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EXHIBIT 1.1
DRAFT
7,000,000 SHARES
TOWNE SERVICES, INC.
COMMON STOCK
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UNDERWRITING AGREEMENT
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FIRST UNION CAPITAL MARKETS CORP.
XXXXXXXXX & XXXXX LLC
X.X. XXXXXXXX & CO.
As Representatives (the "Representatives") of the Several Underwriters
x/x Xxxxx Xxxxx Xxxxxxx Xxxxxxx Xxxx.
Xxxxxxxxxx Xxxxx
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000 __________ __, 1999
Ladies and Gentlemen:
Towne Services, Inc., a Georgia corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
underwriters named in Schedule I hereto (the "Underwriters") 7,000,000 shares of
Common Stock, no par value per share ("Common Stock"), of the Company (the "Firm
Shares"). The Firm Shares are to be sold to the Underwriters, acting severally
and not jointly, in such amounts as are set forth in Schedule I hereto opposite
the name of each Underwriter. Additionally, the Company proposes to grant to the
Underwriters an option to purchase up to 1,050,000 additional shares of Common
Stock (the "Optional Shares") as provided in Section 2 of this Agreement solely
for the purpose of covering over-allotments in connection with the distribution
and sale of the Firm Shares. The Firm Shares and the Optional Shares, if any,
that the Underwriters elect to purchase pursuant to Section 2 hereof are
collectively called the "Shares."
1. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to, and agrees with, the
Underwriters that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (File No.
333-76859) under the Securities
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Act of 1933, as amended (the "Act"), and as a part thereof a preliminary
prospectus, in respect of the Shares, and has filed one or more amendments
thereto. Such registration statement, as amended, has been declared effective by
the Commission, and no stop order suspending the effectiveness of such
registration statement has been issued and no proceeding for that purpose has
been instituted or, to the knowledge of the Company, threatened by the
Commission. Copies of such registration statement and any amendments, including
any post-effective amendments, and all forms of the related prospectuses
contained therein and any supplements thereto, have been delivered to you. Such
registration statement, together with any registration statement filed by the
Company pursuant to Rule 462(b) of the Act, including the prospectus, Part II,
all financial schedules and exhibits thereto, and all information deemed to be a
part of such registration statement pursuant to Rule 430A under the Act at the
time when it became effective, is herein referred to as the "Registration
Statement." The form of final prospectus that discloses all the information that
was omitted from the prospectus contained in the Registration Statement on the
effective date pursuant to Rule 430A of the rules and regulations of the
Commission under the Act and in the form filed pursuant to Rule 424(b) under the
Act is herein referred to as the "Prospectus." The prospectus included in the
Registration Statement, and each prospectus included in any amendment thereto,
prior to the effective date of the Registration Statement, is referred to herein
as a "Preliminary Prospectus."
(b) The Company has not received any order preventing or
suspending the use of any Preliminary Prospectus, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material respects
with the requirements of the Act and the rules and regulations of the Commission
thereunder, and did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by the
Underwriters through you expressly for use therein (it being understood that the
only information so provided is the information included under the caption
"Underwriting" in the Prospectus);
(c) The Registration Statement conforms, and the Prospectus and
any amendments or supplements thereto will conform, in all material respects to
the requirements of the Act and the rules and regulations of the Commission
thereunder and do not and will not, as of the applicable effective date as to
the Registration Statement and any amendment thereto and as of the applicable
filing date as to the Prospectus and any amendment or supplement thereto,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein (in
the light of the circumstances under which they were made, in the case of the
Prospectus and any amendments or supplements thereto) not misleading; provided,
however, that this representation and warranty shall not apply to any statements
or omissions made in reliance upon and in conformity with information furnished
in writing to the Company by the Underwriters through you expressly for use
therein (it being understood that the only information so provided is the
information included under the caption "Underwriting" in the Prospectus);
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(d) Neither the Company nor any of its subsidiaries (as defined in
Rule 405 of the Act), a complete list of which is attached as Schedule II (the
"Subsidiaries"), has sustained, since the date of the latest audited financial
statements included in the Prospectus, any material loss or interference with
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the Prospectus;
and, since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any change in the
outstanding capital stock or long-term debt of the Company or any of its
Subsidiaries, or any issuance of options, warrants or rights to purchase capital
stock of the Company or any of its Subsidiaries, or any change, or any
development that is reasonably likely, currently or prospectively to have a
material adverse change in or effect on the general affairs, management,
financial position, shareholders' equity or results of operations of the Company
and the Subsidiaries, taken as a whole ("Material Adverse Effect"), otherwise
than as set forth or contemplated in the Prospectus;
(e) The Company and each of its Subsidiaries is a corporation in
good standing under the laws of its respective state, with corporate power under
such laws to own, lease and operate its properties and conduct its business as
described in the Prospectus, and the Company and each of its Subsidiaries has
been qualified to transact business as a foreign corporation in all states in
which it is required to be so qualified, except where the failure to so qualify
would not result in a Material Adverse Effect;
(f) The Company and each of the Subsidiaries has good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them, free and clear of all liens,
encumbrances and defects except such as are described in the Prospectus or such
as do not materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the Company or any of
the Subsidiaries; and any real property and buildings held under lease by the
Company or any of the Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company or the Subsidiaries;
(g) The Company has authorized and issued capital stock as set
forth in the Prospectus; all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, are fully paid and
nonassessable and conform to the description of the capital stock of the Company
contained in the Prospectus; except as described in the Prospectus, there are no
preemptive or other similar rights to subscribe for or to purchase any
securities of the Company; except as described in the Prospectus, neither the
Company or any Subsidiary has issued warrants, options or other similar rights
to purchase any securities of the Company or any Subsidiary; and except as
disclosed in the Prospectus, neither the filing of the Registration Statement
nor the offering or sale of the Shares as contemplated by this Agreement gives
rise to any rights for or relating to the registration of any securities of the
Company with respect to such filing, offering or sale;
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(h) All of the issued and outstanding shares of capital stock of
each of the Subsidiaries have been duly and validly authorized and issued and
are fully paid and nonassessable; and all outstanding shares of capital stock of
each of the Subsidiaries are directly owned by the Company free and clear of all
security interests, claims, equities, liens or encumbrances;
(i) The Shares have been duly and validly authorized and, when the
Shares are issued and delivered against payment therefor as provided herein,
will be validly issued, fully paid and nonassessable and will conform to the
description of the Shares contained in the Prospectus;
(j) The Company has full legal right, power and authority to enter
into this Agreement and to issue, sell and deliver the Shares to the
Underwriters as provided herein, and this Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and binding
agreement of the Company enforceable against the Company in accordance with its
terms, except as may be limited by bankruptcy and other creditor rights laws and
general principles of equity, including the availability of the equitable remedy
of specific performance. The issue and sale of the Shares by the Company and the
performance of this Agreement and the consummation by the Company of the
transactions herein contemplated will not conflict with or result in a breach or
violation of any terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its Subsidiaries is a party or to
which the Company or any of its Subsidiaries or any of the properties or assets
of the Company or any of its Subsidiaries is subject, nor will such action
result in any violation of the provisions of the Articles of Incorporation or
bylaws of the Company or any of its Subsidiaries (each as amended to date the
"Charter" and "Bylaws", respectively) or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Company or any of its Subsidiaries or any of the properties or assets of the
Company or any of its Subsidiaries, except for any such conflict, breach,
violation or default which would not have a Material Adverse Effect; and no
consent, approval, authorization, order, registration or qualification of or
with any such court or governmental agency or body is required for the issue and
sale of the Shares or the consummation by the Company of the transactions
contemplated by this Agreement, except such consents, approvals, authorizations,
registrations or qualifications as may be required under the Act and under state
securities or Blue Sky laws in connection with the purchase and distribution of
the Shares by the Underwriters;
(k) There are no legal or governmental proceedings pending to
which the Company or any of the Subsidiaries is a party or of which any
properties or assets of the Company or any of the Subsidiaries are the subject,
other than as set forth or contemplated in the Prospectus, which, if determined
adversely to the Company or any of the Subsidiaries, would individually or in
the aggregate have a Material Adverse Effect and, to the best knowledge of the
Company or any of the Subsidiaries, no such proceedings are threatened or
contemplated by governmental authorities or by others;
(l) Xxxxxx Xxxxxxxx LLP, who have certified certain financial
statements of the Company and the Subsidiaries, are independent public
accountants as required by the Act and the
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Securities Exchange Act of 1934, as amended, (the "Exchange Act") and the rules
and regulations of the Commission thereunder;
(m) The Company and each of the Subsidiaries has previously
disclosed and delivered or made available to the Underwriters or their
representatives prior to the date the Registration Statement was declared
effective copies of all pension, retirement, profit-sharing, deferred
compensation, stock option, employee stock ownership, severance pay, vacation,
bonus or other incentive plans, all other written employee programs,
arrangements or agreements, all medical, vision, dental or other health plans,
all life insurance plans and all other employee benefit plans or fringe benefit
plans, including, without limitation, "employee benefit plans" as that term is
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), adopted, maintained, sponsored in whole or in part or
contributed to by the Company or any of its Subsidiaries for the benefit of
employees, retirees, dependents, spouses, directors, independent contractors or
other beneficiaries and under which employees, retirees, dependents, spouses,
directors, independent contractors or other beneficiaries are eligible to
participate (collectively, the "Company Benefit Plans").
The Company and each of its Subsidiaries has maintained all
Company Benefit Plans (including filing all reports and returns required to be
filed with respect thereto) in accordance with their terms and in compliance
with the applicable terms of ERISA, the Internal Revenue Code of 1986, as
amended (the "Internal Revenue Code"), and any other applicable federal and
state laws the breach or violation of which would have, individually or in the
aggregate, a Material Adverse Effect. Each Company Benefit Plan which is
intended to be qualified under Section 401(a) of the Internal Revenue Code has
either received a favorable determination letter from the Internal Revenue
Service or timely requested such a letter and has at all times been maintained
in accordance with Section 401 of the Internal Revenue Code, except where any
failure to receive or seek such a favorable determination letter or so maintain
such Company Benefit Plan would not have, individually or in the aggregate, a
Material Adverse Effect. Neither the Company nor any of its Subsidiaries has
engaged in a transaction with respect to any Company Benefit Plan that, assuming
the taxable period of such transaction expired as of the date hereof, would
subject the Company or any of its Subsidiaries to a tax or penalty imposed by
either Section 4975 of the Internal Revenue Code or Section 502(i) of ERISA in
amounts which are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect.
Neither the Company nor any of its Subsidiaries is obligated
to provide post-retirement medical benefits or any other unfunded
post-retirement welfare benefits (except COBRA continuation coverage required to
be provided by ERISA Section 601), which liabilities to the Company or any of
the Subsidiaries would have, individually or in the aggregate, a Material
Adverse Effect. Neither the Company, any of its Subsidiaries, nor any member of
a group of trades or businesses under common control (as defined in ERISA
Sections 4001(a)(14) and 4001(b)(1)) with the Company or any of its Subsidiaries
has at any time within the last six years sponsored, contributed to or been
obligated under Title I or IV of ERISA to contribute to a "defined benefit plan"
(as defined in ERISA Section 3(35)). Within the last six years, neither the
Company, any of its Subsidiaries, nor any member of a group of trades or
businesses under
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common control (as defined in ERISA Sections 4001(a)(14) and 4001(b)(1)) with
Company or any of its Subsidiaries, has had an "obligation to contribute" (as
defined in ERISA Section 4212) to a "multiemployer plan" (as defined in ERISA
Sections 4001(a)(3) and 3(37)(A));
(n) The financial statements of the Company and the Subsidiaries,
together with the related notes, as set forth in the Registration Statement
present fairly the financial position and the results of operations of the
Company and the Subsidiaries at the indicated dates and for the indicated
periods; such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied throughout the
periods presented except as noted in the notes thereon, and all adjustments
necessary for a fair presentation of results for such periods have been made;
and the selected financial information included in the Prospectus presents
fairly the information shown therein and has been compiled on a basis consistent
with the financial statements presented therein;
(o) The Company and each of its Subsidiaries has filed all
federal, state and any foreign income tax returns which have been required to be
filed (or has received an extension with respect thereto) and has paid, or made
adequate reserves for, all taxes indicated by said returns and all assessments
received by it to the extent that such taxes have become due and are not being
contested in good faith;
(p) The property, assets and operations of the Company and each of
its Subsidiaries comply in all material respects with all applicable federal,
state or local law, common law, doctrine, rule, order, decree, judgment,
injunction, license, permit or regulation relating to environmental matters (the
"Environmental Laws"), except to the extent that failure to comply with such
Environmental Laws would not have a Material Adverse Effect. To the knowledge of
the Company or any of its Subsidiaries, none of the property, assets or
operations of the Company or any of its Subsidiaries is the subject of any
foreign, federal, state or local investigation evaluating whether any remedial
action is needed to respond to a release into the environment of any substance
regulated by, or form the basis of liability under, any Environmental Laws (a
"Hazardous Material") or is in contravention of any Environmental Law that would
have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries
has received any notice or claim, nor are there pending, reasonably anticipated
or, to the knowledge of the Company or any of its Subsidiaries, threatened
lawsuits against the Company or any of its Subsidiaries with respect to
violations of an Environmental Law or in connection with the release of any
Hazardous Material into the environment. Neither the Company nor any of its
Subsidiaries has any material contingent liability in connection with any
release of Hazardous Material into the environment;
(q) No relationship, direct or indirect, exists between or among
the Company or any of its Subsidiaries on the one hand and the directors,
officers, shareholders, customers or suppliers of the Company or any of its
Subsidiaries on the other hand that is required by the Act or by the rules and
regulations thereunder to be described in the Registration Statement and the
Prospectus that is not so described;
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(r) Neither the Company nor any of its Subsidiaries has taken nor
will take, directly or indirectly, any action that is designed to or that has
constituted or that 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;
(s) The Company and each of the Subsidiaries have the right to use
all trademarks, trade names, trade secrets, servicemarks, inventions, patent
rights, mask works, copyrights, licenses, software code, audiovisual works,
formats, algorithms and underlying data required to operate its business as
presently being conducted and proposed to be conducted as described in the
Prospectus, and the Company and each of the Subsidiaries have all required
approvals and governmental authorizations now used in, or which are necessary
for fulfillment of their respective obligations or the conduct of their
respective businesses as now conducted or proposed to be conducted as described
in the Prospectus; and neither the Company nor any of the Subsidiaries is
infringing any trademark, trade name rights, patent rights, mask works,
copyrights, licenses, trade secret, servicemarks or other similar rights of
others, and there is no claim being made against the Company or any of the
Subsidiaries regarding trademark, trade names, patent, mask work, copyright,
license, trade secret or other infringement or assertion of intellectual
property rights which could have a Material Adverse Effect; the Company has
agreements in place with each employee, consultant or other person or party
engaged by the Company or Subsidiary sufficient to enable the Company and
Subsidiary to fulfill their contractual obligations and to conduct their
respective businesses as now conducted or proposed to be conducted as described
in the Prospectus and providing for the assignment to the Company or any of the
Subsidiaries, as the case may be, of all intellectual property and exploitation
rights in the work performed and the protection of the trade secrets and
confidential information of the Company, each of the Subsidiaries and of third
parties which have been developed by such person for or on behalf of the Company
or any of the Subsidiaries;
(t) The Company and each of its Subsidiaries is insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and adequate for the conduct of its business
and the value of its properties and is customary for companies engaged in
similar industries; and neither the Company nor any of its Subsidiaries has any
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a comparable
cost;
(u) The Shares have been approved for listing, subject to notice
of issuance, on the Nasdaq Stock Market's National Market;
(v) There are no contracts or other documents required by the Act
or by the rules and regulations of the Commission thereunder to be described in
the Registration Statement, any Preliminary Prospectus or the Prospectus or to
be filed as exhibits to the Registration Statement which have not been described
or filed as required;
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(w) The Company and each of its Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurances that
(a) transactions are executed in accordance with the respective management's
general or specific authorization; (b) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (c) access to
assets is permitted only in accordance with the respective management's general
or specific authorization; (d) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences and (e) such controls would prevent or
detect errors or irregularities in amounts that would be material in relation to
the financial statements of the Company or any of its Subsidiaries. Neither the
Company nor any of its Subsidiaries, nor any director, officer, agent, employee
or other person acting, with the knowledge of the Company or any of its
Subsidiaries, on behalf of the Company or any of its Subsidiaries has, directly
or indirectly, used any funds of the Company or any of its Subsidiaries for
unlawful contributions, gifts, entertainment or other unlawful expenses relating
to political activity, made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns from funds of the Company or any of its Subsidiaries, violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended, or made any
bribe, rebate, payoff, influence payment, kickback or other payment, or received
or retained any funds, in violation of any law, rule or regulation;
(x) The Company and each of its Subsidiaries operates its business
in each jurisdiction in which it is doing business in conformity with all
applicable statutes, ordinances, decrees, orders, rules and regulations of all
applicable governmental bodies, including federal, state and local governing
bodies in the United States and all foreign governments in areas outside of the
United States. The Company and each of its Subsidiaries has all material
licenses, permits, approvals and consents necessary to operate its business in
all locations in which such business is currently being operated, and the
Company and each of its Subsidiaries is not aware of any existing or imminent
matter which may adversely impact its operations or business prospects other
than as specifically disclosed in the Prospectus. Neither the Company nor any of
its Subsidiaries has engaged in any activity, whether alone or in concert with
one of its commercial or financial institution customers, creating exposure to
civil or criminal monetary liability or other material sanctions under federal
or state laws regulating consumer credit transactions, debt collection practices
or other violations of law;
(y) The Company and each of its Subsidiaries has filed with or
submitted to the applicable regulatory authorities each statement, report,
information or form required by any applicable law, regulation or order; all
such filings or submissions were in compliance with applicable laws when filed
and no deficiencies have been asserted by any regulatory commission, agency or
authority with respect to such filings or submissions. The Company and each of
its Subsidiaries maintains in full force and effect all licenses and permits
necessary for the conduct of its business and has not received any notification
that any revocation or limitation thereof is threatened or pending. To the
knowledge of the Company or any of its Subsidiaries, there is not pending any
change under any law, regulation, license or permit which could have a Material
Adverse Effect. Neither the Company nor any of its Subsidiaries has received any
notice of violation of or been threatened with a charge of violating and, to the
knowledge of the Company
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or any of its Subsidiaries, is under investigation with respect to a possible
violation of any provision of any law, regulation or order;
(z) No labor dispute exists with the employees of the Company or
any of its Subsidiaries or is imminent that could have a Material Adverse
Effect. Neither the Company nor any of its Subsidiaries is aware of any existing
or imminent labor disturbance by its employees which could be expected to have a
Material Adverse Effect.
(aa) Neither the Company nor any of its Subsidiaries will become as
a result of the transactions contemplated hereby, nor intends 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");
(bb) Neither the Company nor any of its Subsidiaries has violated
any applicable laws relating to immigration, and the Company and its
Subsidiaries have employed only individuals authorized to work in the United
States and have never been the subject of any inspection or investigation
relating to any compliance with or violation of the Immigration Reform and
Control Act of 1986 and all Regulations promulgated thereunder;
(cc) The Company's and the Subsidiaries' computer software (the
"Software") is "Millennium Compliant"; for the purposes of this Agreement
"Millennium Compliant" means: (a) the functions, calculations, and other
computing processes of the Software (collectively, "Processes") perform in an
accurate manner regardless of the date in time on which the Processes are
actually performed and regardless of the date input to the Software, and whether
or not the dates are affected by leap years; (b) the Software can accept, store,
sort, extract, sequence, and otherwise manipulate date inputs and date values,
and return and display date values, in a materially accurate manner regardless
of the dates used or format of the date input; (c) the Software will function
without interruptions caused by the date in time on which the Processes are
actually performed or by the date input to the Software; (d) the Software
accepts and responds to four digit year date input in a manner that resolves any
material ambiguities as to the century in an accurate manner; and (e) the
Software displays, prints and provides electronic output of date information in
ways that are unambiguous as to the determination of the century;
(dd) Neither the Company nor any of its Subsidiaries has received
any communication (written or oral) relating to the termination or modification
or threatened termination or modification of any of the agreements specifically
named in the Prospectus, nor have the Company or any of its Subsidiaries
received any communication (written or oral) relating to any determination not
to renew or extend any agreement specifically named in the Prospectus at the end
of the current term of any such agreement, except where any such termination,
modification, non-renewal or non-extension would not have a Material Adverse
Effect.
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(ee) Any certificate signed by any officer of the Company and
delivered to the Representatives or counsel for the Underwriters shall be deemed
to be a representation and warranty by the Company to each Underwriter as to the
matters covered thereby.
(ff) Neither the Company nor any of its affiliates does business
with the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida Statutes;
(gg) Except as set forth in each Registration Statement and the
Prospectus, there are no agreements, claims, payment, issuances, arrangements or
understandings, whether oral or written, for services in the nature of finder's,
consulting or origination fees with respect to the sale of the Securities or any
other arrangements, agreements, understandings, payments or issuance with
respect to the Company or any of its officers, directors, shareholders,
partners, employees, subsidiaries or affiliates that may affect the
Underwriters' compensation as determined by the National Association of
Securities Dealers (the "NASD");
(hh) The pro forma consolidated financial statements of the Company
and the Subsidiaries, together with related notes, as set forth in the
Registration Statement present fairly the pro forma consolidated financial
position and the results of operations of the Company and the Subsidiaries at
the indicated dates and for the indicated periods; such pro forma financial
statements have been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial statements and have been properly
presented on the bases described therein, and the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances referred to
therein;
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2. PURCHASE AND SALE.
Subject to the terms and conditions herein set forth, (a) the Company
agrees to sell 7,000,000 Firm Shares to the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company, at
a purchase price per share of $_____, the number of Firm Shares to be purchased
by such Underwriter as set forth opposite the name of such Underwriter in
Schedule I hereto and (b) in the event and to the extent that the Underwriters
shall exercise the election to purchase Optional Shares as provided below, the
Company agrees to sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Company, at the purchase
price set forth in clause (a) of this Section 2, that portion of the number of
Optional Shares as to which such election shall have been exercised (to be
adjusted by you so as to eliminate fractional securities) determined by
multiplying such number of Optional Shares by a fraction, the numerator of which
is the maximum number of Optional Shares that such Underwriter is entitled to
purchase as set forth opposite the name of such Underwriter in Schedule I
hereto, and the denominator of which is the maximum number of the Optional
Shares that all of the Underwriters are entitled to purchase.
The Company hereby grants to the Underwriters an option to purchase at
their election up to 1,050,000 Optional Shares, at the purchase price per share
set forth in the paragraph above, for the sole purpose of covering
over-allotments in the sale of the Firm Shares. Any such election to purchase
Optional Shares may be exercised no more than once by written notice from you to
the Company, given within a period of 30 days after the date of this Agreement,
setting forth the aggregate amount of Optional Shares to be purchased and the
date on which such Optional Shares are to be delivered, as determined by you but
in no event earlier than the Second Delivery Date (as defined in Section 4
hereof) or, unless you otherwise agree in writing, earlier than two or later
than 10 business days after the date of such notice.
3. OFFERING BY THE UNDERWRITERS.
Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale to the public
upon the terms and conditions set forth in the Prospectus.
4. DELIVERY AND PAYMENT.
(a) Certificates in definitive form for the Shares to be purchased
by each Underwriter, and in such authorized denominations and registered in such
names as First Union Capital Markets Corp. ("First Union"), may request upon at
least 48 hours' prior notice to the Company shall be delivered by or on behalf
of the Company to you [THROUGH THE FACILITIES OF THE DEPOSITORY TRUST COMPANY
("DTC")] for the account of each Underwriter, against payment by or on behalf of
such Underwriter of the purchase price therefor by wire transfer of Federal
(same-day) funds to the accounts specified by the Company and the Custodian to
First Union at least 48 hours in advance. Such certificates will be made
available for checking and packaging at least 24 hours prior to each Delivery
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Date at the offices of [DTC OR ITS DESIGNATED CUSTODIAN] [FIRST UNION, 000 XXXX
XXXX XXXXXX, XXXXXXXX, XXXXXXXX 00000]. The time and date of such delivery and
payment shall be, with respect to the Firm Shares, 9:30 a.m., Richmond, Virginia
time, on _______, 1999 or at such other time and date as you and the Company may
agree upon in writing, and, with respect to the Optional Shares, 9:30 a.m.,
Richmond, Virginia time, on the date specified by you in the written notice
given by you of the Underwriters' election to purchase such Optional Shares, or
at such other time and date as you and the Company may agree upon in writing.
Such time and date for delivery of the Firm Shares is herein called the "First
Delivery Date," such time and date for delivery of the Optional Shares, if not
the First Delivery Date, is herein called the "Second Delivery Date," and each
such time and date for delivery is herein called a "Delivery Date."
5. AGREEMENTS OF THE COMPANY.
The Company agrees with the Underwriters:
(a) To prepare the Prospectus in a form reasonably approved by you
and to file such Prospectus pursuant to Rule 424(b) under the Act not later than
the Commission's close of business on the second business day following the
execution and delivery of this Agreement or, if applicable, such earlier time as
may be required by Rule 430A(a)(3) under the Act; to make no amendment or
supplement to the Registration Statement or Prospectus prior to any Delivery
Date which is disapproved by you promptly after reasonable notice thereof; to
advise you, promptly after it receives notice thereof, of the time when any
amendment to the Registration Statement has been filed or becomes effective or
any supplement to the Prospectus or any amended Prospectus has been filed and to
furnish you with copies thereof; to file promptly all reports and any definitive
proxy or information statements required to be filed by the Company with the
Commission subsequent to the date of the Prospectus and for so long as the
delivery of a Prospectus is required in connection with the offering or sale of
the Shares; to advise you, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order preventing or
suspending the use of the Preliminary Prospectus or the Prospectus, of the
suspension of the qualification of the Shares for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any such
purpose, of any request by the Commission for the amending or supplementing of
the Registration Statement or Prospectus or for additional information and, in
the event of the issuance of any stop order or of any order preventing or
suspending the use of the Preliminary Prospectus or the Prospectus or suspending
any such qualification, to use promptly its best efforts to obtain its
withdrawal;
(b) Promptly from time to time to take such actions as you may
reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as you may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution of
the Shares; provided, however, that in connection therewith the Company shall
not be required to qualify as a foreign corporation or to file a general consent
to service of process in any jurisdiction;
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(c) To furnish the Underwriters with copies of the Registration
Statement and the Prospectus in such quantities as you may from time to time
reasonably request during such period following the date hereof that a
prospectus is required to be delivered in connection with offers or sales of the
Shares, and, if the delivery of a prospectus is required during this period 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 the light of the circumstances under which they were
made when such Prospectus is delivered, not misleading, or, if for any other
reason it shall be necessary during such period to amend or supplement the
Prospectus to comply with the Act, to notify you and upon your request to file
such document and to prepare and furnish without charge to you 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;
(d) To make generally available to its shareholders and to deliver
to you an earnings statement of the Company conforming with the requirements of
Section 11(a) of the Act and Rule 158 under the Act, covering a period of at
least 12 months beginning after the effective date of the Registration
Statement;
(e) During a period of three years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to shareholders and deliver to you
(i) as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission, the Nasdaq Stock Market or
any national securities exchange on which any class of securities of the Company
is then listed; and (ii) such additional information concerning the business and
financial condition of the Company and its Subsidiaries as you may from time to
time reasonably request;
(f) To apply the net proceeds from the sale of the Shares for the
purposes set forth in the Prospectus and report the use of such proceeds in
accordance with Rule 463 under the Act;
(g) The Company will, from time to time, after the effective date
of the Registration Statement file with the Commission such reports as are
required by the Act, the Exchange Act, and the rules and regulations of the
Commission thereunder, and shall also file with state securities commissions in
states where the Shares have been sold by you (as you shall have advised us in
writing) any such reports as are required to be filed by the securities acts and
the regulations of those states;
(h) During a period of three years after the effective date of the
Registration Statement, to furnish to the Company's shareholders as soon as
practicable after the end of each fiscal year an annual report (including a
balance sheet and statements of income, shareholders' equity and cash flows of
the Company and its consolidated Subsidiaries certified by independent public
accountants);
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(i) If at any time during the 25 day period after the Registration
Statement is declared effective, any rumor, publication or event relating to or
affecting the Company shall occur as a result of which, in your opinion, the
market price for the Common Stock has been or is likely to be materially
affected (regardless of whether such rumor, publication or event necessitates a
supplement to or amendment of the Prospectus), the Company will, after written
notice from you advising it to do so, prepare, consult with you concerning the
substance of, and disseminate a press release or other public statement,
reasonably satisfactory to you, responding to or commenting on such rumor,
publication or event;
(j) Neither the Company, any of its Subsidiaries, nor any of the
officers, directors or affiliates of the Company or any of its Subsidiaries will
take, directly or indirectly, any action designed to cause or result in, or
which might constitute or be expected to constitute, stabilization or
manipulation of the price of the Common Stock;
(k) The Company will cause the Shares to be listed on the Nasdaq
Stock Market's National Market (or such other trading market as shall be
approved by you) at each Delivery Date and will use its best efforts to cause
the Shares to be so listed for at least one year from the date hereof;
(l) The Company will not invest or otherwise use the proceeds
received by the Company from its sale of the Shares in such a manner as would
require the Company to register as an investment company under the 1940 Act;
(m) The Company will maintain a transfer agent and, if necessary
under the laws of the State of Georgia, a registrar for the Common Stock; and
6. PAYMENT OF EXPENSES.
The Company covenants and agrees with the several Underwriters that (a)
the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or
reproducing any Agreement Among Underwriters, this Agreement, the Blue Sky
Survey and any other documents in connection with the offering, purchase, sale
and delivery of the Shares; (iii) the cost of copying or distributing the Blue
Sky Memorandum and any other documents such as underwriters' questionnaires and
powers of attorney in connection with the offering, purchase, sale and delivery
of the Shares; (iv) all expenses in connection with the qualification of the
Shares for offering and sale under state securities laws as provided in Section
5(b) hereof, including the fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with the
Blue Sky survey; (v) all fees and expenses in connection with listing the Shares
on the
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Xxxxxx Xxxxx Xxxxxx; (vi) the filing fees incident to securing any required
review by the NASD of the terms of the sale of the Shares; (vii) the cost of
preparing stock certificates; (viii) the costs or expenses of any transfer agent
or registrar; (ix) the costs and expenses of the Company relating to investor
presentations on any "road show" undertaken in connection with the marketing of
the Shares, including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with the
prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and the
cost of any aircraft chartered in connection with the road show; and (x) all
other costs and expenses incident to the performance of its obligations
hereunder which are not otherwise specifically provided for in this Section. It
is understood, however, that except as provided in this Section, Section 8 and
Section 11 hereof, the Underwriters will pay all of their own costs and
expenses, including the fees of their counsel, stock transfer taxes on resale of
any of the Shares by them, and any advertising expenses connected with any
offers they may make.
7. CONDITIONS TO OBLIGATIONS OF UNDERWRITERS.
The obligations of the Underwriters hereunder, as to the Shares to be
delivered at each Delivery Date, shall be subject, in their discretion, to the
condition that all representations and warranties and other statements of the
Company herein are, at and as of such Delivery Date, true and correct, the
condition that the Company shall have performed its obligations hereunder
theretofore to be performed, and the following additional conditions:
(a) The Registration Statement and all post-effective amendments
thereto shall have become effective not later than 4:00 p.m., Washington, D.C.
time, on the date of this Agreement, or such later time and date as shall have
been consented to by the Representatives, and all filings required by Rule 424,
Rule 430A, Rule 434 or Rule 462(b), if applicable, of the rules and regulations
of the Commission shall have been made; no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission; and all requests for additional information on the part of the
Commission shall have been complied with to your reasonable satisfaction; and no
Underwriter shall have advised the Company that the Registration Statement or
any amendment thereto contains an untrue statement of fact which, in your
judgment, is material or omits to state a fact which, in your judgment, is
material and is required to be stated therein or necessary to make the
statements therein not misleading, or that any Preliminary Prospectus, the
Prospectus or any supplement thereto contains an untrue statement of fact which,
in your judgment, is material, or omits to state a fact which, in your judgment,
is material and is required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
(b) Xxxxxxxxxx Xxxxxxxx LLP, counsel for the Underwriters, shall
have furnished to you their written opinion, dated such Delivery Date, with
respect to the incorporation of the Company and its Subsidiaries, the validity
of the Shares being issued at such Delivery Date, the
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Registration Statement, the Prospectus, and other related matters as you may
reasonably request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters;
(c) Nelson, Mullins, Xxxxx & Scarborough L.L.P., as counsel for
the Company, shall have furnished to you their written opinion, dated such
Delivery Date, in form reasonably satisfactory to you, to the effect that:
(i) The Company and each of the Subsidiaries is a
corporation in good standing under the laws of their respective
jurisdictions, with corporate power under such laws to own, lease and
operate its properties and conduct its business as described in the
Prospectus. The Company and each of its Subsidiaries are qualified to
transact business as a foreign corporation in all states in which they
are required to be so qualified, except where the failure to be so
qualified would not result in a Material Adverse Effect;
(ii) The Company has authorized and issued capital stock
as set forth in the Prospectus under the caption "Capitalization" and
otherwise;
(iii) All of the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid
and nonassessable and conform to the description of capital stock of
the Company in the Prospectus; and none of the outstanding shares of
capital stock were issued in violation of the preemptive rights of any
shareholder of the Company; there are no warrants or options or similar
rights to subscribe for any securities of the Company except as
described in the Prospectus;
(iv) All of the issued and outstanding shares of capital
stock of each of the Subsidiaries have been duly and validly authorized
and issued and are fully paid and nonassessable; and all outstanding
shares of capital stock of each of the Subsidiaries are directly owned
by the Company, free and clear of all security interests, claims,
equities, liens or encumbrances;
(v) The Shares have been duly authorized for issuance and
sale to the Underwriters pursuant to this Agreement and, when issued
and delivered by the Company against payment of the consideration set
forth herein, will be validly issued, fully paid and nonassessable and
no holder thereof will be subject to personal liability by reason of
being such a holder; and the Shares are not subject to the preemptive
rights of any shareholder of the Company;
(vi) Upon issuance and delivery of the Shares to or for
the account of the Underwriters and payment therefor as provided herein
(assuming the Underwriters are purchasing such Firm Shares in good
faith and without notice of any adverse claim), the Underwriters will
receive good and marketable title to the Shares, free and clear of all
liens, pledges, charges, encumbrances, equities, claims, security
interests, restrictions, shareholders agreements and voting trusts
whatsoever;
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(vii) The Shares conform in all material respects as to
legal matters to the description thereof in the Prospectus under the
caption "Description of Capital Stock;"
(viii) The form of certificate evidencing the Shares
complies in all material respects with all applicable statutory
requirements, any applicable requirements of the Charter and Bylaws of
the Company and the requirements of the Nasdaq Stock Market's National
Market;
(ix) To the knowledge of such counsel, all sales of the
Company's securities prior to the date hereof were at all relevant
times duly registered under the Act or exempt from the registration
requirements of the Act, or if such securities were not registered or
exempt in compliance with the Act, any private rights of action for
rescission or damages arising from the failure to register any such
securities are time barred by applicable statutes of limitations or
equitable principles, including laches;
(x) Neither the filing of the Registration Statement nor
the offer or sale of the Shares as contemplated thereby gives rise to
any rights for or related to the registration of any shares of Common
Stock or any other securities of the Company which have not been waived
by the holder or holders thereof prior to the date of this Agreement;
(xi) The Company has duly authorized the execution and
delivery of this Agreement and the performance by the Company hereunder
and has duly executed and delivered this Agreement, and assuming the
due authorization, execution and delivery of this Agreement by the
other parties hereto, this Agreement is enforceable against the
Company, except to the extent that (a) enforceability may be limited by
applicable bankruptcy, insolvency, liquidation, reorganization,
moratorium and other laws relating to or affecting the rights and
remedies of creditors generally, (b) the remedy of specific performance
and other forms of equitable relief may be subject to certain defenses
and to the discretion of the court before which a proceeding may be
brought, and (c) the enforcement of rights to indemnity and
contribution under this Agreement may be limited by federal and state
securities laws or principles of public policy underlying such laws;
(xii) The execution and delivery by the Company of this
Agreement did not, and the performance by the Company hereunder, the
consummation by the Company of the transactions contemplated hereby,
the issuance and sale of the Shares by the Company pursuant hereto and
the compliance by the Company with all of the provisions hereof will
not (with or without the giving of notice or the passage of time or
both), result in any violation by the Company or any of its
Subsidiaries of the Charter or Bylaws of the Company or any of its
Subsidiaries or any breach of or default under any indenture, mortgage,
deed of trust, loan agreement, lease or other written agreement or
instrument to which the Company or any of its Subsidiaries is a party
or by which they or any of their respective properties or assets is
bound and, to the knowledge of such counsel, will not result in any
creation or imposition of a contractual lien or security interest in,
on or against any property or assets of the Company or any of its
Subsidiaries or violate in any
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material respect any existing federal or state constitution, statute,
regulation, rule, order or law (assuming compliance with all applicable
state securities or "blue sky" laws, as to which such counsel need
express no opinion), or any judicial or administrative decree, writ,
judgment or order to which the Company or any of its Subsidiaries or
any of their properties or assets are subject;
(xiii) No consent, approval, authorization or other action
by, or filing with, any governmental authority of the United States or
the State of Georgia is required on the part of the Company for the
performance by the Company of this Agreement and the offering, issuance
and sale of the Shares, except such as have been obtained under the Act
and the Exchange Act and the rules and regulations of the Commission
thereunder and such as may be required under state securities or "blue
sky" laws or by any exchange or the NASD in connection with the offer,
sale and distribution of the Shares by the Underwriters (as to which
such counsel need express no opinion);
(xiv) The Registration Statement and each amendment or
supplement to the Registration Statement and the Prospectus, as of
their respective effective or issue dates (other than the financial
statements and the notes thereto and the related schedules and other
financial and statistical data included therein or omitted therefrom
and the section therein captioned "Underwriting," as to all of which
such counsel need express no opinion), complied as to form in all
material respects with the applicable requirements of the Act and the
rules and regulations of the Commission thereunder. Such counsel has no
reason to believe that, as of the effective date of the Registration
Statement and as of such Delivery Date, either the Registration
Statement or the Prospectus (other than the financial statements and
related schedules and data) (or, as of its date, any further amendment
or supplement thereto made by the Company prior to such Delivery Date)
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or, with respect to the
Prospectus, necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. All required
filings pursuant to Rules 424 and 430A have been made in the manner and
within the time period required;
(xv) To the knowledge of such counsel, there is no
litigation or governmental proceeding pending or overtly threatened by
a written communication against the Company or any of its Subsidiaries,
or to which the Company or any of its Subsidiaries or any of their
properties or assets are subject, that is required to be described in
the Prospectus but is not described as required;
(xvi) There are no legal or governmental proceedings
pending to which the Company or any of the Subsidiaries is a party or
of which any property of the Company or any of the Subsidiaries is the
subject, which, if determined adversely to the Company or any of the
Subsidiaries, is reasonably likely, currently or prospectively,
individually or in the aggregate to have a Material Adverse Effect and,
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to such counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or by others;
(xvii) Such counsel has reviewed all contracts and other
documents referred to in the Registration Statement and the Prospectus,
and the summaries of and other disclosures regarding such contracts and
other documents included in the Registration Statement and the
Prospectus fairly present the information required to be disclosed with
respect thereto; and, to the knowledge of such counsel, there are no
additional contracts or other documents of a character required to be
filed as an exhibit to the Registration Statement or required to be
described in the Registration Statement or the Prospectus which are not
filed or described as required;
(xviii) All descriptions in the Registration Statement and
the Prospectus of statutes, regulations or legal or governmental
proceedings and contracts and other documents are fair summaries
thereof and fairly present the information required to be shown with
respect to such matters;
(xix) The Registration Statement has been declared
effective under the Act, and, to the knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement has
been issued under the Act and no proceedings for that purpose have been
instituted or are pending or threatened by the Commission;
(xx) The Shares have been authorized for quotation on the
Nasdaq Stock Market's National Market, subject to notice of issuance;
and the Common Stock has been registered under the Exchange Act; and
(xxi) The Company is not, and will not be as a result of
the consummation of the transactions contemplated by this Agreement, an
"investment company" or an entity "controlled" by an "investment
company" within the meaning of the 1940 Act;
In addition, such counsel shall state it has reviewed certain
corporate records and other documents of the Company and its
Subsidiaries and has participated in conferences with officers and
other representatives of the Company, the Company's independent public
accountants, and your representatives and your counsel at which the
contents of the Registration Statement and the Prospectus were
discussed and revised. Such counsel shall state that although it has
not independently verified, is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the
information and statements contained in the Registration Statement and
the Prospectus, other than as mentioned in paragraphs (xvii) and
(xviii) above, on the basis of the foregoing, no facts have come to
such counsel's attention that lead such counsel to believe that the
Registration Statement or any amendment thereto, at the time such
Registration Statement or any such amendment became effective,
contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make
the statements therein not misleading, or that the Prospectus
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or any amendment or supplement thereto, at the time the Prospectus was
issued, at the time any such amended or supplemented prospectus was
issued or on the date such opinion is issued, included or includes any
untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that such counsel need not express any belief
regarding the financial statements and notes thereto and the related
schedules and other financial and statistical data contained in or
omitted from the Registration Statement or the Prospectus or any
amendment or supplement thereto.
Such opinion may be furnished subject to such stated assumptions,
limitations and qualifications as shall be acceptable to Xxxxxxxxxx Xxxxxxxx
LLP, counsel for the Underwriters.
(d) At each Delivery Date, Xxxxxx Xxxxxxxx LLP and KPMG LLP shall
have furnished to you a letter or letters, dated the respective date of delivery
thereof, in form and substance reasonably satisfactory to you, containing
statements and information of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements and
other financial information relating to the Company or Forseon Corporation, as
the case may be, contained in the Registration Statement and the Prospectus;
(e) (i) The Company and each of its Subsidiaries shall not have
sustained, since the date of the latest audited financial statements included in
the Prospectus, any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Prospectus, and (ii) since the respective dates as
of which information is given in the Prospectus, there shall not have been any
change in the outstanding capital stock or long-term debt of the Company or any
of its Subsidiaries or any change, or any development involving a prospective
change, in or affecting the general affairs, management, financial position,
shareholders' equity or results of operations of the Company or any of its
Subsidiaries otherwise than as set forth or contemplated in the Prospectus, the
effect of which, in any such case described in clause (i) or (ii), is in your
reasonable judgment so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the Shares
being delivered at such Delivery Date on the terms and in the manner
contemplated by the Prospectus;
(f) On or after the date hereof there shall not have occurred any
of the following: (i) trading in securities of the Company shall have been
suspended; (ii) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange or the Nasdaq Stock Market's National
Market; (iii) a general moratorium on commercial banking activities in New York,
Virginia or Georgia declared by either federal or New York, Virginia or Georgia
authorities; (iv) the outbreak or escalation of hostilities involving the United
States or the declaration by the United States of a national emergency or war,
if any such event specified in this clause (iv) would have such a materially
adverse effect, in your reasonable judgment, as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the Shares
being delivered at such Delivery Date on the terms and in the manner
contemplated in the
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Prospectus; (v) any United States federal or state statute, regulation, rule or
order of any court, legislative body, agency or other governmental authority
shall have been enacted, published, decreed or promulgated or any proceeding or
investigation shall have been commenced which causes a Material Adverse Effect;
or (vi) such a material adverse change in general economic, political, financial
or international conditions affecting financial markets in the United States
having a material adverse impact on trading prices of securities in general as,
in your reasonable judgment, makes it inadvisable to proceed with the payment
for and delivery of the Shares;
[(g) The Company shall have furnished to you copies of agreements
between the directors and executive officers of the Company and certain
shareholders of the Company, in form and content reasonably satisfactory to you,
pursuant to which such persons agree that for a period beginning on the date of
the Prospectus and ending ____ days thereafter, they will not, except pursuant
to this Agreement, directly or indirectly (i) make, agree to or cause any offer,
sale (including short sale), loan, pledge, or other disposition of, or grant any
options, rights or warrants to purchase with respect to, or otherwise transfer
or reduce any risk of ownership of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exchangeable or exercisable for
Common Stock or other capital stock of the Company or (ii) enter into any swap
or other arrangement that transfers all or a portion of the economic
consequences associated with the ownership of the Common Stock (regardless of
whether any of the transactions described in clause (i) or (ii) is to be settled
by the delivery of Common Stock, or such other securities, in cash or
otherwise), or make any demand for or exercise any right with respect to the
registration of Common Stock or any securities convertible into or exchangeable
or exercisable for Common Stock, without the prior written consent of First
Union Capital Markets Corp., which shall not be unreasonably withheld,
conditioned or delayed; provided, however, that nothing contained therein shall
prohibit (x) the exercise of stock options or other purchases of Common Stock
under stock option plans or other incentive compensation arrangements for
employees or directors previously approved by the Company's Board of Directors
or (y) the gift, pledge or assignment of any such securities without the prior
consent of First Union Capital Markets Corp. if the donee, pledgee or assignee
agrees, in writing delivered to First Union Capital Markets Corp. within five
days after such gift, pledge or assignment, to be bound by the terms of such
agreement; and]
(h) The Company shall have furnished or caused to be furnished to
you at such Delivery Date certificates of officers of the Company, as
applicable, reasonably satisfactory to you as to the accuracy of the respective
representations and warranties of the Company, herein at and as of such Delivery
Date, as to the performance by the Company of all of their obligations hereunder
to be performed at or prior to such Delivery Date, as to the matters set forth
in subsections (a) and (f) of this Section and as to such other matters as you
may reasonably request.
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8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will promptly reimburse each Underwriter for any
legal or other expenses reasonably incurred by such Underwriter in connection
with investigating, preparing to defend or defending, or appearing as a
third-party witness in connection with, any such action or claim; 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 any Preliminary Prospectus, the Registration Statement or Prospectus or
any such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by the Underwriters through you expressly
for use therein.
(b) Each Underwriter will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through you expressly
for use therein; and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating, preparing
to defend or defending, or appearing as a third-party witness in connection
with, any such action or claim. The Company acknowledges that the statements set
forth under the heading "Underwriting" in the Preliminary Prospectus and the
Prospectus constitute the only information furnished in writing by or on behalf
of the several Underwriters for inclusion in the Preliminary Prospectus or the
Prospectus, and you, as the Representatives, confirm that such statements are
correct.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any
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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; provided, however, that if the defendants in any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have been advised by counsel that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel to defend such
action on behalf of such indemnified party or parties. It is understood that the
indemnifying party shall, in connection with any such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of only one separate firm of attorneys together with appropriate
local counsel at any time for all indemnified parties. Upon receipt of notice
from the indemnifying party to such indemnified party of its election so to
appoint counsel to defend such action and approval by the indemnified party of
such counsel, the indemnifying party will not be liable for any settlement
entered into without its consent and will not be liable to such indemnified
party under this Section 8 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence, (ii) the indemnifying party shall not
have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action or (iii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of the
indemnifying party; and except that, if clause (i) or (iii) is applicable, such
liability shall be only in respect of the counsel referred to in such clause (i)
or (iii). Notwithstanding the immediately preceding sentence and the first
sentence of this paragraph, if at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for fees and
expenses of counsel, the indemnifying party agrees that it shall be liable for
any settlement of any proceeding effected without its written consent if (i)
such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) above in respect of any losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) in such proportion as is appropriate
to reflect the relative benefits received by the Company on the one hand and the
Underwriters on the other from the offering of the Shares. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law or if the indemnified party failed to give the notice required
under subsection (c) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Underwriters
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on the other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Underwriters
on the other shall be deemed to be in the same proportion as the total net
proceeds from the offering (after deducting the total underwriting discount, but
before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Prospectus. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
on the one hand or the Underwriters on the other and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and the Underwriters agree that it would
not be just and equitable if contributions pursuant to this subsection (d) were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take into account the equitable considerations referred to above in this
subsection (d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) referred to above in this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of damages which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations under this subsection (d) are
several in proportion to their respective underwriting obligations and not
joint.
(e) The obligations of the Company under this Section 8 shall be
in addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who controls
any Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company and to each person, if
any, who controls the Company within the meaning of the Act.
9. DEFAULT OF UNDERWRITERS.
(a) If any Underwriter shall default in its obligation to purchase
the Shares that it has agreed to purchase hereunder at a Delivery Date, you may
in your discretion arrange for you or another party or other parties to purchase
such Shares on the terms contained herein. If within 36 hours after such default
by any Underwriter you do not arrange for the purchase of such Shares, then the
Company, shall be entitled to a further period of 36 hours within which to
procure another party or other parties satisfactory to you to purchase such
Shares on such terms. In the
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event that, within the respective prescribed periods, you notify the Company
that you have so arranged for the purchase of such Shares, or the Company
notifies you that they have so arranged for the purchase of such Shares, you or
the Company shall have the right to postpone such Delivery Date 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, exercised in consultation with Xxxxxxxxxx Xxxxxxxx LLP, may thereby be
made necessary. The term "Underwriter" as used in this Agreement shall include
any person substituted under this Section with like effect as if such person had
originally been a party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase
of the Shares of a defaulting Underwriter or Underwriters by you and the Company
as provided in subsection (a) above, the aggregate number of such Shares that
remains unpurchased does not exceed one-eleventh of the aggregate number of all
the Shares to be purchased at such Delivery Date, then the Company shall have
the right to require each non-defaulting Underwriter to purchase the number of
Shares that such Underwriter agreed to purchase hereunder at such Delivery Date
and, in addition, to require each non-defaulting Underwriter to purchase its pro
rata share (based on the number of Shares that such Underwriter agreed to
purchase hereunder at such Delivery Date) of the share of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the purchase
of the Shares of a defaulting Underwriter or Underwriters by you and the Company
as provided in subsection (a) above, the aggregate number of such Shares that
remains unpurchased exceeds one-eleventh of the aggregate number of all the
Shares to be purchased at such Delivery Date, or if the Company shall not
exercise the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Shares of a defaulting Underwriter or Underwriters,
then this Agreement (or, with respect to the Second Delivery Date, the
obligation of the Underwriters to purchase and of the Company to sell the
Optional Shares) shall thereupon terminate, without liability on the part of any
non-defaulting Underwriters or the Company except for the expenses to be borne
by the Company and the Underwriters as provided in Section 6 hereof and the
indemnity and contribution agreements in Section 8 hereof; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
10. REPRESENTATIONS AND INDEMNITIES TO SURVIVE.
The respective indemnities, agreements, representations, warranties and
other statements of the Company and the several Underwriters, as set forth in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any termination
or cancellation of this Agreement or any investigation (or any statement as to
the results thereof) made by or on behalf of the Underwriters or any controlling
person of any Underwriter, or the Company, or any officer or director or
controlling person of the Company, and shall survive delivery of and payment for
the Shares.
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11. TERMINATION AND PAYMENT OF EXPENSES.
If this Agreement shall be terminated pursuant to Section 9 hereof, the
Company shall not then be under any liability to any Underwriter except as
provided in Section 6 and Section 8 hereof; but if this Agreement shall be
terminated by the Representatives pursuant to Sections 7(f)(i) or otherwise
because of any failure or refusal on the part of the Company to comply with the
terms in all material respects or fulfill in all material respects any of the
conditions of this Agreement, the Company will reimburse the Underwriters
through you for all out-of-pocket expenses, including fees and disbursements of
counsel, reasonably incurred by the Underwriters in making preparations for the
purchase, sale and delivery of the Shares not so delivered, but the Company
shall then be under no further liability to any Underwriter except as provided
in Section 6 and Section 8 hereof.
12. NOTICES.
In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you.
All statements, requests, notices and agreements hereunder shall be in
writing and if to the Underwriters shall be sufficient in all respects if
delivered or sent by reliable courier, first-class mail, telex or facsimile
transmission to First Union Capital Markets Corp. at Riverfront Plaza, 000 Xxxx
Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000, Attention: Corporate Finance Department,
with a copy (which shall not constitute notice) to Xxxxxxxxxx Xxxxxxxx LLP,
counsel for the Underwriters; if to the Company shall be sufficient in all
respects if delivered or sent by reliable courier, first-class mail, telex, or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: Xxxx X. Xxxxxxx, with a copy (which shall not
constitute notice) to Nelson, Mullins, Xxxxx & Xxxxxxxxxxx L.L.P.; provided,
however, that any notice to any Underwriter pursuant to Section 8 hereof shall
be delivered or sent by reliable courier, first-class mail, telex or facsimile
transmission to such Underwriter at its address set forth in the Underwriters'
Questionnaire, which address will be supplied to the Company by you upon
request. Any such statements, requests, notices or agreements shall take effect
upon receipt thereof.
13. SUCCESSORS.
This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Company and, to the extent provided in Sections 8 and
10 hereof, the officers and directors of the Company and each person who
controls the Company or any Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Shares from any Underwriter shall be deemed a successor or assign by reason
merely of such purchase.
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14. TIME OF THE ESSENCE.
Time shall be of the essence in this Agreement.
15. BUSINESS DAY.
As used herein, the term "business day" shall mean any day when the
Commission's office in Washington, D.C. is open for business.
16. APPLICABLE LAW.
This Agreement shall be construed in accordance with the laws of the
Commonwealth of Virginia.
17. CAPTIONS.
The captions included in this Agreement are included solely for
convenience of reference and shall not be deemed to be a part of this Agreement.
18. COUNTERPARTS.
This Agreement may be executed by any one or more of the parties in any
number of counterparts, each of which shall be deemed to be an original, but all
such counterparts shall together constitute one and the same instrument.
[Signatures on the Following Page]
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If the foregoing is in accordance with your understanding, please sign
and return to us four counterparts hereof, and upon the acceptance hereof by
you, this letter and such acceptance hereof shall constitute a binding agreement
among each of the Underwriters and the Company. It is understood that your
acceptance of this Agreement on behalf of each of the Underwriters is pursuant
to the authority set forth in a form of Agreement Among Underwriters, the form
of which will be submitted to the Company for examination, upon request, but
without warranty on your part as to the authority of the signers thereof.
Very truly yours,
TOWNE SERVICES, INC.
By:
---------------------------------------
Xxxx X. Xxxxxxx
Chief Executive Officer and Chairman of
the Board of Directors
Accepted as of the date hereof
at Richmond, Virginia:
FIRST UNION CAPITAL MARKETS CORP.
XXXXXXXXX & XXXXX LLC
X.X. XXXXXXXX & CO.
As Representatives of the Several Underwriters
By: FIRST UNION CAPITAL MARKETS CORP.
By:
------------------------------
By: Xxxxxx X. Xxxxxx
Its: Vice President
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SCHEDULE I
Optional Shares to be
Firm Shares to be Purchased if Maximum
Underwriter Purchased Option Exercised
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30
SCHEDULE II
Subsidiaries of the Company
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