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EXHIBIT 1.1
34,000,000
SERIES B CONVERTIBLE PREFERRED STOCK
2,000,000
SERIES A CONVERTIBLE PREFERRED STOCK
4,000,000
WARRANTS TO PURCHASE
SERIES A CONVERTIBLE PREFERRED STOCK
UNDERWRITING AGREEMENT
March ____, 2000
X.X. XXXXXXXXX & COMPANY, LLC
000 Xxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
MD2patient, Inc., a Georgia corporation (the "Company"), proposes to
issue and sell up to an aggregate of 34,000,000 shares (the "Series B Shares")
of its authorized but unissued Series B Preferred Stock, par value $.01 per
share (the "Series B Preferred Stock"), and 2,000,000 shares (the "Series A
Shares," and together with the Series B Shares, the "Shares") of its authorized
but unissued Series A Preferred Stock, par value $.01 per share (the "Series A
Preferred Stock," and together with the Series B Preferred Stock, the "Preferred
Stock"), to the public at a price of $1.00 per share, and warrants to purchase
4,000,000 shares of Series A Preferred Stock (the "Warrants"), pursuant to a
Form S-1 registered public offering (the "Offering"). This Agreement sets forth
the terms under which X.X. Xxxxxxxxx & Company, LLC (sometimes referred to
herein as "X.X. Xxxxxxxxx") will, as an agent of the Company, assist in the sale
of the Shares and the Warrants in the Offering. The Preferred Stock and the
Warrants are more fully described in the Registration Statement and the
Prospectus hereinafter mentioned.
The Company hereby confirms as follows its agreement with X.X.
Xxxxxxxxx in connection with the proposed offer and sale of the Shares and the
Warrants.
1. REGISTRATION STATEMENT. The Company has filed with the
Securities and Exchange Commission (the "Commission") a registration statement
on Form S-1 (No. 333-91619), including the related preliminary prospectus, for
the registration under the
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Securities Act of 1933, as amended (the "Act"), of the Shares and the Warrants.
Copies of such registration statement and of each amendment thereto, if any,
including the related preliminary prospectus heretofore filed by the Company
with the Commission have been delivered to X.X. Xxxxxxxxx.
The term "Registration Statement" as used in this Agreement shall mean
such registration statement, including all exhibits and financial statements, in
the form in which it became effective, and any registration statement filed
pursuant to Rule 462(b) of the rules and regulations of the Commission with
respect to the Shares and the Warrants (herein called a Rule 462(b) registration
statement), and, in the event of any amendment thereto after the effective date
of such registration statement (herein called the "Effective Date"), shall also
mean (from and after the effectiveness of such amendment) such registration
statement as so amended (including any rule 462(b) registration statement). The
term "Prospectus" as used in this Agreement shall mean the prospectus relating
to the Shares and the Warrants first filed with the Commission pursuant to Rule
424(b) (or if no such filing is required, as included in the Registration
Statement) and, in the event of any supplement or amendment to such prospectus
after the Effective Date, shall also mean (from and after the filing with the
Commission of such supplement or the effectiveness of such amendment) such
prospectus as so supplemented or amended, and, if applicable, shall also mean an
electronic Prospectus as defined in Section 5(f) hereof. The term "Preliminary
Prospectus" as used in this Agreement shall mean each preliminary prospectus
included in such registration statement prior to the time it becomes effective.
The Registration Statement has been declared effective under the
Securities Act, and no post-effective amendment to the Registration Statement
has been filed as of the date of this Agreement. The Company has caused to be
delivered to X.X. Xxxxxxxxx copies of each Preliminary Prospectus and has
consented to the use of such copies for the purposes permitted by the Act.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to X.X. Xxxxxxxxx, as of the date hereof and the
Effective Date, as follows:
(A) Neither the Commission nor any state securities
commission of a state in which the Company is offering Shares or Warrants has
issued any order preventing or suspending the use of any Preliminary Prospectus
or has instituted or, to the Company's knowledge, threatened to institute any
proceedings with respect to such an order. The Registration Statement and the
Prospectus comply in all material respects, with the provisions of the Act and
the rules and regulations of the Commission thereunder. On the Effective Date,
the Registration Statement did not contain any untrue statement of a material
fact and did not omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading, and on the
Effective Date the Prospectus did not contain any untrue statement of a material
fact
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and did not omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that none of the representations and
warranties in this subparagraph (a) shall apply to statements in, or omissions
from, the Registration Statement or the Prospectus made in reliance upon and in
conformity with information herein or otherwise furnished in writing to the
Company by or on behalf of X.X. Xxxxxxxxx expressly for use in the Registration
Statement or Prospectus.
(B) Each of the Company and its subsidiaries (i) has been
duly organized and is validly existing and in good standing under the laws of
its jurisdiction of incorporation or formation, as the case may be, having full
power and corporate authority, to own or lease its properties and to conduct its
business as described in the Registration Statement and the Prospectus; and (ii)
is duly qualified to do business as a foreign corporation or limited liability
company, as the case may be, and is in good standing in all jurisdictions in
which the character of the property owned or leased or the nature of the
business transacted by it makes qualification necessary (except where the
failure to be so qualified would not have a material adverse effect on the
business, properties, financial condition or results of operations of the
Company and its subsidiaries, taken as a whole). Except as disclosed in the
Prospectus, the Company and its subsidiaries do not own any capital stock or
other equity securities in any entity.
(C) The Company had the duly authorized and validly
issued outstanding capitalization set forth under the caption "Capitalization"
in the Prospectus as of the date(s) indicated therein. The securities of the
Company conform to the descriptions thereof contained in the Prospectus. The
form of certificates for the Shares conforms to the corporate law of the
jurisdiction of the Company's incorporation. The outstanding shares of capital
stock (other than the Shares) have been duly authorized and validly issued by
the Company and are fully paid and nonassessable. Except as referred to in the
Prospectus, as of the date(s) indicated in the Prospectus, there are no
outstanding options, warrants, rights or other arrangements requiring the
Company at any time to issue any capital stock. Except as referred to in the
Prospectus, no holders of outstanding shares of capital stock of the Company are
entitled as such to any preemptive or other rights to subscribe for any of the
Shares or the Warrants, and neither the filing of the Registration Statement nor
the offering or sale of the Shares or the Warrants as contemplated by this
Agreement gives rise to any rights, other than those which have been waived or
satisfied, for or relating to, the registration of any securities of the
Company. The Shares and the Warrants are duly authorized, and will be, when sold
to the public as provided herein, validly issued, fully paid and nonassessable
and conform to the description thereof contained in the Prospectus. No further
approval or authority of the shareholders or the Board of Directors of the
Company will be required for the issuance and sale of the Shares or the Warrants
as contemplated herein. The outstanding shares of capital stock or ownership
interests of each of the Company's subsidiaries have been duly authorized and
validly issued, are fully paid and non-assessable, and, except as
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otherwise disclosed in the Prospectus, are solely owned by the Company free and
clear of all liens, encumbrances and equities and claims; and, except as
disclosed in the Prospectus, no options, warrants or other rights to purchase,
agreements or other obligations to issue or other rights to convert any
obligations into shares of capital stock or ownership interests in such
subsidiaries are outstanding. All offers and sales by the Company of the
Company's securities prior to the date hereof were at all relevant times duly
registered under or exempt from the registration requirements of the Act and
were duly registered in accordance with or the subject of an available exemption
from registration under the applicable blue sky laws. The Company has not
affected any sales of securities that would be required to be disclosed in
response to Item 701 of Regulation S-K that are not disclosed in the
Registration Statement.
(D) The Company has full legal right, power and authority
to enter into this Agreement and to consummate the transactions provided for
herein. This Agreement has been duly authorized, executed and delivered by the
Company and, assuming it is a binding agreement of X.X. Xxxxxxxxx, constitutes a
legal, valid and binding agreement of the Company enforceable against the
Company in accordance with its terms (except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application relating to or affecting the enforcement of
creditors' rights and the application of equitable principles relating to the
availability of remedies and except as rights to indemnity or contribution may
be limited by federal or state securities laws and the public policy underlying
such laws), and none of the Company's execution or delivery of this Agreement,
its performance hereunder, its consummation of the transactions contemplated
herein, its application of the net proceeds of the Offering in the manner set
forth under the caption "Use of Proceeds" or the conduct of its business as
described in the Prospectus, conflicts or will conflict with or results or will
result in any breach or violation of any of the terms or provisions of, or
constitutes or will constitute a default under, causes or will cause (or permits
or will permit) the maturation or acceleration of any liability or obligation or
the termination of any right under, or result in the creation or imposition of
any lien, charge, or encumbrance upon, any property or assets of the Company or
any of its subsidiaries pursuant to the terms of (i) the articles of
incorporation or bylaws of the Company or any of its subsidiaries, (ii) any
indenture, mortgage, deed of trust, voting trust agreement, stockholders'
agreement, note agreement or other agreement or instrument to which the Company
or any of its subsidiaries is a party or by which it is bound or to which its
respective property is subject or (iii) any statute, judgment, decree, order,
rule or regulation applicable to the Company or any of its subsidiaries of any
government, arbitrator, court, regulatory body or administrative agency or other
governmental agency or body, domestic or foreign, having jurisdiction over the
Company or any of its subsidiaries, or their activities or properties, which
would materially and adversely affect the business or properties of the Company
and its subsidiaries taken as a whole.
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(E) The financial statements of the Company and its
subsidiaries and the related notes and schedules thereto included in the
Registration Statement and the Prospectus fairly present the financial position,
results of operations, stockholders' equity and cash flows of the Company and
its subsidiaries at the dates and for the periods specified therein. Such
financial statements and the related notes and schedules thereto have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved (except as otherwise noted
therein) and all adjustments necessary for a fair presentation of results for
such periods have been made; provided, however, that the unaudited financial
statements are subject to normal year-end audit adjustments (which are not
expected to be material) and do not contain all footnotes required under
generally accepted accounting principles. The summary and selected financial and
statistical data included in the Registration Statement and the Prospectus
present fairly the information shown therein and such data have been prepared on
a basis consistent with the financial statements contained therein and in the
books and records of the Company.
(F) Xxxxx & Young LLP, who have certified the financial
statements filed with the Commission as part of the Registration Statement, are
independent public accountants as required by the Act and the rules and
regulations promulgated thereunder.
(G) Each of the Company and its subsidiaries maintains 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 generally
accepted accounting principles and to maintain accountability for assets; (iii)
access to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(H) The Company and its subsidiaries have filed all
necessary federal, state and local income, franchise and other material tax
returns and has paid all taxes shown as due thereunder, and the Company and its
subsidiaries have no tax deficiency that has been or, to their knowledge, which
might be assessed against the Company and its subsidiaries which, if so
assessed, would materially and adversely affect the business or properties of
the Company and its subsidiaries, taken as a whole. All tax liabilities accrued
through the date hereof have been adequately provided for on the books of the
Company and its subsidiaries.
(I) Except as disclosed in the Prospectus, there is no
action, suit, claim, proceeding or investigation pending or, to the Company's
knowledge, threatened against the Company or any of its subsidiaries before or
by any court, regulatory body or administrative agency or any other governmental
agency or body, domestic or foreign,
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which (i) questions the validity of the capital stock of the Company or this
Agreement or of any action taken or to be taken by the Company pursuant to or in
connection with this Agreement, (ii) is required to be disclosed in the
Registration Statement which is not so disclosed (and such proceedings, if any,
as are summarized in the Registration Statement are accurately summarized in all
material respects), or (iii) may have a material adverse affect upon the
business operations, financial conditions or income of the Company and its
subsidiaries, taken as a whole.
(J) All executed agreements or copies of executed
agreements filed or incorporated by reference as exhibits to the Registration
Statement to which the Company or any of its subsidiaries is a party or by which
it is bound or to which its assets, properties or businesses are subject have
been duly and validly authorized, executed and delivered by the Company or such
subsidiary and constitute the legal, valid and binding agreements of the Company
or such subsidiary enforceable against it in accordance with their respective
terms (except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws relating to enforcement of
creditors' rights generally, and general equitable principles relating to the
availability of remedies, and except as rights to indemnity or contribution may
be limited by federal or state securities laws and the public policy underlying
such laws). The descriptions in the Registration Statement of contracts and
other documents are accurate and fairly present the information required to be
shown with respect thereto by the Act and the rules and regulations promulgated
thereunder, and there are no contracts or other documents which are required by
the Act or the rules and regulations promulgated thereunder to be described in
the Registration Statement or filed as exhibits to the Registration Statement
which are not described or filed as required and the exhibits which have been
filed are complete and correct copies of the documents of which they purport to
be copies.
(K) Since the Effective Date, no event has occurred which
should have been set forth in a supplement or amendment to the Prospectus or the
Registration Statement which has not been set forth in an effective supplement
or amendment to the Prospectus or the Registration Statement.
(L) Neither the Company nor any of its subsidiaries is,
or with the giving of notice or lapse of time or both, will be, in violation of
or in default under, any term or provision of (i) its articles of incorporation,
bylaws or operating agreement, (ii) any indenture, mortgage, deed of trust,
voting trust agreement, stockholders' agreement, note agreement or other
agreement or instrument to which it is a party or by which it is or may be bound
or to which any of its property is or may be subject, or any indebtedness, the
effect of which breach or default singly or in the aggregate may have a material
adverse effect on the business, management, properties, assets, rights,
operations, or condition (financial or otherwise) of the Company and its
subsidiaries, taken as a whole, or (iii) any statute, judgment, decree, order,
rule or regulation applicable to the Company or such
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subsidiary or of any arbitrator, court, regulatory body, administrative agency
or any other governmental agency or body, domestic or foreign, having
jurisdiction over the Company or such subsidiary or its activities or properties
and the effect of which breach or default singly or in the aggregate may have a
material adverse effect on the business, management, properties, assets, rights,
operations, or condition (financial or otherwise) of the Company and its
subsidiaries, taken as a whole.
(M) 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.
(N) No labor disturbance by the employees of the Company
or any of its subsidiaries exists or, to the Company's knowledge, is imminent.
(O) Each of the Company and its subsidiaries owns, is
licensed or otherwise possesses all rights to use, all patents, patent rights,
inventions, computer programs, source code, object code, databases, devices,
techniques, methods, processes, procedures, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks, trade names,
copyrights and other intellectual property rights (collectively, the "Rights")
necessary for the conduct of its business as it is currently being conducted. To
the Company's knowledge, no claims have been asserted against the Company or any
of its subsidiaries by any person with respect to the use of any such Rights or
challenging or questioning the validity or effectiveness of any such Rights. The
continued use of the Rights in connection with the business and operations of
the Company and its subsidiaries does not, to the knowledge of the Company and
its subsidiaries, infringe on the rights of any person, which, if the subject of
an unfavorable decision, ruling or filing, would have a material adverse effect
on the condition, business or properties of the Company and its subsidiaries
taken as a whole.
(P) The Company and its subsidiaries are conducting their
businesses in compliance with all applicable laws, ordinances or governmental
rules or regulations of the jurisdictions in which they are conducting business,
except where failure to be so in compliance would not materially and adversely
affect the business or properties of the Company and its subsidiaries, taken as
a whole. Each approval, consent, order, authorization, designation, declaration
or filing by or with any regulatory, administrative or other governmental body
necessary in connection with the execution and delivery by the Company of this
Agreement and the consummation of the transactions herein contemplated (except
such additional steps as may be required by the National Association of
Securities Dealers, Inc. (the "NASD"), the Act, the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or to qualify or exempt the Shares and
the Warrants for public offering under state securities or Blue Sky laws) has
been obtained or made and is in full force and effect.
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(Q) Neither the Company nor any of its subsidiaries is,
or after giving effect to the issuance and sale of the Shares and the Warrants
by the Company will be, an "investment company" within the meaning of such term
under the Investment Company Act of 1940, as amended, and the rules and
regulations of the Commission promulgated thereunder.
(R) The Company and its subsidiaries have good and valid
title to all properties and assets described in the Prospectus as owned by them,
free and clear of all liens, encumbrances, security interests, equities, claims
and defects, except such as are described in the Registration Statement and
Prospectus, or such as are not materially important in relation to the business
of the Company and its subsidiaries when taken in the aggregate. The Company has
valid leases for the properties described in the Prospectus as leased by it,
enforceable against the Company and free and clear of all liens, encumbrances,
security interests, equities, claims and defects, except such as are described
in the Registration Statement and Prospectus, or such as are not material and do
not interfere in any material respect with the use made by the Company and its
subsidiaries thereof. The Company and its subsidiaries own or lease all such
properties as are necessary to their operations as currently conducted, as such
current operations are set forth in the Registration Statement and the
Prospectus and the properties and business of the Company and its subsidiaries
conform in all material respects to the descriptions thereof contained in the
Registration Statement and the Prospectus.
(S) Each of the Company and its subsidiaries holds all
franchises, licenses, permits, approvals, certificates and other authorizations
from federal, state and other governmental or regulatory authorities necessary
to the ownership, leasing and operation of its properties or required for the
present conduct of its business, and such franchises, licenses, permits,
approvals, certificates and other governmental authorizations are in full force
and effect and the Company and its subsidiaries are in compliance therewith in
all material respects, except where the failure so to obtain, maintain or comply
with would not have a materially adverse effect on the business, financial
condition or results of operations of the Company and its subsidiaries, taken as
a whole.
(T) The Company and its subsidiaries are in compliance in
all material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder (herein called "ERISA"); no "reportable
event" (as defined in ERISA) has occurred with respect to any "pension plan" (as
defined in ERISA) for which the Company or any of its subsidiaries would have
any liability; the Company and its subsidiaries have not incurred and do 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, including the regulations
and published interpretations thereunder (the "Code"); and each "Pension
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Plan" for which the Company and its subsidiaries would have 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, which would cause the loss of such qualification.
(U) No relationship, direct or indirect, exists between
or among the Company or its subsidiaries, on the one hand, and the directors,
officers, shareholders, customers or suppliers of the Company or its
subsidiaries, on the other hand, which is required to be described in the
Prospectus that is not so described.
(V) Neither the Company nor any of its subsidiaries, nor
to the Company's knowledge, any director, officer, agent, employee or other
person associated with or acting on behalf of the Company or any of its
subsidiaries, has used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political activity; made any
direct or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; violated or is in violation of any
provisions of the Foreign Corrupt Practices Act of 1972; or made any bribe,
rebate, payoff, influence, payment, kickback or other unlawful payment.
(W) The business, operations and facilities of the
Company and each of its subsidiaries have been and are being conducted or
operated in compliance with all applicable laws, ordinances, rules, regulations,
licenses, permits, approvals, plans, authorizations or requirements relating to
occupational safety and health, pollution, protection of health or the
environment (including, without limitation, those relating to emissions,
discharges, release or threatened releases of pollutants, contaminants or
hazardous or toxic substances, materials or wastes into ambient air, surface
water, groundwater or land, or relating to the manufacture, processing,
distribution, use treatment, storage, disposal, transport or handling of
chemical substances, pollutants, contaminants or hazardous or toxic substances,
materials or wastes, whether solid, gaseous or liquid in nature) or otherwise
relating to remediating real property in which the Company or any of its
subsidiaries has or has had any interest, whether owned or leased, of any
governmental department, commission, board, bureau, agency or instrumentality of
the United States, any state or political subdivision thereof and all applicable
judicial or administrative agency or regulatory decrees, awards, judgments and
orders relating thereto, except for such failures to so comply as would not,
individually or in the aggregate, have a material adverse effect on the business
of the Company and its subsidiaries taken as a whole, and neither the Company
nor any of its subsidiaries has received any notice from a governmental
instrumentality or any third party alleging any violation thereof or liability
thereunder (including, without limitation, liability for costs of investigating
or remediating sites containing hazardous substances or damage to natural
resources).
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(X) Neither the Company nor any of its subsidiaries, nor
to the Company's knowledge any officer or employee of the Company or any of its
subsidiaries is a party to any contract or commitment that restricts in any
material respect the ability of the Company, any of its subsidiaries or such
individual to engage in the business of the Company or such subsidiary as
described in the Registration Statement and the Prospectus.
(Y) Any certificate signed by any officer of the Company
on behalf of the Company and delivered to X.X. Xxxxxxxxx or to counsel for X.X.
Xxxxxxxxx shall be deemed a representation and warranty of the Company hereunder
to X.X. Xxxxxxxxx as to the matters covered thereby.
3. SALE AND DELIVERY OF THE SHARES AND THE WARRANTS.
(A) On the basis of the representations and warranties
and subject to the terms and conditions herein set forth, the Company agrees to
issue and sell the Shares and the Warrants through X.X. Xxxxxxxxx, as agent for
the Company, to the public, and X.X. Xxxxxxxxx agrees to sell the Shares and
Warrants, as agent for the Company, upon the terms and conditions set forth in
the Prospectus. The parties agree that the Shares will be offered and sold to
the public at the price of $1.00 per Share (the "Public Offering Price"). X.X.
Xxxxxxxxx makes no representations as to the number of Shares or Warrants it
will sell. The Company acknowledges and agrees that X.X. Xxxxxxxxx is not
obligated to purchase any of the Shares or the Warrants and that there is no
firm commitment to sell any certain number of the Shares or the Warrants by X.X.
Xxxxxxxxx. The Company agrees to pay X.X. Xxxxxxxxx a fee (the "Selling
Commission"), as follows: (i) $400,000 upon the Initial Closing (as defined
below) of the sale of 5,000,000 Shares, (ii) eight cents ($.08) per Share of the
Shares sold through X.X. Xxxxxxxxx in the Offering after the Initial Closing,
until an aggregate of 6,250,000 Shares have been sold, (iii) zero cents ($.00)
per Share of the Shares sold through X.X. Xxxxxxxxx in the Offering after an
aggregate of 6,250,000 Shares have been sold and until 16,666,666 Shares have
been sold, and (iv) three cents ($0.03) per Share of the Shares sold through
X.X. Xxxxxxxxx in the Offering after an aggregate of 16,666,666 Shares have been
sold.
(B) X.X. Xxxxxxxxx shall receive all funds resulting from
the sales of Shares by the Company (through X.X. Xxxxxxxxx as agent for the
Company) to investors in the Offering and shall transmit all such funds to an
interest bearing account with SunTrust Bank, a Georgia banking corporation (the
"Escrow Agent"), by noon (San Francisco time) of the next business day following
the debit of such funds from such investors' brokerage accounts with X.X.
Xxxxxxxxx. The debit of such investors' brokerage accounts with X.X. Xxxxxxxxx
will occur seven calendar days following X.X. Xxxxxxxxx'x receipt of an order to
buy the Shares. The escrow procedures established by X.X. Xxxxxxxxx, the Company
and the Escrow Agent shall comply with Commission Rule 15c2-4 promulgated under
the Exchange Act and X.X. Xxxxxxxxx shall comply with Rule 15c2-4. Only
broker/dealers who are either (i) members in good standing of the NASD that are
registered with the
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NASD and maintain net capital pursuant to Rule 15c3-1 promulgated under the
Exchange Act of not less than $25,000 or (ii) dealers with their principal
places of business located outside the United States, its territories and its
possessions and not registered as brokers or dealers under the Exchange Act, who
have agreed not to make any sales within the United States, its territories or
its possessions or to persons who are nationals thereof or residents therein
shall be designated selected dealers by X.X. Xxxxxxxxx. X.X. Xxxxxxxxx shall
require all selected dealers to comply with Rule 15c2-4.
(C) On or before the third business day following the
Company's and X.X. Xxxxxxxxx'x notification to the Escrow Agent that 5,000,000
Series B Shares have been sold and the Escrow Agent has received cash or cleared
funds for 5,000,000 Series B Shares prior to December 31, 2000 (the "Offering
Termination Date"), an initial closing (the "Initial Closing") on the sale of
such Series B Shares shall take place at such time and place as is mutually
agreed upon by the Company and X.X. Xxxxxxxxx, provided that the other
conditions to the obligations of X.X. Xxxxxxxxx and the Company set forth in
Sections 6 and 7 hereof have been satisfied. Following the Initial Closing, the
Company and X.X. Xxxxxxxxx shall mutually agree upon the time and place for
additional closings (each a "Closing," and together with the Initial Closing,
the "Closings") on the sale of Series A Shares, Warrants and additional Series B
Shares sold prior to the Offering Termination Date, provided that the other
conditions to the obligations of X.X. Xxxxxxxxx and the Company set forth in
Sections 6 and 7 hereof have been satisfied. In the event that 5,000,000 Series
B Shares are not sold by the Company in the Offering prior to the earlier of (i)
the Offering Termination Date and (ii) the receipt by the Company of an order
from the Commission granting the withdrawal of the Registration Statement (the
"Registration Statement Withdrawal"), all funds held by the Escrow Agent will be
promptly refunded to the investors in full, without deduction therefrom in
accordance with the terms of the Escrow Agreement. During the period of escrow
described above, investors in the Offering will not have the right to demand a
refund of the funds placed on their behalf of by X.X. Xxxxxxxxx with the Escrow
Agent. Until such time as the funds have been released from escrow (either to
the Company or the investors, as the case may be) investors will not be deemed
shareholders of the Company. The funds in escrow will be held for the benefit of
the investors until released to the Company and will not be subject to creditors
of the Company.
(D) At each of the Closings, the Company shall deliver to
X.X. Xxxxxxxxx certificates for the Shares in such denominations and in such
name or names as X.X. Xxxxxxxxx may request at least one business day before
such Closing against payment to the Company by the Escrow Agent, on behalf of
the purchasers of such Shares (by wire transfer or other immediately available
funds acceptable to the Company) of the Public Offering Price of such Shares,
less the Selling Commission owed by the Company to X.X. Xxxxxxxxx in accordance
with Section 3(a) hereof. Such Selling Commission shall be paid to X.X.
Xxxxxxxxx at each of the Closings by the Escrow Agent (by wire transfer or other
immediately available funds acceptable to W.R.
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Xxxxxxxxx). At each of the Closings involving the sale of Warrants, the Company
shall deliver to X.X. Xxxxxxxxx Warrants in such denominations and in such name
or names as X.X. Xxxxxxxxx may request at least one business day before such
Closing.
4. OFFERING BY X.X. XXXXXXXXX.
(A) It is understood that, after the Registration
Statement becomes effective, X.X. Xxxxxxxxx proposes to sell the Shares and the
Warrants to the public as agent for the Company upon the terms and conditions
set forth in the Prospectus, such selling efforts to include receiving, handling
and disbursing all payments from investors and delivering the Warrants and the
certificates for the Shares to the investors once received by X.X. Xxxxxxxxx
pursuant to Section 3(d) above. Upon written notice provided by the Company to
X.X. Xxxxxxxxx, X.X. Xxxxxxxxx hereby agrees to suspend its selling efforts
until it has received written notice from the Company that it may continue its
selling efforts in accordance with this Agreement and upon the terms and
conditions set forth in the Prospectus.
(B) The information set forth under the caption "Plan of
Distribution" in the Registration Statement, any Preliminary Prospectus and the
Prospectus (insofar as such information relates to X.X. Xxxxxxxxx or related
persons) constitutes the only information furnished by X.X. Xxxxxxxxx to the
Company for inclusion in the Registration Statement, any Preliminary Prospectus,
and the Prospectus, and X.X. Xxxxxxxxx represents and warrants to the Company
that the statements made therein (insofar as they relate to X.X. Xxxxxxxxx or
related persons) are correct and do not omit any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(C) X.X. Xxxxxxxxx xxxxxx represents and warrants that it
is registered as a broker-dealer under federal securities laws and under state
securities laws in all fifty States of the United States of America and that it
will act as a broker-dealer as required in order for offers and sales of Shares
and Warrants to comply with all applicable federal and state securities laws in
the States specified by the Company.
5. COVENANTS OF THE COMPANY. The Company covenants and agrees as
follows:
(A) The Company will not file with the Commission any
amendment to the Registration Statement or supplement to the Prospectus (i) of
which X.X. Xxxxxxxxx shall not previously have been advised and furnished with a
copy a reasonable period of time prior to the proposed filing and as to which
filing X.X. Xxxxxxxxx shall not have given its consent or (ii) which is not in
compliance with the Act or the rules and regulations of the Commission
thereunder.
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(B) As soon as the Company is advised or obtains
knowledge thereof, the Company will advise X.X. Xxxxxxxxx (i) of any request
made by the Commission for amendment of the Registration Statement, for
supplement to the Prospectus or for additional information, (ii) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement, or the institution or threat of any action,
investigation or proceeding for that purpose, or (iii) the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Shares or the Warrants for sale in any jurisdiction, or the receipt by it
of notice of the initiation or threatening of any proceeding for that purpose.
The Company will use its best efforts to prevent the issuance of any such order
and, if issued, to obtain the lifting or withdrawal thereof as soon as possible.
(C) The Company will (i) on or before each date on which
a Closing occurs (each such date a "Closing Date" and collectively, the "Closing
Dates"), deliver to X.X. Xxxxxxxxx a signed copy of the Registration Statement
as originally filed and of each amendment thereto filed prior to the time the
Registration Statement became effective and, promptly upon the filing thereof,
a signed copy of each post-effective amendment, if any to the Registration
Statement (together with, in each case, all exhibits thereto unless previously
delivered to X.X. Xxxxxxxxx), (ii) as promptly as possible deliver to X.X.
Xxxxxxxxx, at such office as X.X. Xxxxxxxxx may designate, as many copies of
the Prospectus as X.X. Xxxxxxxxx may reasonably request, and (iii) thereafter
from time to time during the period in which a prospectus is required by law to
be delivered by X.X. Xxxxxxxxx or dealers, likewise send to X.X. Xxxxxxxxx as
many additional copies of the Prospectus and as many copies of any supplement
to the Prospectus and of any amended prospectus, filed by the Company with the
Commission, as X.X. Xxxxxxxxx may reasonably request for the purposes
contemplated by the Act.
(D) If at any time (i) during the period in which a
prospectus is required by law to be delivered by X.X. Xxxxxxxxx or dealers or
(ii) prior to the Offering Termination Date any event relating to or affecting
the Company, or of which the Company shall be advised in writing by X.X.
Xxxxxxxxx, shall occur as a result of which it is necessary to supplement or
amend the Prospectus in order to make the Prospectus not misleading in the light
of the circumstances existing at the time it is delivered to a purchaser of the
Shares or the Warrants, the Company will, subject to Section 5(a) hereof,
forthwith prepare and file with the Commission a supplement to the Prospectus or
an amended prospectus so that the Prospectus as so supplemented or amended will
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances existing at the time such Prospectus is delivered to such
purchaser, not misleading. The Company authorizes X.X. Xxxxxxxxx to use the
Prospectus, as from time to time amended or supplemented, in connection with the
sale of the Shares or Warrants by X.X. Xxxxxxxxx
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as agent for the Company in accordance with this Agreement and the applicable
provisions of the Act and the applicable rules and regulations thereunder for
such period.
(E) Prior to the filing thereof with the Commission, the
Company will submit to X.X. Xxxxxxxxx, for its information, a copy of any
post-effective amendment to the Registration Statement and any supplement to the
Prospectus or any amended prospectus proposed to be filed.
(F) The Company shall cause to be prepared and delivered,
at its expense, promptly following the effective date of this Agreement, to X.X.
Xxxxxxxxx an "electronic Prospectus" to be used by X.X. Xxxxxxxxx in connection
with the Offering. As used herein, the term "electronic Prospectus" means a form
of Prospectus, and any amendment or supplement thereto, that meets each of the
following conditions: (i) it shall be encoded in an electronic format,
reasonably satisfactory to X.X. Xxxxxxxxx, that may be transmitted
electronically by X.X. Xxxxxxxxx to offerees and purchasers of the Shares or the
Warrants for at least the Prospectus delivery period; (ii) it shall disclose the
same information as the paper Prospectus and Prospectus filed pursuant to the
Electronic Data Gathering, Analysis and Retrieval System ("XXXXX"), except to
the extent that graphic and image material cannot be disseminated
electronically, in which case such graphic and image material shall be replaced
in the electronic Prospectus with a fair and accurate narrative description or
tabular representation of such material, as appropriate; and (iii) it shall be
in or convertible into a paper format or an electronic format, reasonably
satisfactory to X.X. Xxxxxxxxx, that will allow investors to store and have
continuously ready access to the Prospectus at any future time, without charge
to investors (other than any fee charged for subscription to the system as a
whole and for online time). Such electronic Prospectus may consist of a Rule 434
preliminary prospectus, together with the applicable term sheet, provided that
it otherwise satisfies the format and conditions described in the immediately
preceding sentence.
(G) The Company will use its best efforts to qualify the
Shares and the Warrants for offer and sale under the securities or blue sky laws
of such jurisdictions as the Company may designate, will provide written
notification to X.X. Xxxxxxxxx of the jurisdictions in which the Shares and the
Warrants are qualified for offer and sale, and, during the period in which a
prospectus is required by law to be delivered by X.X. Xxxxxxxxx or a dealer,
will maintain such qualifications in good standing under said securities or blue
sky laws; provided, however, that the Company shall not be required to qualify
as a foreign corporation or file any general consent to service of process in
any jurisdiction in which it is not so qualified. The Company will immediately
notify X.X. Xxxxxxxxx when the Shares or Warrants are no longer
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qualified for offer and sale in a particular jurisdiction and when it desires XX
Xxxxxxxxx to cease selling Shares or Warrants in a particular jurisdiction.
(H) The Company agrees to pay all costs and expenses
incident to the performance of the obligations of the Company under this
Agreement, including, without limitation, all costs and expenses incident to (i)
the preparation, printing and filing with the Commission and the NASD of the
Registration Statement, any Preliminary Prospectus and the Prospectus, (ii) the
furnishing to X.X. Xxxxxxxxx of copies of any Preliminary Prospectus and of the
several documents required by paragraph (c) of this Section 5 to be so
furnished, (iii) the printing of this Agreement and related documents delivered
to X.X. Xxxxxxxxx, (iv) the preparation, printing and filing of all supplements
and amendments to the Prospectus referred to in paragraph (d) of this Section 5,
(v) blue sky fees and related disbursements (including reasonable counsel fees
and disbursements and cost of printing memoranda) in qualifying the Shares and
the Warrants under state securities or blue sky laws, and (vi) the printing and
issuance of stock certificates, including the transfer agent's fees.
(I) The Company agrees to reimburse X.X. Xxxxxxxxx, for
the account of the X.X. Xxxxxxxxx, for blue sky fees and related disbursements
(including reasonable counsel fees and disbursements and cost of printing
memoranda for X.X. Xxxxxxxxx) paid by or for the account of X.X. Xxxxxxxxx or
its counsel in qualifying the Shares and the Warrants under state securities or
blue sky laws and in the review of the offering by the NASD.
(J) As soon as practicable, but in any event not later
than 45 days after the end of the first fiscal quarter first occurring after the
first anniversary of the Effective Date, the Company will make generally
available to its security holders, in the manner specified in Rule 158(b) of the
rules and regulations promulgated under the Act an earnings statement which will
be in the detail required by, and will otherwise comply with, the provisions of
Section 11(a) of the Act and Rule 158(a) of the rules and regulations
promulgated thereunder.
(K) 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 Preferred Stock.
(L) The Company will apply the net proceeds of the
offering received by it in the manner set forth under the caption "Use of
Proceeds" in the Prospectus.
(M) The Company will timely file all such reports, forms
or other documents as may be required from time to time, under the Act, the
rules and regulations promulgated thereunder, the Exchange Act, and the rules
and regulations promulgated thereunder, and all such reports, forms and
documents filed will comply in all material
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respects as to form and substance with the applicable requirements under the
Act, the rules and regulations promulgated thereunder, the Exchange Act and the
rules and regulations promulgated thereunder.
(N) The Company is familiar with the Investment Company
Act of 1940, as amended, and has in the past conducted its affairs, and will in
the future conduct its affairs, in such a manner to ensure that the Company was
not and will not be an "investment company" or a "company" controlled by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended, and the rules and regulations thereunder.
(O) The Company will reserve and keep available that
maximum number of its authorized but unissued shares of common stock, par value
$.01 per share ("Common Stock"), which are issuable upon conversion of the
Preferred Stock or upon exercise of the Warrants outstanding from time to time.
The Company will reserve and keep available that minimum number of its
authorized but unissued shares of Series A Preferred Stock, which are issuable
upon conversion of the Series B Preferred Stock or upon exercise of the Warrants
outstanding from time to time.
(P) The Company will notify X.X. Xxxxxxxxx promptly of
any material adverse change affecting any of its representations, warranties,
agreements and indemnities herein at any time during the term of this Agreement.
6. CONDITIONS OF X.X. XXXXXXXXX'X OBLIGATIONS. The obligations of
X.X. Xxxxxxxxx under this Agreement are subject to the performance by the
Company on and as of each Closing Date, of its covenants and agreements
hereunder, and the following additional conditions:
(A) The Registration Statement shall have become
effective, and no stop order suspending the effectiveness of the Registration
Statement shall have been issued, and no proceedings for that purpose shall have
been instituted or threatened or, to the knowledge of the Company or X.X.
Xxxxxxxxx, shall be contemplated by the Commission.
(B) X.X. Xxxxxxxxx shall be satisfied that (i) as of the
Effective Date, the statements made in the Registration Statement and the
Prospectus were true and correct and neither the Registration Statement nor the
Prospectus omitted to state a fact required to be stated therein or necessary to
make the statements therein not misleading, (ii) since the Effective Date, no
event has occurred which should have been set forth in a supplement or amendment
to the Prospectus which has not been set forth in an effective supplement or
amendment, (iii) neither the Company nor any of its subsidiaries has any
material contingent obligations which are not disclosed in the Registration
Statement and the Prospectus to the extent required under the Act, (iv) there
are not pending or known
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threatened legal proceedings to which the Company or any of its subsidiaries is
a party or of which property of the Company or any of its subsidiaries is
subject which are material and which are not disclosed in the Registration
Statement and the Prospectus to the extent required under the Act, (v) there are
not any franchises, contracts, leases or other documents which are required to
be filed as exhibits to the Registration Statement which have not been filed as
required, and (vi) the representations and warranties of the Company herein are
true and correct in all material respects as of each Closing Date.
(C) On or prior to each Closing Date, the legality and
sufficiency of the sale of the Shares and the Warrants hereunder and the
validity and form of the certificates representing the Shares, all corporate
proceedings and other legal matters incident to the foregoing, and the form of
the Registration Statement and of the Prospectus (except as to the financial
statements contained therein), shall have been approved at or prior to such
Closing Date by Bass, Xxxxx & Xxxx PLC, counsel for X.X. Xxxxxxxxx, which
approval may not be unreasonably withheld. X.X. Xxxxxxxxx shall have received
from counsel to X.X. Xxxxxxxxx, such opinion or opinions with respect to the
issuance and sale of the Shares and the Warrants, the Registration Statement and
the Prospectus and such other related matters as X.X. Xxxxxxxxx reasonably may
request and such counsel shall have received such documents and other
information as they reasonably request to enable them to pass upon such matters,
which opinion or opinions shall not be unreasonably withheld.
(D) On each Closing Date, X.X. Xxxxxxxxx shall have
received an opinion addressed to X.X. Xxxxxxxxx, dated such Closing Date, of
Xxxxxx & Bird LLP, counsel to the Company ("Company Counsel"), to the effect set
forth below:
(I) Each of the Company and its corporate
subsidiaries has been duly incorporated and is validly
existing and in good standing under the laws of its
jurisdiction of incorporation, and has the corporate power to
own or lease its properties and to conduct its business, and
the Company is duly qualified to do business as a foreign
corporation and is in good standing in the State of Tennessee;
(II) The Company has authorized and outstanding
capital stock in the number and classes as set forth under the
heading "Capitalization" in the Prospectus. The securities of
the Company conform in all material respects to the
description thereof contained in the Prospectus. Proper
corporate proceedings have been validly taken to authorize the
Company's authorized capital stock and all outstanding shares
of such capital stock have been duly authorized and validly
issued by the Company, are fully paid and nonassessable. No
preemptive rights, rights of first refusal or other rights
exist with respect to the Shares or the Warrants, or the issue
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and sale thereof, pursuant to the Company's articles of
incorporation or bylaws and, there are to the knowledge of
such counsel no contractual preemptive rights that have not
been waived, rights of first refusal or rights of co-sale
which exist with respect to the Shares or the Warrants.
(III) The outstanding shares of capital stock of
each of the Company's corporate subsidiaries have been duly
authorized and validly issued, are fully paid and
non-assessable, and are owned by the Company, to such
counsel's knowledge, free and clear of all liens, encumbrances
and equities and claims; and, to such counsel's knowledge, no
options, warrants or other rights to purchase, agreements or
other obligations to issue or other rights to convert any
obligations into shares of capital stock or ownership
interests in such subsidiaries are outstanding.
(IV) To such counsel's knowledge, there are no
rights of any holders of the Company's securities, not
effectively satisfied or waived, to require registration under
the Act of any of the Company's securities or other securities
of the Company in connection with the filing of the
Registration Statement or with the offer or sale of the Shares
or the Warrants;
(V) The Company has the corporate power to enter
into this Agreement and to consummate the transactions
provided for herein. This Agreement has been duly authorized,
executed and delivered by the Company.
(VI) The execution and delivery by the Company of
this Agreement does not, and if the Company were now to
perform its obligations under this Agreement such performance
would not, result in any breach or violation of any of the
terms or provisions of, or constitute a default under, or
result in the creation or imposition of any contractual lien,
charge or encumbrance upon any property or assets of the
Company pursuant to, the terms of the certificate of
incorporation or bylaws of the Company or any of its corporate
subsidiaries; the terms of any material indenture, mortgage,
deed of trust, voting trust agreement, stockholder's
agreement, note agreement or other agreement or instrument
known to such counsel to which the Company or any of its
subsidiaries is a party or by which it is bound or to which
its properties are subject; any existing federal or state
statute, rule or regulation to which the Company or any of its
subsidiaries is subject, which would materially and adversely
affect the business or properties of the Company and its
subsidiaries taken as a whole; or any judicial or
administrative judgment, decree or order, known to such
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counsel to which the Company or any of its subsidiaries is
subject, which would materially and adversely affect the
business or properties of the Company and its subsidiaries
taken as a whole;
(VII) No consent, approval, authorization or order
of any governmental authority of the United States or the
State of Georgia is required for the consummation of the
transactions contemplated in this Agreement, except such as
have been obtained under the Act or may be required by the
NASD or under state securities or Blue Sky laws in connection
with the issuance and sale of the Shares and the Warrants by
the Company pursuant to this Agreement;
(VIII) The Registration Statement is effective
under the Act; any required filing of the Prospectus pursuant
to Rule 424(b) has been made in the manner and within the time
period required by Rule 424(b); and, to the knowledge of such
counsel, no stop order suspending the effectiveness of the
Registration Statement or any amendment thereto has been
issued, and no proceedings for that purpose have been
instituted or are pending or are threatened or contemplated by
the Commission;
(IX) The Registration Statement and the
Prospectus (except for the financial statements, schedules and
other financial and statistical data included therein, as to
which such counsel need not express any opinion), complied as
to form in all material respects with the requirements of the
Act and the rules and regulations of the Commission
thereunder;
(X) The descriptions contained and summarized in
the Registration Statement and the Prospectus of written
franchises, contracts, leases, documents, or any threatened
legal or governmental actions, suits or proceedings, are
accurate in all material respects and fairly represent in all
material respects the information required to be shown by the
Act and the rules and regulations of the Commission
thereunder. To the knowledge of such counsel, there are no
written franchises, contracts, leases, documents, or any
threatened legal or governmental actions, suits or
proceedings, which are required by the Act and the rules and
regulations of the Commission thereunder to be described in
the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement which are not described
or filed as required;
(XI) The statements in the Prospectus under the
caption "Description of Capital Stock" in each case insofar as
such statements constitute summaries of the legal matters,
documents or proceedings referred to therein, fairly present
in all material respects the information
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required under the Act and the rules and regulations
promulgated thereunder (the "Act and Rules") with respect
to such legal matters, documents and proceedings and
fairly summarize in all material respects the matters
referred to therein to the extent required by the
Act and Rules;
(XII) Good and valid title to the Shares and the
Warrants sold in the Offering, free and clear of all liens,
encumbrances, equities, security interests and claims of which
counsel has knowledge, has been transferred to the purchasers
in the Offering, assuming for the purpose of this opinion that
such purchasers purchased the same in good faith without
notice of any liens, encumbrances, equities, security
interests or adverse claims; and
In addition, such counsel shall state that in the course of the
preparation of the Registration Statement and the Prospectus, such counsel has
participated in conferences with officers and representatives of the Company and
with the Company's independent public accountants, at which conferences such
counsel made inquiries of such officers, representatives and accountants and
discussed the contents of the Registration Statement and the Prospectus and
(without taking any further action to verify independently the statements made
in the Registration Statement and the Prospectus and, except as stated in the
foregoing opinion, without assuming responsibility for the accuracy,
completeness or fairness of such statements) nothing has come to such counsel's
attention that causes such counsel to believe that the Registration Statement as
of the date it is declared effective contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or that the
Prospectus as of its date and as of the applicable Closing Date contained or
contains any untrue statement of a material fact or omitted or omits to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (it being understood
that such counsel need not express any opinion with respect to the financial
statements, schedules and other financial and statistical data included in the
Registration Statement or the Prospectus).
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and public officials. References to the Registration
Statement and the Prospectus in this paragraph (d) shall include any amendment
or supplement thereto at the date of such opinion.
(E) X.X. Xxxxxxxxx shall have received from Ernst & Young
LLP a letter or letters, addressed to X.X. Xxxxxxxxx and dated each Closing
Date, confirming that they are independent public accountants with respect to
the Company within the meaning of the Act and the applicable published rules and
regulations thereunder and based upon the procedures described in their letter
delivered to X.X. Xxxxxxxxx concurrently with the execution of this Agreement
(the "Original Letter"), but carried out
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to a date not more than three business days prior such Closing Date (i)
confirming, to the extent true, that the statements and conclusions set forth in
the Original Letter are accurate as of such Closing Date or such later date, as
the case may be, and (ii) setting forth any revisions and additions to the
statements and conclusions set forth in the Original Letter which are necessary
to reflect any changes in the facts described in the Original Letter since the
date of the Original Letter or to reflect the availability of more recent
financial statements, data or information. The letters shall not disclose any
change, or any development involving a prospective change, in or affecting the
business or properties of the Company or any of its subsidiaries, which should
have been set forth in a supplement or amendment to the Prospectus which has not
been set forth in an effective supplement or amendment.
(F) On each Closing Date, X.X. Xxxxxxxxx shall have
received a certificate, dated such Closing Date or such later date, as the case
may be, signed by the Chief Executive Officer and Chief Financial Officer of the
Company, (i) stating that the respective signers of said certificate have
carefully examined the Registration Statement in the form in which it originally
became effective and the Prospectus contained therein and any amendments or
supplements thereto and this Agreement, and that the statements included in
clauses (i) through (vi) of paragraph (b) of this Section 6 are true and
correct, and (ii) representing and warranting that the representations and
warranties of the Company pursuant to Section 2 of this Agreement are true and
correct as of each such Closing Date.
(G) X.X. Xxxxxxxxx shall have been furnished evidence
reasonably satisfactory to X.X. Xxxxxxxxx from the appropriate authorities of
the several jurisdictions of the qualification referred to in paragraph (g) of
Section 5 hereof.
7. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY.
(A) The obligations of the Company to deliver the Shares and the
Warrants shall be subject to the conditions that (i) the Registration Statement
shall have become effective, (ii) no stop order suspending the effectiveness
thereof shall be in effect and no proceedings therefor shall be pending or
threatened by the Commission and (iii) since the Effective Date, no event has
occurred which should have been set forth in a supplement or amendment to the
Prospectus which has not been set forth in an effective supplement or amendment.
(B) The Company shall have been furnished evidence
reasonably satisfactory to the Company from the appropriate authorities of the
several jurisdictions of the qualification referred to in paragraph (g) of
Section 5 hereof.
8. INDEMNIFICATION AND CONTRIBUTION.
(A) Subject to the provisions of paragraph (d) of this
Section 8, the Company agrees to indemnify and hold harmless X.X. Xxxxxxxxx (and
any person participating in the distribution who is deemed to be an underwriter
(as defined in Section 2(11) of the Act) and each person (including each member
or officer thereof), if any, who
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controls X.X. Xxxxxxxxx within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, from and against any and all losses, claims, damages or
liabilities, joint or several (and actions in respect thereof), to which such
indemnified parties or any of them may become subject, under the Act, the
Exchange Act or other federal or state statutory law or regulation, at common
law or otherwise, and the Company agrees to reimburse X.X. Xxxxxxxxx and
controlling person for any legal or other expenses (including, except as
otherwise hereinafter provided, reasonable fees and disbursements of counsel)
incurred by the respective indemnified parties in connection with defending
against any such losses, claims, damages, or liabilities or in connection with
any investigation or inquiry of, or other proceeding which may be brought
against, the respective indemnified parties, in each case arising out of or are
based upon (i) any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement (including the Prospectus as part
thereof and any Rule 462(b) registration statement) or any post-effective
amendment thereto (including any Rule 462(b) registration statement) or 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, or
(ii) any untrue statement or alleged untrue statement of any material fact
contained in the Prospectus (as amended or as supplemented if the Company shall
have filed with the Commission any amendment thereof or supplement thereto) or
the omission or alleged omission to state therein a material fact necessary to
make the statements therein, in light of the circumstance under which they were
made, not misleading; provided, however, that the indemnity agreement of the
Company contained in this paragraph (a) shall not apply to any such loss, claim,
damage, liability or action if such statement or omission was made in reliance
upon and in conformity with information furnished as herein stated or otherwise
furnished in writing to the Company by or on behalf of X.X. Xxxxxxxxx expressly
for use in the Registration Statement or the Prospectus or any such amendment
thereof or supplement thereto. The indemnity agreements of the Company contained
in this paragraph (a) and the representations and warranties of the Company
contained in Section 2 hereof shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any indemnified
party and shall survive the delivery and payment for the Shares and the
Warrants.
(B) X.X. Xxxxxxxxx agrees to indemnify and hold harmless
the Company, each of its directors, each of its officers who has signed the
Registration Statement, each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, against any
and all losses, claims, damages or liabilities, joint or several, to which such
indemnified parties or any of them may become subject, under the Act, the
Exchange Act or other federal or state statutory law or regulation, at common
law or otherwise and to reimburse each of them for any legal or other expenses
(including, except as otherwise hereinafter provided, reasonable fees and
disbursements of counsel) incurred by the respective indemnified parties in
connection with defending against any such losses, claims, damages or
liabilities or in connection with any investigation or inquiry of, or other
proceeding which may be
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brought against, the respective indemnified parties, in each case arising out of
or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement (including the Prospectus
as part thereof and any Rule 462(b) registration statement) or any
post-effective amendment thereto (including any Rule 462(b) registration
statement) or 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, or (ii) any untrue statement or alleged untrue statement of any
material fact contained in the Prospectus (as amended or as supplemented if the
Company shall have filed with the Commission any amendment thereof or supplement
thereto) or the omission or alleged omission to state therein a material fact
necessary to make the statements therein, in light of the circumstance under
which they were made, not misleading, in each case to the extent, but only to
the extent, that such statement or omission was made in reliance upon and in
conformity with information furnished as herein stated or otherwise furnished in
writing by or on behalf of X.X. Xxxxxxxxx to the Company expressly for use in
the Registration Statement or the Prospectus or any such amendment thereof or
supplement thereto, and will reimburse, as incurred, all legal or other expenses
reasonably incurred by the Company or any such director, officer or controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action. The indemnity agreement of X.X. Xxxxxxxxx contained
in this paragraph (b) shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any indemnified party
and shall survive the delivery and payment for the Shares and the Warrants.
(C) Each party indemnified under the provisions of
paragraph (a) or (b) of this Section 8 agrees that, upon the service of a
summons or other initial legal process upon it in any action or suit instituted
against it or upon its receipt of written notification of the commencement of
any investigation or inquiry of, or proceeding against it, in respect of which
indemnity may be sought on account of any indemnity agreement contained in such
paragraphs, such indemnified party will promptly notify any party or parties
from whom indemnification may be sought hereunder of the commencement thereof in
writing. No indemnification provided for in such paragraphs shall be available
to any party who shall fail so to give such notice if the party to whom such
notice was not given was unaware of the action, suit, investigation, inquiry or
proceeding to which such notice would have related and was prejudiced by the
failure to give the notice, but the omission so to notify such indemnifying
party or parties of any such service or notification shall not relieve such
indemnifying party or parties from any liability which it or they may have to
the indemnified party for contribution or otherwise than on account of such
indemnity agreement. Any indemnifying party or parties against which a claim is
to be made will be entitled, at its own expense, to participate in the defense
of such action, suit, investigation or inquiry of, an indemnified party. Any
indemnifying party shall be entitled, if it so elects within a reasonable time
after receipt of notice from the indemnified party or parties of an action,
suit, investigation or inquiry to which indemnity may be sought, to assume the
entire defense thereof (alone or in conjunction with any
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other indemnifying party or parties), at its own expense, in which case such
defense shall be conducted by counsel reasonably satisfactory to the indemnified
party or parties; provided, however, that (i) if the indemnified party or
parties has reasonably concluded that there may be a conflict between the
positions of the indemnifying party or parties and of the indemnified party or
parties in conducting the defense of such action, suit, investigation, inquiry
or proceeding or that there may be legal defenses available to such indemnified
party or parties different from or in addition to those available to the
indemnifying party or parties, then counsel for the indemnified party or parties
shall be entitled to conduct such defense to the extent reasonably determined by
such counsel to be necessary to protect the interests of the indemnified party
or parties and (ii) in any event, the indemnified party or parties shall be
entitled to have counsel chosen by such indemnified party or parties participate
in, but not conduct, the defense. Upon receipt of notice from the indemnifying
party to such indemnified party of its election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under Section 9 for any legal or
other expenses (other than the reasonable costs of investigation) subsequently
incurred by such indemnified party in connection with the defense thereof unless
(i) the indemnified party has employed such counsel in connection with the
assumption of different or additional legal defenses in accordance with the
proviso to the immediately preceding sentence, or (ii) the indemnifying party
has authorized in writing the employment of counsel for the indemnified party at
the expense of the indemnifying party. If no such notice to assume the defense
of such action has been given within a reasonable time of the indemnified
party's or parties' notice to such indemnifying party or parties, the
indemnifying party or parties shall be responsible for any reasonable legal or
other expenses incurred by the indemnified party or parties in connection with
the defense of the action, suit, investigation, inquiry or proceeding.
(D) If the indemnification provided for in this Section 8
is unavailable or insufficient to hold harmless an indemnified party under
paragraph (a) or (b) above in respect of any losses, claims, damages, expenses
or liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
referred to in paragraphs (a) and (b) above (i) in such proportion as is
appropriate to reflect the relative benefits received by each of the
contributing parties from the offering of the Shares and the Warrants or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of each of the
contributing parties, on the one hand, and the party to be indemnified, on the
other hand in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company, on the one hand,
and X.X. Xxxxxxxxx, on the other, shall be deemed to be in the same proportion
as the total net proceeds from the
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Offering of the Shares (before deducting expenses) and the total Selling
Commissions received by X.X. Xxxxxxxxx, bear to the aggregate Public Offering
Price of the Shares. 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 each indemnifying party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission.
The parties agree that it would not be just and equitable if
contributions pursuant to this paragraph (d) were to be determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable consideration referred to above. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this paragraph (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 paragraph (d), X.X. Xxxxxxxxx
shall not be required to contribute any amount in excess of the Selling
Commissions applicable to the Shares sold by the Company through X.X. Xxxxxxxxx
as agent for the Company hereunder. 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.
Each party entitled to contribution agrees that upon the service of a
summons or other initial legal process upon it in any action instituted against
it in respect to which a claim for contribution may be made against another
party or parties under this paragraph (d), it will promptly notify such party or
parties from whom contribution may be sought, but the omission so to notify such
party or parties shall not relieve the party or parties from whom contribution
may be sought from any other obligation it may have hereunder or otherwise
(except as specifically provided in paragraph (c) of this Section 8). The
contribution agreement set forth above shall be in addition to any liabilities
which any indemnifying party may have at common law or otherwise.
(E) No indemnifying party will without the prior written
consent of the indemnified party, settle or compromise or consent to the entry
of any judgment in any pending or threatened claim, action, suit or proceeding
in respect of which indemnification may be sought hereunder (whether or not such
indemnified party or any person who controls X.X. Xxxxxxxxx within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act is a party to such
claim, action, suit or proceeding) unless such settlement, compromise or consent
includes an unconditional release of such indemnified party and each such
controlling person from all liability arising out of such claim, action, suit or
proceeding.
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9. REIMBURSEMENT OF CERTAIN EXPENSES. In addition to their other
obligations under Section 8 of this Agreement, the Company hereby agrees to
reimburse on a quarterly basis X.X. Xxxxxxxxx for all reasonable legal and other
expenses incurred in connection with investigating or defending any claim,
action, investigation, inquiry or other proceeding arising out of or based upon
any statement or omission, or any alleged statement or omission, described in
paragraph (a) of Section 8 of this Agreement, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the obligations
under this Section 9 and the possibility that such payments might later be held
to be improper; provided, however, that (i) to the extent that any such payment
is ultimately held to be improper, X.X. Xxxxxxxxx shall promptly refund it and
(ii) X.X. Xxxxxxxxx shall provide to the Company, upon request, reasonable
assurances of their ability to effect any refund, when and if due.
10. REPRESENTATIONS, ETC. TO SURVIVE DELIVERY. The respective
representations, warranties, agreements, covenants, indemnities and statements
of, and on behalf of, the Company and its officers, and X.X. Xxxxxxxxx,
respectively, set forth in or made pursuant to this Agreement will remain in
full force and effect, regardless of any investigation made by or on behalf of
X.X. Xxxxxxxxx, and will survive delivery of and payment for the Shares and the
Warrants. Any successors to X.X. Xxxxxxxxx shall be entitled to the indemnity,
contribution and reimbursement agreements contained in this Agreement.
11. TERMINATION.
(A) This Agreement may be terminated by the Company for
any reason by giving notice to X.X. Xxxxxxxxx.
(B) This Agreement may be terminated by X.X. Xxxxxxxxx by
giving notice to the Company if and only if there occurs any refusal, inability
or failure on the part of the Company to perform in all material respects any
agreement herein, to fulfill in all material respects any of the conditions
herein (including, without limitation, the conditions set forth in paragraphs
(a) through (g) of Section 6), or to comply in all material respects with any
provision hereof other than by reason of a default by X.X. Xxxxxxxxx, subject to
the Company's right to cure any such refusal, inability or failure within ten
business days of the Company's receipt of X.X. Xxxxxxxxx'x notice thereof.
(C) If this agreement is terminated pursuant to this
Section 11, there shall be no liability of the Company to X.X. Xxxxxxxxx and no
liability of X.X. Xxxxxxxxx to the Company; provided, however, that in the event
of any such termination, the Company agrees to pay all fees owed pursuant to
Section 3(a) and to indemnify and hold harmless X.X. Xxxxxxxxx from all costs or
expenses incident to the performance of the obligations of the Company under
this Agreement, including any costs and expenses referred to in paragraphs (h)
and (i) of Section 5. Additionally, if this Agreement is terminated prior to the
Initial Closing, the Company will reimburse X.X. Xxxxxxxxx
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upon demand for all out-of-pocket expenses (including reasonable fees and
disbursements of counsel) that have actually been incurred by X.X. Xxxxxxxxx
incident to the performance of X.X. Xxxxxxxxx'x obligations under this
Agreement. Notwithstanding any termination of this agreement, the provisions of
this Section 11(c) and Section 8 hereof shall survive and remain in full force
and effect.
12. NOTICES. All communications hereunder shall be in writing and
if sent to X.X. Xxxxxxxxx shall be mailed or delivered or telegraphed and
confirmed by letter or telecopied and confirmed by letter to X.X. Xxxxxxxxx &
Company, LLC at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 or, if
sent to the Company, shall be mailed or delivered or telegraphed and confirmed
to the Company at 000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxx, XX 00000.
13. SUCCESSORS. This agreement shall incur to the benefit of and
be binding upon the Company and X.X. Xxxxxxxxx and, with respect to the
provisions of Section 8 hereof, the several parties (in addition to the Company
and X.X. Xxxxxxxxx) indemnified under the provisions of said Section 8, and
their respective personal representatives successors and assigns. Nothing in
this agreement is intended or shall be construed to give any other person any
legal or equitable right, remedy or claim under or in respect of this agreement,
or any provisions herein contained. The term "successors and assigns" as herein
used shall not include any purchaser, as such purchaser, of any of the Shares or
Warrants from the Company.
14. COUNTERPARTS. This agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
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If the foregoing correctly sets forth our understanding, please indicate X.X.
Xxxxxxxxx'x acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between us.
Very truly yours,
MD2PATIENT, INC.
By:
---------------------------
Xxxx X. Xxxxxx
President and Secretary
Accepted as of the date first above written:
X.X. XXXXXXXXX & COMPANY, LLC
By: X.X. Xxxxxxxxx & Company, LLC
By:
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Title:
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