Exhibit 1
FORM OF
THE PROVIDENCE SERVICE CORPORATION
(a Delaware Corporation)
2,350,000 Shares of Common Stock
Par Value $0.001 Per Share
UNDERWRITING AGREEMENT
March [___], 2004
SunTrust Capital Markets, Inc.
Xxxxxxxxx & Company, Inc.
Avondale Partners, LLC
c/o SunTrust Capital Markets, Inc.
0000 Xxxxxxxxx Xxxx, XX
Xxxxxxx, XX 00000
Ladies and Gentlemen:
The Providence Service Corporation, a Delaware corporation (the
"Company"), and those certain stockholders of the Company listed in Schedule I
(the "Selling Stockholders") propose to sell to the several underwriters named
in Schedule II (collectively, the "Underwriters") an aggregate of 2,350,000
shares (the "Firm Shares") of the Company's common stock, $0.001 par value per
share (the "Common Stock"), of which 750,000 shares will be sold by the Company
and 1,600,000 shares will be sold by the Selling Stockholders. The Firm Shares
are to be sold to each Underwriter, acting severally and not jointly, in such
amounts as are set forth in Schedule II opposite the name of such Underwriter.
The respective number of shares to be sold by the Selling Stockholders is set
forth opposite their names in Schedule I.
Solely for the purpose of covering over-allotments in the sale of the
Firm Shares, the Company and certain of the Selling Stockholders (the "Option
Stockholders") grant to the Underwriters the right to purchase up to an
additional 352,500 shares of Common Stock (up to 112,500 shares from the Company
and up to 240,000 shares from the Option Stockholders) (the "Option Shares"),
which option shall be exercisable in the manner, and such Option Shares shall be
sold in the denominations, set forth in Section 3(b) below. The Firm Shares and
Option Shares are herein sometimes referred to as the "Shares."
Section 1. Representations and Warranties of the Company. The Company
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represents and warrants to, and agrees with, each of the Underwriters that:
(a) The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (File No.
333-113264) with respect to the Shares, including a preliminary form of
prospectus subject to completion, in conformity with the requirements of the
Securities Act of 1933, as amended (the "1933 Act"), and the rules and
regulations of the Commission thereunder (all such rules and regulations,
including, without limitation, Regulation S-X and Regulation S-K to the extent
applicable, referred to as the "1933 Act Regulations"); and such amendments to
such registration statement as may have been required, if any, prior to the date
hereof
have been filed with the Commission, and such amendments have been similarly
prepared. Copies of such registration statement and amendment or amendments and
of each related preliminary prospectus, and the exhibits, financial statements
and schedules, as finally amended and revised, have been delivered to you. The
Company has prepared in the same manner, and proposes so to file with the
Commission, one of the following: (i) prior to effectiveness of such
registration statement, a further amendment thereto, including the form of final
prospectus, or (ii) a final prospectus in accordance with Rules 430A and 424(b)
of the 1933 Act Regulations. If the Company elects, with the consent of the
Underwriters, to rely on Rule 434 of the 1933 Act Regulations, all references to
the Prospectus shall be deemed to include the form of prospectus and term sheet
contemplated by Rule 434, taken together, provided to the Underwriters by the
Company in reliance on Rule 434 (the "Rule 434 Prospectus"). The Company also
may file a related registration statement with the Commission pursuant to Rule
462(b) of the 1933 Act Regulations for the purpose of registering certain
additional shares of Common Stock, which registration statement will be
effective upon filing with the Commission. As filed, such amendment, any
registration statement filed pursuant to Rule 462(b) of the 1933 Act Regulations
and the final prospectus, shall include all Rule 430A Information (as
hereinafter defined) and, except to the extent that you shall agree in writing
to a modification, shall be in all respects in the form furnished to you prior
to the date and time that this Agreement was executed and delivered by the
parties hereto, or, to the extent not completed at such date and time, shall
contain only such specific additional information and other changes (beyond that
contained in the latest preliminary prospectus) as the Company shall have
previously advised you in writing would be included or made therein.
The term "Registration Statement" as used in this Agreement shall mean
such registration statement at the time such registration statement becomes
effective and, in the event any post-effective amendment thereto becomes
effective prior to the Closing Time (as hereinafter defined), shall also mean
such registration statement as so amended; provided, however, that such term
shall also include all Rule 430A Information contained in any Prospectus (as
hereinafter defined) and deemed to be included in such registration statement at
the time such registration statement becomes effective as provided by Rule 430A
of the 1933 Act Regulations. The term "Preliminary Prospectus" shall mean any
preliminary prospectus referred to in the preceding paragraph and any
preliminary prospectus included in the Registration Statement at the time it
becomes effective that omits Rule 430A Information. The term "Prospectus" as
used in this Agreement shall mean any Rule 434 Prospectus or the prospectus
relating to the Shares in the form in which it is first filed with the
Commission pursuant to Rule 424(b) of the 1933 Act Regulations or, if no filing
pursuant to Rule 424(b) of the 1933 Act Regulations is required, shall mean the
form of final prospectus included in the Registration Statement at the time such
Registration Statement becomes effective. The term "Rule 430A Information" means
information with respect to the Shares and the offering thereof permitted
pursuant to Rule 430A of the 1933 Act Regulations to be omitted from the
Registration Statement when it becomes effective. The term "462(b) Registration
Statement" means any registration statement filed with the Commission pursuant
to Rule 462(b) of the 1933 Act Regulations (including the Registration Statement
and any Preliminary Prospectus or Prospectus incorporated therein at the time
such registration statement becomes effective).
(b) The Commission has issued no order preventing or suspending the use
of any Preliminary Prospectus and no proceedings for that purpose have been
instituted or, to the knowledge of the Company, threatened by the Commission or
the state securities authority of any jurisdiction.
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(c) When the Registration Statement and any 462(b) Registration
Statement shall become effective, when the Prospectus is first filed pursuant to
Rule 424(b) of the 1933 Act Regulations, when any amendment to the Registration
Statement or any 462(b) Registration Statement becomes effective, when any Rule
434 Prospectus is filed with the Commission, when any supplement to the
Prospectus is filed with the Commission, and at each Closing Date (as
hereinafter defined in Section 3), (i) the Registration Statement, the 462(b)
Registration Statement, the Prospectus and all amendments thereof and
supplements thereto will conform in all respects with the requirements of the
1933 Act and the 1933 Act Regulations and (ii) neither the Registration
Statement, the 462(b) Registration Statement, the Prospectus nor any amendment
or supplement thereto, will contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances in which
they were made, not misleading; provided, however, that this representation and
warranty shall not apply to any statement or omission made in reliance upon and
in conformity with information furnished in writing to the Company by an
Underwriter expressly for use in the Registration Statement or any 462(b)
Registration Statement.
(d) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the state of Delaware, with all
requisite corporate power and authority to own, lease and license its properties
and conduct its business as currently carried on and as contemplated in the
Prospectus. The Company has qualified to do business and is in good standing as
a foreign corporation in every jurisdiction in which the ownership or leasing of
its properties or the nature or conduct of its business, as currently carried on
and as contemplated in the Prospectus, requires such qualification, except where
the failure to do so would not reasonably be expected to have a material adverse
effect on the financial condition, results of operations or cash flows of the
Company and its subsidiaries taken as a whole (a "Material Adverse Effect").
(e) Each subsidiary of the Company ("Subsidiary") has been duly
incorporated or organized and is an existing corporation or other entity in good
standing under the laws of the jurisdiction of its state of incorporation or
organization, with all requisite corporate power and authority to own and lease
its properties and conduct its business as currently carried on and as
contemplated in the Prospectus; and each Subsidiary is duly qualified to do
business as a foreign corporation or other entity in good standing in every
jurisdiction in which its ownership or leasing of property or the conduct of its
business requires such qualification except where the failure to be so qualified
or in good standing would not reasonably be expected to have a Material Adverse
Effect; all of the issued and outstanding shares of capital stock or other
equity interest of each Subsidiary has been duly authorized and validly issued
and is fully paid and non-assessable; and the capital stock or other equity
interest of each Subsidiary owned by the Company, directly or through its
Subsidiaries, is owned free from liens and encumbrances, except for those set
forth in the Company's credit facilities with Healthcare Business Credit
Corporation ("HBCC").
(f) The Company has the full legal right, power and authority to enter
into this Agreement and to consummate the transactions contemplated herein. The
Company has the full corporate power and authority to issue, sell and deliver
the Shares as provided herein. This Agreement has been duly authorized, executed
and delivered by the Company and constitutes the valid and binding agreement of
the Company enforceable against the Company in accordance with its terms, except
to the extent that the indemnification provisions set forth in Section 8 of this
Agreement may be limited by federal and state securities laws or principles of
public policy and except as enforceability may be limited by
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bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws affecting the enforceability of creditors' rights generally
and general principles of equity and rules of law governing specific
performance, estoppel, waiver, injunctive relief and other equitable remedies
(regardless of whether enforcement is sought in a proceeding at law or in
equity).
(g) Each consent, approval, authorization, order, designation or filing
by or with any governmental agency or body necessary for the valid
authorization, issuance, sale and delivery of the Shares, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby, has been made or obtained by the Company, and
is in full force and effect, except as may be required under applicable state
securities laws. The issuance, sale and delivery of the Shares, the execution,
delivery and performance of this Agreement, and the consummation of the
transactions contemplated by this Agreement, (i) will not result in a breach or
violation of any of the terms and provisions of, or constitute a default by the
Company or any Subsidiary under, its Certificate of Incorporation or Bylaws,
each as amended (or similar corporate documents) and (ii) will not result in a
breach or violation of any of the terms or provisions of, or constitute a
default by the Company or any Subsidiary, under, any provision of any indenture,
mortgage, deed of trust, loan agreement, note, lease or other agreement or
instrument to which the Company or any Subsidiary is a party or to which it or
its properties is subject, except where such breach, violation or default would
not reasonably be expected to have a Material Adverse Effect, or (iii) will not
result in a breach or violation of any statute, rule or regulation, or, to the
best of the Company's knowledge, any judgment, decree or order, of any court or
governmental agency or body applicable to the Company or any Subsidiary or any
of their properties, except where such breach or violation would not reasonably
be expected to have a Material Adverse Effect.
(h) The authorized, issued and outstanding capital stock of the Company
is as set forth in the Prospectus under the caption "Capitalization." All of the
issued and outstanding shares of Common Stock of the Company have been duly
authorized and validly issued, are fully paid and non-assessable. As of the
Closing Time, the Common Stock of the Company will conform to the description of
the Common Stock contained in the Registration Statement and the Prospectus. All
offers and sales of the Company's capital stock prior to the date hereof were at
all relevant times duly registered under the 1933 Act or were exempt from the
registration requirements of the 1933 Act by reason of Sections 3(b), 4(2) or
4(6) thereof and were duly registered or the subject of an available exemption
from the registration requirements of the applicable state securities or blue
sky laws. The Shares to be sold by the Company, when issued and delivered by the
Company and paid for pursuant to this Agreement, will be validly issued, fully
paid and non-assessable and will conform in all respects to the description
thereof contained in the Prospectus. No preemptive rights of stockholders exist
with respect to any of the Shares. No person or entity holds a right to require
or participate in the registration of the offer and sale of the Shares under the
1933 Act, and, no person holds a right to require registration under the 1933
Act of the offer and sale of any shares of Common Stock of the Company at any
other time, except for those rights granted to EOS Partners SBIC, L.P. and EOS
Partners SBIC II, LP (collectively referred to as "EOS") and the Xxxxxxxx Family
Trust u/a June 26, 1996 (the "Xxxxxxxx Trust") pursuant to that Second Amended
and Restated Registration Rights Agreement, dated July 30, 2003 (the
"Registration Rights Agreement"), which rights have been waived by EOS and the
Xxxxxxxx Trust and such waivers have been accepted by the Company, pursuant to
Section 17 of the Registration Rights Agreement. No person or entity has a right
of participation or first refusal with respect to the sale of the Shares by the
Company or Selling Stockholders. None of
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the issued shares of capital stock of the Company has been issued in violation
of any preemptive or similar right of any security holder of the Company. Except
as described in the Prospectus, there are no outstanding options, warrants or
other rights calling for the issuance of any share of capital stock of the
Company or any security convertible into or exchangeable for capital stock of
the Company. There is no commitment, plan or arrangement to issue any share of
capital stock of the Company or any security convertible into or exchangeable
for capital stock of the Company, except as is disclosed in the Prospectus.
(i) The financial statements of the Company (including all related
notes and schedules) included in the Registration Statement and the Prospectus
present fairly the financial position of the Company and its consolidated
Subsidiaries, as of the dates indicated and the results of their operations,
stockholders' equity and cash flows for the periods specified, all in conformity
with accounting principles generally accepted in the United States ("GAAP")
applied on a consistent basis throughout the periods involved (subject, in the
case of unaudited financial statements, to normal year-end adjustments) and in
conformity with Regulation S-X of the Commission. The supporting schedules
included in the Registration Statement present fairly in accordance with GAAP
the information required to be stated therein. The historical financial data of
the Company and its consolidated Subsidiaries included in the Prospectus,
including that set forth under the captions "Summary Financial and Operating
Information," "Selected Consolidated Financial and Operating Data" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," fairly present the information shown therein and have been compiled
on a basis consistent with that of the financial statements included in the
Registration Statement and the Prospectus. No financial statements or schedules
other than those included in the Prospectus are required by Form S-1 or
otherwise to be included in the Registration Statement or the Prospectus.
The financial projections set forth in the Prospectus under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations-Liquidity and capital resources" (i) are identical to those contained
in the Company's press release dated February 9, 2004 and Current Report on Form
8-K filed with the Commission on February 9, 2004; (ii) have been prepared on
the same basis and utilizing the same accounting principals, estimates and
methods as the Company's financial statements included in the Prospectus; (iii)
present management's best estimate of sales, gross margin percentage, effective
tax rate and earnings per share for calendar year 2004; (iv) are based on
assumptions that management believes are reasonably likely to be attained and
which management reasonably believes are the key variables affecting its
business; (v) have been prepared in a manner consistent with budgets and/or
projections for prior fiscal years; and (vi) have been reviewed by the Company's
Audit Committee of the Board of Directors, which has approved the publication of
the projections.
The pro forma financial data set forth in the Registration Statement
and Prospectus comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act and the 1933 Act Regulations, the
assumptions underlying the pro forma adjustments are reasonable, and such
adjustments have been properly applied to the historical amounts in the
compilation of such statements.
(j) To the extent relevant, the accounts receivable of the Company and
its Subsidiaries have been adjusted to reflect material changes in the
reimbursement policies of third party payors such
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as Medicare, Medicaid, private insurance companies, health maintenance
organizations, preferred provider organizations, managed care systems and other
third party payors. The Company's accounts receivable, after giving effect to
the allowance for doubtful accounts, relating to such third party payors do not
exceed amounts the Company and its subsidiaries are entitled to receive in any
material respect.
(k) Ernst & Young LLP, which has examined and is reporting upon certain
of the audited financial statements and schedules included in the Registration
Statement and the Prospectus, is, and was during the periods covered by its
reports included in the Registration Statement and the Prospectus, independent
public accountants with respect to the Company and its Subsidiaries within the
meaning of the 1933 Act and the 1933 Act Regulations.
(l) The Company has obtained, for the benefit of the Underwriters, from
each of the Company's directors and executive officers and each Selling
Stockholder, a written agreement ("Lock-Up Agreement") that for a period of 90
days from the date of the Prospectus (the "Lock-Up Period") such director,
executive officer or Selling Stockholder will not, without the prior written
consent of SunTrust Capital Markets, Inc. on behalf of the Underwriters, except
as permitted in such Lock-Up Agreement, offer, sell, contract to sell, pledge,
grant any option to purchase, or otherwise dispose of, directly or indirectly,
any shares of Common Stock or other instrument which by its terms is convertible
into, or exercisable or exchangeable for, any shares of Common Stock except for
those shares of Common Stock being sold by the Selling Stockholders pursuant
hereto and listed in the Prospectus.
(m) Neither the Company nor any of its Subsidiaries has sustained,
since December 31, 2003, any material loss or interference with its business
from fire, explosion, flood, hurricane, accident or other calamity, whether or
not covered by insurance, or from any labor dispute or arbitration, or from any
court or governmental action or inaction (including action or inaction relating
to budget or appropriation matters materially impacting the Company or any of
its Subsidiaries), order or decree, otherwise than as set forth in the
Prospectus; and, since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there has not been (i) any change
in the capital stock, long-term debt, obligations under capital leases or
short-term borrowings of the Company or any of its Subsidiaries; (ii) any event
or development which could reasonably be seen as having a Material Adverse
Effect; or (iii) any liability or obligation, direct or contingent, incurred or
undertaken by the Company or any of its Subsidiaries, except for liabilities or
obligations incurred in the ordinary course of business or which otherwise would
not reasonably be expected to have a Material Adverse Effect.
(n) Neither the Company nor any of its Subsidiaries is in violation of
its Certificate of Incorporation (or similar organizational document), or its
Bylaws (or similar document governing the internal affairs of the entity) and,
as of the date hereof, no default exists, and no event has occurred, nor state
of facts exists, which, with notice or after the lapse of time to cure or both,
would constitute a default in the due performance and observance of any
obligation, agreement, covenant, consideration or condition contained in any
indenture, mortgage, deed of trust, loan agreement, note, lease or other
agreement or instrument to which the Company or any of its Subsidiaries is a
party or by which it, any of its Subsidiaries or any of their respective
properties is subject, and no violation of any law, order, rule, regulation,
writ, injunction or decree of any government, governmental instrumentality or
court,
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domestic or foreign, has occurred or exists, in any such case where the
consequences of such violation or default would reasonably be expected to have a
Material Adverse Effect.
(o) Except as otherwise disclosed in the Prospectus, (i) the Company
has not authorized or conducted, and otherwise has no knowledge of the
generation, transportation, storage, presence, use, treatment, disposal, release
or handling of (in an amount or of a type that has been or must be reported to
any governmental agency, violates any Environmental Law (as hereinafter
defined), or has required or could require remediation expenditures) any
hazardous substance, asbestos, radon, polychlorinated biphenyl ("PCBs"),
petroleum product or waste (including crude oil or any fraction thereof),
natural gas, liquefied gas, synthetic gas or other material defined, regulated,
controlled or potentially subject to any remediation requirement under any
Environmental Law (collectively, "Hazardous Materials"), on, in or under any
real property owned, leased or used by the Company or any of its Subsidiaries,
(ii) the Company and each of its Subsidiaries is in compliance with all federal,
state and local laws, ordinances, rules, regulations and other governmental
requirements relating to pollution, control of chemicals, management of waste,
discharges of materials into the environment, health, safety, natural resources,
and the environment (collectively, "Environmental Laws"), and (iii) the Company
and each of its Subsidiaries has, and is in compliance with, all licenses,
permits, registrations and government authorizations necessary to operate under
all applicable Environmental Laws, except in the case of clause (i) or (ii)
where such noncompliance would not reasonably be expected to have a Material
Adverse Effect. Except as otherwise disclosed in the Prospectus, neither the
Company nor any of its Subsidiaries has received any written or oral notice from
any governmental entity or any other person, and there is no pending or, to the
knowledge of the Company or any of its Subsidiaries, threatened claim,
litigation or any administrative agency proceeding, that: (i) alleges a
violation of any Environmental Laws by the Company or any of its Subsidiaries;
(ii) alleges that the Company or any of its Subsidiaries is a liable party or a
potentially responsible party under the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. xx.xx. 9601, et seq., or any state
superfund law; (iii) has resulted in or could result in the attachment of an
environmental lien on any real property owned, leased or used by the Company or
any of its Subsidiaries; or (iv) alleges the occurrence of contamination of any
of such real property, damage to natural resources, property damage, or personal
injury based on activities of the Company or any of its Subsidiaries, or the
activities of its predecessors, if any, or third parties (whether at the real
property or elsewhere) involving Hazardous Materials, whether arising under the
Environmental Laws, common law principles, or other legal standards.
(p) The Company and its Subsidiaries have good and marketable title to
all real property owned by them, free and clear of all liens, encumbrances,
claims, security interests, restrictions and defects, except such as are
reflected in the Prospectus. Each parcel of real property owned or leased by the
Company or any of its Subsidiaries, and each improvement thereon, complies with
all applicable codes, laws and regulations (including, without limitation,
building and zoning codes, laws and regulations and laws relating to access to
facilities located on such real property), except for such failures to comply
that would not reasonably be expected to have a Material Adverse Effect. Neither
the Company nor any of its Subsidiaries has knowledge of any pending or
threatened condemnation proceedings, zoning change, or other proceeding or
action that will in any manner affect the size of, use of, improvements on,
construction on or access to such real property and improvements, except such
proceedings or actions that would not reasonably be expected to have a Material
Adverse Effect.
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(q) All real property and buildings held or occupied under leases by
the Company or any of its Subsidiaries are held or occupied under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not interfere in any material respect with the uses made and proposed to be
made of such property and buildings by the Company or any of its Subsidiaries;
such leases conform to the descriptions thereof, if any, set forth in the
Registration Statement and the Prospectus; and no notice has been given or claim
asserted by anyone adverse to the rights of the Company or any of its
Subsidiaries under any of the leases or affecting the Company's or any of its
Subsidiaries' rights to the continued possession of the leased property.
(r) Except as described in the Prospectus, there is not pending, nor to
the Company's knowledge threatened, any action, suit, proceeding, inquiry or
investigation, against the Company, any of its Subsidiaries or any of their
respective officers, directors or stockholders or to which the properties,
assets or rights of the Company or any of its Subsidiaries are subject, before
or brought by any court or governmental agency or body or board of arbitrators,
which would, if adversely determined, reasonably be expected to have a Material
Adverse Effect, or which could prevent consummation of the transactions
contemplated by this Agreement.
(s) There are no contracts or other documents required by the 1933 Act
or the 1933 Act Regulations to be described in or incorporated by reference into
the Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement which have not been accurately described in all material
respects in the Prospectus or incorporated or filed as required. To the best of
the Company's or any of its Subsidiary's knowledge, the agreements to which the
Company or any of its Subsidiaries is a party which are described in the
Registration Statement and the Prospectus are valid and enforceable in all
material respects by the Company or its Subsidiary in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar laws relating to or affecting
the enforceability of creditors' rights generally or by general principles of
equity and rules of law governing specific performance, estoppel, waiver,
injunctive relief and other equitable remedies (regardless of whether
enforcement is sought in a proceeding at law or in equity), and no party thereto
is in breach or default under any of such agreements except where such breach or
default would not reasonably be expected to have a Material Adverse Effect.
Neither the Company nor any of its Subsidiaries has received notice by any other
party to any contract to which the Company or any Subsidiary is also a party, of
such party's intent to terminate such contract, except such contracts
termination of which, individually or in the aggregate with other contracts with
respect to which such notice shall have been received, would not reasonably be
expected to have a Material Adverse Effect.
(t) The Company and each of its Subsidiaries owns, possesses or has
obtained all permits, licenses, provider numbers, approvals (including
certificate of need approvals), consents, orders, certifications (including
certification under the Medicare and Medicaid programs), accreditations
(including, accreditation by the Joint Commission on Accreditation of Healthcare
Organizations) and other authorizations (collectively, "Governmental Licenses")
issued by, and have made all declarations and filings with, the appropriate
federal, state or local regulatory agencies or bodies as are necessary to own or
lease, as the case may be, and to operate its properties and to carry on its
businesses as presently conducted and as contemplated by the Prospectus, except
where a failure to so declare, file, own, possess or obtain such Governmental
Licenses would not, singly and in the aggregate, have a Material Adverse Effect;
the Company and its Subsidiaries are in compliance with the terms and
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conditions of all such Governmental Licenses, except where the failure so to
comply would not, singly and in the aggregate, have a Material Adverse Effect;
all of the Governmental Licenses are valid and in full force and effect, except
when the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have a Material
Adverse Effect; and neither the Company nor any of its Subsidiaries has received
any notice of proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a Material Adverse
Effect.
(u) The Company and each of its Subsidiaries owns or possesses all
intangible property rights and know-how necessary for the conduct of its
business as currently carried on and as contemplated by the Prospectus
(collectively, the "Intellectual Property"). Except as described in the
Prospectus, (i) no third parties have received rights to any such Intellectual
Property from the Company or any Subsidiary, other than licenses granted in the
ordinary course of business; (ii) to the Company's or any Subsidiary's
knowledge, there is no infringement by third parties of any such Intellectual
Property; (iii) there is no pending or, to the Company's or any Subsidiary's
knowledge, threatened action, suit, proceeding or claim by others challenging
the Company's or any Subsidiary's rights in or to any such Intellectual
Property, and the Company and each Subsidiary is unaware of any facts which
would form a basis for any such claim; and (iv) there is no pending or, to the
Company's or any Subsidiary's knowledge, threatened action, suit, proceeding or
claim by others challenging the validity or scope of any such Intellectual
Property, and the Company and each Subsidiary is unaware of any facts which
would form a basis for any such claim. To the Company's and each Subsidiary's
knowledge, none of the technology employed by the Company or any Subsidiary has
been obtained or is being used by the Company or any Subsidiary in violation of
the rights of any person or third party. Neither the Company nor any Subsidiary
knows of infringement by others of Intellectual Property owned by or licensed to
the Company or any Subsidiary.
(v) The Company and its Subsidiaries have implemented controls and
other procedures that are designed to ensure that information required to be
disclosed by the Company in the reports that it files or submits under the
Securities Exchange Act of 1934, as amended (the "1934 Act") is recorded,
processed, summarized and reported, within the time periods specified in the
Commission's rules and forms and is accumulated and communicated to the
Company's management, including its chief executive officer and chief financial
officer, or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure; and the Company makes and keeps books,
records, and accounts, which, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the Company and its
subsidiaries; and the Company and its subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with GAAP and to maintain accountability
for assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences; and,
to the Company's knowledge, neither the Company nor any Subsidiary, nor any
director, employee or agent thereof, has made any payment of funds of the
Company or any Subsidiary, as the case may be, or received or retained any such
funds, and no funds of the Company or any Subsidiary, as the case may be, have
been set aside to be used for any payment, in each case in violation of any law,
rule or regulation.
9
(w) The Company is in compliance, in all material respects, with all
applicable provisions of the Xxxxxxxx-Xxxxx Act of 2002, including the related
rules and regulations promulgated thereunder by the Commission or The Nasdaq
Stock Market's National Market (the "Nasdaq").
(x) The Company has filed in a timely manner each document or report
required to be filed by it pursuant to the 1934 Act and the rules and
regulations of the Commission promulgated thereunder (the "1934 Act Rules and
Regulations"); each such document or report at the time it was filed conformed
to the requirements of the 1934 Act and the 1934 Act Rules and Regulations; and
none of such documents or reports when filed contained an untrue statement of
any material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
(y) The Company and each Subsidiary has filed all federal, state, local
and foreign income, franchise, property and other tax returns and tax forms
required to be filed or has duly obtained extensions of time for the filing
thereof, except where the failure to do so would not reasonably be expected to
have a Material Adverse Effect. Neither the Company nor any Subsidiary is in
default in the payment of any taxes that were payable pursuant to said returns
or any assessments with respect thereto, other than any which the Company or any
Subsidiary is contesting in good faith and as to which adequate reserves have
been provided, except where any such default would not reasonably be expected to
have a Material Adverse Effect. Such returns and forms are complete and correct
in all material respects. The Company and each Subsidiary have made all payroll
withholdings required to be made by it with respect to employees. The charges,
accruals and reserves on the books of the Company and each Subsidiary in respect
of any tax liability for any year not finally determined are adequate to meet
any assessments or reassessments for additional taxes. There have been no tax
deficiencies asserted and, to the Company's and each Subsidiary's knowledge, no
tax deficiency might be reasonably asserted or threatened against the Company or
any Subsidiary that could individually or in the aggregate reasonably be
expected to have a Material Adverse Effect.
(z) The Company and each Subsidiary maintains insurance (issued by
insurers of recognized financial responsibility) of the types and in the amounts
generally deemed adequate for its business and, to the best of the Company's and
each Subsidiary's knowledge, generally consistent with insurance coverage
maintained by similar companies in similar businesses, including, but not
limited to, professional liability insurance covering the acts and omissions of
the Company's agents and employees acting in their capacities as agents and/or
employees of the Company, and insurance covering real and personal property
owned or leased by the Company or any Subsidiary against theft, damage,
destruction, acts of vandalism and all other risks customarily insured against,
professional liability and casualty and liability (including, but not limited to
product liability) insurance covering the Company's and its Subsidiaries'
operations, all of which insurance is in full force and effect.
(aa) To the Company's and each Subsidiary's knowledge, no labor problem
exists with the Company's or any Subsidiary's employees, or is threatened or
imminent, that would reasonably be expected to have a Material Adverse Effect.
Neither the Company nor any Subsidiary is aware of any existing, threatened or
imminent labor disturbance by the employees of any of its principal suppliers,
contractors or customers that would reasonably be expected to have a Material
Adverse Effect.
10
(bb) Neither the Company nor any of its Subsidiaries, nor any of their
officers, directors, stockholders or affiliates, have taken, and such parties
will not take, directly or indirectly, any action designed to, or that might be
reasonably expected to, cause or result in or constitute, the stabilization or
manipulation of the price of the Shares to facilitate the sale or resale of the
Shares or that violates Regulation M of the Commission in any respect.
(cc) The Shares have been registered pursuant to Section 12(g) of the
1934 Act, and the Shares have been approved for listing on the Nasdaq, subject
to official notice of issuance.
(dd) The Company has not incurred any liability for a fee, commission
or other compensation on account of the employment of a broker or finder in
connection with the transactions contemplated by this Agreement other than as
contemplated hereby or as described in the Prospectus.
(ee) The Company is not, will not become as a result of the
transactions contemplated hereby, and does not intend to conduct its business in
a manner that would cause it to become, an "investment company" or a company
controlled by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended (the "1940 Act").
(ff) Except as described in the Registration Statement or Prospectus,
the Company has not sold or issued any shares of Common Stock during the
six-month period preceding the date of the Prospectus, other than shares of
Common Stock issued upon exercise of stock options granted prior to such period,
including any sales pursuant to Rule 144A under, or Regulations D or S of, the
1933 Act Regulations.
(gg) The Company and each Subsidiary has good and marketable title to
all personal property owned by it, free and clear of all encumbrances and
defects except for those set forth in the Company's credit facilities with HBCC
as described in the Prospectus and other than such as would not reasonably be
expected to have a Material Adverse Effect; and all personal property held under
lease by the Company and each Subsidiary is held by it under valid, subsisting
and enforceable leases, with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property by the
Company or its Subsidiary.
(hh) No relationship, direct or indirect, exists between or among the
Company or any Subsidiary on the one hand, and the directors, officers,
stockholders, employees, affiliates, customers or suppliers of the Company or
any Subsidiary on the other hand, which is required to be described in the
Prospectus and which is not so described.
(ii) The market-related statistical data and other market-related data
included in the Prospectus and the Registration Statement are based on or
derived from sources that the Company believes to be reliable and accurate.
(jj) The Company and each Subsidiary is in compliance in all material
respects with all currently applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and published
interpretations thereunder (herein called "ERISA"); to the Company's and each
Subsidiary's knowledge, no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in Section 3(2) ERISA) for which
the
11
Company or any Subsidiary would have any liability; neither the Company nor any
Subsidiary has incurred, and does not expect to incur, liability under (i) Title
IV of ERISA with respect to termination of, or withdrawal from, any "pension
plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as
amended (the "Code"); and each "pension plan" for which the Company or any
Subsidiary would have any liability that is intended to be qualified under
Section 401(a) of the Code is so qualified in all material respects and nothing
has occurred, whether by action or by failure to act, that would reasonably be
expected to cause the loss of such qualification.
(kk) Except as set forth in the Registration Statement and the
Prospectus, the Company and each of its Subsidiaries is in material compliance
with all of its obligations arising under any contract to which the Company (or
any if its Subsidiaries) is a party or by which it is bound where the Company
(or any of its Subsidiaries) is a prime contractor to a government entity or
agency or a subcontractor or supplier at any tier to any entity providing
services to a government entity or agency including material compliance with all
statutes, regulations and contractual provisions applicable to the Company as a
government contractor, prime contractor, subcontractor, service provider or
supplier as incorporated into any prime contracts, subcontracts or supply
agreements, except where such noncompliance would not reasonably be expected to
have a Material Adverse Effect. Except as set forth in the Registration
Statement and the Prospectus, neither the Company nor any of its Subsidiaries
has questioned or disallowed costs pending pursuant to any government contract
audit of which the Company or any Subsidiary has knowledge and has no pending or
threatened claims against it as a result of the performance or non-performance
of any government contract, subcontract or supply agreement.
(ll) Neither the Company nor its Subsidiaries, nor, to the knowledge of
the Company, any officer, director, stockholder, employee or other agent of the
Company or any of its Subsidiaries, has engaged on behalf of the Company,
directly or indirectly, in (i) any material activities which are prohibited
under Medicare and Medicaid statutes or any regulations promulgated pursuant to
such statutes, or (ii) any activities which are prohibited under related state
or local statutes or regulations or any rules of professional conduct, including
the following: (A) knowingly and willfully making or causing to be made a false
statement or representation of a material fact in connection with the receipt of
or claim for any benefit or payment under the Medicare or Medicaid program or
from any other third party payor; (B) failing to disclose knowledge by a
claimant of the occurrence of any event affecting the initial or continued right
to any benefit or payment under the Medicare or Medicaid program or from any
other third party payor on its own behalf or on behalf of another, with intent
to secure such benefit or payment fraudulently; (C) knowingly and willfully
offering, paying, soliciting or receiving any remuneration, in cash or in kind
(1) in return for referring an individual to a person for the furnishing or
arranging for the furnishing of any item or service for which payment may be
made in whole or in part by Medicare or Medicaid or any other third party payor,
or (2) in return for purchasing, leasing or ordering or arranging for, or
recommending the purchasing, leasing or ordering of, any good, facility,
service, or item for which payment may be made in whole or in part by Medicare
or Medicaid or any other third party payor; (D) knowingly and willfully
referring an individual to a person or entity with which it has ownership or
other financial arrangements (where applicable federal or state law prohibits
such referrals); and (E) knowingly and willfully violating any enforcement
initiative instituted by any governmental agency (including the Office of the
Inspector General and the Department of Justice).
12
Section 2. Representations and Warranties of the Selling Stockholders.
--------- ----------------------------------------------------------
Each Selling Stockholder severally and not jointly represents and warrants to
each Underwriter and agrees that:
(a) Such Selling Stockholder has duly and irrevocably executed and
delivered a custody agreement and power of attorney (the "Custody Agreement")
(i) appointing Xxxxxxxx X. XxXxxxxx and Xxxxxxx X. Xxxxxx and either one of them
acting singly, as attorneys-in-fact (the "Attorneys-in-Fact"), with full power
of substitution, and with full authority (exercisable by either one or both of
them) to execute and deliver this Agreement and to take such other action as may
be necessary or desirable to carry out the provisions hereof on behalf of the
Selling Stockholder and (ii) appointing SunTrust Bank as custodian (the
"Custodian") thereunder.
(b) Such Selling Stockholder has, pursuant to the terms of the Custody
Agreement, placed in custody, for delivery under this Agreement, the following
items: (i) the certificate or certificates, if any, representing not less than
the total number of Shares to be sold by such Selling Stockholder to the
Underwriters as set forth on Schedule I hereto; and (ii) a stock power, duly
endorsed in blank, with the signature of such Selling Stockholder thereon
guaranteed by a financial institution that is a participant in the Security
Transfer Agents Medallion Program or the Stock Exchange Medallion Program,
relating to the Shares to be sold by such Selling Stockholder.
(c) Such Selling Stockholder has all legal capacity necessary to
execute and deliver this Agreement and the Custody Agreement, to sell and
deliver the Shares to be sold by him, her or it hereunder and to perform all
other obligations under this Agreement and the Custody Agreement; each of this
Agreement and the Custody Agreement has been duly executed and delivered by such
Selling Stockholder and constitutes the valid and binding agreement of such
Selling Stockholder, enforceable against him, her or it in accordance with its
terms, except that the indemnification provisions set forth in Section 9 of this
Agreement may be limited by applicable law or equitable principles, and except
as enforceability may be limited by bankruptcy, reorganization, moratorium or
similar laws affecting the enforceability of creditors' rights generally and
rules of law governing specific performance, injunctive relief and other
equitable remedies; the execution, delivery and performance of this Agreement
and the Custody Agreement by such Selling Stockholder do not and will not
conflict with, result in the creation or imposition of any lien, charge or
encumbrance upon any of the Shares to be sold by such Selling Stockholder
pursuant to the terms of, or constitute a default under, any agreement or other
instrument, or any order, rule or regulation of any court or governmental agency
having jurisdiction over such Selling Stockholder or such Selling Stockholder's
properties other than any lien, charge or encumbrance contemplated by this
Agreement and/or the Custody Agreement; and except as required by the 1933 Act
and applicable state securities laws, no consent, authorization or order of, or
filing or registration with, any court or governmental agency is required (or,
if required, has been obtained) for the execution, delivery and performance of
this Agreement and the Custody Agreement by such Selling Stockholder.
(d) At the Closing Time and any Delivery Date, such Selling Stockholder
will have good and valid title to the Shares being sold by him, her or it
hereunder; such Shares are, and at the Closing Time and any Delivery Date will
be, duly authorized, validly issued and outstanding, fully paid and
non-assessable Common Stock of the Company with no personal liability attaching
to the ownership thereof; and upon the delivery of and payment for such Shares
as contemplated herein, the
13
Underwriters will receive good title to the Shares purchased by them,
respectively, from such Selling Stockholder, free and clear of any and all
liens, encumbrances, security interests and adverse claims.
(e) Such Selling Stockholder has not (i) taken, and agrees that he, she
or it will not take, directly or indirectly, any action which might reasonably
be expected to cause or result in stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the Shares, or
(ii) since the filing of the Registration Statement (A) sold, bid for,
purchased, or paid anyone any compensation for soliciting purchases of, the
Shares, or (B) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.
(f) Except as set forth in the Prospectus, such Selling Stockholder is
disposing of his, her or its Shares hereunder for such Selling Stockholder's own
account and is not selling such Shares, directly or indirectly, for the benefit
of the Company.
(g) When the Registration Statement or any amendment thereto or any
462(b) Registration Statement or any amendment thereto was or is declared
effective and at the Closing Time or any Date of Delivery, as the case may be,
(i) it contained or will contain all statements required to be stated therein
regarding such Selling Stockholder in accordance with the requirements of the
1933 Act and the 1933 Act Regulations and (ii) such statements regarding such
Selling Stockholder in the Registration Statement, any 462(b) Registration
Statement or any amendment thereto as are made in reliance upon and in
conformity with written information furnished to the Company by such Selling
Stockholder specifically for use therein did not or will not include any untrue
statement of a material fact or omit to state any material fact regarding such
Selling Stockholder necessary to make the statements therein not misleading.
When the Prospectus or any amendment or supplement thereto is filed with the
Commission pursuant to Rule 424(b) (or, if any Prospectus or such amendment or
supplement is not required to be so filed, when the Registration Statement or
the amendment thereto containing such amendment or supplement to the Prospectus
was or is declared effective), and at the Closing Time or any Date of Delivery,
as the case may be, (a) the Prospectus, as amended or supplemented at any such
time, contained or will contain all statements required to be contained or
stated therein regarding such Selling Stockholder in accordance with the
requirements of the 1933 Act and the 1933 Act Regulations and (b) such
statements regarding such Selling Stockholder in the Prospectus, as so amended
or supplemented at any such time, as are made in reliance upon and in conformity
with written information furnished to the Company by such Selling Stockholder
specifically for use therein will not include any untrue statement of a material
fact or omit to state any material fact regarding such Selling Stockholder
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(h) The sale of the Shares by such Selling Stockholder pursuant to this
Agreement is not prompted by any information concerning the Company that is not
set forth in the Prospectus.
(i) The Selling Stockholder has not incurred any liability for a fee,
commission or other compensation on account of the employment of a broker or
finder in connection with the transactions contemplated by this Agreement other
than as contemplated hereby.
Section 3. Sale and Delivery of Shares to the Underwriters; Closing.
--------- --------------------------------------------------------
14
(a) On the basis of the representations and warranties herein
contained, and subject to the terms and conditions herein set forth, the Company
and the Selling Stockholders agree to sell to the Underwriters named in Schedule
II hereto, and the Underwriters agree, severally and not jointly, to purchase
from the Company and the Selling Stockholders, at a purchase price of $[___] per
share (representing a public offering price of $___ per share, less an
underwriting discount of $___per share), the aggregate number of Firm Shares set
forth opposite the name of such Underwriter in Schedule II hereto.
(b) On the basis of the representations and warranties herein
contained, and subject to the terms and conditions herein set forth, the
Company, with respect to 112,500 shares, and the Option Stockholders, in the
denominations set forth opposite their names on Schedule I, hereby grant an
option to the Underwriters, severally and not jointly, to purchase up to an
additional 352,500 Option Shares on the same terms and conditions as the Firm
Shares. The option hereby granted will expire if not exercised within the 30-day
period after the first date on which you release the Firm Shares for sale to the
public. The option granted hereby may be exercised by the Underwriters, in whole
or in part (but not more than once), only for the purpose of covering the
over-allotments that may be made in connection with the offering and
distribution of the Firm Shares, by giving written notice to the Company and the
Option Stockholders. The notice of exercise shall set forth the number of Option
Shares as to which the several Underwriters are exercising the option, and the
time and date of payment and delivery thereof. Such time and date of delivery
(the "Date of Delivery") shall be determined by you but shall not be earlier
than the second business day after the date on which the notice of the exercise
of the option shall have been given nor later than seven full business days
after the exercise of such option, nor in any event prior to the Closing Time.
If the option is exercised in part but not in whole, then the Option Shares with
respect to which the option shall have been exercised, shall be sold to the
Underwriters pro rata among the Company and each of the Option Stockholders
(based, for the Company, on 112,500 shares and based, for the Option
Stockholders, on the denominations set forth opposite their names on Schedule
I), as adjusted by the Underwriters in such a manner to avoid fractional shares.
If the option is exercised as to all or any portion of the Option Shares, the
Option Shares as to which the option is exercised shall be purchased by the
Underwriters, severally and not jointly, in their respective underwriting
obligation proportions.
(c) Payment of the purchase price for and delivery of the Firm Shares
shall be made at the offices of SunTrust Capital Markets, Inc. (address) or at
such other place as shall be agreed upon by the Company, the Selling
Stockholders and you, at 9:00 A.M. (prevailing Eastern time), either (i) on the
third business day after the "trade" date determined pursuant to rules of the
Commission, or (ii) at such other time not more than ten full business days
thereafter as you, the Selling Stockholders and the Company shall determine
(unless, in either case, postponed pursuant to Section 10 hereof) (such date and
time of payment and delivery being herein called the "Closing Time") (the
Closing Time and each Date of Delivery, if any, being sometimes referred to as a
"Closing Date"). In addition, in the event that any or all of the Option Shares
are purchased by the Underwriters, payment of the purchase price for and
delivery of the Option Shares shall be made at the offices of SunTrust Capital
Markets, Inc. in the manner set forth above, or at such other place as the
Company, the Option Stockholders and you shall determine, on the Date of
Delivery as specified in the notice from you to the Company and the Option
Stockholders. Payment for the Firm Shares and the Option Shares in immediately
available funds shall be made by wire transfer to the respective bank accounts
designated by the Company and
15
the Custodian for the Selling Stockholders, against delivery to you for the
respective accounts of the Underwriters of the Shares to be purchased by them.
(d) The Shares to be purchased by the Underwriters shall be in such
denominations and registered in such names as you may request in writing at
least two full business days before the Closing Date. The Shares will be made
available at the offices of the transfer agent SunTrust Bank, or at such other
place as you may designate for examination and packaging not later than 9:00
A.M. (prevailing Eastern time) at least one full business day prior to the
Closing Time or the Date of Delivery, as the case may be.
(e) After the Registration Statement becomes effective, you intend to
offer the Shares to the public as set forth in the Prospectus, but after the
initial public offering of such Shares, you may from time to time increase or
decrease the public offering price, in your sole discretion, by reason of
changes in general market condition or otherwise.
Section 4. Certain Covenants of the Company. The Company covenants and
--------- --------------------------------
agrees with each Underwriter as follows:
(a) The Company will use its best efforts to cause the Registration
Statement to become effective (if not yet effective at the date and time that
this Agreement is executed and delivered by the parties hereto). If the Company
elects to rely upon Rule 430A of the 1933 Act Regulations or the filing of the
Prospectus is otherwise required under Rule 424(b) of the 1933 Act Regulations,
and subject to the provisions of Section 4(b) of this Agreement, the Company
will comply with the requirements of Rule 430A and will file the Prospectus,
properly completed, pursuant to the applicable provisions of Rule 424(b), within
the time period prescribed. If the Company elects to rely upon Rule 462(b), the
Company shall file a 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) by 10:00 A.M., prevailing Eastern time, on the date
of this Agreement, and the Company shall at the time of filing, either pay to
the Commission the filing fee for the Rule 462(b) Registration Statement or give
irrevocable instructions for the payment of such fee. If the Company elects,
with the consent of the Underwriters, to rely on Rule 434 under the 1933 Act,
the Company will file with the Commission in accordance with Rule 424(b) of the
1933 Act Regulations the Rule 434 Prospectus. The Company will notify you
immediately and confirm the notice in writing, (i) when the Registration
Statement, the 462(b) Registration Statement or any post-effective amendment to
the Registration Statement, shall have become effective, or any supplement to
the Prospectus or any amended Prospectus shall have been filed, (ii) of the
receipt of any comments from the Commission, (iii) of any request by the
Commission to amend the Registration Statement or the 462(b) Registration
Statement or amend or supplement the Prospectus or for additional information,
and (iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any 462(b) Registration Statement
or of any order preventing or suspending the use of any Preliminary Prospectus,
or of the suspension of the qualification of the Shares for offering or sale in
any jurisdiction, or of the institution or threat of any proceedings for any of
such purposes. The Company will make every reasonable effort to prevent the
issuance of any such stop order or of any order preventing or suspending such
use and, if any such order is issued, to obtain the withdrawal thereof at the
earliest possible moment.
16
(b) The Company will not at any time file or make any amendment to the
Registration Statement or any amendment or supplement (i) to the Prospectus, if
the Company has not elected to rely upon Rule 430A, or (ii) if the Company has
elected to rely upon Rule 430A, to either the Prospectus included in the
Registration Statement at the time it becomes effective or to the Prospectus
filed in accordance with Rule 424(b), or (iii) if the Company has elected to
rely upon Rule 462(b), to any 462(b) Registration Statement, in any case if you
shall not have previously been advised and furnished a copy thereof a reasonable
time prior to the proposed filing, or if you or counsel for the Underwriters
shall reasonably object to such amendment or supplement.
(c) The Company has furnished or will furnish to you, at the Company's
expense, as soon as available, as many signed copies of the Registration
Statement as originally filed and of all amendments thereto, whether filed
before or after the Registration Statement becomes effective, copies of all
exhibits and documents filed therewith and signed copies of all consents and
certificates of experts, as you may reasonably request, and has furnished or
will furnish to each Underwriter, one conformed copy of the Registration
Statement as originally filed and of each amendment thereto (but without
exhibits).
(d) The Company will deliver to each Underwriter, at the Company's
expense, from time to time, as many copies of each Preliminary Prospectus as
such Underwriter may reasonably request, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act and the 1933 Act
Regulations. If the Company elects, with the consent of the Underwriters, to
rely on Rule 434 under the 1933 Act, the Company will provide the Underwriters
with copies of the Rule 434 Prospectus (including copies of a term sheet that
complies with the requirements of Rule 434 under the 1933 Act), in such numbers
as each Underwriter may reasonably request. The Company will deliver to each
Underwriter, at the Company's expense, as soon as the Registration Statement
shall have become effective, and thereafter from time to time as requested
during the period when the Prospectus is required to be delivered under the 1933
Act, such number of copies of the Prospectus (as supplemented or amended) as
each Underwriter may reasonably request. The Company will use its best efforts
to comply with the 1933 Act and the 1933 Act Regulations so as to permit the
completion of the distribution of the Shares as contemplated in this Agreement
and in the Prospectus. In case you are required to deliver a prospectus within
nine months after the time of issue of the Prospectus in connection with the
offering or sale of the Shares and if at such time any event shall have occurred
as a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made when such Prospectus is delivered, not
misleading, or, if for any reason it shall be necessary during such period to
amend or supplement the Prospectus in order to comply with the 1933 Act or the
1933 Act Regulations, the Company will notify you and upon your request prepare
promptly and furnish without charge to each Underwriter and to any dealer in
securities as many copies as you may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus which will correct such
statement or omission or effect such compliance. In case any Underwriter is
required to deliver a prospectus in connection with sales of any of the Shares
at any time nine months or more after the time of issue of the Prospectus, upon
your request but at the expense of such Underwriter, the Company will prepare
and deliver to such Underwriter as many copies as you may request of an amended
or supplemented Prospectus complying with the requirements of Section 10(a)(3)
of the 1933 Act.
17
(e) The Company will use its best efforts, in cooperation with you, to
qualify the Shares for offering and sale under the applicable securities laws of
such states and other jurisdictions as you may designate and to maintain such
qualifications in effect for as long as may be necessary to complete the
distribution of the Shares; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation in any jurisdiction in which it is not otherwise so subject.
The Company will file such statements and reports as may be required by the laws
of each jurisdiction in which the Shares have been qualified as above provided.
(f) The Company will use the net proceeds received by it from the sale
of the Shares in the manner specified in the Prospectus under the caption "Use
of Proceeds."
(g) The Company will make generally available to its security holders
as soon as practicable, but in any event not later than the end of the fiscal
quarter first occurring after the first anniversary of the "effective date of
the Registration Statement" (as defined in Rule 158(c) of the 1933 Act
Regulations), an earnings statement (in reasonable detail but which need not be
audited) complying with the provisions of Section 11(a) of the 1933 Act and Rule
158 of the 1933 Act Regulations and covering a period of at least 12 months
beginning after the effective date of the Registration Statement.
(h) During a period of three years from the date hereof, the Company
will furnish to you: (i) copies of all reports mailed to stockholders of the
Company; and (ii) copies of all reports and financial statements furnished to or
filed with the Commission, the Nasdaq, any securities exchange or the National
Association of Securities Dealers, Inc. ("NASD").
(i) During the Lock-Up Period, the Company will not, without the prior
written consent of SunTrust Capital Markets, Inc., on behalf of the
Underwriters, directly or indirectly, sell, offer to sell, grant any option for
the sale of, hypothecate, pledge, enter into any transaction which is designed
to, or might reasonably be expected to, result in the disposition (whether by
actual disposition or effective economic disposition due to cash settlement or
otherwise) by the Company or any affiliate, or otherwise issue or dispose of,
any Common Stock or securities convertible into or exchangeable or exercisable
for Common Stock, or register or publicly announce any intent to register under
the 1933 Act the offer or sale of any capital stock of the Company, except for:
(i) the issuance of shares of Common Stock pursuant to the exercise of options
in existence on the date of execution of this Agreement; (ii) the registration
of the offer and sale of the Shares and sales to the Underwriters pursuant to
this Agreement; (iii) contributions to employee benefit plans in existence on
the date of the execution of this Agreement; (iv) the grant of options, not
exercisable during the Lock-Up Period, pursuant to the Company's 2003 Stock
Option Plan in effect at the time of execution of this Agreement; (v) a
registration statement filed on Form S-8 limited in scope to the Company's 2003
Stock Option Plan described in the Registration Statement and Prospectus and the
Company's tax-qualified employee savings plan under Section 401(k) of the Code;
and (vi) the issuance of shares of Common Stock or securities convertible into
or exchangeable or exercisable for shares of Common Stock (and the shares of
Common Stock issuable upon the conversion, exercise or exchange thereof) in
connection with any future acquisition, merger or other business combination, or
purchase of assets or of all or a portion of a business by the Company or any of
its Subsidiaries. The Company will not, and will use its best efforts to cause
its officers, directors and affiliates not to, take, directly or indirectly,
prior to the termination of the underwriting syndicate contemplated by this
Agreement, any action
18
designed to stabilize or manipulate the price of any security of the Company, or
which may cause or result in, or which might in the future reasonably be
expected to cause or result in, the stabilization or manipulation of the price
of any security of the Company, to facilitate the sale or resale of any of the
Shares.
(j) For a period of three years from the date hereof, the Company will
maintain a transfer agent and, if necessary under the jurisdiction of
incorporation of the Company, a registrar (which may be the same entity as the
transfer agent) for its Common Stock.
(k) For as long as the Common Stock of the Company is publicly traded,
the Company will use its commercially reasonable efforts to maintain the listing
of its shares of Common Stock on the Nasdaq; provided that nothing herein shall
prevent the Company from listing its Common Stock on the New York Stock
Exchange.
(l) If at any time during the 30-day period after the Registration
Statement becomes effective, any publication or event relating to or affecting
the Company shall occur as a result of which in your reasonable opinion the
market price of the Common Stock has been or is likely to be materially affected
(regardless of whether such publication or event necessitates a supplement or
amendment of the Prospectus), the Company agrees to forthwith consult and
cooperate with you concerning the Company's response to or comment on such
publication or event.
(m) The Company will comply with all applicable provisions of the
Xxxxxxxx-Xxxxx Act of 2002, including the related rules and regulations
promulgated thereunder by the Commission or the Nasdaq.
(n) The Company will supply the Underwriters with copies of all
correspondence to and from and all documents issued to and by the Commission or
the Commission staff in connection with the registration of the Shares under the
1933 Act.
Section 5. Covenants of the Selling Stockholders. Each Selling
--------- -------------------------------------
Stockholder covenants and agrees with each Underwriter as follows:
(a) Such Selling Stockholder will pay all taxes, if any, on the
transfer and sale of the Shares to be sold by such Selling Stockholder.
(b) Such Selling Stockholder will comply with all reasonable requests
of the Company to cause the Registration Statement to become effective, to do
and perform all things to be done and performed by the Selling Stockholder
hereunder prior to the Closing Time and, if applicable, the Date of Delivery,
and to satisfy all conditions precedent to the delivery of the Shares to be sold
by the Selling Stockholders.
(c) Such Selling Stockholder will not take, directly or indirectly,
prior to the termination of the underwriting syndicate contemplated by this
Agreement, any action designed to stabilize or manipulate the price of any
security of the Company, or which may cause or result in, or which might in the
future reasonably be expected to cause or result in, the stabilization or
manipulation of the price of any security of the Company, to facilitate the sale
or resale of any of the Shares.
19
(d) Such Stockholder acknowledges and agrees that the shares to be sold
by the Selling Stockholder hereunder, which are represented by the certificates
held in custody for the Selling Stockholder, are subject to the interests of the
Underwriters and the other Selling Stockholders thereunder, that the
arrangements made by the Selling Stockholder for such custody are to that extent
irrevocable, and that the obligations of the Selling Stockholder hereunder shall
not be terminated by any act of the Selling Stockholder, by operation of law, by
the death or incapacity of any individual Selling Stockholder or, in the case of
a trust, by the death or incapacity of any executor or trustee or the
termination of such trust, or the occurrence of any other event.
(e) Such Selling Stockholder will deliver to you prior to the Closing
Time a properly completed and executed U.S. Treasury Department Form W-9.
Section 6. Payment of Expenses.
--------- -------------------
(a) General. The Company will pay or cause to be paid and bear all
-------
costs, fees and expenses incident to the performance of its obligations under
this Agreement, including (i) the preparation, printing and filing of the
Registration Statement (including financial statements and exhibits), as
originally filed and as amended, the Preliminary Prospectuses and the Prospectus
and any amendments or supplements thereto, and the cost of furnishing copies
thereof to the Underwriters; (ii) the preparation, printing and distribution of
this Agreement and any instruments relating to any of the foregoing; (iii) the
issuance and delivery of the Shares to the Underwriters, including any transfer
taxes payable upon the sale of the Shares to the Underwriters (other than
transfer taxes on resales by the Underwriters); (iv) the fees and disbursements
of the Company's counsel and accountants; (v) the qualification of the Shares
under the applicable securities laws in accordance with Section 4(e) hereof and
any filing for review of the offering with the NASD, including filing fees and
fees and disbursements of counsel for the Underwriters in connection therewith,
up to an aggregate maximum of $10,000; (vi) the transfer agent's and registrar's
fees and all miscellaneous expenses referred to in Item 13 of the Registration
Statement; (vii) costs related to travel and lodging incurred by the Company and
its representatives relating to meetings with and presentations to prospective
purchasers of the Shares; and (viii) all other costs and expenses incident to
the performance of the Company's obligations hereunder (including costs incurred
in closing the purchase of the Option Shares, if any) that are not otherwise
specifically provided for in this section.
(b) Selling Stockholders. The Selling Stockholders shall pay (i) their
--------------------
proportionate share of the Underwriters' discount relating to Shares sold by
such Selling Stockholders and (ii) any transfer taxes imposed on the sale of the
Shares to the Underwriters by the Selling Stockholders (other than transfer
taxes on resales by the Underwriters).
(c) Termination. If the Underwriters terminate this Agreement in
-----------
accordance with the provisions of Section 7 or Section 10(b) hereof, the Company
shall reimburse the Underwriters for all of their out-of-pocket expenses,
including the reasonable fees and expenses of counsel for the Underwriters.
Section 7. Conditions of Underwriters' Obligations. The obligations
--------- ---------------------------------------
of the Underwriters to purchase and pay for the Shares that they have severally
agreed to purchase pursuant to this Agreement
20
(whether Firm Shares at the Closing Time or, upon exercise of the option granted
in Section 3, Option Shares on the Date of Delivery) are subject to the
following conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 P.M., prevailing Eastern time, on the date of this Agreement or, with
your consent, at a later time and date not later, however, than 5:30 P.M.,
prevailing Eastern time, on the first business day following the date hereof, or
at such later time or on such later date as you may agree to in writing; as of
such Closing Date the Registration Statement shall remain effective and no stop
order suspending the effectiveness of the Registration Statement shall have been
issued under the 1933 Act and no proceedings for that purpose shall have been
instituted or shall be pending or, to your knowledge or the knowledge of the
Company or the Selling Stockholders, shall be contemplated by the Commission,
and any request on the part of the Commission for additional information shall
have been complied with to the reasonable satisfaction of counsel for the
Underwriters. If the Company has elected to rely upon Rule 430A, a prospectus
containing the Rule 430A Information shall have been filed with the Commission
in accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with the
requirements of Rule 430A).
(b) You shall have received the favorable opinion, dated such Closing
Date, of Blank Rome LLP, counsel for the Company and the Selling Stockholders,
with respect to the Company and the Selling Stockholders, together with signed
or reproduced copies of such opinions for each of the other Underwriters, in
form and substance satisfactory to you and counsel for the Underwriters, stating
that:
(i) the Company and each of its Subsidiaries is validly
existing as a corporation or other entity in good standing under the
laws of the state of its incorporation or organization, and to such
counsel's knowledge, based solely on its review of certificates of
public officials, is duly qualified to do business and is in good
standing as a foreign corporation or other entity in the jurisdictions
listed on a schedule to such opinion provided by such counsel;
(ii) all of the issued and outstanding capital stock or other
equity interest of each Subsidiary of the Company has been duly
authorized and validly issued and is fully paid and non-assessable;
and, to such counsel's knowledge, except as described in the
Prospectus, the capital stock or other equity interest of each
Subsidiary owned by the Company, directly or through Subsidiaries, is
owned free from liens, encumbrances and defects, based solely on such
counsel's review of the certificates, if any, representing such capital
stock or other equity interests and an officers' certificate, it being
understood such counsel shall not have conducted any tax, lien or UCC,
litigation, judgment or similar searches;
(iii) the Company and each of its Subsidiaries has all
corporate power and authority necessary to own or hold its properties
and conduct its business as described in the Registration Statement and
Prospectus;
(iv) the authorized capital stock of the Company as of
December 31, 2003 was as set forth for December 31, 2003 under the
heading "Capitalization" in the Prospectus, and, as of the date of such
counsel's opinion, all of the [_____] issued and outstanding shares of
capital stock of the Company set forth in the first paragraph under the
heading "Description of Capital
21
Stock" in the Prospectus have been duly authorized and validly issued
and are fully paid and non-assessable;
(v) the outstanding shares of capital stock of the Company are
free of statutory, preemptive rights, and, to such counsel's knowledge,
the outstanding shares of capital stock of the Company are free of
contractual preemptive rights granted by the Company; to such counsel's
knowledge there are no outstanding securities of the Company
convertible or exchangeable into, or evidencing the right to purchase
or subscribe for, any shares of capital stock of the Company, except
for options granted under the Company's 1997 Stock Option and Incentive
Plan and the 2003 Stock Option Plan as described in the Registration
Statement and Prospectus; there are no restrictions upon the voting or
transfer of any shares of the Company's capital stock pursuant to the
Company's Certificate of Incorporation or Bylaws, each as amended, or
any agreement or other instrument to which the Company is a party known
to such counsel;
(vi) the Shares being issued and sold by the Company to the
Underwriters hereunder have been duly authorized and, when issued and
delivered against payment therefore as described herein, will be
validly issued, fully paid and non-assessable;
(vii) to such counsel's knowledge, other than as set forth in
the Prospectus, there are no legal or governmental proceedings pending
or threatened to which the Company or any Subsidiary is a party or of
which any property or assets of the Company or any Subsidiary is the
subject which is required to be set forth in the Prospectus except for
any such proceeding which would not reasonably be expected to have a
Material Adverse Effect;
(viii) the Registration Statement and the Prospectus and any
further amendments or supplements thereto made by the Company (except
as to the financial statements, notes and schedules thereto and other
financial and numerical and statistical information and data contained
therein or omitted therefrom and the information provided by the
Underwriters, as set forth in Section 8(f), contained therein or
omitted therefrom, as to which such counsel need express no opinion)
comply in all material respects with the requirements of the 1933 Act
and the 1933 Regulations;
(ix) based solely on requests for acceleration of the
effectiveness of the Registration Statement filed by the Company with
the Commission and a telephone call made to representatives of the
Commission on the date specified in such opinion, the Registration
Statement was declared effective under the 1933 Act as of the date and
time specified in such opinion, any required filing with the Commission
of the Prospectus pursuant to Rule 424 of the 1933 Act Regulations was
made as of the date specified in such opinion, and, to the knowledge of
such counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that
purpose is pending or threatened by the Commission;
(x) the statements contained in the Prospectus under the
caption "Description of Capital Stock," insofar as they purport to
summarize certain legal provisions of the capital stock of the Company,
are correct in all material respects and constitute a fair summary
thereof; the statements contained in the Prospectus under the captions
"Management" and "Description
22
of Capital Stock" and in the Registration Statement in Item 14, in each
case insofar as such statements constitute summaries of statutes,
rules, regulations, or legal matters, are correct in all material
respects and constitute a fair summary thereof;
(xi) this Agreement has been duly authorized, executed and
delivered by the Company, and it constitutes the valid and binding
agreement of the Company, enforceable in accordance with its terms,
subject to usual limitations on enforceability;
(xii) the issuance and sale of the Shares being delivered by
the Company pursuant to this Agreement and the execution, delivery and
performance by the Company with all of the provisions of this Agreement
and the consummation of the transactions contemplated hereby will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument filed as
exhibits to the Registration Statement pursuant to the 1933 Act
Regulations to which the Company or any of its Subsidiaries is a party
or by which the Company or any of its Subsidiaries is bound or to which
any of the property or assets of the Company or any of its Subsidiaries
is subject, nor will such actions result in any violation of the
provisions of the Certificate of Incorporation or Bylaws, each as
amended (or similar corporate documents) of the Company or any of its
Subsidiaries or any statute, rule or regulation which an attorney
admitted to practice in the state of Delaware exercising reasonable
diligence would recognize as being applicable to transactions of the
type contemplated by this Agreement, or any order known to such counsel
of any court or governmental agency or body having jurisdiction over
the Company or any of its Subsidiaries or any of their respective
properties or assets, in any case which conflict, breach or violation
would reasonably be expected to have a Material Adverse Effect; and,
except for the registration of the Shares under the 1933 Act and such
consents, approvals, authorizations, registrations or qualifications as
may be required under the 1934 Act and applicable state securities laws
in connection with the purchase and distribution of the Shares by the
Underwriters, no consent, approval, authorization or order of, or
filing or registration with, any court or governmental agency or body
under a law which an attorney admitted to practice in the state of
Delaware exercising reasonable diligence would recognize as being
applicable to transactions of the type contemplated by this Agreement
is required for the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby,
except for such consents, approvals, authorizations, orders, filings or
registrations as have been obtained or made;
(xiii) to such counsel's knowledge, based on an officer's
certificate setting forth the factual matters underlying the
definitions of "investment company" and an entity "controlled" by an
"investment company," as those terms are defined in the 1940 Act, the
Company is not and, after giving effect to the offering and sale of the
Shares, will not be, an "investment company" or an entity "controlled"
by an "investment company," as those terms are defined in the 1940 Act;
(xiv) except as described in the Prospectus, to such counsel's
knowledge, there are no contracts, agreements or understandings between
the Company and any person granting such person the right to require
the Company to file a registration statement under the 1933 Act with
23
respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration
statement filed by the Company under the 1933 Act;
(xv) each Selling Stockholder has full right and power to
enter into this Agreement, and the Custody Agreement; except for the
registration of the Shares under the 1933 Act and such consents,
approvals, authorizations, registrations or qualifications as may be
required under the 1934 Act and applicable state securities laws in
connection with the purchase and distribution of the Shares by the
Underwriters, such counsel has no knowledge of any consent, approval,
authorization or order of, or filing or registration with, any court or
governmental agency or body that is required for the execution,
delivery and performance of this Agreement and the Custody Agreement by
any Selling Stockholder and the consummation by any Selling Stockholder
of the transactions contemplated hereby and thereby;
(xvi) this Agreement has been duly executed and delivered by
or on behalf of each Selling Stockholder, and it constitutes the valid
and binding agreement of each such Selling Stockholder, enforceable in
accordance with its terms, subject to usual limitations on
enforceability;
(xvii) the Custody Agreement has been duly executed and
delivered by each Selling Stockholder and constitute valid and binding
agreements of each Selling Stockholder, enforceable in accordance with
their respective terms, subject to usual limitations on enforceability;
and
(xviii) upon the delivery of the Shares to be sold hereunder
by the Selling Stockholders and payment therefor in accordance with the
terms of this Agreement and assuming that each of the Underwriters
which has severally purchased such Shares is a "protected purchaser"
within the meaning of Section 8-303 of the Uniform Commercial Code, the
delivery by each Selling Stockholder to the several Underwriters of
certificates for the Shares being sold by such Selling Stockholder,
duly endorsed for transfer by such Selling Stockholder against payment
therefore as provided in this Agreement, will result in the
Underwriters' acquiring all rights of the Selling Stockholders in such
Shares, free and clear of any adverse claim as defined in Section
8-102(a)(1) of the Uniform Commercial Code.
In rendering such opinion, such counsel may state that its opinion is
limited to matters governed by the 1933 Act and the 1940 Act and the laws of the
state of Delaware. Such counsel shall also state to the effect that (x) such
counsel has acted as counsel to the Company and the Selling Stockholders in
connection with the preparation of the Registration Statement, and (y) based on
the foregoing, no facts have come to the attention of such counsel which leads
it to believe that the Registration Statement (except for the financial
statements, notes and schedules thereto and other financial and numerical and
statistical information and data included therein or omitted therefrom and the
information provided by the Underwriters, as set forth in Section 8(f),
contained therein or omitted therefrom, as to which such counsel need express no
view), as of the Closing Date, contains any untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not
24
misleading, or that the Prospectus (except as stated above) contains any untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The foregoing
opinion and statement may be qualified by a statement to the effect that such
counsel does not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or the
Prospectus (other than as set forth in clause (x) above) and have not undertaken
any independent investigation to determine the existence or absence of any
factual circumstance or condition.
(c) You shall have received a favorable opinion from Bass, Xxxxx & Xxxx
PLC, counsel for the Underwriters, dated such Closing Date, with respect to the
Registration Statement, the Prospectus and other related matters as the
Underwriters may reasonably require, and the Company shall have furnished to
such counsel such documents as they reasonably request for the purpose of
enabling them to pass upon such matters.
(d) As of such Closing Date,
(i) the Registration Statement, any 462(b) Registration
Statement, and the Prospectus, as they may then be amended or
supplemented, shall contain all statements that are required to be
stated therein under the 1933 Act and the 1933 Act Regulations and in
all respects shall conform to the requirements of the 1933 Act and the
1933 Act Regulations, the Company shall have complied in all respects
with Rules 424(b), 430A and 462 under the 1933 Act and neither the
Registration Statement, any 462(b) Registration Statement nor the
Prospectus, as they may then be amended or supplemented, shall contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading;
(ii) there shall not have been any change in the capital stock
or long-term debt of the Company or any Subsidiary or any change, or
any development involving a prospective change, in or affecting the
business, general affairs, management, condition (financial or
otherwise), stockholders' equity, results of operations, properties or
prospects of the Company and its Subsidiaries, otherwise than as set
forth in the Prospectus, the effect of which is, in your judgment, so
material and adverse as to make it impracticable or inadvisable to
proceed with the completion of the public offering or the sale of
payment for the Shares;
(iii) no action, suit or proceeding at law or in equity before
or by any federal, state or other commission, court, board or
administrative agency shall be pending or, to the best of the Company's
or any Subsidiary's knowledge, threatened against the Company or any of
its Subsidiaries that would be required to be set forth in the
Prospectus, other than as set forth therein, wherein an unfavorable
decision, ruling or finding would reasonably be expected to have a
Material Adverse Effect;
(iv) the Company and the Selling Stockholders shall have
complied with all agreements and satisfied all conditions contained
herein in all respects on their respective parts to be performed or
satisfied at or prior to such Closing Date; and
25
(v) the representations and warranties of the Company set
forth in Section 1 and of the Selling Stockholders set forth in Section
2, shall be accurate in all respects as though expressly made at and as
of such Closing Date and you shall have received certificates, dated as
of such Closing Date, executed by the Selling Stockholders, the Chief
Executive Officer and the Chief Financial Officer of the Company to
such effect and with respect to the following additional matters:
(A) the Registration Statement has become effective
under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or preventing or
suspending the use of the Prospectus has been issued, and no
proceedings for that purpose have been instituted or are
pending or, to the best of their knowledge, threatened under
the 1933 Act;
(B) they have carefully reviewed the Registration
Statement, any 462(b) Registration Statement and the
Prospectus and when the Registration Statement and any 462(b)
Registration Statement became effective and at all times
subsequent thereto up to the delivery of such certificate, the
Registration Statement, any 462(b) Registration Statement and
the Prospectus and any amendments or supplements thereto
contained all statements and information required to be
included therein or necessary to make the statements therein
in light of the circumstances in which they were made, not
misleading and neither the Registration Statement, any 462(b)
Registration Statement, the Prospectus nor any amendment or
supplement thereto included any untrue statement of a material
fact or omitted to state any material fact required to be
stated therein or necessary in order to make the statements
therein not misleading, 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 that
has not been so set forth, and
(C) all agreements herein to be performed by the
Company and the Selling Stockholders, respectively, on or
prior to such Closing Date have been duly performed.
(e) You shall have received from Ernst & Young LLP a letter addressed
to the Underwriters and dated the date hereof and the Closing Date,
substantially in the form heretofore approved by you and your counsel.
(f) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the Nasdaq or in the
over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or the
settlement of such trading generally shall have been materially disrupted or
minimum prices shall have been established on any such exchange or such market
by the Commission, by such exchange or by any other regulatory body or
governmental authority having jurisdiction, (ii) a banking moratorium shall have
been declared by federal or state authorities, (iii) the United States shall
have become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a declaration
of a national emergency or war by the United States or (iv) there shall have
occurred such a material adverse change in general economic, political or
financial conditions, including without limitation as a result of terrorist
activities after the date hereof, or the effect of international conditions
26
on the financial markets in the United States shall be such as to make it, in
your judgment, impracticable or inadvisable to proceed with the completion of
the public offering or the sale or payment for the Shares.
(g) As of such Closing Date, counsel for the Underwriters shall have
been furnished with all such documents, certificates and opinions as they may
reasonably request for the purpose of enabling them to pass upon the issuance
and sale of the Shares as contemplated in this Agreement and the matters
referred to in Section 7 and in order to evidence the accuracy and completeness
of any of the representations and warranties or statements of the Company and
the Selling Stockholders, the performance of any of the covenants of the Company
and the Selling Stockholders, or the fulfillment of any of the conditions herein
contained; and all proceedings taken by the Company and the Selling Stockholders
at or prior to such Closing Date in connection with the authorization, issuance
and sale of the Shares as contemplated in this Agreement shall be reasonably
satisfactory in form and substance to you and to counsel for the Underwriters.
The Company will furnish you with such number of conformed copies of such
opinion, certificates, letters and documents, as you shall request.
(h) The NASD, upon review of the terms of the public offering of the
Shares, shall not have objected to such offering, such terms or the
Underwriters' participation in the same.
(i) The Firm Shares and the Option Shares, if any, shall have been
approved for listing on the Nasdaq upon official notice of the issuance, sale
and evidence of satisfactory distribution thereof pursuant to this underwritten
public offering.
(j) Each officer, director and Selling Stockholder of the Company
referred to in Section 1(l) shall have agreed in writing as to the matters set
forth in Section 1(l) relating to the Lock-up Agreement.
If any of the conditions specified in this Section 7 shall not have
been fulfilled when and as required by this Agreement to be fulfilled, this
Agreement may be terminated by you on notice to the Company and the Selling
Stockholders at any time at or prior to such Closing Date, and such termination
shall be without liability of any party to any other party.
Section 8. Indemnification and Contribution.
--------- --------------------------------
(a) The Company will indemnify and hold harmless each Underwriter, its
partners, directors and officers and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act, and the successors and assigns of all such persons, from and
against any losses, claims, damages or liabilities, joint or several, to which
any such Underwriter or any such other person may become subject under the 1933
Act, the 1934 Act, common law 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 a material fact
contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, any Rule 434 Prospectus, or any amendment or supplement thereto, or
in any "blue sky" application or other document executed by the Company or based
upon any information furnished in writing by the Company, filed in any
jurisdiction in order to qualify any or all of the Shares under the securities
laws thereof ("Blue Sky Application"), or arise out of or are based upon the
omission or alleged omission to
27
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading, and will reimburse each Underwriter and each such partner,
director, officer, employee and controlling person for any legal or other
expenses reasonably incurred by such Underwriter, partner, director, officer,
employee or controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement, such Preliminary Prospectus, Prospectus or Rule 434
Prospectus, or such amendment or supplement, or any Blue Sky Application in
reliance upon and in conformity with written information furnished to the
Company by you or by any Underwriter through you expressly for use therein, it
being understood and agreed that the only such information furnished by you or
by any Underwriter through you consists of the information specified in Section
8(f) below; provided, further, that the Company will not be liable for any such
losses, claims, damages, or liabilities arising from the sale of the Shares to
any person if a copy of the Prospectus (as first filed pursuant to Rule 424(b))
or the Prospectus as amended or supplemented by all amendments or supplements
thereto which has been furnished to the Underwriters (within a reasonable amount
of time prior to such sale) shall not have been sent, mailed or given to such
person, at or prior to the written confirmation of the sale of such Shares to
such person, but only if and to the extent that such Prospectus, if so sent or
delivered, would have cured the defect giving rise to, and been a complete
defense against the person asserting, such loss, claim, damage or liability. In
addition to its other obligations under this Section 8(a), the Company agrees
that, as an interim measure during the pendency of any such claim, action,
investigation, inquiry or other proceeding arising out of or based upon any
breach or any statement or omission, or any alleged statement or omission,
described in this Section 8(a), it will reimburse the Underwriters, their
partners, directors, officers, employees and controlling persons on a monthly
basis for all reasonable legal and other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the Company's obligation to reimburse the
Underwriters and such other persons for such expense and the possibility that
such payments might later be held to have been improper by a court of competent
jurisdiction. This indemnity agreement shall be in addition to any liabilities
that the Company may otherwise have.
(b) Each Underwriter, severally but not jointly, will indemnify and
hold harmless the Company against any losses, claims, damages or liabilities to
which the Company may become subject under the 1933 Act, the 1934 Act, common
law or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, any Rule 434 Prospectus,
or any amendment or supplement thereto, or any Blue Sky Application or arise out
of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in the
Registration Statement, such Preliminary Prospectus, Prospectus or Rule 434
Prospectus, or such amendment or supplement, or any Blue Sky Application, in
reliance upon and in conformity with information furnished to the Company by
such Underwriter expressly for use therein, it being understood and agreed that
the only such information furnished by any Underwriter consists of the
28
information specified in Section 8(f) below, and will reimburse the Company for
any legal or other expenses reasonably incurred by the Company in connection
with investigating or defending any such loss, claim, damage, liability or
action. In addition to their other obligations under this Section 8(b), the
Underwriters agree that, as an interim measure during the pendency of any such
claim, action, investigation, inquiry or other proceeding arising out of or
based upon any breach or any statement or omission, or any alleged statement or
omission, described in this Section 8(b), they will reimburse the Company on a
monthly basis for all reasonable legal and other expenses incurred in connection
with investigating or defending any such claim, action, investigation, inquiry
or other proceeding, notwithstanding the absence of a judicial determination as
to the propriety and enforceability of their obligation to reimburse the Company
for such expense and the possibility that such payments might later be held to
have been improper by a court of competent jurisdiction. This indemnity
agreement shall be in addition to any liabilities that the Underwriters may
otherwise have.
The indemnity agreement in this Section 8(b) shall extend upon the same
terms and conditions to, and shall inure to the benefit of, each director of the
Company, each officer of the Company who signed the Registration Statement, and
each person, if any, who controls the Company within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act, to the same extent as such
agreement applies to the Company.
(c) Within ten days after receipt by an indemnified party under Section
8(a) or 8(b) above of notice of commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; no indemnification provided in Section 8(a)
or 8(b) shall be available to any party who shall fail to give notice as
provided in this Section 8(c) if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related and was
prejudiced by the failure to give such notice, but the omission so to notify the
indemnifying party will not relieve the indemnifying party from any liability
that it may have to any indemnified party otherwise than under this Section 8.
In case any such action shall be brought against any indemnified party and it
shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein, and, to the extent
that it shall wish, jointly with any other indemnifying party, similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses, other than reasonable costs of investigation, subsequently
incurred by such indemnified party in connection with the defense thereof. The
indemnified party shall have the right to employ its own counsel in any such
action, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the employment of counsel by such indemnified
party has been authorized by the indemnifying party, (ii) the indemnified party
shall have been advised by such counsel that there may be a conflict of interest
between the indemnifying party and the indemnified party in the conduct of the
defense of such action (in which case the indemnifying party shall not have the
right to direct the defense of such action on behalf of the indemnified party)
or (iii) the indemnifying party shall not in fact have employed counsel to
assume the defense of such action, in any of which events the fees and expenses
of one such counsel shall be borne by the indemnifying party. The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written consent, but if settled with such consent or if there be a final
judgment for
29
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
(d) In order to provide for just and equitable contribution in
circumstances under which the indemnity provided for in this Section 8 is for
any reason judicially determined (by the entry of a final judgment or decree by
a court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Company and the
Underwriters shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by such indemnity incurred by
the Company and one or more of the Underwriters, as incurred, in such
proportions that (i) the Underwriters are responsible pro rata for that portion
represented by the underwriting discount appearing on the cover page of the
Prospectus bears to the public offering price (before deducting expenses)
appearing thereon, and (ii) the Company is responsible for the balance;
provided, however, that no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 0000 Xxx) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation;
provided, further, that if the allocation provided above is not permitted by
applicable law, the Company and the Underwriters shall contribute to the
aggregate losses in such proportion as is appropriate to reflect not only the
relative benefits referred to above but also the relative fault of the Company
and the Underwriters in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. Relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or by the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by a
party as a result of the losses, claims, damages or liabilities referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this subsection (d), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Shares underwritten by it and distributed
to the public were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. For purposes of this
Section 8(d), the partners, directors, officers and employees and each person,
if any, who controls an Underwriter within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act shall have the same rights to contribution as
such Underwriter, and each director of the Company, each officer of the Company
who signed the Registration Statement and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act shall have the same rights to contribution as the Company.
(e) The parties to this Agreement acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions of this Agreement, including without
limitation, the provisions of this Section 8, and are fully informed regarding
said provisions. They further acknowledge that the provisions of this Section 8
fairly allocate the risks in light of the ability of the parties to investigate
the Company and its business in order to assure that adequate disclosure is made
in the Registration Statement and Prospectus as required by the 0000 Xxx. The
parties are advised that federal or state public policy, as interpreted by the
courts in certain
30
jurisdictions, may be contrary to certain of the provisions of this Section 8,
and the parties hereto hereby expressly waive and relinquish any right or
ability to assert such public policy as a defense to a claim under this Section
8 and further agree not to attempt to assert any such defense.
(f) For purposes of this Section 8, the Underwriters severally confirm,
and the Company and the Selling Stockholders acknowledge, that the second
paragraph under the caption "Underwriting" concerning the concession and
re-allowance figures, the text under the caption "Underwriting--Passive market
making pursuant to Regulation M," and the text under the caption
"Underwriting--Stabilization, short positions and penalty bids" in any
Preliminary Prospectus and in the Prospectus constitutes the only information
furnished by the Underwriters to the Company for inclusion in any Preliminary
Prospectus, the Prospectus or the Registration Statement.
Section 9. Representations and Agreements to Survive Delivery. The
--------- --------------------------------------------------
representations, warranties, indemnities, agreements and other statements of the
Company and the Selling Stockholders, set forth in or made pursuant to this
Agreement will remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Company, the Selling Stockholders, any
Underwriter or any representative, officer, director or any controlling person
with respect to an Underwriter or the Company, and will survive delivery of and
payment for the Shares or termination of this Agreement.
Section 10. Effective Date of Agreement and Termination.
---------- -------------------------------------------
(a) This Agreement shall become effective upon the later of (a) the
execution and delivery hereof by the parties hereto and (b) release of
notification of the effectiveness of the Registration Statement by the
Commission, provided, however, that the provisions of Sections 6 and 9 shall at
all times be effective.
(b) You may terminate this Agreement by notice to the Company and the
Selling Stockholders at any time at or prior to the Closing Date in accordance
with the last paragraph of Section 7 of this Agreement.
(c) If this Agreement is terminated pursuant to this Section 10, such
termination shall be without liability of any party to any other party, except
that, notwithstanding any such termination, (i) the provisions of Section 6 and
Section 8 shall remain in effect, and (ii) if any Shares have been purchased
hereunder, the representations and warranties in Section 1 and Section 2 and all
obligations under Section 4 and Section 5 shall also remain in effect.
Section 11. Default by One or More of the Underwriters.
---------- ------------------------------------------
(a) If any Underwriter shall default in its obligation to purchase the
Firm Shares that it has agreed to purchase hereunder, you may in your discretion
arrange for you, another party, or other parties to purchase such Firm Shares on
the terms contained herein. If within 36 hours after such default by any
Underwriter you do not arrange for the purchase of such Firm Shares, then the
Company or the Selling Stockholders shall be entitled to a further period of 36
hours within which to procure another party or other parties satisfactory to you
to purchase such Firm Shares on such terms. In the event that, within the
respective prescribed periods, you notify the Company and the Selling
31
Stockholders that you have so arranged for the purchase of such Firm Shares, or
the Company or the Selling Stockholders notifies you that it has so arranged for
the purchase of such Firm Shares, you or the Company or the Selling Stockholders
shall have the right to postpone the Closing Time for a period of not more than
seven days in order to effect whatever changes may thereby be made necessary in
the Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in your opinion may thereby be
made necessary. The term "Underwriter" as used in this Agreement shall include
any persons substituted under this Section 11 with like effect as if such person
had originally been a party to this Agreement with respect to such Firm Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Firm Shares of a defaulting Underwriter or Underwriters made by you or the
Company or the Selling Stockholders as provided in subsection (a) above, the
aggregate number of Firm Shares which remains unpurchased does not exceed 10%
then the Company shall have the right to require each non-defaulting Underwriter
to purchase the Firm Shares which such Underwriter agreed to purchase hereunder
and, in addition, to require each non-defaulting Underwriter to purchase its pro
rata share (based on the number of Firm Shares which such Underwriter agreed to
purchase hereunder) of the Firm Shares of such defaulting Underwriter or
Underwriters for which such arrangements have not been made; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Firm Shares of a defaulting Underwriter or Underwriters made by you or the
Company or the Selling Stockholders as provided in subsection (a) above, the
number of Firm Shares which remains unpurchased exceeds 10%, or if the Company
shall not exercise the right described in subsection (b) above to require
non-defaulting Underwriters to purchase Firm Shares of a defaulting Underwriter
or Underwriters, then this Agreement shall thereupon terminate, without
liability on the part of any non-defaulting Underwriter or the Company or the
Selling Stockholders except for the expenses to be borne by the Company, the
Selling Stockholders and the Underwriters as provided in Section 6 hereof and
the indemnity and contribution agreements in Section 8 hereof; but nothing
herein shall relieve a defaulting Underwriter from liability for its default.
Section 12. Default by the Company or the Selling Stockholders. If the
---------- --------------------------------------------------
Company or the Selling Stockholders shall fail at the Closing Time to sell and
deliver the respective aggregate number of Firm Shares that they are obligated
to sell, then this Agreement shall terminate without any liability on the part
of any non-defaulting party, except to the extent provided in Section 6 and
except that the provisions of Section 8 shall remain in effect. No action taken
pursuant to this Section shall relieve the Company or the Selling Stockholders
from liability, if any, in respect of its default.
Section 13. Notices. All notices and other communications under this
---------- -------
Agreement shall be in writing and shall be deemed to have been duly given if
mailed, delivered or transmitted by any standard form of telecommunication.
Notices to the Underwriters shall be directed c/o SunTrust Xxxxxxxx Xxxxxxxx,
000 Xxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxxxx
Xxxxx and notices to the Company and the Selling Stockholders shall be directed
to The Providence Service Corporation, 000 Xxxxx Xxxxxxxxx, Xxxxxx, Xxxxxxx
00000, Attention: Xxxxxxxx XxXxxxxx. Each notice hereunder shall be effective
upon receipt by the party to which it is addressed.
32
Section 14. Tax Disclosure. The Company is authorized, subject to
---------- --------------
applicable law, to disclose any and all aspects of this potential transaction
that are necessary to support any United States federal income tax benefits
expected to be claimed with respect to such transaction, and all materials of
any kind (including tax opinions or other tax analyses) related to those
benefits, without the Underwriters imposing any limitation of any kind.
Section 15. Parties. This Agreement is made solely for the benefit of
---------- -------
the Underwriters, the Selling Stockholders, and the Company and, to the extent
so provided, the partners, directors, officers and employees of the Underwriters
and any person controlling any of the Underwriters, the directors of the
Company, the officers of the Company who have signed the Registration Statement
and any person controlling the Company, and their respective executors,
administrators, successors and assigns and, subject to the provisions of Section
11, no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include any purchaser, as
such purchaser, from any of the several Underwriters of the Shares.
Section 16. Governing Law and Time. This Agreement shall be governed
---------- ----------------------
by, and construed in accordance with, the laws of the State of Delaware.
Specified time of the day refers to United States Eastern Time, unless otherwise
specified.
Section 17. Counterparts. This Agreement may be executed in any number
---------- ------------
of counterparts and when a counterpart has been executed by each party, all such
counterparts taken together shall constitute one and the same agreement.
33
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement among the Company, the Selling
Stockholders and the Underwriters in accordance with its terms.
Very truly yours,
THE PROVIDENCE SERVICE CORPORATION
By:
----------------------------------------------------------
Xxxxxxxx X. XxXxxxxx, Chairman and Chief Executive Officer
THE SELLING STOCKHOLDERS NAMED IN SCHEDULE I
By:
-----------------------------------------------------------
Xxxxxxxx X. XxXxxxxx, Attorney-in-Fact
Confirmed and accepted in Atlanta, Georgia,
as of the date first above written, by SunTrust
Capital Markets, Inc. on behalf of the Underwriters
named in Schedule II hereto.
By:
----------------------------------------------------------
Name:
--------------------------------------------------------
Title:
-------------------------------------------------------
34
SCHEDULE I
----------
Number of Firm Number of Option
Selling Stockholder Shares to be Sold Shares to be Sold
------------------- ----------------- -----------------
Eos Partners SBIC, L.P. 1,056,250 158,410
Eos Partners SBIC II, L.P. 193,750 29,102
Xxxxxxx X. Xxxxxx 32,857
Xxxxxxx Xxxx Dover 60,000
Xxxxxx Xxxxx Xxxxx 26,692
Xxxxxxxx Xxx XxXxxxxx 155,451 52,488
Xxxxx X. Xxxxxx 25,000
Xxxx X. Xxxx 50,000
Total 1,600,000 240,000
--------- -------
Schedule I
SCHEDULE II
Name Number of Shares
---- ----------------
SunTrust Capital Markets, Inc. ...............................
Xxxxxxxxx & Company, Inc. ....................................
Avondale Partners, LLC .......................................
Total ................................................... 2,350,000
Schedule II
