents of the Company or any of its Subsidiaries, or any agreement, contract,
mortgage, deed of trust, loan agreement, note, lease, indenture or other
instrument known to such counsel, to which the Company or any of its
Subsidiaries is a party or by which any of them is bound, or to which any of
their properties is subject, nor will the performance by the Company of its
obligations hereunder violate any law, rule, administrative regulation or decree
of any court or any governmental agency or body having jurisdiction over the
Company, its Subsidiaries or their properties, or result in the creation or
imposition of any lien, charge, claim or encumbrance upon any property or asset
of the Company or any of its Subsidiaries. Except for permits and similar
authorizations required under the Securities Act and the securities or "Blue
Sky" laws of certain jurisdictions and for such permits and authorizations which
have been obtained, no consent, approval, authorization or order of any court,
governmental agency or body or financial institution is required in connection
with the consummation of the transactions contemplated by this Agreement.
(v) This Agreement has been duly authorized, executed and delivered by
the Company and, assuming capacity, due authorization, execution and delivery by
the other parties hereto, constitutes the legal, valid and binding obligation of
the Company and is enforceable against the Company in accordance with its terms,
except as rights to indemnity may be limited by federal or state securities laws
and except (i) as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and (ii) to
the extent that rights to indemnity or contribution under this Agreement may be
limited by federal or state securities laws or the public policy underlying such
laws.
(vi) The Company has all requisite corporate power and authority to own,
lease and license its assets and properties and conduct its business as
described in the Registration Statement and the Prospectus; and the Company has
all requisite corporate power and authority and all necessary authorizations,
approvals, consents, orders, licenses, certificates and permits to enter into,
deliver and perform this Agreement and to issue and sell the Securities, except
as may be required under state or foreign securities or Blue Sky laws.
(vii) The Registration Statement and all post-effective amendments thereto
and the Rule 462(b) Registration Statement, if any, have become effective under
the Securities Act and, to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted or are pending before or
contemplated by the Commission and any and all filings required by Rule 424 and
Rule 430A of the Rules and Regulations have been made; the Registration
Statement, each Preliminary Prospectus and the Prospectus and any amendment or
supplement thereto, as of their respective effective dates and as of each Time
of Delivery complied in all
<PAGE>
material respects with the requirements of the Securities Act and the Rules and
Regulations (except that counsel need express no opinion on the financial
statements and supporting notes and schedules and other financial data); the
conditions for use of Form S-1, set forth in the General Instructions thereto,
have been satisfied.
(viii) All descriptions in the Prospectus of statutes, regulations, legal
or governmental proceedings, contracts and other documents are accurate and
fairly present the information required to be shown under the Securities Act;
and such counsel does not know of any contracts or 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, nor does such counsel
know of any pending or threatened litigation or any governmental proceeding,
statute or regulation required to be described in the Prospectus which is not so
described.
(ix) The statements in the Prospectus under "Regulation and Supervision",
"Business -- Legal Proceedings", "Certain Transactions," "Description of Capital
Stock" and `Shares Eligible for Future Sale" have been reviewed by such counsel,
and insofar as they refer to statements of law, descriptions of statutes,
licenses, rules or regulations or legal conclusions, are correct in all
respects.
(x) To the knowledge of such counsel, the persons listed under the
caption "Principal Stockholders" in the Prospectus are the respective
"beneficial owners" (as such phrase is defined in regulation 13d-3 under the
Exchange Act) of the securities set forth opposite their respective names
thereunder, as and to the extent set forth therein.
(xi) Except as described in the Prospectus, no person, corporation,
trust, partnership, association or other entity has the right to include and/or
register any securities of the Company in the Registration Statement, require
the Company to file any registration statement or, if filed, to include any
security in such registration statement;
(xii) To such counsel's knowledge, and other than as set forth in the
Prospectus, there is no litigation or other proceeding before any court or
before or by any state or federal public body pending or threatened against, or
involving the assets, properties or businesses of, the Company or any of its
Subsidiaries which would have a material adverse effect upon the business.
Results of operations or financial condition of the Company and its
Subsidiaries.
(xiii) The issuance and sale of the Representative's Warrant has been duly
authorized and, when issued, paid for and delivered pursuant to the terms of the
Representative's Warrant, will constitute the valid and binding obligation of
the Company, enforceable as to the Company in accordance with its terms,
subject, as to enforcement of remedies, to applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and other similar laws
affecting the rights of creditors generally and the discretion of courts in
granting equitable remedies and except that enforceability of the
indemnification provisions may be limited by the federal securities laws or
public policy underlying such laws. The Warrant Securities have been duly
reserved for issuance in accordance with the provisions of the Representative's
Warrant. The
<PAGE>
Representative's Warrant conforms in all material respects to the descriptions
thereof contained in the Registration Statement and the Prospectus.
(xiv) To the knowledge of such counsel, except as described in the
Prospectus, there are no claims, payments, issuances, arrangements or
understandings for services in the nature of a finder's or origination fee with
respect to the sale of the Securities hereunder or financial consulting
arrangement or any other arrangements, agreements, understandings, payments or
issuances that may affect the Underwriters' compensation, as determined by the
NASD.
(xv) Assuming due execution by the parties thereto other than the
Company, the Lock-up Agreements are legal, valid and binding obligations of the
parties thereto, enforceable against the party and any subsequent holder of the
securities subject thereto in accordance with its terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
affecting enforcement of creditors' rights and the application of equitable
principles in any action, legal or equitable, and except as rights to indemnity
or contribution may be limited by applicable law).
(xvi) The Common Stock has been duly registered pursuant to Section 12 of
the Exchange Act.
(xvii) Neither the Company nor any of its Subsidiaries is, nor upon
consummation of the transactions contemplated hereby will be, an "investment
company" as such term is defined in the Investment Company Act.
Such counsel shall state that it has participated in conferences with
officers and other representatives of the Company and representatives of the
independent public accountants for the Company at which conferences such counsel
made inquiries of such officers, representatives and accountants and discussed
the contents of the Prospectus, the Registration Statement and the Prospectus,
as well as related matters, and no facts have come to the attention of such
counsel which lead them to believe that either the Registration Statement or any
amendment thereto, at the time such Registration Statement or amendment became
effective or the Prospectus or amendment or supplement thereto, as of the date
of such opinion, contained any 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 (it being understood that such counsel need
express no opinion with respect to the financial statements, related notes and
schedules and other financial data included therein).
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance satisfactory to Underwriters' counsel) of
other counsel acceptable to Underwriters' counsel, familiar with the applicable
laws, (B) as to matters of fact, to the extent they deem proper, on certificates
and written statements of officers of the Company, and certificates or other
written statements of officers or departments of various
<PAGE>
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company or any of its Subsidiaries, provided that copies of
any such statements or certificates shall be delivered to Underwriters' counsel
if requested. Such opinion shall state that Underwriters' counsel is entitled to
rely thereon.
