Exhibit 1.1
NN, INC.
6,500,000 Shares of Common Stock*
UNDERWRITING AGREEMENT
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July __, 2002
McDonald Investments Inc.
Legg Mason Wood Walker, Incorporated
As Representatives of the Several Underwriters
c/o McDonald Investments Inc.
McDonald Investment Center
800 Superior Avenue
Cleveland, Ohio 44114
Dear Sirs:
1. Introductory. NN, Inc., a Delaware corporation (the "Company"), proposes
to issue and sell 2,600,000 shares of its common stock, $0.01 par value per
share (the "Common Stock"), which are authorized but unissued, and certain
stockholders of the Company named in Schedule A hereto (the "Selling
Stockholders"), propose to sell 3,900,000 shares of Common Stock, which are
issued and outstanding, to the public through the underwriters named in Schedule
B annexed hereto (the "Underwriters"), for whom you are acting as the
Representatives. The 6,500,000 shares of Common Stock to be purchased in
aggregate from the Company and the Selling Stockholders are hereinafter referred
to as the "Firm Stock." The Company and the Selling Stockholders also propose to
sell to the Underwriters, at their option, an aggregate of not more than 975,000
additional shares of Common Stock, including 421,250 shares of Common Stock to
be sold by the Selling Stockholders and 553,750 shares of Common Stock to be
sold by the Company, which are hereinafter referred to as the "Option Stock."
The Firm Stock and the Option Stock are hereinafter collectively referred to as
the "Stock" and are more fully described in the Registration Statement and the
Prospectus (as hereinafter defined). The Company and the Selling Stockholders
hereby confirm their several agreements with you, acting as the Representatives
of the Underwriters.
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* Plus an option to purchase up to 975,000 additional shares of Common Stock
to cover over-allotments.
2. Representations and Warranties of the Company. The Company represents
and warrants to each of the Underwriters that:
(a) The Company has been subject to the requirements of Section 12 or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
for a period of at least 12 months prior to the initial filing of the
Registration Statement (as hereinafter defined) and has filed all material
required to be filed pursuant to Section 13, 14 or 15(d) of the Exchange Act for
a period of at least 12 calendar months immediately preceding the initial filing
of the Registration Statement and through and including the date of this
Agreement in a timely manner and otherwise satisfies all applicable requirements
for the use of Form S-3 under the Act in connection with the transactions
contemplated hereby and by the Registration Statement (as hereinafter defined).
(b) The documents incorporated by reference in the Prospectus (as
hereinafter defined), when they were filed with the Commission, conformed in all
material respects to the requirements of the Exchange Act and the rules and
regulations of the Commission thereunder (the "Exchange Act Regulations"), and
none of such documents contained at the date of such filing 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.
(c) The Company does not own or control, directly or indirectly, any
corporation, association or other entity other than those listed in Exhibit 21
to the Registration Statement (as hereinafter defined). The Company has been
duly organized and is validly existing as a corporation in good standing under
the laws of Delaware with power and authority to own and lease its properties
and conduct its business as described in the Prospectus (as hereinafter
defined). Each of the Company's subsidiaries has been duly incorporated or duly
formed, as the case may be, and is validly existing as a corporation, limited
liability company or limited partnership, as the case may be, in good standing
under the laws of its respective jurisdiction of incorporation, with power and
authority to own and lease its properties and conduct its respective business.
The Company and each of its subsidiaries are duly qualified to do business as a
foreign entity and are in good standing in all jurisdictions (i) in which the
conduct of business, as presently being conducted, requires such qualification
(except for those jurisdictions in which the failure to so qualify will not in
the aggregate have a material adverse effect on the Company and its
subsidiaries) and (ii) in which the Company or its subsidiaries owns or leases
real property. Except as disclosed in the Registration Statement, the Company
does not own, directly or indirectly, any equity securities or securities
convertible into or exchangeable for equity securities of any other corporation,
partnership, joint venture, Massachusetts or other business trust, limited
liability company, limited partnership or any other business enterprise.
(d) This Agreement has been duly and validly authorized, executed and
delivered on behalf of the Company and constitutes a valid and binding
obligation of the Company enforceable in accordance with its terms.
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(e) The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission"), in accordance with the provisions of the
Securities Act of 1933, as amended (the "Act"), and the Rules and Regulations of
the Commission thereunder (as hereinafter defined), a registration statement on
Form S-3 (Registration No. 333-89950) including a preliminary prospectus
relating to the Company's Stock, and such amendments to such registration
statement as may have been required prior to the date hereof have been similarly
prepared and filed with the Commission. The registration statement as amended at
the time when it becomes effective, or, if applicable, as amended at the time
the most recent post-effective amendment to such registration statement filed
with the Commission prior to the execution and delivery of this Agreement became
effective (the "Effective Date"), and including information (if any) contained
in a prospectus subsequently filed with the Commission pursuant to Rule 424(b)
under the Act, and deemed to be part of the registration statement at the time
of effectiveness pursuant to Rule 430A under the Act (including the documents
incorporated therein by reference pursuant to Item 12 of Form S-3 under the Act
and the information, if any, deemed to be part thereof pursuant to Rule 430A of
the Rules and Regulations of the Commission thereunder, as hereinafter defined)
is hereinafter referred to as the "Registration Statement"; the prospectus in
the form first used to confirm sales of Stock, whether or not filed with the
Commission pursuant to Rule 424(b) under the Act is hereinafter referred to as
the "Prospectus." Any reference herein to the Registration Statement, and
preliminary prospectus or the Prospectus shall be deemed to refer to and include
the documents incorporated therein by reference pursuant to Item 12 of Form S-3
under the Act.
(f) As of the Effective Date, and at all times subsequent thereto up to
and including the respective Closing Dates (as hereinafter defined) of the
offering, (i) the Registration Statement and the Prospectus, and any amendments
thereof or supplements thereto, will in all material respects conform to the
requirements of the Act and the applicable rules, regulations and interpretive
releases of the Commission thereunder (the "Rules and Regulations"); (ii) the
Registration Statement or any amendment thereof or supplement thereto, did not
or will not contain, as the case may be, any 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 (iii) the Prospectus or any
amendment thereof or supplement thereto, did not or will not, as the case may
be, contain any untrue statement of a material fact or omit to state a 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 representations, warranties or agreements as to
information contained in the Registration Statement or the Prospectus or any
such amendment or supplement thereto in reliance upon and in conformity with
written information furnished to the Company (a) through you as the
Representatives specifically for use in the preparation thereof, or (b) by the
Selling Stockholders specifically for use in the preparation thereof.
(g) The Company has a duly authorized and outstanding capitalization as
set forth under "Capitalization" in the Prospectus; all of the outstanding
shares of Common Stock are duly authorized and validly issued, fully paid and
nonassessable, are free of any preemptive rights, rights of first refusal or
similar rights, were issued and sold in compliance with the applicable Federal
and state securities laws and conform in all material respects to the
description in the Prospectus; except as described in the Prospectus, there are
no outstanding
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options, warrants or other rights calling for the issuance of, and there are no
commitments, plans or arrangements to issue any shares of capital stock of the
Company or any security convertible or exchangeable or exercisable for capital
stock of the Company. There are no holders of securities of the Company who, by
reason of the filing of the Registration Statement have the right (and have not
waived such right) to request the Company to include in the Registration
Statement securities owned by them, other than such rights as have been
satisfied by the inclusion of securities in the Registration Statement.
(h) The Common Stock of the Company conforms in substance to all
statements in relation thereto contained in the Registration Statement and the
Prospectus; the Stock to be sold by the Company and the Selling Stockholders
hereunder has been duly authorized and, (i) with respect to the Stock to be sold
by the Company, when issued and delivered pursuant to this Agreement, will be
validly issued, fully paid and nonassessable and (ii) with respect to the Stock
to be sold by the Selling stockholders, is validly issued, fully paid and
nonassessable; and (iii) will conform to the description thereof contained in
the Prospectus. All corporate action required to be taken for the issuance of
the Stock by the Company has been validly and sufficiently taken. The Company
has not granted any preemptive rights of security holders of the Company with
respect to the issuance and sale of the Stock by the Company and the Selling
Stockholders pursuant hereto.
(i) All the issued shares of capital stock of each subsidiary of the
Company have been duly and validly authorized and issued, are fully paid and
non-assessable and the portion of such shares owned by the Company is free and
clear of all liens, encumbrances, equities, security interests, or claims; and
there are no outstanding options, warrants or other rights calling for the
issuance of, and there are no commitments, plans or arrangements to issue, any
shares of capital stock of any subsidiary or any security convertible or
exchangeable or exercisable for capital stock of any subsidiary; except as
disclosed in the Registration Statement and except for the shares of stock or
equity interests of each subsidiary owned by the Company, neither the Company
nor any subsidiary owns, directly or indirectly, any shares of capital stock of
any corporation or has any equity interest in any firm, partnership, joint
venture, association, limited liability company, limited partnership or other
entity.
(j) Subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, except as set forth or
contemplated in the Prospectus, (i) neither the Company nor any of its
subsidiaries has incurred any material liabilities or obligations, direct or
contingent, nor have any of them entered into any material transaction, (ii)
there has not been and will not have been any change on a pro forma basis or
otherwise in the capital stock or funded debt of the Company and its
subsidiaries which is material or any material adverse change in the business or
the financial position or results of operations of the Company and its
subsidiaries, taken as a whole and (iii) no loss or damage (whether or not
insured) to the property of the Company and its subsidiaries have been sustained
which materially and adversely affects the operations of the Company and its
subsidiaries, taken as a whole.
(k) The consummation of the transactions herein contemplated and the
fulfillment of the terms hereof will not conflict with or result in a breach of
any of the terms and
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provisions of, or constitute a default under, (i) the Certificate of
Incorporation or Bylaws of the Company, or the organizational documents of any
of its subsidiaries, or (ii) any indenture, mortgage, deed of trust or other
agreement or instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound, or (iii) any
order, rule or regulation applicable to the Company or any of its subsidiaries
of any court or of any federal or state regulatory body or administrative agency
or other governmental body having jurisdiction over the Company or any of its
subsidiaries or any of their properties.
(l) The financial statements of the Company included or incorporated by
reference in the Registration Statement and the Prospectus fairly present the
financial position and results of operations of the Company at the respective
dates and for the respective periods to which they apply, and such financial
statements have been prepared in conformity with generally accepted accounting
principles consistently applied throughout the periods involved, except as
described in the financial statements.
(m) KPMG, LLP and PricewaterhouseCoopers LLP, who have examined and
expressed their opinion on the financial statements of the Company referenced in
their opinions set forth in the Prospectus, are each independent accountants
within the meaning of the Act and the Rules and Regulations.
(n) The Company and its subsidiaries hold all necessary material
authorizations, approvals, orders, licenses, certificates and permits of and
from all governmental regulatory officials and bodies (collectively the
"licenses") required for the conduct of its business as described in the
Prospectus, and all such licenses are valid and in full force and effect, and
the Company and its subsidiaries have no reason to believe they are not
operating in compliance in all material respects with the terms and provisions
of such licenses and with all material laws, regulations, orders and decrees
applicable to the Company and its subsidiaries, and their respective businesses
and assets.
(o) Neither the Company nor any of its subsidiaries is in violation of any
applicable Federal, state or local laws, statutes, rules, regulations or
ordinances relating to public health, safety or the environment, including,
without limitation, relating to releases, discharges, emissions or disposal to
air, water, land or groundwater, to the withdrawal or use of groundwater, to the
use, handling or disposal of polychlorinated biphenyls (PCBs), asbestos or urea
formaldehyde, to the treatment, storage, disposal or management of hazardous
substances (including, without limitation, petroleum, crude oil or any fraction
thereof, or other hydrocarbons), pollutants or contaminants, to exposure to
toxic, hazardous or other controlled, prohibited or regulated substances, which
violation would have a material adverse effect on the business, condition
(financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole, or which might materially and adversely affect
the consummation of the transactions contemplated by this Agreement. In
addition, and irrespective of such compliance, neither the Company nor any of
its subsidiaries is subject to any liabilities for environmental remediation or
clean-up, including any liability or class of liability of the lessee under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, or the Resource Conservation and Recovery Act of 1976, as amended,
which liability would have a material adverse effect on the business, condition
(financial or other) or results of
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operations of the Company and its subsidiaries, taken as a whole, or which might
materially and adversely affect the consummation of the transactions
contemplated by this Agreement.
(p) There are no legal or governmental actions, suits or proceedings
pending or, to the knowledge of the Company, threatened to which the Company or
any of its subsidiaries, or any of their executive officers or directors is a
party or of which the business or property (including, without limitation, any
of the licenses referred to in (l) above) of the Company or any of its
subsidiaries or any of the Company's or any of its subsidiaries' employees is
the subject which if decided adversely, would have a material adverse effect on
the business, condition (financial or other) or results of operations of the
Company and its subsidiaries, taken as a whole, except as set forth in the
Prospectus.
(q) Neither the Company nor any of its subsidiaries is in violation of its
Certificate of Incorporation or its Bylaws or other organizational documents,
and no default exists by the Company or any of its subsidiaries in the due
performance and observance of any term, covenant or condition of any agreement
material to the Company and its subsidiaries to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries is
bound.
(r) The Company and its subsidiaries have good title to, or valid and
enforceable leasehold estates in, all properties and assets used for their
businesses (including the property described in the Prospectus as being owned or
leased by the Company), in each case free and clear of all liens, encumbrances
and defects other than those set forth or referred to in the Registration
Statement or Prospectus or those which do not materially affect the value of
such property or leasehold and do not materially interfere with the use made or
proposed to be made of such property or leasehold by the Company and its
subsidiaries; and all of the leases and subleases under which the Company and
its subsidiaries hold such properties are in full force and effect.
(s) Other than as set forth in the Prospectus, the Company and its
subsidiaries own or possess, or can acquire on reasonable terms, the patents,
patent rights, licenses, inventions, copyrights, know-how (including trade
secrets, applications and other unpatented or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks, and
trade names (collectively, "Proprietary Rights") used in or necessary for the
conduct of their businesses as now conducted and as proposed to be conducted as
described in the Prospectus; the Company and its subsidiaries have the right to
use all Proprietary Rights used in or necessary for the conduct of their
businesses without infringing the rights of any person or violating the terms of
any licensing or other agreement to which the Company or any of its subsidiaries
is a party, and to the knowledge of the Company no person is infringing upon any
Proprietary Right which the Company or any of its subsidiaries has the sole and
exclusive right to use; no charges, claims or litigation have been asserted or
to the knowledge of the Company threatened against the Company or any of its
subsidiaries contesting the right of the Company or any of its subsidiaries to
use, or the validity of, any Proprietary Right or challenging or questioning the
validity or effectiveness of any license or agreement pertaining thereto or
asserting the misuse thereof, and, to the Company's knowledge, no valid basis
exists for the assertion of any such charge, claim or litigation; all licenses
and other
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agreements to which the Company or any of its subsidiaries is a party relating
to Proprietary Rights are in full force and effect and constitute valid, binding
and enforceable obligations of the Company or such subsidiary, and, to the
Company's knowledge, the other respective parties thereto, and there have not
been and there currently are not any defaults which would have a material
adverse effect on the Company and its subsidiaries, taken as a whole, and no
event has occurred which (whether by notice or lapse of time or both) would
constitute a default under any license or other agreement affecting Proprietary
Rights used in or necessary for the conduct of the businesses of the Company and
its subsidiaries by any party; and except as set forth in the Prospectus, the
validity, continuation and effectiveness of all such licenses and other
agreements and the current terms thereof will not be affected by the
transactions contemplated by this Agreement.
(t) No approval, authorization, consent or other order of any public board
or body (other than in connection with or in compliance with the provisions of
the Act and the securities or Blue Sky laws of various jurisdictions) is legally
required for the sale of the Stock by the Company.
(u) The Common Stock has been registered under Section 12(g) of the
Exchange Act, and has been authorized for trading on the Nasdaq National Market
("Nasdaq").
(v) The outstanding debt, the properties and the business of the Company
and its subsidiaries conform in all material respects to the description thereof
contained in the Registration Statement and the Prospectus.
(w) The Company and its subsidiaries have 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; and no tax deficiency has been asserted against the Company or any
of its subsidiaries, nor does the Company know of any tax deficiency which is
likely to be asserted against the Company or any of its subsidiaries which if
determined adversely to the Company or such subsidiary could materially
adversely affect the business, prospects, properties, assets, results of
operations or condition (financial or otherwise) of the Company and its
subsidiaries, taken as a whole. All tax liabilities are adequately provided for
on the books of the Company.
(x) The Company and each of its subsidiaries maintain insurance of the
types and in the amounts generally deemed adequate for their respective
businesses and, to the best of the Company's knowledge, consistent with
insurance coverage maintained by similar companies in similar businesses.
(y) To the best of the Company's knowledge, no labor problem exists with
its employees or is threatened or imminent that could materially adversely
affect the Company and its subsidiaries, and the Company is not aware of any
existing, threatened or imminent labor disturbance by the employees of any of
its principal suppliers, contractors or customers that could be expected to
materially adversely affect the business, prospects, properties, assets, results
of operation or condition (financial or other) of the Company and the
subsidiaries, taken as a whole.
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(z) The Company has obtained the agreement of each of its executive
officers and directors who are not Selling Stockholders that, for a period of 90
days from the date of the Prospectus, such persons will not, without the prior
written consent of McDonald Investments Inc., except for any transfer by gift
upon the condition that the donee shall agree in writing, with a copy to be
delivered to McDonald Investments Inc., to be bound by the following restriction
in the same manner as it applies to the donor, (i) directly or indirectly sell,
offer to sell, contract to sell, pledge, grant any option for the sale of,
transfer, distribute or otherwise dispose of by any means any shares of the
Company's Common Stock or any securities that such persons have or will have the
right to acquire through options, warrants, subscription or other rights, (ii)
announce an intent to sell, an offer to sell, a contract to sell, the grant of
any option for the sale of, a transfer or a distribution of any shares of the
Company's Common Stock or any securities that such persons have or will have the
right to acquire through options, warrants, subscription or other rights, or
exercise any registration rights with respect to any shares of the Company's
Common Stock.
(aa) Neither the Company nor any of its officers, directors or affiliates
(as defined in the Act and the Rules and Regulations), has taken or will take,
directly or indirectly, any action designed to stabilize or manipulate, or which
has constituted, or might in the future reasonably be expected to cause or
result in, stabilization or manipulation of, the price of the Stock of the
Company in order to facilitate the sale or resale of the Stock or otherwise.
(bb) The Company's system of internal accounting controls is sufficient to
meet the broad objectives of internal accounting control insofar as those
objectives pertain to the prevention or detection of errors or irregularities in
amounts that would be material in relation to the Company's financial
statements, and, to the best of the Company's knowledge, neither the Company nor
any employee or agent of the Company or any of its subsidiaries has made any
payment of funds of the Company or any of its subsidiaries or received or
retained any funds and no funds of the Company or any of its subsidiaries have
been set aside to be used for any payments in violation of any law, rule or
regulation.
(cc) Neither the Company nor any of its subsidiaries is an "investment
company" under the Investment Company Act of 1940, as amended.
(dd) All contracts and documents which are required to be filed as exhibits
to the Registration Statement have been so filed.
(ee) Neither the Company nor, to the best of the Company's knowledge, any
officer, director, employee, agent or stockholder thereof, in each case acting
on behalf of the Company, has done any act or authorized, directed or
participated in any act, in violation of any provision of the Foreign Corrupt
Practices Act of 1977, as amended, applicable to such entity or person for which
civil or criminal liability or penalties, as the case may be, could currently be
imposed on the Company.
3. Representations and Warranties of the Selling Stockholders. Each Selling
Stockholder hereby represents and warrants to each of the Underwriters that:
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(a) Such Selling Stockholder now has and at each Closing Date (as defined
in Section 4 hereof) will have good and valid title to all the Stock of the
Company to be sold by such Selling Stockholder hereunder on such date, free and
clear of all liens, encumbrances, equities, security interests and claims
whatsoever, with full legal right, power and authority to enter into this
Agreement and the Custody Agreement and Power of Attorney, dated as of
__________ __, 2002 (the "Custody Agreement");
(b) Such Selling Stockholder has duly executed and delivered the Custody
Agreement, and the Attorneys-in-Fact are authorized to execute and deliver this
Agreement on behalf of such Selling Stockholder, to determine the purchase price
to be paid by the Underwriters to such Selling Stockholder, to authorize the
delivery of the Stock to be sold by such Selling Stockholder hereunder, to
accept payment therefor, and otherwise act on behalf of such Selling Stockholder
in connection with the Agreement, subject to the terms of and the limitations
set forth in the Custody Agreement.
(c) Such Selling Stockholder has not taken and will not take, directly or
indirectly, any action designed to stabilize or manipulate, or which has
constituted or which might in the future reasonably be expected to cause or
result in stabilization or manipulation of, the price of the Stock of the
Company in order to facilitate the sale or resale of the Stock or otherwise.
(d) Such Selling Stockholder is disposing of such Stock for his, her or its
own account. Such Selling Stockholder is not selling such Stock, directly or
indirectly, for the benefit of the Company, and no part of the proceeds of the
such sale to be received by such Selling Stockholder will inure, directly or
indirectly, to the benefit of the Company.
(e) This Agreement and the Custody Agreement have been duly authorized,
executed and delivered by or on behalf of such Selling Stockholder, and each of
this Agreement and the Custody Agreement is a valid and binding obligation of
such Selling Stockholder enforceable in accordance with its terms, subject to
general principles of equity and to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or other similar laws relating to, or
affecting generally, the enforcement of applicable creditors' rights and
remedies; and pursuant to the power of attorney conferred by such Custody
Agreement, such Selling Stockholder has, among other things, authorized the
Attorneys-in-Fact to execute and deliver on such Selling Stockholder's behalf
this Agreement and any other document that such Selling Stockholder may deem
necessary, advisable or appropriate in connection with the transactions
contemplated hereby.
(f) All information furnished in writing to the Company or the Underwriters
by such Selling Stockholder specifically for use in the preparation of the
Registration Statement and the Prospectus and other documents to be filed with
the National Association of Securities Dealers, Inc. or state securities or Blue
Sky authorities is true and correct and does not contain an untrue statement of
a material fact nor does it omit to state any material fact required to be
stated therein or necessary to make such information not misleading.
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(g) The execution and performance of this Agreement and the consummation of
the transactions herein contemplated and the fulfillment of the terms hereof
will not conflict with, result in a breach of, or constitute a default under any
will, trust (constructive or other), agreement, indenture, mortgage, note, deed,
rule, regulation, order, injunction, judgment, decree or other instrument to
which such Selling Stockholder is a party or by which he is bound.
(h) All consents, approvals, authorizations and orders necessary for the
execution and delivery by such Selling Stockholder of this Agreement and for the
sale and delivery of the Stock to be sold by such Selling Stockholder hereunder
have been obtained other than (i) such as have been obtained, or will have been
obtained at each Closing Date under the Act, (ii) such approvals as have been
obtained in connection with the approval of the quotation of the Stock on Nasdaq
and (iii) any necessary qualification under the securities or blue sky laws of
the various jurisdictions in which the Stock is being offered by the
Underwriters.
(i) For a period of 90 days from the date of the Prospectus, such Selling
Stockholder will not, without the prior written consent of McDonald Investments
Inc., except for any transfer by gift upon the condition that the donee shall
agree in writing, with a copy to be delivered to McDonald Investments Inc., to
be bound by the following restriction in the same manner as it applies to the
donor, (a) directly or indirectly sell, offer to sell, contract to sell, pledge,
grant any option for the sale of, transfer, distribute or otherwise dispose of
by any means any shares of the Company's Common Stock or any securities that
such Selling Stockholder has or will have the right to acquire through options,
warrants, subscription or other rights, (ii) announce an intent to sell, an
offer to sell, a contract to sell, the grant of any option for the sale of, a
transfer or a distribution of any shares of the Company's Common Stock or any
securities that such Selling Stockholder has or will have the right to acquire
through options, warrants, subscription or other rights, or exercise any
registration rights with respect to any shares of the Company's Common Stock.
(j) Certificates for all shares of Stock to be sold by such Selling
Stockholder pursuant to this Agreement in suitable form for transfer have been
placed in custody with the Custodian (as defined in the Custody Agreement) for
the purpose of effecting delivery hereunder.
4. Sale, Purchase and Delivery of Stock. (a) On the basis of the
representations and warranties herein contained, but subject to the terms and
conditions herein set forth, the Company and the Selling Stockholders hereby
agree to sell to each Underwriter, and each Underwriter, severally and not
jointly, agrees to purchase from the Company and the Selling Stockholders the
respective number of shares of the Firm Stock set forth opposite the
Underwriter's name in Schedule B hereto, at a price of $______ per share.
(b) The Company and the Selling Stockholders will deliver the Firm Stock to
you for the respective accounts of the several Underwriters at the office of
McDonald Investments Inc., McDonald Investment Center, 800 Superior Avenue,
Cleveland, Ohio 44114, at 10:00 A.M., Cleveland time, or to your designee at a
specified place at the same time, against payment of the purchase price at the
place of such Closing, by wire transfer in immediately
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available funds to the accounts designated by the Company and the Selling
Stockholders in writing on the third full business day after the effective date
of the Registration Statement (or, if the Firm Stock is priced after 4:30 p.m.,
Cleveland time on the effective date of the Registration Statement, the fourth
full business day after the effective date of the Registration Statement), or at
such other time not later than seven full business days after such public
offering as you shall determine, such time and place being herein referred to as
the "Closing Date." The certificates for the Firm Stock so to be delivered will
be in such denominations and registered in such names as you may specify to the
Company at or before 3:00 P.M., Cleveland time, on the second full business day
prior to the Closing Date. Such certificates will be made available for checking
and packaging at least 24 hours prior to the Closing Date.
(c) On the basis of the representations and warranties herein contained,
but subject to the terms and conditions herein set forth, the Company and the
Selling Stockholders, on a pro rata basis, hereby grant an option to the several
Underwriters to purchase, severally and not jointly, up to 975,000 additional
shares in the aggregate of the Option Stock, including 421,250 shares of Common
Stock from the Selling Stockholders and 553,750 shares of Common Stock from the
Company, at the purchase price set forth in Section 4(a) hereof, for use solely
in covering any over-allotments made by the Underwriters in the sale and
distribution of the Firm Stock. The option granted hereunder may be exercised at
any time (but not more than once) within 30 days after the date the Registration
Statement becomes effective, upon written or telegraphic notice by the
Representatives to the Company and the Selling Stockholders setting forth the
aggregate number of shares of the Option Stock as to which the Underwriters are
exercising the option and the time and place at which certificates will be
delivered, such time (which, unless otherwise determined by you, the Company and
the Selling Stockholders, shall not be earlier than three nor later than seven
full business days after the exercise of said option) being herein called the
"Second Closing Date." The Closing Date and the Second Closing Date are referred
to herein collectively as the "Closing Dates." The number of shares of the
Option Stock to be sold by the Company and the Selling Stockholders to each
Underwriter and purchased by such Underwriter from the Company and the Selling
Stockholders shall be the same percentage of the total number of shares of the
Option Stock to be purchased by the several Underwriters on the Second Closing
Date as such Underwriter purchased of the total number of shares of the Firm
Stock, as adjusted by the Representatives to avoid fractions and to reflect any
adjustment required by Section 13 hereof. The Company and the Selling
Stockholders will deliver certificates for the shares of the Option Stock being
purchased by the several Underwriters to you on the Second Closing Date at the
place and time of such Closing, or to your designee at a specified place at the
same time, against payment of the purchase price at the place of such Closing,
by wire transfer in immediately available funds to the accounts designated by
the Company and the Selling Stockholders in writing. The certificates for the
Option Stock so to be delivered will be in such denominations and registered in
such names as you may specify to the Company and the Selling Stockholders at or
before 3:00 P.M., Cleveland time, on the second full business day prior to the
Second Closing Date. Such certificates will be made available for checking and
packaging at least 24 hours prior to the Second Closing Date. The option granted
hereby may be cancelled by you as the Representatives of the several
Underwriters, as to the shares of the Option Stock for which the option is
unexercised, at any time prior to the expiration of the 30-day period, upon
notice to the Company.
-11-
5. Offering by Underwriters. Subject to the terms and conditions hereof,
the several Underwriters agree that (i) they will offer the Stock to the public
as set forth in the Prospectus as soon after the Registration Statement becomes
effective as may be practicable, but in no event later than 5:00 p.m., Cleveland
time, on the 15th business day subsequent to the date that the Registration
Statement becomes effective, and (ii) they will offer and sell the Stock to the
public only in those jurisdictions, and in such amounts, where due qualification
and/or registration has been effected or an exemption from such qualification
and/or registration is available under the applicable securities or Blue Sky
laws of such jurisdiction; it being understood, however, that such agreement
only covers the initial sale of the Stock by the Underwriters and not any
subsequent sale of such Stock in any trading market which may develop after the
public offering.
6. Covenants of the Company. The Company covenants and agrees with each of
the Underwriters that:
(a) The Company will make every reasonable effort to cause the Registration
Statement to become effective and will advise you when it is effective under the
Act. The Company will not file any amendment to the Registration Statement, or
supplement to the Prospectus, of which you have not been previously advised and
furnished with a copy, or to which you have reasonably objected in writing.
(b) The Company will advise you promptly of any request of the Commission
for amendment of the Registration Statement or Prospectus or for additional
information and of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or of the institution of any
proceedings for that purpose of which it has knowledge, and the Company will
make every reasonable effort to prevent the issuance of any such stop order and
to obtain as soon as possible the lifting thereof, if issued.
(c) The Company will comply, to the best of its ability, with the Act so as
to permit the continuance of sales of and dealings in the Stock under the Act
for such period as may be required by the Act; whenever it is necessary to amend
or supplement the Prospectus to make the statements therein not misleading,
furnish, without charge to you as the Representatives, either amendments to the
Prospectus or supplemental information, so that the statements in the Prospectus
as so amended or supplemented will not be misleading; and file a post-effective
amendment to the Registration Statement whenever such an amendment may be
required and furnish, without charge to you, a reasonable number of copies of
any such amendment and related Prospectus.
(d) Not later than the 45th day following the end of the fiscal quarter
first occurring after the first anniversary of the Effective Date, the Company
will make generally available to its security holders and deliver to you an
earnings statement (which need not be audited) covering a period of at least 12
months beginning not earlier than the Effective Date which shall satisfy the
provisions of Section 11(a) of the Act and/or Rule 158 promulgated under the
Act.
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(e) The Company will furnish to you copies of the Registration Statement
(two of which will be signed and will include all exhibits thereto), each
preliminary prospectus, the Prospectus, all amendments of and supplements to
such documents, and all correspondence between the Commission and the Company or
its counsel or accountants relating thereto, in each case as soon as available
and in such quantities as you may reasonably request.
(f) For a period of three years from the date of the Prospectus, the
Company will deliver to you (i) within 90 days after the end of each fiscal
year, consolidated balance sheets, statements of income, statements of cash flow
and statements of changes in stockholders' equity of the Company and its
consolidated subsidiaries, if any, as at the end of and for such year and the
last preceding year, all in reasonable detail and certified by independent
accountants, (ii) within 45 days after the end of each of the first three
quarterly periods in each fiscal year, unaudited consolidated balance sheets and
statements of income, statements of cash flow and statements of changes in
stockholders' equity of the Company and its consolidated subsidiaries, if any,
as at the end of and for such period, all in reasonable detail, (iii) as soon as
available, all such proxy statements, financial statements and reports as the
Company shall send or make available to its stockholders, and (iv) copies of all
annual or periodic reports as the Company or any subsidiary shall file with the
Commission as required by the Act, the Exchange Act and any rules or regulations
thereunder, which are available for public inspection at the Commission, or any
material reports filed in connection with the Company's listing on any stock
exchange.
(g) The Company will apply the net proceeds from the sale of the Stock sold
by it in the manner set forth in the Prospectus, and will comply with any
reporting obligations as may be required by Rule 463 under the Act.
(h) If, at the time that the Registration Statement becomes effective, any
information shall have been omitted therefrom in reliance upon Rule 430A
promulgated under the Act, then not later than the Commission's close of
business on the second business day following the execution of this Agreement,
the Company will prepare, and file or transmit for filing with the Commission in
accordance with Rule 430A and Rule 424(b) promulgated under the Act, copies of
an amended Prospectus or, if required by such Rule 430A, a post-effective
amendment (including an amended Prospectus), containing all information so
omitted.
(i) The Company will file with the NASD all documents and notices required
of companies that have issued securities that are traded on Nasdaq.
(j) The Company will cooperate with you and your counsel to qualify the
Stock for sale under the securities or Blue Sky laws of such jurisdictions
within the United States as you reasonably designate, including furnishing such
information and executing such instruments as may be required, and will continue
such qualifications in effect for a period of at least three months from the
date hereof; provided, however, the Company shall not be required to register or
qualify as a foreign corporation or as a dealer in securities nor, except as to
matters and transactions relating to the offer and sale of the Stock, consent to
a service of process in any jurisdiction.
-13-
(k) For a period of 90 days from the date of the Prospectus, the Company
will not publicly sell, except with your prior written consent, any shares of
Common Stock or securities convertible into shares of Common Stock for cash,
except pursuant to the exercise of any outstanding stock options of the Company
that are described in the Prospectus.
(l) After the Closing Dates, the Company and the Subsidiaries will be in
compliance with the financial record-keeping requirements and internal
accounting control requirements of Section 13(b)(2) of the Exchange Act.
(m) The Company, during the period when the Prospectus is required to be
delivered under the Act, will file all documents required to be filed with the
Commission pursuant to Sections 13, 14 or 15 of the Exchange Act within the time
periods required by the Exchange Act and the Exchange Act Regulations.
7. Covenants of the Selling Stockholders. Each Selling Stockholder
covenants and agrees with each Underwriter that, for a period of 90 days from
the date of the Prospectus, such Selling Stockholder will not, without the prior
written consent of McDonald Investments Inc., except for any transfer by gift
upon the condition that the donee shall agree in writing, with a copy to be
delivered to McDonald Investments Inc., to be bound by the following restriction
in the same manner as it applies to the donor, (i) directly or indirectly sell,
offer to sell, contract to sell, pledge, grant any option for the sale of,
transfer, distribute or otherwise dispose of by any means any shares of the
Company's Common Stock or any securities that such Selling Stockholder has or
will have the right to acquire through options, warrants, subscription or other
rights, (ii) announce an intent to sell, an offer to sell, a contract to sell,
the grant of any option for the sale of, a transfer or a distribution of any
shares of the Company's Common Stock or any securities that such Selling
Stockholder has or will have the right to acquire through options, warrants,
subscription or other rights, or exercise any registration rights with respect
to any shares of the Company's Common Stock. However, the giving of your written
consent with respect to any such sale or transfer by such Selling Stockholder
shall not constitute a waiver of this covenant with respect to any other request
by such Selling Stockholder, it being understood that you may, in your absolute
discretion, consent to certain proposed sales or transfers and refuse to consent
to others during such 90-day period. Any request from such Selling Stockholder
to permit a sale or transfer of Common Stock of the Company shall be in writing
and addressed to you and shall set forth in reasonable detail the reasons for
the proposed sale or transfer.
8. Payment of Expenses. The Company will pay or cause to be paid all costs
and expenses incident to the performance of the obligations of the Company
hereunder, including, but not limited to, the reasonable fees and disbursements
of its counsel; the reasonable fees, costs and expenses of preparing, printing
and delivering the certificates for the Stock; the reasonable fees, costs and
expenses of the transfer agent and registrar for the Common Stock; the
reasonable fees and disbursements of its accountants; the filing fees and
reasonable expenses incurred in connection with the qualification, registration
or exemption of the Stock under state securities or Blue Sky laws and the fees
and disbursements of counsel for the Underwriters in connection with such
qualification, registration or exemption and the preparation and printing of the
preliminary and final Blue Sky Surveys; the filing fees and reasonable expenses
paid and
-14-
incurred by the Underwriters, including fees and disbursements of counsel for
Underwriters, in connection with the review of the terms of the underwriting
arrangements by the NASD; the costs and expenses in connection with the
preparation, printing and filing of the Registration Statement (including
exhibits thereto) and the Prospectus and the furnishing to the Underwriters of
such copies of each preliminary and final Prospectus as the Underwriters may
reasonably require; and the costs and expenses in connection with the printing
of this Agreement, the Agreement Among Underwriters, the Selected Dealers
Agreement and other documents distributed to the Underwriters.
9. Conditions of the Obligation of the Underwriters. The obligations of the
several Underwriters to purchase and pay for the Firm Stock on the Closing Date
and the Option Stock on the Second Closing Date shall be subject to the
condition that the representations and warranties made by the Company and the
Selling Stockholders herein are true and correct as of the date hereof and as of
the respective Closing Dates, to the condition that the written statements of
Company officers made pursuant to the provisions hereof are true and correct,
and to the performance by the Company and the Selling Stockholders of their
respective obligations hereunder in all material respects and to the following
additional conditions:
(a) The Registration Statement shall have become effective not later than
5:00 P.M., Cleveland time, on the date of this Agreement, or at such later time
as shall have been consented to by you, and prior to each Closing Date no stop
order suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been instituted or shall
be pending, or to the knowledge of the Company or you, shall be contemplated by
the Commission.
(b) You shall not have advised the Company that the Registration Statement
or Prospectus or any amendment thereof or supplement thereto contains an untrue
statement of fact which, in the reasonable opinion of Calfee, Halter & Griswold
LLP, counsel for the Underwriters, is material, or omits to state a fact which,
in the opinion of such counsel, is material and is required to be stated therein
or is necessary to make the statements therein not misleading.
(c) You shall have received as of each Closing Date (or prior thereto as
indicated) the following:
(i) An opinion of Blackwell Sanders Peper Martin LLP, dated the respective
Closing Dates, to the effect that:
(aa) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of Delaware with corporate power and
authority to own its properties and conduct its business as described in the
Prospectus. Each of the Company's subsidiaries has been duly incorporated or
duly formed, as the case may be, and is validly existing as a corporation,
limited liability company or limited partnership, as the case may be, in good
standing under the laws of its respective jurisdiction of incorporation, with
power and authority to own and lease its properties and conduct its respective
business. The Company and each of its subsidiaries are duly qualified to do
business as a foreign entity
-15-
and are in good standing in all jurisdictions (i) in which the conduct of
business, as presently being conducted requires such qualification (except for
those jurisdictions in which the failure to so qualify will not in the aggregate
have a material adverse effect on the Company and its subsidiaries, taken as a
whole) and (ii) in which the Company or such subsidiary owns or leases real
property.
(bb) The authorized capital stock of the Company is as set forth under
"Capitalization" in the Prospectus; all issued and outstanding Common Stock of
the Company have been duly authorized and validly issued, are free of preemptive
rights of stockholders, rights of first refusal or similar rights and are fully
paid and nonassessable. Except as described in the Prospectus, there are no
outstanding options, warrants or other rights calling for the issuance of, and
there are no commitments, plans or arrangements to issue any shares of capital
stock of the Company or any security convertible or exchangeable or exercisable
for capital stock of the Company. There are no holders of securities of the
Company who, by reason of the filing of the Registration Statement have the
right (and have not waived such right) to request the Company to include in the
Registration Statement securities owned by them.
(cc) The shares of Common Stock of the Company to be issued and sold by the
Company hereunder have been duly authorized, and, when issued, delivered and
paid for pursuant to this Agreement, will be validly issued, fully paid and
nonassessable. The shares of Common Stock of the Company to be sold by the
Selling Stockholders hereunder have been duly authorized and validly issued, and
are fully paid and nonassessable. The Company has not granted any preemptive
rights of security holders of the Company with respect to the issuance and sale
of the stock by the Company and the Selling Stockholders pursuant to this
Agreement. The Common Stock of the Company conforms to the description thereof
contained in the Prospectus and the certificates for the Common Stock of the
Company (including the Stock) are in due and legal form under Delaware law.
(dd) The Company has the corporate power and authority to enter into and
perform this Agreement, and to issue and deliver the Stock as provided herein.
The execution, delivery and performance of this Agreement by the Company has
been duly authorized by all necessary action of the Company.
(ee) All the issued shares of capital stock of each subsidiary of the
Company have been duly and validly authorized and issued, are fully paid and
non-assessable and the portion of such shares owned by the Company is free and
clear of all liens, encumbrances, equities, security interests, or claim; and
there are no outstanding options, warrants or other rights calling for the
issuance of, and there are no commitments, plans or arrangements to issue, any
shares of capital stock of any subsidiary or any security convertible or
exchangeable or exercisable for capital stock of any subsidiary; except as
disclosed in the Registration Statement and except for the shares of stock or
equity interests of each subsidiary owned by the Company, neither the Company
nor any subsidiary owns, directly or indirectly, any shares of capital stock of
any corporation or has any equity interest in any firm, partnership, joint
venture, association, limited liability company, limited partnership or other
entity.
-16-
(ff) The Registration Statement has become effective under the Act and, to
the best of the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending or contemplated under the
Act.
(gg) The consummation of the transactions herein contemplated and the
fulfillment of the terms hereof will not result in a breach of any of the terms
and provisions of, or constitute a default under, any material indenture,
mortgage, deed of trust or other agreement or instrument to which the Company or
any of its subsidiaries is a party and of which such counsel has knowledge after
reasonable investigation, or the Certificate of Incorporation or Bylaws of the
Company, or the organizational documents of any of its subsidiaries, or, to the
knowledge of such counsel, any order, rule or regulation binding upon the
Company or any of its subsidiaries of any court or of any federal or state
regulatory body or administrative agency or other governmental body having
jurisdiction over the Company or any of its subsidiaries or the properties of
any of them, except for such breaches or defaults as will not have a material
adverse effect on the consummation of the transactions herein contemplated and
the fulfillment of the terms hereof by the Company.
(hh) All approvals, consents and orders of all governmental bodies required
in connection with the valid authorization, issuance and sale of the Stock as
contemplated by this Agreement have been obtained, except such as may be
required under the securities or Blue Sky laws of any jurisdiction as to which
such counsel need express no opinion.
(ii) To such counsel's knowledge, neither the Company nor any of its
subsidiaries is in violation of its Certificate of Incorporation or its Bylaws
or other organizational documents, and no default exists by the Company or any
of its subsidiaries in the due performance and observance of any term, covenant
or condition of any agreement material to the Company and its subsidiaries to
which the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries is bound and which is filed as an exhibit to the
Registration Statement or incorporated by reference therein.
(jj) The Company is not required to be registered as an "investment
company" or is not a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(kk) Such counsel is of the opinion that the statements contained in the
Prospectus under the caption "Description of Capital Stock," insofar as they
purport to summarize the provisions of the documents referred to therein,
present fair summaries of such provisions.
(ll) In the course of the preparation by the Company of the Registration
Statement and the Prospectus, such counsel participated in discussions with
officers, directors and employees of the Company, representatives of KPMG, LLP
and PricewaterhouseCoopers LLP, the independent accountants who examined certain
of the financial statements of the Company and its subsidiaries included in the
Registration Statement
-17-
and the Prospectus, counsel for the Underwriters and your representatives
concerning the information contained in the Registration Statement and
Prospectus and the proposed responses to various items in Form S-3 under the
Act. Based upon such counsel's examination of the Registration Statement and the
Prospectus, such counsel's investigations made in connection with the
preparation of the Registration Statement and the Prospectus and such counsel's
participation in the discussions referred to above, such counsel is of the
opinion that the Registration Statement and the Prospectus (in each case, except
for (i) the financial statements, financial schedules and other financial and
statistical information included therein and (ii) the information referred to
under the caption "Experts" as having been included therein on the authority of
KPMG, LLP and PricewaterhouseCoopers LLP, as experts, as to which such counsel
expresses no opinion) at the time the Registration Statement became effective
under the Act, and at the time the Prospectus was filed pursuant to the Act,
respectively, complied as to form in all material respects with the Act and the
rules and regulations thereunder.
(mm) Such counsel does not know of any litigation or any governmental
proceedings or investigations, pending or threatened, before any court or before
or by any public, regulatory or governmental body or board against or involving
the business or property of the Company or any of its subsidiaries required to
be described in the Prospectus that are not described as required, or of any
contracts or documents of a character required to be described in the
Registration Statement or Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required.
(nn) To the best of such counsel's knowledge, the Company and its
subsidiaries hold and are in compliance with all necessary material
authorizations, approvals, orders, licenses, certificates and permits of and
from all governmental regulatory officials and bodies (collectively, the
"licenses") required for the conduct of its business as described in the
Prospectus, except where the failure to so hold or comply with any license would
not have, individually or in the aggregate, a material adverse effect on the
business, condition (financial or other) or results of operations of the Company
and its subsidiaries, taken as a whole.
(oo) Such counsel has not independently verified and is not passing upon,
and does not assume any responsibility for the accuracy, completeness, or
fairness of the information contained in the Registration Statement and
Prospectus, except and as to the extent set forth in paragraph (kk) above with
respect to the description of the Common Stock contained in the Prospectus.
Based upon such counsel's examinations, investigations and participation in the
discussions described above, however, no facts have come to such counsel's
attention that cause such counsel to believe that the Registration Statement
(except for (i) the financial statements and the notes thereto and the auditors'
reports thereon, financial schedules and other financial and statistical
information included therein and (ii) the information referred to under the
caption "Experts" as having been included therein on the authority of KPMG, LLP
and PricewaterhouseCoopers LLP, as experts, as to which such counsel expresses
no view), at the time it became effective and at the Closing Date or the Second
Closing Date, as the case may be, contained any 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 not misleading, or that the
Prospectus (with the foregoing exceptions) as of the date thereof and as of the
Closing Date or
-18-
the Second Closing Date, as the case may be, contained or contains any untrue
statement of a material fact or omitted or omits 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.
In rendering such opinion, such counsel may (A) limit its opinion to the
Federal laws of the United States and the laws of the State of Delaware; (B)
rely 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
specified in such opinion, if at all, upon an opinion or opinions of other
counsel, familiar with the applicable laws; and (C) rely as to matters of fact
on certificates of officers of the Company and certificates or other written
statements of officers of departments of various jurisdictions having custody of
documents respecting the corporate existence or good standing of the Company and
its subsidiaries. The opinion of such counsel for the Company shall state that
the opinion of any such other counsel is in form satisfactory to such counsel
and, in their opinion, you and they are justified in relying thereon.
(ii) Such opinion or opinions of Calfee, Halter & Griswold LLP, counsel for
the Underwriters, dated the respective Closing Dates, with respect to the
sufficiency of all corporate proceedings and other legal matters relating to
this Agreement, the validity of the Stock, the Registration Statement, the
Prospectus, and other related matters as you may reasonably request, and the
Company shall have furnished to such counsel such documents as they may request
for the purpose of enabling them to pass upon such matters. In connection with
such opinions, such counsel may rely on representations or certificates of
officers of the Company.
(iii) A certificate of the Company executed by the principal executive
officer and the principal financial and accounting officer of the Company, dated
each respective Closing Date, to the effect that:
(aa) The representations and warranties of the Company in Section 2 of this
Agreement are true and correct as of each respective Closing Date, 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 each respective Closing
Date.
(bb) No stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the respective signers of the
certificate, are contemplated under the Act.
(cc) The signers of the certificate have carefully examined the
Registration Statement and the Prospectus; no facts have come to their attention
which would lead them to believe that either the Registration Statement at the
time it became effective (or any amendment thereof or supplement thereto made
prior to the Closing Date or the Second Closing Date, as the case may be, as of
the date of such amendment or supplement) contained an untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
-19-
Prospectus as of the date thereof (or any amendment thereof or supplement
thereto made prior to the Closing Date or the Second Closing Date, as the case
may be, as of the date of such amendment or supplement) contained an untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; since the latest
respective dates as of which information is given in the Registration Statement,
there has been no material adverse change in the financial position, business or
results of operations of the Company and its subsidiaries, taken as a whole,
except as set forth in or contemplated by the Prospectus; and since the
Effective Date of the Registration Statement there has occurred no event
required to be set forth in an amended or supplemented Prospectus which has not
been set forth.
(iv) An opinion of Gibson, Dunn & Crutcher LLP, dated the respective
Closing Dates, to the effect that:
(aa) To such counsel's knowledge, each Selling Stockholder has the power
and authority (or, with respect to each Selling Stockholder that is a
corporation, the corporate power and authority) to enter into and deliver this
Agreement and the Custody Agreement. To such counsel's knowledge, all actions
(or, with respect to each Selling Stockholder that is a corporation, all
corporate actions) required to be taken by each Selling Stockholder for the due
and proper sale and delivery of the Stock in connection with the Agreement have
been duly and validly taken, and each of this Agreement and the Custody
Agreement has been duly executed and delivered by or on behalf of each Selling
Stockholder.
(bb) To such counsel's knowledge, each Selling Stockholder has good and
valid title to the Stock to be sold by such Selling Stockholder pursuant to this
Agreement, free and clear of any pledge, lien, security interest, encumbrance,
claim or equity other than pursuant to this Agreement; each Selling Stockholder
has full right, power and authority to sell, transfer and deliver the Stock to
be sold by such Selling Stockholder under this Agreement and the Custody
Agreement, and upon delivery of the Stock to be sold by such Selling Stockholder
thereunder and payment of the purchase price therefor as therein contemplated,
each of the Underwriters will receive good and valid title to the Stock
purchased by it from such Selling Stockholder, free and clear of any pledge,
lien, security interest, encumbrance, claim or equity.
In rendering such opinion, such counsel may (A) assume the legal capacity of all
natural persons; (B) limit its opinions to the Federal laws of the United States
and the General Corporation Law of the State of Delaware and (C) rely as to
matters of fact on certificates of the Selling Stockholders.
(v) A certificate of each Selling Stockholder, dated the respective Closing
Dates, to the effect that the representations and warranties of such Selling
Stockholder in Section 3 of this Agreement are true and correct as of the
respective Closing Dates, and such Selling Stockholder has, in all material
respects, complied with all the agreements and satisfied all the conditions on
his part to be performed or satisfied at or prior to such Closing Date.
-20-
(vi) Letters from KPMG, LLP, dated the date of this Agreement and each
respective Closing Date, addressed to you and in form and substance previously
approved by you, with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectus.
(d) Prior to each Closing Date, the Company shall have furnished to you
such further certificates and documents as you may reasonably request.
(e) Prior to each Closing Date no stop orders suspending the qualification
of the Stock under the securities or Blue Sky laws of the states in which the
Stock is to be offered and sold shall have been issued and no proceedings for
that purpose shall have been instituted or shall be pending, or to the knowledge
of the Company or you, shall be contemplated by the applicable state securities
administrators.
If any condition of the Underwriters' obligations specified in Section 9 to
be satisfied prior to any Closing Date is not so satisfied, this Agreement may
be terminated by you prior to such Closing Date, by notice in writing or by
telegram confirmed in writing to the Company.
All such opinions, certificates, letters and documents furnished to you
pursuant to this Section 9 will be in compliance with the provisions hereof only
if they are in all material respects satisfactory to you and to Calfee, Halter &
Griswold LLP, counsel for the Underwriters, as to which both you and such
counsel shall act reasonably. The Company and the Selling Stockholders will
furnish you with such executed and conformed copies of such opinions,
certificates, letters and documents as you may request.
You, on behalf of the Underwriters, may waive in writing the compliance by
the Company or any of the Selling Stockholders of any one or more of the
foregoing conditions or extend the time for their performance.
10. Representations of the Underwriters. Each of the Underwriters severally
represents and warrants to the Company and the Selling Stockholders that the
information furnished to the Company in writing by such Underwriters or by you
expressly for use in the preparation of the Registration Statement or the
Prospectus does not, and any amendments thereof or supplements thereto thus
furnished 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. Through you each Underwriter has only
furnished to the Company expressly for such use and the statements relating to
the terms of the offering by the several Underwriters set forth under the
caption "Underwriting" in the Prospectus.
11. Termination of Agreement. (a) This Agreement shall become effective:
(i) upon the execution and delivery hereof by the parties hereto; or (ii) if, at
the time this Agreement is executed and delivered, it is necessary for the
registration statement or a post-effective amendment thereto to be declared
effective before the offering of the Stock may commence, when notification of
the effectiveness of the registration statement or such post-
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effective amendment has been released by the Commission. At any time before the
happening of such occurrence, the Company or the Selling Stockholders may, by
notice to you, terminate this Agreement; and at any time prior to such time,
you, as the Representatives of the several Underwriters, may, by notice to the
Company and the Selling Stockholders, terminate this Agreement.
(b) This Agreement may also be terminated by you, as the Representatives of
the several Underwriters, by notice to the Company and the Selling Stockholders
on or after the Effective Date of the Registration Statement and prior to each
respective Closing Date, if at any time during such period any of the following
has occurred: (i) except as disclosed in or contemplated by the Registration
Statement, since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or any
development involving a prospective material adverse change in or affecting the
condition, financial or otherwise, of the Company and its subsidiaries taken as
a whole or the earnings, business affairs, management or business prospects of
the Company and its subsidiaries taken as a whole, whether or not arising in the
ordinary course of business; (ii) any outbreak of hostilities or escalation in
existing hostilities anywhere in the world or other national or international
calamity or crisis or change in economic or political conditions, if the effect
of such outbreak, escalation, calamity, crisis or change on the financial
markets in the United States would, in your reasonable judgment, make it
impracticable to offer for sale or to enforce contracts made by the Underwriters
for the resale of the Stock agreed to be purchased hereunder; (iii) any general
suspension of trading in securities on the New York Stock Exchange or the
American Stock Exchange or Nasdaq or any general limitation on prices for such
trading or any general restrictions on the distribution of securities, all to
such a degree as would in your reasonable judgment materially adversely affect
the market for the Stock; or (iv) a banking moratorium shall have been declared
by either Federal, Ohio or New York State authorities. If you terminate this
Agreement as provided in this Section 11, you shall notify the Company and the
Attorneys-in-Fact promptly by telephone, promptly confirmed by facsimile.
This Agreement may also be terminated as provided in Sections 9 and 13
hereof.
If this Agreement shall be terminated by you because of any failure on the
part of the Company to comply with any of the terms or to fulfill any of the
conditions of this Agreement, or if for any reason the Company shall be unable
to perform its obligations under this Agreement, the Company shall pay, in
addition to the costs and expenses referred to in Section 8, all reasonable
out-of-pocket expenses incurred by the Underwriters in contemplation of the
performance by them of their obligations hereunder, including but not limited to
the reasonable fees and disbursements of counsel for the Underwriters, the
Underwriters' reasonable printing and traveling expenses and postage, telegraph
and telephone charges relating directly to the offering contemplated by the
Prospectus, and also including reasonable advertising expenses of the
Representatives incurred after the Effective Date of the Registration Statement
and so relating, it being understood that such out-of-pocket expenses shall not
include any compensation, salaries or wages of the officers, partners or
employees of any of the Underwriters. Only such out-of-pocket expenses as shall
be accounted for by the Underwriters shall be paid to the Underwriters by the
Company.
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The Company and the Selling Stockholders shall not in any event be liable
to the several Underwriters for damages on account of loss of anticipated
profits arising out of the transactions contemplated by this Agreement.
12. Indemnification. (a) The Company will indemnify and hold harmless each
Underwriter, and each person, if any, who controls each Underwriter within the
meaning of the Act, against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter or such controlling person may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based in whole
or in part on any inaccuracy in the representations and warranties of the
Company contained herein or any failure of the Company to perform its
obligations hereunder, or arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, any related preliminary prospectus (if used prior to the Effective
Date), the Prospectus or any amendment thereof or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and, subject to the provisions of Section 12(d), will
reimburse each Underwriter and each such controlling person for any legal or
other expenses reasonably incurred by such Underwriter or such controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the indemnity agreement
contained in this Section 12(a) with respect to any preliminary prospectus shall
not inure to the benefit of any Underwriter or to the benefit of any person
controlling such Underwriter in respect of any loss, claim, damage, liability or
action asserted by a person who purchases shares of the Stock from such
Underwriter, if such Underwriter failed to send or give a copy of the Prospectus
(as the same may then be amended or supplemented) to such person with or prior
to written confirmation of the sale to such person; and provided, further, that
the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any untrue
statement or omission or alleged omission made in the Registration Statement,
any preliminary prospectus, the Prospectus or any amendment thereof or
supplement thereto in reliance upon or in conformity with written information
furnished to the Company by an Underwriter specifically for use in the
preparation thereof, as referred to in the last sentence of Section 10 hereof.
This indemnity agreement will be in addition to any liability which the Company
may otherwise have.
(b) Each Selling Stockholder will indemnify and hold harmless each
Underwriter, and each person, if any, who controls each Underwriter within the
meaning of the Act, against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter or such controlling person may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) (i) arise out of or are based in
whole or in part on any inaccuracy in the representations and warranties of such
Selling Stockholder contained herein or any failure of such Selling Stockholder
to perform its obligations hereunder, or (ii) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Registration Statement, any related preliminary prospectus (if used prior to
the Effective Date), the Prospectus or any amendment thereof or supplement
thereto including, without limitation, information set for in questionnaires
returned to the Company or its counsel, 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
-23-
statements therein not misleading, but only insofar as any 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 or omission or alleged
omission of a material fact contained in and made in reliance upon and in
conformity with written information furnished to the Company by such Selling
Stockholder expressly for use in the Registration Statement (or any amendment
thereto) or any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto), including, without limitation, information set forth in
questionnaires returned to the Company or its counsel, and, subject to the
provisions of Section 12(d), will reimburse each Underwriter and each such
controlling person for any legal or other expenses reasonably incurred by such
Underwriter or such controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the indemnity agreement contained in this Section 12(b) with respect to any
preliminary prospectus shall not inure to the benefit of any Underwriter or to
the benefit of any person controlling such Underwriter in respect of any loss,
claim, damage, liability or action asserted by a person who purchases shares of
the Stock from such Underwriter, if such Underwriter failed to send or give a
copy of the Prospectus (as the same may then be amended or supplemented) to such
person with or prior to written confirmation of the sale to such person; and
provided further, that such Selling Stockholder will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon any untrue statement or omission or alleged omission made in
the Registration Statement, any preliminary prospectus, the Prospectus or any
amendment thereof or supplement thereto in reliance upon or in conformity with
written information furnished to the Company by an Underwriter specifically for
use in the preparation thereof, as referred to in the last sentence of Section
10 hereof. This indemnity agreement will be in addition to any liability which
such Selling Stockholder may otherwise have. Notwithstanding anything in this
Agreement to the contrary, the indemnity agreement contained in this subsection
(b) shall not require any Selling Stockholder to reimburse the Underwriters for
any amount in excess of the gross sale price of the Stock sold by such Selling
Stockholder pursuant to this Agreement.
(c) Each Underwriter will indemnify and hold harmless the Company, each
person, if any, who controls the Company within the meaning of the Act, each of
its directors, each of its officers who have signed the Registration Statement,
and each Selling Stockholder against any losses, claims, damages or liabilities
to which the Company, or any such director, officer or Selling Stockholder may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, any preliminary prospectus, the
Prospectus, or any amendment thereof or supplement thereto, or arise out of or
are based upon the omission or the alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in the Registration Statement, any preliminary prospectus, the Prospectus
or any amendment thereof or supplement thereto in reliance upon or in conformity
with written information furnished to the Company by such Underwriter through
you, as the Representatives of the Underwriters, specifically for use in the
preparation thereof, as referred to in the last sentence of Section 10 of this
Agreement; and will reimburse the Company and each such director, officer or
Selling
-24-
Stockholder for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action. This indemnity agreement will be in addition to any
liability which the Underwriters may otherwise have.
(d) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section, notify each party against whom indemnification is to be sought in
writing of the commencement thereof; but the omission so to notify an
indemnifying party will not relieve it from any liability which they may have to
any indemnified party otherwise than under this Section. In case any such action
is brought against any indemnified party, and it notifies the Company of the
commencement thereof, the Company will be entitled to participate in, and to the
extent that it may wish, to assume the defense thereof, with counsel approved by
such indemnified party (which approval shall not be unreasonably withheld), and
after notice from the Company to such indemnified party of its election so to
assume the defense thereof, the Company will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof except as
provided below and except for the reasonable costs of investigation subsequently
incurred by such indemnified party at the request of the indemnifying party in
connection with the defense thereof. The indemnified party shall have the right
to employ its counsel in any such action, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (i) the
employment of counsel by such indemnified party has been authorized in writing
by the indemnifying parties, (ii) the named parties to any such action include
both the indemnifying party and the indemnified party, and the indemnified party
shall have reasonably concluded based on the advice of counsel that there is an
actual or potential conflict of interest between the indemnifying parties and
the indemnified party in the conduct of the defense of such action or that there
may be defenses available to the indemnified party which are different from or
additional to those available to the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party) or (iii) the indemnifying parties
shall not have employed counsel to assume the defense of such action within a
reasonable time after notice of the commencement thereof, in each of which cases
the fees and expenses of counsel shall be at the expense of the indemnifying
parties. In no event shall the indemnifying party or parties be liable for the
fees and expenses of more than one counsel for all indemnified parties in
connection with any one or separate but similar or related actions in the same
jurisdiction arising out of the same allegations or circumstances. Anything in
this Section to the contrary notwithstanding, an indemnifying party shall not be
liable for any settlement of any claim or action effected without its written
consent.
(e) In order to provide for contribution in circumstances in which the
indemnification provided for in this Section is for any reason held to be
unavailable from the Company, the Selling Stockholders or the Underwriters or is
insufficient to hold harmless a party indemnified hereunder, the Company, the
Selling Stockholders and the Underwriters shall contribute to the aggregate
losses, claims, damages, liabilities and expenses of the nature contemplated by
such indemnification provisions (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement of, any
action, suit or proceeding or any claims asserted, but after deducting in the
case of losses, claims, damages,
-25-
liabilities and expenses suffered by the Company and the Selling Stockholders
any contribution received by the Company or the Selling Stockholders from
persons, other than the Underwriters, who may also be liable for contribution,
including persons who control the Company within the meaning of the Act,
officers of the Company who signed the Registration Statement and directors of
the Company) to which the Company, the Selling Stockholders and one or more of
the Underwriters may be subject, in such proportions as is appropriate to
reflect the relative benefits received by the Company, the Selling Stockholders
and the Underwriters from the offering of the Stock or, if such allocation is
not permitted by applicable law or indemnification is not available as a result
of the indemnifying party not having received notice as provided in this
Section, in such proportion as is appropriate to reflect not only the relative
benefits referred to above but also the relative fault of the Company, the
Selling Stockholders and the Underwriters in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company, the Selling Stockholders and the Underwriters
shall be deemed to be in the same proportion as (x) the total proceeds from the
offering (net of underwriting discounts and commissions but before deducting
expenses) received by the Company, (y) the total proceeds from the offering
received by the Selling Stockholders and (z) the underwriting discounts and
commissions received by the Underwriters, respectively, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault of
the Company, the Selling Stockholders and of the Underwriters shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omissions or alleged omission to
state a material fact relates to information supplied by the Company, the
Selling Stockholders or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company, the Selling Stockholders and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 12(e) were determined by pro rata allocation even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to above. The Company and each Selling Stockholder shall be severally,
and not jointly, liable for the amounts to be contributed by each of them
pursuant to the provisions of this Section 12(e). Notwithstanding the provisions
of this Section 12(e), (i) in no case shall any Underwriter (except as may be
provided in the Agreement Among Underwriters) be liable or responsible for any
amount in excess of the underwriting discounts and commissions applicable to the
Stock purchased by such Underwriter hereunder, (ii) in no case shall any Selling
Stockholder be liable or responsible for any amount in excess of the gross sales
price of the Stock sold by such Selling Stockholder hereunder and (iii) no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person, if any, who
was not guilty of such fraudulent misrepresentation. For purposes of this
Section 12(e), each person, if any, who controls an Underwriter within the
meaning of Section 15 of the Act shall have the same rights to contribution as
such Underwriter, and each person, if any, who controls the Company within the
meaning of Section 15 of the Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to clauses
(i) and (ii) of this Section 12(e). Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under this Section 12(e), notify
-26-
such party or parties from whom contribution may be sought, but the omission to
so notify such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have under this
Section 12(e) or otherwise. No party shall be liable for contribution for any
settlement of any action or claim effected without its written consent.
13. Default of the Underwriters. If any Underwriter or Underwriters default
in their obligations to purchase the Stock hereunder and arrangements
satisfactory to you and the Company, evidenced by a writing or writings signed
by you and the Company, for the purchase of such Stock by other persons are not
made within 36 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Underwriter and the Company (except
that the Company shall be liable for the expenses to be paid by it pursuant to
the provisions of Section 8), provided, however, that if the number of shares of
the Stock which all such defaulting Underwriters have agreed but failed to
purchase shall not exceed 10% of the number of shares of the Firm Stock or the
Option Stock, as the case may be, agreed to be purchased pursuant to this
Agreement (other than the shares agreed to be taken up hereunder which the
defaulting Underwriters failed to purchase) by all non-defaulting Underwriters,
the non-defaulting Underwriters shall be obligated proportionately to take up
and pay for the shares of the Firm Stock or the Option Stock which such
defaulting Underwriters failed to purchase.
If any such default occurs, either you or the Company shall have the right
to postpone the Closing Date for not more than seven business days in order that
the necessary changes in the Registration Statement, Prospectus and any other
documents, as well as any other arrangement, may be effected. As used in this
Agreement, the term "Underwriters" includes any person substituted for an
Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from its liability to the other several Underwriters, the Company
and the Selling Stockholders for its default hereunder.
14. Representations and Indemnities to Survive Delivery. The respective
indemnities, agreements, representations and warranties of the Company and the
Selling Stockholders and the several Underwriters, set forth in or made pursuant
to this Agreement, will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter, the Company or any of its
officers or directors or any controlling person and the Selling Stockholders,
and will survive delivery of and payment for the Stock and, in the case of the
agreements contained in Sections 8, 11 and 12 hereof, will survive any
termination of this Agreement. The Company, each Selling Stockholder and each
Underwriter agree promptly to notify the others of the commencement of any
litigation or proceeding against it and, in the case of the Company, against any
of the Company's officers and directors, in connection with the sale and
delivery of the Stock, or in connection with the Registration Statement or
Prospectus.
15. Notices. All communications hereunder will be in writing and, if sent
to the Underwriters, will be mailed, delivered or telegraphed and confirmed to
you at McDonald Investments Inc., McDonald Investment Center, 800 Superior
Avenue, Cleveland, Ohio 44114, Attention: Jonathan Crane, with a copy to Calfee,
Halter & Griswold LLP, 1400 McDonald Investment Center, 800 Superior Avenue,
Cleveland, Ohio 44114, Attention: John J. Jenkins, or if sent to the Company,
will be mailed, delivered or telegraphed and confirmed to the Company at 2000
Waters Edge Drive, Building C, Suite 12, Johnson City, Tennessee 37604,
Attention:
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Dave Dyckman, Chief Financial Officer and Vice President of Business
Development, with a copy to Blackwell Sanders Peper Martin, LLP, Two Pershing
Square, 2300 Main Street, Suite 1000, Kansas City, Missouri 64108, Attention:
James M. Ash.
16. Successors, Governing Law. This Agreement will inure solely to the
benefit of and be binding upon the parties hereto and the officers and directors
and controlling persons referred to in Section 12 hereof and their respective
successors, assigns, heirs, executors and administrators, and no other persons
will have any right or obligation hereunder. This Agreement will be governed by
and construed in accordance with the laws of the State of Ohio, without giving
effect to the principles of conflicts of laws thereof.
17. Execution in 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.
18. Authority of the Representatives. You represent and warrant that you
have been authorized by the several Underwriters to enter into this Agreement on
their behalf and to act for them in the manner hereinbefore provided.
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If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed copies hereof, whereupon it will
become a binding agreement by and among the Company, the Selling Stockholders
and the several Underwriters in accordance with its terms.
Very truly yours,
NN, INC.
By:__________________________________________
Its:_________________________________________
__________________,
Attorney-in-Fact for the Selling Stockholders
_____________________________________________
The foregoing Agreement is hereby confirmed
and accepted by us in Cleveland, Ohio,
acting on our own behalf and as the
Representatives of the several Underwriters
named on Schedule B annexed hereto, as of
the date first above written.
McDONALD INVESTMENTS INC.
LEGG MASON WOOD WALKER, INCORPORATED
As Representatives of the Several Underwriters
BY: McDONALD INVESTMENTS INC.
By:___________________________________
Managing Director
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SCHEDULE A
SELLING SHAREHOLDERS
Richard D. Ennen
Michael D. Huff
Charles L. Edminsten
Leonard Bowman
Janet M. Huff
Monica C. Ennen
Deborah E. Bagierek
SCHEDULE B
Number of
Shares to be
Underwriters Purchased
------------ ---------
McDonald Investments Inc. .........................................
Legg Mason Wood Walker, Incorporated...............................
Total............................................................ 6,500,000
A-1