EXHIBIT 1.1
QUANTA CAPITAL HOLDINGS LTD.
10.25% SERIES A PREFERRED SHARES
UNDERWRITING AGREEMENT
December 14, 2005
FRIEDMAN, BILLINGS, RAMSEY & CO., INC.
as Representative of the several Underwriters
c/o Friedman, Billings, Ramsey & Co., Inc.
1001 19th Street North
Arlington, Virginia 22209
Dear Sirs:
Quanta Capital Holdings Ltd., a Bermuda exempted company (the
"Company") confirms its agreement with each of the Underwriters
listed on
Schedule I hereto (collectively, the "Underwriters"), for whom
Friedman,
Billings, Ramsey & Co., Inc. is acting as representative (in
such capacity,
the "Representative"), with respect to (i) the sale by the Company
of
3,000,000 shares (the "Initial Shares") of 10.25% Series A
Preferred
Shares, par value $0.01 per share, of the Company (the "Preferred
Shares"),
and the purchase by the Underwriters, acting severally and not
jointly, of
the respective number of shares of Preferred Shares set forth
opposite the
names of the Underwriters in Schedule I hereto, and (ii) the grant
of the
option described in Section 1(b) hereof to purchase all or any part
of
450,000 additional shares of Preferred Shares to cover
over-allotments (the
"Option Shares"), if any, from the Company to the Underwriters,
acting
severally and not jointly, in the respective proportion as set
forth
opposite the names of the Underwriters in Schedule I hereto. The
3,000,000
shares of Preferred Shares to be purchased by the Underwriters and
all or
any part of the 450,000 shares of Preferred Shares subject to the
option
described in Section l(b) hereof are hereinafter called,
collectively, the
"Shares."
The Company understands that the Underwriters propose to make a
public offering of the Shares as soon as the Underwriters deem
advisable
after this Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission
(the Commission"), a registration statement on Form S-3 (No.
333-129255)
and a related preliminary prospectus for the registration of the
Shares
under the Securities Act of 1933, as amended (the "Securities
Act"), and
the rules and regulations thereunder (the "Securities Act
Regulations").
The Company has prepared and filed such amendments to the
registration
statement and such amendments or supplements to the related
preliminary
prospectus as may have been required to the date hereof, and will
file such
additional amendments or supplements as may hereafter be required.
The
registration statement has been declared effective under the
Securities Act
by the Commission. The registration
statement, as amended at the time it was declared effective by the
Commission (and, if the Company files a post-effective amendment to
such
registration statement which becomes effective prior to the Closing
Time
(as defined below), such registration statement as so amended) and
including all information deemed to be a part of the registration
statement
pursuant to incorporation by reference, Rule 430B of the Securities
Act
Regulations or otherwise, is hereinafter called the "Registration
Statement." Any registration statement filed pursuant to Rule
462(b) of the
Securities Act Regulations is hereinafter called the "Rule 462(b)
Registration Statement," and after such filing the term
"Registration
Statement" shall include the 462(b) Registration Statement. The
term "Base
Prospectus" means the prospectus dated November 2, 2005 included in
the
Registration Statement including the information incorporated by
reference
therein. The term "Prospectus Supplement" means the prospectus
supplement
specifically relating to the Shares, in the form first filed with
the
Commission pursuant to Rule 424 under the Securities Act, including
any
amendment or supplement thereto and all information incorporated by
reference therein. The term "Prospectus" means the Base Prospectus
together
with the Prospectus Supplement. The term "Preliminary Prospectus"
means any
preliminary form of the Prospectus in the form filed with the
Commission
pursuant to Rule 424 of the Securities Act Regulations.
The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus.
The term "Disclosure Package" means (i) the Base Prospectus and
the Preliminary Prospectus, as most recently amended or
supplemented
immediately prior to the Initial Sale Time (as defined herein),
(ii) the
Issuer Free Writing Prospectuses (as defined below), if any,
identified in
Schedule II hereto, and (iii) any other Free Writing Prospectus (as
defined
below) that the parties hereto shall hereafter expressly agree to
treat as
part of the Disclosure Package.
The term "Issuer Free Writing Prospectus" means any issuer free
writing prospectus, as defined in Rule 433 of the Securities Act
Regulations. The term "Free Writing Prospectus" means any free
writing
prospectus, as defined in Rule 405 of the Securities Act
Regulations.
The Company and the Underwriters agree as follows:
1.
Sale and Purchase:
(a) Initial Shares. Upon the basis of the warranties and
representations and other terms and conditions herein set forth, at
the
purchase price per share of $24.2125, the Company agrees to sell to
the
Underwriters 3,000,000 Initial Shares and each Underwriter agrees,
severally and not jointly, to purchase from the Company the number
of
Initial Shares set forth in Schedule I opposite such Underwriter's
name,
plus any additional number of Initial Shares which such Underwriter
may
become obligated to purchase pursuant to the provisions of Section
9
hereof, subject in each case, to such
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adjustments among the Underwriters as the Representative in its
sole
discretion shall make to eliminate any sales or purchases of
fractional
shares.
(b) Option Shares. In addition, upon the basis of the warranties
and
representations and other terms and conditions herein set forth, at
the
purchase price per share set forth in paragraph (a), the Company
hereby
grants an option to the Underwriters, acting severally and not
jointly, to
purchase from the Company, all or any part of the Option Shares,
plus any
additional number of Option Shares which such Underwriter may
become
obligated to purchase pursuant to the provisions of Section 9
hereof. The
option hereby granted will expire 30 days after the date hereof and
may be
exercised in whole or in part from time to time only for the
purpose of
covering over-allotments which may be made in connection with the
offering
and distribution of the Initial Shares upon notice by the
Representative to
the Company setting forth the number of Option Shares as to which
the
several Underwriters are then exercising the option and the time
and date
of payment and delivery for such Option Shares. Any such time and
date of
delivery shall be determined by the Representative, but shall not
be later
than three full business days (or earlier, without the consent of
the
Company, than two full business days) after the exercise of such
option,
nor in any event prior to the Closing Time, as hereinafter defined.
If the
option is exercised as to all or any portion of the Option Shares,
the
Company will sell the total number of Option Shares then being
purchased
and each of the Underwriters, acting severally and not jointly,
will
purchase that proportion of the total number of Option Shares then
being
purchased which the number of Initial Shares set forth in Schedule
I
opposite the name of such Underwriter bears to the total number of
Initial
Shares, subject in each case to such adjustments among the
Underwriters as
the Representative in its sole discretion shall make to eliminate
any sales
or purchases of fractional shares.
2.
Payment and Delivery:
(a) Initial Shares. The Shares to be purchased by each Underwriter
hereunder, in definitive form, and in such authorized denominations
and
registered in such names as the Representative may request upon at
least
forty-eight hours' prior notice to the Company shall be delivered
by or on
behalf of the Company to the Representative, including, at the
option of
the Representative, through the facilities of The Depository Trust
Company
("DTC") for the account of such Underwriter, against payment by or
on
behalf of such Underwriter of the purchase price therefor by wire
transfer
of Federal (same-day) funds to the account specified to the
Representative
by the Company upon at least forty-eight hours' prior notice. The
Company
will cause the certificates representing the Initial Shares to be
made
available for checking and packaging not later than 1:00 p.m. New
York City
time on the business day prior to the Closing Time (as defined
below) with
respect thereto at the office of Friedman, Billings, Ramsey &
Co., Inc.,
1001 19th Street North, Arlington, Virginia 22209, or at the office
of DTC
or its designated custodian, as the case may be (the "Designated
Office").
The time and date of such delivery and payment shall be 9:30 a.m.,
New York
City time, on the fourth business day after the date hereof (unless
another
time and date shall be agreed to by the Representative and the
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Company). The time at which such payment and delivery of both
Initial
Shares and Option Shares are actually made is hereinafter sometimes
called
the "Closing Time" and the date of delivery of both Initial Shares
and
Option Shares is hereinafter sometimes called the "Date of
Delivery."
(b) Option Shares. Any Option Shares to be purchased by each
Underwriter hereunder, in definitive form, and in such authorized
denominations and registered in such names as the Representative
may
request upon at least forty-eight hours' prior notice to the
Company shall
be delivered by or on behalf of the Company to the Representative,
including, at the option of the Representative, through the
facilities of
DTC for the account of such Underwriter, against payment by or on
behalf of
such Underwriter of the purchase price therefor by wire transfer of
Federal
(same-day) funds to the account specified to the Representative by
the
Company upon at least forty-eight hours' prior notice. The Company
will
cause the certificates representing the Option Shares to be made
available
for checking and packaging at least twenty-four hours prior to the
Date of
Delivery with respect thereto at the Designated Office. The time
and date
of such delivery and payment shall be 9:30 a.m., New York City
time, on the
date specified by the Representative in the notice given by the
Representative to the Company of the Underwriters' election to
purchase
such Option Shares or on such other time and date as the Company
and the
Representative may agree upon in writing.
3.
Representations and Warranties of the Company:
The Company represents and warrants to the Underwriters that:
(a) the Company has an authorized capitalization as set forth in
both
the Prospectus and the Disclosure Package; the outstanding shares
of
capital stock of the Company and each material subsidiary of the
Company
(each, a "Subsidiary") that is a corporation have been duly and
validly
authorized and issued and are fully paid and non-assessable, and
all of the
outstanding shares of capital stock of the Subsidiaries that are
corporations are directly or indirectly owned of record and
beneficially by
the Company and all of the membership interests in each Subsidiary
that is
a limited liability company have been duly and validly authorized
and
issued and fully paid, and all of the outstanding membership
interests in
each Subsidiary that is a limited liability company are directly or
indirectly owned of record and beneficially by the Company; except
as
disclosed in both the Prospectus and the Disclosure Package, there
are no
outstanding (i) securities or obligations of the Company or any of
the
Subsidiaries convertible into or exchangeable for any capital stock
or
membership interests of the Company or any such Subsidiary, (ii)
warrants,
rights or options to subscribe for or purchase from the Company or
any such
Subsidiary any such capital stock or membership interests or any
such
convertible or exchangeable securities or obligations, or (iii)
obligations
of the Company or any such Subsidiary to issue any shares of
capital stock
or membership interests, any such convertible or exchangeable
securities or
obligation, or any such warrants, rights or options;
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(b) each of the Company and the Subsidiaries (all Subsidiaries of
which are named in Exhibit 21 to the Company's Annual Report for
2004 on
Form 10-K) has been duly incorporated or formed and is validly
existing as
a corporation or limited liability company, as applicable, in good
standing
under the laws of its respective jurisdiction of organization with
full
corporate or limited liability company, as applicable, power and
authority
to own its respective properties and to conduct its respective
businesses
as described in each of the Registration Statement, the Prospectus
and the
Disclosure Package and, in the case of the Company, to execute and
deliver
this Agreement and to consummate the transactions contemplated
herein;
(c) the Company and all of the Subsidiaries are duly qualified or
licensed and are in good standing in each jurisdiction in which
they
conduct their respective businesses or in which they own or lease
real
property or otherwise maintain an office and in which the failure,
individually or in the aggregate, to be so qualified or licensed
would
reasonably be expected to have a material adverse effect on the
assets,
business, operations, earnings, prospects, properties or condition
(financial or otherwise), present or prospective, of the Company
and the
Subsidiaries taken as a whole, (any such effect or change, where
the
context so requires, is hereinafter called a "Material Adverse
Effect" or
"Material Adverse Change"); except as disclosed in both the
Prospectus and
the Disclosure Package, no Subsidiary is prohibited or restricted,
directly
or indirectly, in any material respect from paying dividends to the
Company, or from making any other distribution with respect to such
Subsidiary's capital stock or from repaying to the Company or any
other
Subsidiary any amounts which may from time to time become due under
any
loans or advances to such Subsidiary from the Company or such other
Subsidiary, or from transferring any such Subsidiary's property or
assets
to the Company or to any other Subsidiary; other than as disclosed
in both
the Prospectus and the Disclosure Package, the Company does not
own,
directly or indirectly, any capital stock or other equity
securities of any
other corporation or any ownership interest in any partnership,
joint
venture or other association;
(d) the Company and the Subsidiaries are in compliance in all
material
respects with all applicable laws, rules, regulations, orders,
decrees and
judgments, including those relating to transactions with
affiliates, except
where the failure to comply would not reasonably be expected to
have a
Material Adverse Effect;
(e) neither the Company nor any Subsidiary is in breach of or in
default under (nor has any event occurred which with notice, lapse
of time,
or both would constitute a breach of, or default under), its
respective
organizational documents, or in the performance or observance of
any
obligation, agreement, covenant or condition contained in any
license,
indenture, mortgage, deed of trust, loan or credit agreement or
other
agreement or instrument to which the Company or any Subsidiary is a
party
or by which any of them or their respective properties is bound,
except for
such breaches or defaults which would not reasonably be expected
to,
individually or in the aggregate, have a Material Adverse Effect;
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(f) the execution, delivery and performance of this Agreement, and
consummation of the transactions contemplated herein will not (A)
conflict
with, or result in any breach of, or constitute a default under
(nor
constitute any event which with notice, lapse of time, or both
would
constitute a breach of, or default under), (i) any provision of the
organizational documents of the Company or any Subsidiary, or (ii)
any
provision of any license, indenture, mortgage, deed of trust, loan
or
credit agreement or other agreement or instrument to which the
Company or
any Subsidiary is a party or by which any of them or their
respective
properties may be bound or affected, or under any federal, state,
local or
foreign law, regulation or rule or any decree, judgment or order
applicable
to the Company or any Subsidiary, except in the case of this clause
(ii)
for such breaches or defaults which would not reasonably be
expected to,
individually or in the aggregate, have a Material Adverse Effect;
or (B)
result in the creation or imposition of any lien, charge, claim or
encumbrance upon any property or asset of the Company or any
Subsidiary;
(g) this Agreement has been duly authorized, executed and delivered
by
the Company and is a legal, valid and binding agreement of the
Company
enforceable in accordance with its terms, except as may be limited
by
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, and by general equitable
principles,
and except to the extent that the indemnification and contribution
provisions of Section 10 hereof may be limited by federal or state
securities laws and public policy considerations in respect
thereof;
(h) no approval, authorization, consent or order of or filing with
any
federal, state or local governmental or regulatory commission,
board, body,
authority or agency, domestic or foreign, is required in connection
with
the Company's execution, delivery and performance of this
Agreement, its
consummation of the transactions contemplated herein, and its sale
and
delivery of the Shares, other than (A) such as have been obtained,
or will
have been obtained at the Closing Time or the relevant Date of
Delivery, as
the case may be, under the Securities Act and the Securities
Exchange Act
of 1934 (the "Exchange Act"), (B) such approvals as have been
obtained in
connection with the approval of the quotation of the Shares on
NASDAQ, (C)
any necessary qualification under the securities or blue sky laws
of the
various jurisdictions in which the Shares are being offered by the
Underwriters, (D) such approvals, authorizations, consents, orders
or
filings under the rules and regulations of the NASD and (E) such
filings
and approvals as may be required in such jurisdictions outside the
United
States where the Underwriters choose to market the Shares and such
as may
be required and have been obtained from the Bermuda Monetary
Authority;
(i) each of the Company and the Subsidiaries has all necessary
licenses, authorizations, consents and approvals and has made all
necessary
filings required under any federal, state or local law, regulation
or rule,
domestic or foreign, and has obtained all necessary authorizations,
consents and approvals from other persons, required in order to
conduct
their respective businesses as described in both the Prospectus and
the
Disclosure
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Package, except to the extent that any failure to have any such
licenses,
authorizations, consents or approvals, to make any such filings or
to
obtain any such authorizations, consents or approvals would not
reasonably
be expected to, individually or in the aggregate, have a Material
Adverse
Effect; neither the Company nor any of the Subsidiaries is required
by any
applicable law to obtain accreditation or certification from any
governmental agency or authority in order to provide the products
and
services which it currently provides or which it proposes to
provide as set
forth in both the Prospectus and the Disclosure Package, except for
such
accreditations or certifications that the failure of which to
obtain would
not reasonably be expected to individually or in the aggregate,
have a
Material Adverse Effect; neither the Company nor any of the
Subsidiaries is
in violation of, in default under, or has received any notice
regarding a
possible violation, default or revocation of any such license,
authorization, consent or approval or any federal, state, domestic
or
foreign law, regulation or rule or any decree, order or judgment,
domestic
or foreign, applicable to the Company or any of the Subsidiaries
the effect
of which would reasonably be expected to result in a Material
Adverse
Change;
(j) each of the Registration Statement and any Rule 462(b)
Registration Statement has become effective under the Securities
Act and no
stop order suspending the effectiveness of the Registration
Statement or
any Rule 462(b) Registration Statement has been issued under the
Securities
Act and no proceedings for that purpose have been instituted or are
pending
or, to the knowledge of the Company, are contemplated or threatened
by the
Commission, and the Company has complied to the Commission's
satisfaction
with any request on the part of the Commission for additional
information;
(k) the Preliminary Prospectus and the Prospectus when filed and
the
Registration Statement as of each effective date and as of the date
hereof
complied or will comply, and the Prospectus and any further
amendments or
supplements to the Registration Statement, the Preliminary
Prospectus or
the Prospectus will, when they become effective or are filed with
the
Commission, as the case may be, comply, in all material respects
with the
requirements of the Securities Act and the Securities Act
Regulations;
(l) the Registration Statement, as of each effective date and as of
the date hereof, did not, does not and will not contain an untrue
statement
of a material fact or omit to state a material fact required to be
stated
therein or necessary to make the statements therein not misleading;
and the
Preliminary Prospectus does not, and the Prospectus as supplemented
by any
Issuer Free Writing Prospectus or any amendment or supplement
thereto will
not, as of the applicable filing date and at the Closing Time and
on each
Date of Delivery (if any), contain an untrue statement of a
material fact
or omit to state a material fact necessary to make the statements
therein,
in the light of the circumstances under which they were made, not
misleading; provided, however, that the Company makes no warranty
or
representation with respect to any statement contained in or
omitted from
the Registration Statement, the Preliminary Prospectus or the
Prospectus in
reliance upon and in conformity with the information concerning the
Underwriters and
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furnished in writing by or on behalf of the Underwriters through
the
Representative to the Company expressly for use therein (that
information
being limited to that described in the last sentence of the first
paragraph
of Section 10(b) hereof);
(m) each document incorporated by reference in the Prospectus and
the
Disclosure Package, when it became effective or was filed with the
Commission, as the case may be, conformed in all material respects
to the
requirements of the Securities Act or the Exchange Act, as
applicable, and
the Securities Act Regulations and the Exchange Act 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
in order to make the statements therein, in the light of the
circumstances
under which they were made, not misleading; and any further
documents so
filed and incorporated by reference in the Prospectus and the
Disclosure
Package or 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
or the Exchange Act, as applicable, and the Securities Act
Regulations and
the rules and regulations under the Exchange Act (the "Exchange Act
Regulations") and will not include an untrue statement of a
material fact
or omit to state a material fact required to be stated therein or
necessary
in order to make the statements therein, in the light of the
circumstances
under which they were made, not misleading;
(n) as of 6:00 p.m. (Eastern time) on the date of this Agreement
(the
"Initial Sale Time"), the Disclosure Package did not, and at each
Closing
Time, the Disclosure Package will not, contain any untrue statement
of a
material fact or omit to state any material fact necessary in order
to make
the statements therein, in the light of the circumstances under
which they
were made, not misleading; provided, however, that the Company
makes no
warranty or representation with respect to any statement contained
in or
omitted from the Disclosure Package in reliance upon and in
conformity with
the information concerning the Underwriters and furnished in
writing by or
on behalf of the Underwriters through the Representative to the
Company
expressly for use therein (that information being limited to that
described
in the last sentence of the first paragraph of Section 10(b)
hereof);
(o) each Issuer Free Writing Prospectus, as of its issue date and
at
all subsequent times through the completion of the public offer and
sale of
the Shares did not, does not and will not include any information
that
conflicted, conflicts or will conflict with the information
contained in
the Registration Statement, including any document incorporated by
reference therein that has not been superseded or modified;
(p) the Company is eligible to use Free Writing Prospectuses in
connection with this offering pursuant to Rules 164 and 433 under
the
Securities Act; any Free Writing Prospectus that the Company is
required to
file pursuant to Rule 433(d) under the Securities Act Regulations
has been,
or will be, filed with the Commission in accordance with the
Securities Act
Regulations; and each Free Writing Prospectus that the Company
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has filed, or is required to file, pursuant to Rule 433(d) under
the
Securities Act Regulations or that was prepared by or on behalf of
or used
by the Company complies or will comply in all material respects
with the
requirements of the Securities Act and the Securities Act
Regulations;
(q) except for the Issuer Free Writing Prospectuses, if any,
identified in Schedule II hereto, and any electronic road show
relating to
the offering, the Company has not prepared, used or referred to,
and will
not, without the prior consent of the Representative, prepare, use
or refer
to, any Free Writing Prospectus;
(r) the Preliminary Prospectus, the Prospectus and any Issuer Free
Writing Prospectuses (to the extent any such Issuer Free Writing
Prospectus
was required to be filed with the Commission) delivered to the
Underwriters
for use in connection with this offering have been and will be
identical to
the versions of such documents transmitted to the Commission for
filing via
the Electronic Data Gathering Analysis and Retrieval System
("EDGAR"),
except to the extent permitted by Regulation S-T;
(s) the Company filed the Registration Statement with the
Commission
before using any Issuer Free Writing Prospectus;
(t) there are no actions, suits, proceedings, inquiries or
investigations pending or, to the knowledge of the Company,
threatened
against the Company or any Subsidiary or any of their respective
officers
and directors or to which the properties, assets or rights of any
such
entity are subject, at law or in equity, before or by any federal,
state,
local or foreign governmental or regulatory commission, board,
body,
authority, arbitral panel or agency which would not reasonably be
expected
to result in a judgment, decree, award or order having a Material
Adverse
Effect;
(u) the financial statements, including the notes thereto, included
in
(or incorporated by reference into) each of the Registration
Statement, the
Prospectus and the Disclosure Package present fairly the
consolidated
financial position of the entities to which such financial
statements
relate (the "Covered Entities") as of the dates indicated and the
consolidated results of operations and changes in financial
position and
cash flows of the Covered Entities for the periods specified; such
financial statements have been prepared in conformity with
generally
accepted accounting principles as applied in the United States and
on a
consistent basis during the periods involved and in accordance with
Regulation S-X promulgated by the Commission; the financial
statement
schedules included in the Registration Statement and the amounts in
both
the Prospectus and the Disclosure Package under the captions
"Prospectus
Summary - Summary Historical Consolidated Financial Information"
and
"Selected Historical Consolidated Financial Information" fairly
present the
information shown therein and have been compiled on a basis
consistent with
the financial statements included in each of the Registration
Statement,
the Prospectus and the Disclosure Package; the amounts in both the
Prospectus and the Disclosure Package in the table under the
caption
"Prospectus Summary - Recent Developments" and under the caption
"Capitalization" fairly present in
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all material respects the information shown therein and have been
compiled
on a basis consistent with the financial statements included in
each of the
Registration Statement, the Prospectus and the Disclosure Package;
no other
financial statements or supporting schedules are required to be
included in
the Registration Statement, the Prospectus or the Disclosure
Package;
(v) to the best of the Company's knowledge, PricewaterhouseCoopers
LLP, whose reports on the consolidated financial statements of the
Company
and the Subsidiaries are filed with the Commission as part of each
of the
Registration Statement, the Prospectus and the Disclosure Package
or are
incorporated by reference therein, and any other accounting firm
that has
certified Company financial statements and delivered its reports
with
respect thereto, are, and were during the periods covered by their
reports,
independent registered public accounting firms as required by the
Securities Act and the Securities Act Regulations registered with
the
Public Company Accounting Oversight Board;
(w) subsequent to the respective dates as of which information is
given in each of the Registration Statement, the Prospectus and the
Disclosure Package, and except as may be otherwise stated in such
documents, there has not been (A) any Material Adverse Change or
any
development that could reasonably be expected to result in a
Material
Adverse Change, whether or not arising in the ordinary course of
business,
(B) any transaction that is material to the Company and the
Subsidiaries
taken as a whole, contemplated or entered into by the Company or
any of the
Subsidiaries other than in the ordinary course of business, (C) any
obligation, contingent or otherwise, directly or indirectly
incurred by the
Company or any Subsidiary outside the ordinary course that is
material to
the Company and Subsidiaries taken as a whole or (D) any dividend
or
distribution of any kind declared, paid or made by the Company on
any class
of its capital stock;
(x) the Shares conform in all material respects to the description
thereof contained in the Registration Statement, the Prospectus and
the
Disclosure Package;
(y) there are no persons with registration or other similar rights
to
have any equity or debt securities, including securities which are
convertible into or exchangeable for equity securities, registered
pursuant
to the Registration Statement in connection with the sale of the
Shares or
otherwise registered by the Company under the Securities Act,
except for
those registration or similar rights which have been waived with
respect to
the offering contemplated by this Agreement, all of which
registration or
similar rights are fairly summarized in the Prospectus;
(z) the Shares have been duly authorized and, when issued and duly
delivered against payment therefor as contemplated by this
Agreement, will
be validly issued, fully paid and non-assessable, free and clear of
any
pledge, lien, encumbrance, security interest or other claim (except
as set
forth in the Company's Bye-laws and Certificate of Designation
related to
the Shares), and the issuance and sale of the Shares by the
-10-
Company is not subject to preemptive or other similar rights
arising by
operation of law, under the organizational documents of the Company
or
under any agreement to which the Company or any Subsidiary is a
party or
otherwise;
(aa) application has been made for listing the Shares on NASDAQ;
(bb) the Company has not taken, and will not take, directly or
indirectly, any action which is designed to or which has
constituted or
which might reasonably be expected to cause or result in
stabilization or
manipulation of the price of any security of the Company to
facilitate the
sale or resale of the Shares;
(cc) neither the Company nor any of its affiliates (i) is required
to
register as a "broker" or "dealer" in accordance with the
provisions of the
Exchange Act, or the Exchange Act Regulations, or (ii) directly, or
indirectly through one or more intermediaries, controls or has any
other
association with (within the meaning of Article I of the By-laws of
the
National Association of Securities Dealers, Inc. (the "NASD")) any
member
firm of the NASD;
(dd) the Company has not relied upon the Representative or legal
counsel for the Representative for any legal, tax or accounting
advice in
connection with the offering and sale of the Shares;
(ee) any certificate signed by any officer of the Company or any
Subsidiary delivered to the Representative or to counsel for the
Underwriters pursuant to or in connection with this Agreement shall
be
deemed a representation and warranty by the Company to each
Underwriter as
to the matters covered thereby;
(ff) the form of certificate used to evidence the Preferred Shares
complies in all material respects with all applicable statutory
requirements, with any applicable requirements of the
organizational
documents of the Company and the requirements of the NASDAQ;
(gg) the Company and the Subsidiaries have good and marketable
title
in fee simple to all real property, if any, and 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 both the Prospectus and the Disclosure
Package or
such as do not materially and adversely affect the value of such
property
and do not interfere with the use made or proposed to be made of
such
property by the Company and the Subsidiaries; and any real property
and
buildings held under lease by the Company or any Subsidiary are
held under
valid, existing and enforceable leases, with such exceptions as are
disclosed in both the Prospectus and the Disclosure Package or are
not
material to the Company and its Subsidiaries as a whole and do not
interfere with the use made or proposed to be made of such property
and
buildings by the Company or such Subsidiary;
-11-
(hh) the descriptions in each of the Registration Statement, the
Prospectus and the Disclosure Package of the legal or governmental
proceedings, contracts, leases and other legal documents therein
described
present fairly in all material respects the information required to
be
shown, and there are no legal or governmental proceedings,
contracts,
leases, or other documents of a character required to be described
in the
Registration Statement, the Prospectus or the Disclosure Package or
to be
filed as exhibits to the Registration Statement which are not
described or
filed as required; all agreements between the Company or any of the
Subsidiaries and third parties expressly referenced in both the
Prospectus
and the Disclosure Package are legal, valid and binding obligations
of the
Company or one or more of the Subsidiaries, enforceable in
accordance with
their respective terms, except to the extent enforceability may be
limited
by bankruptcy, insolvency, reorganization, moratorium or similar
laws
affecting creditors' rights generally and by general equitable
principles;
(ii) the Company and each Subsidiary owns or possesses adequate
licenses or other rights to use all patents, trademarks, service
marks,
trade names, copyrights, software and design licenses, trade
secrets,
manufacturing processes, other intangible property rights and
know-how
(collectively "Intangibles") necessary to entitle the Company and
each
Subsidiary to conduct its business as described in both the
Prospectus and
the Disclosure Package except where the failure to own or possess,
or to be
able to acquire, such Intangibles would reasonably be expected to
have a
Material Adverse Effect, and neither the Company nor any Subsidiary
has
received notice of infringement of or conflict with (and the
Company knows
of no such infringement of or conflict with) asserted rights of
others with
respect to any Intangibles which would reasonably be expected to
have a
Material Adverse Effect;
(jj) (x) the Company has established and maintains disclosure
controls
and procedures (as such term is defined in Rule 13a-15(e) under the
Exchange Act), which (i) are designed to ensure that material
information
relating to the Company, including its consolidated subsidiaries,
is made
known to the Company's principal executive officer and its
principal
financial officer by others within those entities, particularly
during the
periods in which the periodic reports required under the Exchange
Act are
being prepared, (ii) have been evaluated for effectiveness as of
the end of
the last fiscal quarter covered by the Registration Statement, and
(iii)
are effective in all material respects to perform the functions for
which
they were established, and (y) based on the evaluation of the
Company's
disclosure controls and procedures described above, the Company is
not
aware of (i) any significant deficiency or material weakness in the
design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the Company's ability to
record,
process, summarize and report financial information, or (ii) any
fraud,
whether or not material, that involves management or other
employees who
have a significant role in the Company's internal control over
financial
reporting. Since the most recent evaluation of the Company's
disclosure
controls and procedures described above, there have been no
significant
changes in internal control over financial reporting or in other
factors
that could significantly affect internal control over financial
reporting;
-12-
(kk) the Company is not aware of any significant deficiency or
material weaknesses existing in the design or implementation of the
internal controls over financial reporting of the Company that
adversely
affects the Company's ability to record, process, summarize and
report to
management or the Board of Directors material financial information
relating to the Company;
(ll) each of the Company and the Subsidiaries has filed on a timely
basis all necessary federal, state, local and foreign income and
franchise
tax returns required to be filed through the date hereof and have
paid all
taxes shown as due thereon other than those being contested in good
faith
and for which adequate reserves have been provided or any of those
currently payable without penalty or interest; and no tax
deficiency has
been asserted against any such entity, nor does any such entity
know of any
tax deficiency which has been threatened against any such entity
which, if
determined adversely to any such entity, could have a Material
Adverse
Effect; all tax liabilities are adequately provided for on the
respective
books of such entities;
(mm) each of the Company and the Subsidiaries maintains insurance
(issued by insurers of recognized financial responsibility) of the
types
and in the amounts generally deemed adequate for their respective
businesses and consistent with insurance coverage maintained by
similar
companies in similar businesses, including, but not limited to,
insurance
covering real and personal property owned or leased by the Company
and the
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;
(nn) neither the Company nor any of the Subsidiaries is in
violation,
or has received notice of any violation with respect to, any
applicable
environmental, safety or similar law applicable to the business of
the
Company or any of the Subsidiaries; the Company and the
Subsidiaries have
received all permits, licenses or other approvals required of them
under
applicable federal and state occupational safety and health and
environmental laws and regulations to conduct their respective
businesses,
and the Company and the Subsidiaries are in compliance with all
terms and
conditions of any such permit, license or approval, except any such
violation of law or regulation, failure to receive required
permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals which would not
reasonably be expected to, individually or in the aggregate, result
in a
Material Adverse Change;
(oo) neither the Company nor any Subsidiary is in violation of or
has
received notice of any violation with respect to any federal or
state law
relating to discrimination in the hiring, promotion or pay of
employees,
nor any applicable federal or state wages and hours law, nor any
state law
precluding the denial of credit due to t
