Exhibit 1.1
DRAFT: 11/1/96
[6 1/2% to 8%] Convertible Subordinated Debentures Due 2003
COMPLETE MANAGEMENT, INC.
UNDERWRITING AGREEMENT
New York, New York
December _____, 1996
National Securities Corporation,
Commonwealth Associates
As Representatives of the Several Underwriters
c/o National Securities Corporation
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Complete Management, Inc., a New York corporation (the
"Company"), hereby agrees with National Securities Corporation ("National")
Commonwealth Associates ("Commonwealth"), and each of the underwriters named in
Schedule A hereto (collectively, the "Underwriters," which term shall also
include any underwriter substituted as hereinafter provided in Section 11), for
whom National and Commonwealth are acting as representatives (in such capacity,
National and Commonwealth shall hereinafter be referred to as "you" or the
"Representatives") with respect to the sale by the Company and the purchase by
the Underwriters, acting severally and not jointly, of $25,000,000 aggregate
principal amount of the Company's [6 - 2%] Convertible Subordinated Debentures
Due 2003 (the "Debentures") to be issued pursuant to the provisions of an
Indenture dated as of the date hereof (the "Indenture") between the Company and
Chemical Bank, N.A., as Trustee (the "Trustee") and 3,000,000 shares of common
stock (the "Common Stock") of the Company. Such $25,000,000 aggregate principal
amount of Debentures and 3,000,000 Shares of Common Stock are hereinafter
referred to as the "Firm Securities." Upon your request, as provided in Section
2(b) of this Agreement, the Company shall also issue and sell to the
Underwriters, acting severally and not jointly, up to an additional $3,750,000
principal amount of Debentures and 450,000 Shares of Common Stock for the
purpose of covering over-allotments, if any. Such $3,750,000 principal amount of
Debentures and 450,000 Shares of Common Stock are hereinafter referred to as the
"Option Securities." The Firm Securities and the Option Securities are
hereinafter referred to collectively as the "Securities." The shares of Common
Stock issuable upon conversion of the Debentures are hereinafter referred to as
the "Underlying Stock." The Company also proposes to issue and sell to you
warrants (the "Representatives' Warrants") pursuant to the Representatives'
Warrant Agreement (the
"Representatives' Warrant Agreement") for the purchase of an additional
____shares of Common Stock. The Option Securities and shares of Common Stock
issuable upon exercise of the Representatives' Warrants are hereinafter
referred to as the "Representatives' Securities." The Firm Securities, Option
Securities, the Representatives' Warrants, the Representatives' Securities and
the Underlying Stock are more fully described in the Registration Statement and
the Prospectus referred to below.
1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each of the Underwriters as of the
date hereof, and as of the Closing Date and the Option Closing Date, if any, as
follows:
(a) The Company has prepared and filed with the
Securities and Exchange Commission (the "Commission") a registration statement,
and an amendment or amendments thereto, on Form S-1 (No. 333- ), including
any related preliminary prospectus (the "Preliminary Prospectus"), for the
registration of the Securities, the Representatives' Securities and the
Underlying Stock under the Securities Act of 1933, as amended (the "Act"), which
registration statement and amendment or amendments have been prepared by the
Company in conformity with the requirements of the Act, and the Regulations (as
defined below) of the Commission under the Act. The Company will not file any
other amendment thereto to which the Underwriters shall have objected in writing
after having been furnished with a copy thereof. Except as the context may
otherwise require, such registration statement, as amended, on file with the
Commission at the time the registration statement becomes effective (including
the prospectus, financial statements, schedules, exhibits and all other
documents filed as a part thereof or incorporated therein and all information
deemed to be a part thereof as of such time pursuant to paragraph (b) of Rule
430(A) of the Regulations), is hereinafter called the "Registration Statement,"
and the form of prospectus in the form first filed with the Commission pursuant
to Rule 424(b) of the Regulations, is hereinafter called the "Prospectus." For
purposes hereof, "Regulations" mean the rules and regulations adopted by the
Commission under either the Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as applicable.
(b) Neither the Commission nor any state regulatory
authority has issued any order preventing or suspending the use of any
Preliminary Prospectus, the Registration Statement or the Prospectus or any part
thereof or the qualification of the Trustee, and no proceedings for a stop order
suspending the effectiveness of the Registration Statement, any of the Company's
securities or the qualification of the Trustee have been instituted, or, to the
Company's knowledge, have been instituted or are pending or threatened. Each of
the Preliminary Prospectus, the Registration Statement and the Prospectus at the
time of filing thereof conformed in all material respects with the requirements
of the Act, the Trust Indenture Act and the Regulations, and none of the
Preliminary Prospectus, the Registration Statement or the Prospectus at the time
of filing thereof contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that this representation and warranty does not apply to
statements made in reliance upon and in conformity with written information
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furnished to the Company with respect to the Underwriters by or on behalf of the
Underwriters expressly for use in such Preliminary Prospectus, Registration
Statement or Prospectus.
(c) When the Registration Statement becomes effective
and at all times subsequent thereto up to the Closing Date (as defined in
Section 2(c) hereof) and each Option Closing Date (as defined in Section 2(b)
hereof), if any, and during such longer period as the Prospectus may be required
to be delivered in connection with sales by the Underwriters or a dealer, the
Registration Statement and the Prospectus, as amended or supplemented as
required, will contain all statements which are required to be stated therein in
accordance with the Act, the Trust Indenture Act and the Regulations, and will
conform in all material respects to the requirements of the Act, the Trust
Indenture Act and the Regulations; neither the Registration Statement nor the
Prospectus, nor any amendment or supplement thereto, will contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, provided, however,
that this representation and warranty does not apply to statements made or
statements omitted in reliance upon and in conformity with information furnished
to the Company in writing by or on behalf of any Underwriter expressly for use
in the Registration Statement or the Prospectus or any amendment thereof or
supplement thereto.
(d) The Company and Medical Management, Inc. ("MMI")
have been duly organized and are validly existing as corporations in good
standing under the laws of the respective states of their incorporation. The
Company does not own or control, directly or indirectly, any corporation,
partnership, trust, joint venture or other business entity other than the
subsidiaries listed in Exhibit 21 of the Registration Statement. Each of the
Company and MMI is duly qualified and licensed and in good standing as a foreign
corporation in each jurisdiction in which its ownership or leasing of any
properties or the character of its operations require such qualification or
licensing. Each of the Company and MMI has all requisite power and authority
(corporate and other), and has obtained any and all necessary authorizations,
approvals, orders, licenses, certificates, franchises and permits of and from
all governmental or regulatory officials and bodies (including, without
limitation, those having jurisdiction over environmental or similar matters), to
own or lease its properties and conduct its business as described in the
Prospectus; the Company and MMI are and have been doing business in compliance
with all such authorizations, approvals, orders, licenses, certificates,
franchises and permits and all federal, state, local and foreign laws, rules and
regulations; and neither the Company nor MMI has received any notice of
proceedings relating to the revocation or modification of any such
authorization, approval, order, license, certificate, franchise, or permit
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would materially and adversely affect the condition,
financial or otherwise, or the business affairs, operations, properties, or
results of operations of the Company and MMI, taken as a whole. The disclosures
in the Registration Statement concerning the effects of federal, state, local,
and foreign laws, rules and regulations on the Company's and MMI's businesses as
currently conducted and as contemplated are correct in all material respects and
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do not omit to state a material fact necessary to make the statements contained
therein not misleading in light of the circumstances in which they were made.
(e) The Company has a duly authorized, issued and
outstanding capitalization as set forth in the Prospectus under the headings
"Capitalization" and "Description of Debentures" and will have the adjusted
capitalization set forth therein on the Closing Date and the Option Closing
Date, if any, based upon the assumptions set forth therein, and the Company is
not a party to or bound by any instrument, agreement or other arrangement,
including, but not limited to, any voting trust agreement, stockholders
agreement or other agreement or instrument, affecting the securities or rights
or obligations of securityholders of the Company or MMI or providing for either
of them to issue any capital stock, rights, warrants, options or other
securities, except for this Agreement, the Indenture, the Representatives'
Warrant Agreement and as described in the Prospectus. The Securities, the
Representatives' Warrants, the Representatives' Securities and the Underlying
Stock and all other securities issued or issuable by the Company or MMI conform
or, when issued and paid for, will conform, in all material respects to all
statements with respect thereto contained in the Registration Statement and the
Prospectus. All issued and outstanding shares of capital stock of each of the
Company and MMI have been duly authorized and validly issued and are fully paid
and nonassessable. Except as disclosed in or contemplated by the Prospectus and
the financial statements of the Company and the related notes thereto included
in the Prospectus, neither the Company nor any subsidiary has outstanding any
options to purchase, or any preemptive rights or other rights to subscribe for
or to purchase, any securities or obligations convertible into, or any contracts
or commitments to issue or sell, shares of its capital stock or any such
options, rights, convertible securities or obligations. The description of the
Company's stock option, stock bonus and other stock plans or arrangements and
the options or other rights granted and exercised thereunder as set forth in the
Prospectus conforms in all material respects with the requirements of the Act.
All issued and outstanding securities of the Company have been duly authorized
and validly issued and are fully paid and non-assessable, and the holders
thereof have no rights of rescission with respect thereto and are not subject to
personal liability by reason of being such holders; and none of such securities
were issued in violation of the preemptive rights of any holders of any security
of the Company or similar contractual rights granted by the Company.
(f) The Debentures will be issued pursuant to the terms
and conditions of the Indenture, and the Indenture will conform to the
description thereof contained in the Prospectus. The Debentures and the Common
Stock have been duly authorized and, when validly authenticated, issued,
delivered and paid for in the manner contemplated by the Indenture, will be duly
authorized, validly issued and outstanding obligations of the Company entitled
to the benefits of the Indenture. The shares of Common Stock issuable upon
conversion of the Debentures will, upon such issuance, be duly authorized,
validly issued, fully paid and non-assessable, and the Company has duly
authorized and reserved for issuance upon conversion of the Debentures the
shares of Common Stock issuable upon such conversion. The Securities, the
Representatives' Warrants, the Representatives' Securities and the Underlying
Stock are not and will not be subject to any preemptive or other similar rights
of any securityholder of the Company or MMI; the holders thereof will not be
subject to any liability solely
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as such holders; all corporate action required to be taken for the
authorization, issue and sale of the Securities, the Representatives' Warrants,
the Representatives' Securities and the Underlying Stock has been duly and
validly taken; and the certificates representing the Securities, the
Representatives' Warrants, the Representatives' Securities and the Underlying
Stock will be in due and proper form. Upon the issuance and delivery pursuant to
the terms of this Agreement, the Indenture and the Representatives' Warrant
Agreement of the Securities, the Representatives' Warrants and the
Representatives' Securities to be sold by the Company hereunder and thereunder,
the Underwriters or the Representatives; as the case may be, will acquire good
and marketable title thereto free and clear of any lien, charge, claim,
encumbrance, pledge, security interest, defect or other restriction or equity
interest of any kind whatsoever.
(g) The financial statements of the Company and MMI,
together with the related notes and schedules thereto, included in the
Registration Statement, each Preliminary Prospectus and the Prospectus fairly
present the financial position, changes in stockholders' equity and the results
of operations of the Company and MMI at the respective dates and for the
respective periods to which they apply and such financial statements have been
prepared in conformity with generally accepted accounting principles and the
Regulations, consistently applied throughout the periods involved. There has
been no material adverse change or development involving a material prospective
change in the condition, financial or otherwise, or in the business, affairs,
operations, properties, or results of operation of the Company and MMI taken as
a whole whether or not arising in the ordinary course of business since the date
of the financial statements included in the Registration Statement and the
Prospectus and the outstanding debt, the property, both tangible and intangible,
and the business of the Company and MMI taken as a whole conform in all respects
to the descriptions thereof contained in the Registration Statement and the
Prospectus. Financial information set forth in the Prospectus under the headings
"Prospectus Summary -- Summary Financial Information," "Selected Financial
Data," "Capitalization," and "Management's Discussion and Analysis of Financial
Condition and Results of Operations," fairly present, on the basis stated in the
Prospectus, the information set forth therein and have been derived from or
compiled on a basis consistent with that of the audited financial statements
included in the Prospectus.
(h) Each of the Company and MMI have (i) paid all
federal, state, local, franchise, and foreign taxes for which it is liable,
including, but not limited to, withholding taxes and amounts payable under
Chapters 21 through 24 of the Internal Revenue Code of 1986, as amended (the
"Code"), and have furnished all information returns it is required to furnish
pursuant to the Code, (ii) has established adequate reserves for such taxes
which are not due and payable, and (iii) does not have any tax deficiency or
claims outstanding, proposed or assessed against it.
(i) No transfer tax, stamp duty or other similar tax is
payable by or on behalf of the Underwriters or the Representatives in connection
with (i) the issuance by the Company of the Securities, the Representatives'
Warrants, the Representatives' Securities and the Underlying Stock, (ii) the
purchase by the Underwriters of the Securities from the Company and the purchase
by the Representatives of the Representatives' Warrants or the
Representatives'
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Securities from the Company, (iii) the consummation by the Company of any of its
obligations under this Agreement, the Indenture or the Representatives' Warrant
Agreement, or (iv) resales of the Securities in connection with the distribution
contemplated hereby.
(j) Each of the Company and MMI maintains insurance
policies, including, but not limited to, general liability, property and product
liability insurance and surety bonds which insures the Company and MMI and their
respective professional staffs against such losses and risks generally insured
against by comparable businesses. Neither the Company nor MMI (a) have failed to
give notice or present any insurance claim with respect to any matter,
including, but not limited to, the Company's or MMI's businesses, property or
professional staff, under any insurance policy or surety bond in a due and
timely manner, (B) have any disputes or claims against any underwriter of such
insurance policies or surety bonds or have failed to pay any premiums due and
payable thereunder, or (C) have failed to comply with all conditions contained
in such insurance policies and surety bonds. There are no facts or circumstances
under any such insurance policy or surety bond which would relieve any insurer
of its obligation to satisfy in full any valid claim of the Company or any of
the Subsidiaries.
(k) There is no action, suit, proceeding, inquiry,
arbitration, mediation, investigation, litigation or governmental proceeding
(including, without limitation, those having jurisdiction over environmental or
similar matters), domestic or foreign, pending or threatened against (or
circumstances that may give rise to the same), or involving the properties or
businesses of, the Company and MMI which (i) questions the validity of the
capital stock of the Company and MMI, this Agreement, the Indenture, or the
Representatives' Warrant Agreement, or of any action taken or to be taken by
the Company and MMI pursuant to or in connection with this Agreement, or the
Indenture, or the Representatives' Warrant Agreement, (ii) is required to be
disclosed in the Registration Statement which is not so disclosed (and such
proceedings as are summarized in the Registration Statement are accurately
summarized in all material respects), or (iii) might materially and adversely
affect the condition, financial or otherwise, or the business, affairs,
position, stockholders' equity, operation, properties, or results of operations
of the Company and MMI taken as a whole.
(l) The Company has the full legal right, corporate
power and authority to authorize, issue, deliver, and sell the Securities, the
Representatives' Warrants, the Representatives' Securities and the Underlying
Stock and to enter into this Agreement and the Representatives' Warrant
Agreement, and to consummate the transactions provided for in such agreements;
and this Agreement, the Indenture and the Representatives' Warrant Agreement
have each been duly and properly authorized, executed, and delivered by the
Company. Each of this Agreement, the Indenture and the Representatives' Warrant
Agreement constitutes a legal, valid and binding agreement of the Company
enforceable against the Company in accordance with their respective terms
(except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
relating to or affecting enforcement of creditors' rights and the application of
equitable principles in any action, legal or equitable, and except as rights to
indemnity or contribution may be limited by applicable law), and none of the
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Company's issue and sale of the Securities, the Representatives' Warrants, the
Representatives' Securities and the Underlying Stock execution, delivery or
performance of this Agreement, the Indenture and the Representatives' Warrant
Agreement, their consummation of the transactions contemplated herein and
therein, or the conduct by their and MMI of their businesses as described in the
Registration Statement, the Prospectus, and any amendments or supplements
thereto, conflicts with 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, or result in the creation or imposition of any lien,
charge, claim, encumbrance, pledge, security interest, defect or other
restriction or equity of any kind whatsoever upon, any property or assets
(tangible or intangible) of the Company or MMI pursuant to the terms of (i) the
certificate of incorporation or by-laws of the Company or MMI, as amended and
restated, (ii) any license, contract, indenture, mortgage, deed of trust, voting
trust agreement, stockholders' agreement, note, loan or credit agreement or any
other agreement or instrument to which the Company and MMI is a party or by
which it is or may be bound or to which their properties or assets (tangible or
intangible) is or may be subject, or any indebtedness, or (iii) any statute,
judgment, decree, order, rule or regulation applicable to the Company or MMI of
any arbitrator, court, regulatory body or administrative agency or other
governmental agency or body (including, without limitation, those having
jurisdiction over environmental or similar matters), domestic or foreign, having
jurisdiction over the Company of any of their activities or properties.
(m) No consent, approval, authorization or order of,
and no filing with, any court, regulatory body, government agency or other body,
domestic or foreign, is required for the issuance of the Securities pursuant to
the Prospectus and the Registration Statement, the performance of this
Agreement, the Indenture, the Representatives' Warrant Agreement, and the
transactions contemplated hereby and thereby, including without limitation, any
waiver of any preemptive, first refusal or other rights that any entity or
person may have for the issue and/or sale of any of the Securities, or the
Representatives' Warrants, except such as have been or may be obtained under
the Act or may be required under state securities or Blue Sky laws in connection
with the Underwriters' purchase and distribution of the Securities and the
Representatives' purchase of the Representatives' Warrants.
(n) All executed agreements, contracts or other
documents or copies of executed agreements, contracts or other documents filed
as exhibits to the Registration Statement to which the Company or MMI is a party
or by which it may be bound or to which its assets, properties or businesses may
be subject have been duly and validly authorized, executed and delivered by the
Company or MMI, as the case may be, and constitute the legal, valid and binding
agreements of the Company or MMI, as the case may be, enforceable against the
Company or MMI, as the case may be, in accordance with their respective terms
(except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
relating to or affecting enforcement of creditors' rights and the application of
equitable principles in any action, legal or equitable, and except as rights to
indemnity or contribution may be limited by applicable law). The descriptions in
the Registration Statement of such agreements, contracts and other documents are
accurate in all material respects and fairly present the information required to
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be shown with respect thereto by Form S-1, and there are no contracts or other
documents which are required by the Act 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.
(o) Since the respective dates as of which information
is given in the Registration Statement and Prospectus, and except as described
in or specifically contemplated by the Prospectus, neither the Company nor MMI
(i) has incurred any material liabilities or obligations, indirect, direct or
contingent, or entered into any material verbal or written agreement or other
transaction which is not in the ordinary course of business or which could
result in a material reduction in the future earnings of the Company or MMI;
(ii) has not sustained any material loss or interference with its business or
properties from fire, flood, wind-storm, accident or other calamity, whether or
not covered by insurance; (iii) has paid or declared any dividends or other
distributions with respect to its capital stock, and neither the Company or MMI
is in default in the payment of principal or interest on any outstanding debt
obligations; (iv) has had any change in its capital stock (other than upon the
sale of the Firm Securities, the Option Securities and the Representatives'
Firm Securities hereunder and upon the exercise of options and warrants
described in the Registration Statement) of, or indebtedness material to, the
Company or MMI (other than in the ordinary course of business); (v) has issued
any securities or incurred any liability or obligation, primary or contingent,
for borrowed money; or (vi) has experienced any material adverse change in the
condition (financial or otherwise) of their respective businesses, properties,
results of operations, or prospects.
(p) Except as disclosed in or specifically contemplated
by the Prospectus, (i) the Company and MMI had sufficient trademarks, trade
names, patent rights, copyrights, licenses, approvals and governmental
authorizations to conduct its business as now conducted; (ii) the expiration of
any trademarks, trade names, patent rights, copyrights, licenses, approvals or
governmental authorizations would not have a material adverse effect on the
condition (financial or otherwise), business, results of operations or prospects
of the Company or MMI; (iii) the Company has no knowledge of any infringement by
it or its subsidiaries of trademark, trade name rights, patent rights,
copyrights, licenses, trade secret or other similar rights of others; and (iv)
there is no claim being made against the Company or MMI regarding trademark,
trade name, patent, copyright, license, trade secret or other infringement which
could have a material adverse effect on the condition (financial or otherwise),
business, results of operations or prospects of the Company.
(q) Neither the Company nor MMI is or with the giving
of notice or lapse of time or both, will be, in violation of or in default under
its charter or By-laws, and no default exists in the due performance and
observance of any term, covenant or condition of any license, contract,
indenture, mortgage, installment sale agreement, lease, deed of trust, voting
trust agreement, stockholders agreement, note, loan or credit agreement, or any
other material agreement or instrument evidencing an obligation for borrowed
money, or any other material agreement or instrument to which the Company or MMI
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are parties or by which the Company or MMI may be bound or to which the property
or assets (tangible or intangible) of the Company or MMI are subject or
affected.
(r) To the Company's knowledge, there are no pending
investigations involving the Company or MMI by the U.S. Department of Labor, or
any other governmental agency responsible for the enforcement of such federal,
state, local, or foreign laws and regulations. There is no unfair labor practice
charge or complaint against the Company or MMI pending before the National Labor
Relations Board or any strike, picketing, boycott, dispute, slowdown or stoppage
pending or to its knowledge threatened against or involving the Company or MMI.
No representation question exists respecting the employees of the Company or
MMI. No collective bargaining agreement, or modification thereof is currently
being negotiated by the Company or MMI. No grievance or arbitration proceeding
is pending under any expired or existing collective bargaining agreements of the
Company or MMI. No labor dispute with the employees of the Company or MMI exists
or is imminent.
(s) Except as described in the Prospectus, neither the
Company nor MMI maintains, sponsors or contributes to any program or arrangement
that is an "employee pension benefit plan, " an "employee welfare benefit plan,"
or a "multi-employer plan" as such terms are defined in Sections 3(2), 3(1) and
3(37), respectively, of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") ("ERISA Plans"). Neither the Company nor MMI maintains or
contributes to a defined benefit plan, as defined in Section 3(35) of ERISA. No
ERISA Plan (or any trust created thereunder) has engaged in a "prohibited
transaction" within the meaning of Section 406 of ERISA or Section 4975 of the
Code, which could subject the Company or MMI to any tax penalty on prohibited
transactions and which has not adequately been corrected. Each ERISA Plan is in
compliance with all material reporting, disclosure and other requirements of the
Code and ERISA as they relate to any such ERISA Plan. Determination letters have
been received from the Internal Revenue Service with respect to each ERISA Plan
which is intended to comply with Code Section 401(a), stating that such ERISA
Plan and the attendant trust are qualified thereunder. Neither the Company nor
MMI have never completely or partially withdrawn from a "multi-employer plan."
(t) None of the Company, nor MMI, nor any of their
employees, directors, stockholders, or affiliates (within the meaning of the
Regulations) of any of the foregoing has taken or will take directly or
indirectly, any action designed to or which has constituted or which might 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 Securities or
the Underlying Stock.
(u) Each of the Company and MMI has good and marketable
title to, or valid and enforceable leasehold estates in, all items of real and
personal property stated in the Prospectus to be owned or leased by it, free and
clear of all liens, charges, claims, encumbrances, pledges, security interests,
or other restrictions or equities of any kind whatsoever other than those
referred to in the Prospectus and liens for taxes not yet due and payable.
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(v) Xxxxxx Xxxxxxxx LLP ("Xxxxxx Xxxxxxxx"), whose
report is filed with the Commission as a part of the Registration Statement, are
independent certified public accountants as required by the Act and the
Regulations.
(w) There are no claims, payments, arrangements or
understandings, whether oral or written, for services in the nature of a
finder's or origination fee with respect to the sale of the Securities hereunder
or any other arrangements, agreements, understandings, payments or issuance with
respect to the Company, MMI, or any of their respective officers, directors,
stockholders, employees or affiliates that may affect the Underwriters'
compensation as determined by the Commission and the National Association of
Securities Dealers, Inc. (the "NASD").
(x) The Securities and the Common Stock have been
approved for quotation on the American Stock Exchange, subject only to official
notice of insurance.
(y) Each of the Company and MMI 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.
(z) Neither the Company, MMI, nor any of their
respective officers, employees, agents or any other person acting on behalf of
the Company or MMI has, directly or indirectly, given or agreed to give any
money, gift or similar benefit (other than legal price concessions to customers
in the ordinary course of business) to any customer, supplier, employee or agent
of a customer or supplier, or official or employee of any governmental agency
(domestic or foreign) or instrumentality of any government (domestic or foreign)
or any political party or candidate for office (domestic or foreign) or other
person who was, is, or may be in a position to help or hinder the business of
the Company or MMI (or assist the Company or MMI in connection with any actual
or proposed transaction) which might subject the Company, MMI, or any other such
person to any damage or penalty in any civil, criminal or governmental
litigation or proceeding (domestic or foreign). Each of the Company's and MMI's
internal accounting controls are sufficient to cause the Company and MMI to
comply with the Foreign Corrupt Practices Act of 1977, as amended.
(aa) Except as set forth in the Prospectus, no officer,
director or stockholder of the Company, MMI, or any "affiliate" or "associate"
(as these terms are defined in Rule 405 promulgated under the Regulations) of
any of the foregoing persons or entities has or has had, either directly or
indirectly, (i) an interest in any person or entity which (A) furnishes or sells
services or products which are furnished or sold or are proposed to be furnished
or sold by the Company or MMI, or (B) purchases from or sells or furnishes to
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the Company or MMI any goods or services, or (ii) a beneficiary interest in any
contract or agreement to which the Company or MMI is a party or by which the
Company or MMI may be bound or affected. Except as set forth in the Prospectus
there are no existing agreements, arrangements, understandings or transactions,
or proposed agreements, arrangements, understandings or transactions, between or
among the Company, MMI, and any officer, director, principal shareholder (as
such term is used in the Prospectus) of the Company, or any affiliate or
associate of any of the foregoing persons or entities.
(ab) Neither the Company nor MMI intends to conduct
their respective businesses in a manner in which it would become an "investment
company" within the meaning of the Investment Company Act of 1940, as amended
(the "1940 Act").
(ac) Any certificate signed by any officer of the
Company and delivered to the Underwriters or to the Underwriters' Counsel (as
defined in Section 4(d) herein) shall be deemed a representation and warranty by
the Company to the Underwriters as to the matters covered thereby.
(ad) The minute books of each of the Company and MMI
have been made available to the Underwriters and contain a complete summary of
all meetings and actions of the directors and stockholders of each of the
Company and MMI, since the time of their respective incorporation, and reflect
all transactions referred to in such minutes accurately in all material
respects.
(ae) Neither the Company nor MMI has distributed nor
will distribute prior to the Closing Date any offering material in connection
with the offering and sale of the Debentures in this offering other than the
Prospectus, the Registration Statement and the other materials permitted by the
Act. Except as described in the Prospectus, no holders of any securities of the
Company or MMI or of any options, warrants or other convertible or exchangeable
securities of the Company or MMI have the right to include any securities issued
by the Company or MMI as part of the Registration Statement or to require the
Company or MMI to file a registration statement under the Act and no person or
entity holds any anti-dilution rights with respect to any securities of the
Company or MMI.
(af) Each of the Company and MMI maintains insurance by
insurers of recognized financial responsibility of the types and in the amounts
as are prudent, customary and adequate for the business in which it is engaged,
including, but not limited to, insurance covering real and personal property
owned or leased by the Company and MMI against theft, damage, destruction, acts
of vandalism and all other risks customarily insured against, all of which
insurance is in full force and effect. Neither the Company nor MMI has any
reason to believe that they will not be able to renew existing insurance
coverage with respect to their respective businesses as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue their respective businesses, in either case, at a cost that would
not have a material adverse effect on their respective financial conditions,
operations, businesses, assets or properties. Neither the Company nor MMI has
-11-
failed to file any claims, has any material disputes with their insurance
company regarding any claims submitted under their insurance policies, or has
failed to comply with all material provisions contained in its insurance
policies.
(ag) The Company confirms as of the date hereof that it
is in compliance with all provisions of Section 1 of Laws of Florida, Chapter
92-198, An Act Relating to Disclosure of Doing Business with Cuba, and the
Company further agrees that if it commences engaging in business with the
government of Cuba or with any person or affiliate located in Cuba after the
date the Registration Statement becomes or has become effective with the
Commission or with the Florida Department of Banking and Finance (the
"Department"), whichever date is later, or if the information reported or
incorporated by reference in the Prospectus, if any, concerning the Company's
business with Cuba or with any person or affiliate located in Cuba changes in
any material way, the Company will provide the Department notice of such
business or change, as appropriate, in a form acceptable to the Department.
2. Purchase, Sale and Delivery of the Securities and
Representatives' Warrants.
(a) On the basis of the representations, warranties,
covenants and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to sell to each Underwriter, and
each Underwriter, severally and not jointly agrees to purchase from the Company
that aggregate principal amount of Firm Securities set forth opposite the name
of such Underwriter in Schedule A hereto at a price equal to 93% of the
principal amount thereof, plus accrued interest, if any, from _________________,
1996 to the Closing Date, subject to such adjustment as the Representatives in
its discretion shall make to eliminate any fractional sales or purchases, plus
any additional amount of Firm Securities which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 11 hereof.
(b) In addition, on the basis of the representations,
warranties, covenants and agreements, herein contained, but subject to the terms
and conditions herein set forth, the Company hereby grants an option to the
Underwriters, severally and not jointly, to purchase all or any part of an
additional $3,750,000 aggregate principal amount of Debentures at a price equal
to 93% of the principal amount thereof and 450,000 shares of Common Stock. The
option granted hereby will expire 45 days after (i) the date the Registration
Statement becomes effective, if the Company has elected not to rely on Rule 430A
under the Regulations, or (ii) the date of this Agreement if the Company has
elected to rely upon Rule 430A under the Regulations, and may be exercised in
whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Firm Securities upon notice by the Representatives to the
Company setting forth the aggregate principal amount of Option Securities as to
which the several Underwriters are then exercising the option and the time and
date of payment and delivery for any such Option Securities. Any such time and
date of delivery (an "Option Closing Date") shall be determined by the
Representatives, but shall not be later than seven full business days after the
exercise of said option, nor in any event prior to the Closing Date, as
hereinafter defined, unless otherwise agreed upon by the Representatives and the
Company. Nothing herein contained shall obligate the
-12-
Underwriters to exercise the over-allotment option described above. No Option
Securities shall be delivered unless the Firm Securities shall be simultaneously
delivered or shall theretofore have been delivered as herein provided.
(c) Payment of the purchase price for the Firm
Securities shall be made at the offices of National, 0000 Xxxxxx Xxxxxx, Xxxxx
0000, Xxxxxxx, Xxxxxxxxxx, or at such other place as shall be agreed upon by the
Representatives and the Company. Such delivery and payment shall be made at
12:30 p.m. (New York time) on or at such other time and date as shall be agreed
upon by the Representatives and the Company, but no more than three (3) business
days after the date hereof (such time and date of payment and delivery being
herein called the "Closing Date"). In addition, in the event that any or all of
the Option Securities are purchased by the Underwriters, payment of the purchase
price for, and delivery of certificates for, such Option Securities shall be
made at the above mentioned office of National or at such other place as shall
be agreed upon by the Representatives and the Company on each Option Closing
Date as specified in the notice from the Representatives to the Company.
Delivery of the certificates for the Firm Securities and the Option Securities,
if any, shall be made to the Underwriters against payment by the Underwriters,
of the purchase price for the Firm Securities and the Option Securities, if any,
to the order of the Company. In the event such option is exercised, each of the
Underwriters, acting severally and not jointly, shall purchase that proportion
of the total number of Option Securities then being purchased which the number
of Firm Securities set forth in Schedule A hereto opposite the name of such
Underwriter bears to the total number of Firm Securities, subject in each case
to such adjustments as the Representatives in their discretion shall make to
eliminate any sales or purchases of fractional shares. Certificates for the Firm
Securities and the Option Securities, if any, shall be in definitive, fully
registered form, shall bear no restrictive legends and shall be in such
denominations and registered in such names as the Underwriters may request in
writing at least three (3) business days prior to Closing Date or the relevant
Option Closing Date, as the case may be. The certificates for the Firm
Securities and the Option Securities, if any, shall be made available to the
Representatives at such office or such other place as the Representatives may
designate for inspection, checking and packaging no later than 9:30 a.m. on the
last business day prior to Closing Date or the relevant Option Closing Date, as
the case may be.
(d) On the Closing Date, the Company shall issue and
sell to the Representatives Representatives' Warrants at a purchase price of [$
] per warrant, which warrants shall entitle the holders thereof to purchase the
Representatives' Securities. The Representatives' Warrants shall expire five
(5) years after the effective date of the Registration Statement and shall be
exercisable for a period of five (5) years commencing one (1) year from the
effective date of the Registration Statement the exercise prices described in
the first paragraph hereof. The Representatives' Warrant Agreement and form of
Warrant Certificate shall be substantially in the form filed as Exhibit 4.2 to
the Registration Statement. Payment for the Representatives' Warrants shall be
made on the Closing Date.
3. Public Offering of the Firm Securities. As soon after the
Registration Statement becomes effective as the Representatives deem advisable,
-13-
the Underwriters shall make a public offering of the Firm Securities (other than
to residents of or in any jurisdiction in which qualification of the Firm
Securities is required and has not become effective) at the price and upon the
other terms set forth in the Prospectus. The Representatives may from time to
time increase or decrease the public offering price after distribution of the
Firm Securities has been completed to such extent as the Representatives, in its
sole discretion deem advisable. The Underwriters may enter into one or more
agreements as the Underwriters, in each of their sole discretion, deem advisable
with one or more broker-dealers who shall act as dealers in connection with such
public offering.
4. Covenants of the Company. The Company covenants and agrees
with each of the Underwriters as follows:
(a) The Company shall use its best efforts to cause the
Registration Statement and any amendments thereto to become effective as
promptly as practicable and will not at any time, whether before or after the
effective date of the Registration Statement, file any amendment to the
Registration Statement or supplement to the Prospectus or file any document
under the Act or Exchange Act before termination of the offering of the Firm
Securities by the Underwriters of which the Representatives shall not previously
have been advised and furnished with a copy, or to which the Representatives
shall have objected or which is not in compliance with the Act, the Exchange Act
or the Regulations.
(b) As soon as the Company is advised or obtains
knowledge thereof, the Company will advise the Representatives and confirm the
notice in writing, (i) when the Registration Statement, as amended, becomes
effective, if the provisions of Rule 430A promulgated under the Act will be
relied upon, when the Prospectus has been filed in accordance with said Rule
430A and when any post-effective amendment to the Registration Statement becomes
effective, (ii) of the issuance by the Commission of any stop order or of the
initiation, or the threatening, of any proceeding, suspending the effectiveness
of the Registration Statement or any order preventing or suspending the use of
the Preliminary Prospectus or the Prospectus, or any amendment or supplement
thereto, or the institution of proceedings for that purpose, (iii) of the
issuance by the Commission or by any state securities commission of any
proceedings for the suspension of the qualification of any of the Securities for
offering or sale in any jurisdiction or of the initiation, or the threatening,
of any proceeding for that purpose, (iv) of the receipt of any comments from the
Commission; and (v) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or for
additional information. If the Commission or any state securities commission
authority shall enter a stop order or suspend such qualification at any time,
the Company will use its best efforts to obtain promptly the lifting of such
order.
(c) The Company shall file the Prospectus (in form and
substance satisfactory to the Representatives) in accordance with the
requirements of the Act.
(d) The Company will give the Representatives notice of
its intention to file or prepare any amendment to the Registration Statement
-14-
(including any post-effective amendment) or any amendment or supplement to the
Prospectus (including any revised prospectus which the Company proposes for use
by the Underwriters in connection with the offering of the Registered Securities
which differs from the corresponding prospectus on file at the Commission at the
time the Registration Statement becomes effective, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) of the Regulations),
and will furnish the Representatives with copies of any such amendment or
supplement a reasonable amount of time prior to such proposed filing or use, as
the case may be, and will not file any such amendment or supplement to which the
Representatives or Camhy Xxxxxxxxx & Xxxxx LLP ("Underwriters' Counsel") shall
reasonably object.
(e) The Company shall endeavor in good faith, in
cooperation with the Representatives, at or prior to the time the Registration
Statement becomes effective, to qualify the Registered Securities for offering
and sale under the securities laws of such jurisdictions as the Representatives
may reasonably designate to permit the continuance of sales and dealings therein
for as long as may be necessary to complete the distribution, and shall make
such applications, file such documents and furnish such information as may be
required for such purpose; provided, however, the Company shall not be required
to qualify as a foreign corporation or become subject to service of process in
any such jurisdiction. In each jurisdiction where such qualification shall be
effected, the Company will, unless the Representatives agree that such action is
not at the time necessary or advisable, use all reasonable efforts to file and
make such statements or reports at such times as are or may reasonably be
required by the laws of such jurisdiction to continue such qualification.
(f) During the time when a prospectus is required to be
delivered under the Act, the Company shall use all reasonable efforts to comply
with all requirements imposed upon it by the Act, as now and hereafter amended,
and by the Regulations, as from time to time in force, so far as necessary to
permit the continuance of sales of or dealings in the Registered Securities in
accordance with the provisions hereof and the Prospectus, or any amendments or
supplements thereto. If at any time when a prospectus relating to the Registered
Securities is required to be delivered under the Act, any event shall have
occurred as a result of which, in the opinion of counsel for the Company or
Underwriters' Counsel, the Prospectus, as then amended or supplemented, includes
an untrue statement of a material fact or omits to state any 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, or if
it is necessary at any time to amend or supplement the Prospectus to comply with
the Act, the Company will notify the Representatives promptly and prepare and
file with the Commission an appropriate amendment or supplement in accordance
with Section 10 of the Act, each such amendment or supplement to be satisfactory
to Underwriters' Counsel, and the Company will furnish to the Underwriters
copies of such amendment or supplement as soon as available and in such
quantities as the Underwriters may request.
(g) As soon as practicable, but in any event not later
than 45 days after the end of the 12-month period beginning on the day after the
end of the fiscal quarter of the Company during which the effective date of the
-15-
Registration Statement occurs (90 days in the event that the end of such fiscal
quarter is the end of the Company's fiscal year), the Company shall make
generally available to its securityholders (including Debenture holders), in the
manner specified in Rule 158(b) of the Regulations, and to the Representatives,
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 Regulations, which statement need not be audited unless required
by the Act, covering a period of at least 12 consecutive months after the
effective date of the Registration Statement.
(h) During a period of five (5) years after the date
hereof, the Company will furnish to its securityholders (including Debenture
holders), as soon as practicable, annual reports (including financial statements
audited by independent public accountants) and will deliver to the
Representatives:
(i) concurrently with furnishing such quarterly
reports to its securityholders, statements of income of the
Company for each quarter in the form furnished to the
Company's stockholders;
(ii) concurrently with furnishing such annual
reports to its stockholders, a balance sheet of the Company as
at the end of the preceding fiscal year, together with
statements of operations, stockholders' equity, and cash flows
of the Company for such fiscal year, accompanied by a copy of
the certificate thereon of independent certified public
accountants;
(iii) as soon as they are available, copies of
all reports (financial or other) mailed to stockholders;
(iv) as soon as they are available, copies of
all reports and financial statements furnished to or filed
with the Commission, the Nasdaq National Market or any
securities exchange;
(v) every press release and every material news
item or article of interest to the financial community in
respect of the Company or MMI or their respective affairs
which was released or prepared by or on behalf of the Company
and MMI; and
(vi) any additional information of a public
nature concerning the Company and MMI (and any future
subsidiaries) or their respective businesses which the
Representatives may reasonably request.
During such five-year period, if the Company has active
subsidiaries, the foregoing financial statements will be on a consolidated basis
to the extent that the accounts of the Company and its subsidiaries are
consolidated, and will be accompanied by similar financial statements for any
significant subsidiary which is not so consolidated.
-16-
(i) The Company will maintain a transfer agent (the
"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 the Common Stock and the Representatives' Warrants.
(j) The Company will furnish to the Representatives or
on the Representatives' order, without charge, at such place as the
Representatives may designate, copies of each Preliminary Prospectus, the
Registration Statement and any pre-effective or post-effective amendments
thereto (two of which copies will be signed and will include all financial
statements and exhibits), each Preliminary Prospectus, the Prospectus, and all
amendments and supplements thereto, including any prospectus prepared after the
effective date of the Registration Statement, in each case as soon as available
and in such quantities as the Representatives may reasonably request.
(k) The Company shall use its best efforts to cause its
officers, directors, stockholders or affiliates (within the meaning of the
Regulations) not to take, directly or indirectly, any action designed to, or
which might in the future reasonably be expected to cause or result in,
stabilization or manipulation of the price of any securities of the Company.
(l) The Company shall apply the net proceeds from the
sale of the Securities substantially in the manner, and subject to the
conditions, set forth under "Use of Proceeds" in the Prospectus.
(m) The Company shall timely file all such reports,
forms or other documents as may be required (including, but not limited to, a
Form SR as may be required pursuant to Rule 463 under the Act) from time to
time, under the Act, the Exchange Act, the Trust Indenture Act, and the
Regulations, and all such reports, forms and documents filed will comply as to
form and substance with the applicable requirements under the Act, the Exchange
Act, and the Regulations.
(n) The Company shall cause the Securities to be quoted
on the American Stock Exchange and for a period of two (2) years from the date
hereof shall use its best efforts to maintain the quotation of the Debentures
and the Securities and the Common Stock to the extent outstanding.
(o) For a period of two (2) years from the Closing
Date, the Company shall furnish to the Representatives, at the Company's sole
expense, daily consolidated transfer sheets relating to the Debentures and the
Common Stock.
(p) For a period of five (5) years after the effective
date of the Registration Statement the Company shall, at the Company's sole
expense, take all necessary and appropriate actions to further qualify the
Company's securities in all jurisdictions of the United States in order to
permit secondary sales of such securities pursuant to the Blue Sky laws of those
jurisdictions which do not require the Company to qualify as a foreign
corporation or to file a general consent to service of process.
-17-
(q) The Company (i) prior to the effective date of the
Registration Statement, has filed a Form 8-A with the Commission providing for
the registration of the Debentures and the Common Stock under the Exchange Act
and (ii) as soon as practicable, will use its best efforts to take all necessary
and appropriate actions to be included in Standard and Poor's Corporation
Descriptions and Xxxxx'x OTC Manual and to continue such inclusion for a period
of not less than five (5) years.
(r) The Company agrees that for a period of nine (9)
months following the effective date of the Registration Statement it will not,
without the prior written consent of National, offer, issue, sell, contract to
sell, grant any option for the sale of or otherwise dispose (i) the Option
Securities, (ii) the Representatives' Warrants, (iii) shares of Common Stock
issued upon the exercise of currently outstanding warrants or options, (iv)
shares of Common Stock issued in connection with the acquisition of businesses
or entry into medical management agreements for terms of at least 5 years, (v)
options for shares of Common Stock granted, or shares issued upon the exercise
thereof, under any stock option plan in effect on the Closing Date, (vi) (A)
options for shares of Common Stock granted, or shares issued upon the exercise
thereof, pursuant to a stock option plan approved by the stockholders within
such nine month period or (B) other options for shares of Common Stock, or
shares issued on the exercise thereof, provided, however, that options for
shares of Common Stock granted or shares issued upon the exercise thereof
pursuant to this subsection (vi) shall not exceed 10% of the shares of Common
Stock outstanding as of the date hereof and that such number of shares of Common
Stock outstanding shall not include shares held in the treasury of the Company.
(s) Until the completion of the distribution of the
Registered Securities, neither the Company nor MMI shall, without the prior
written consent of National or Underwriters' Counsel, issue, directly or
indirectly issue any press release or other communication or hold any press
conference with respect to the Company, MMI, their respective activities or the
offering contemplated hereby, other than trade releases issued in the ordinary
course of the Company's business consistent with past practices with respect to
the Company's operations.
(t) For a period equal to the lesser of (i) five (5)
years from the date hereof, and (ii) the sale to the public of the
Representatives' Firm Securities, the Company will not take any action or
actions which may prevent or disqualify the Company's use of Form S-1 (or other
appropriate form) for the registration under the Act of the Representatives'
Securities and the Underlying Representatives Stock, and for such period as any
of the Debentures are outstanding, the Company will not take any action or
actions which may cause the exemption from registration provided by Section
3(a)(9) of the Act (or any successor provision) to be unavailable for the
conversion of the Debentures into Common Stock.
(u) The Company agrees that any and all future
transactions between the Company or MMI and their respective officers,
directors, principal stockholders and the affiliates of the foregoing persons
will be on terms no less favorable to the Company or MMI than could reasonably
be obtained in arm's length transactions with independent third parties, and
-18-
that any such transactions also be approved by a majority of the Company's or
MMI's, as the case may be, outside independent directors disinterested in the
transaction.
(v) The Company shall prepare and deliver, at the
Company's sole expense, to National within the one hundred and twenty (120) day
period after the later of the effective date of the Registration Statement or
the latest Option Closing Date, as the case may be, one bound volume containing
all correspondence with regulatory officials, agreements, documents and all
other materials in connection with the offering as requested by the
Underwriters' Counsel.
(w) The Company shall 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 or any of the Subsidiaries to register as an
investment company under the 1940 Act.
5. Payment of Expenses.
(a) The Company hereby agrees to pay on each of the
Closing Date and each Option Closing Date (to the extent not previously paid)
all expenses and fees (other than fees of Underwriters' Counsel, except as
provided in (iv) below) incident to the performance of the obligations of the
Company under this Agreement and the Representatives' Warrant Agreement,
including, without limitation, (i) the fees and expenses of accountants and
counsel for the Company, (ii) all costs and expenses incurred in connection with
the preparation, duplication, printing, filing, delivery and mailing (including
the payment of postage with respect thereto) of the Registration Statement and
the Prospectus and any amendments and supplements thereto and the duplication,
mailing (including the payment of postage with respect thereto) and delivery of
this Agreement, the Agreement Among Underwriters, the Selected Dealers
Agreement, the Powers of Attorney, and related documents, including the cost of
all copies thereof and of the Preliminary Prospectuses and the Prospectus and
any amendments thereof or supplements thereto supplied to the Underwriters and
such dealers as the Underwriters may request, in quantities as hereinabove
stated, (iii) the printing, engraving, issuance and delivery of the certificates
representing the Securities and the Representatives' Warrants, (iv) the
qualification of the Securities, the Representatives' Securities and the
Underlying Stock under state or foreign securities or Blue Sky laws and
determination of the status of such securities under legal investment laws,
including the costs of printing and mailing the "Preliminary Blue Sky
Memorandum," the "Supplemental Blue Sky Memorandum" and "Legal Investments
Survey," if any, and reasonable disbursements and fees of counsel in connection
therewith, (v) advertising costs and expenses, including but not limited to the
costs and expenses incurred by the Company in connection with the "road show"
(but not including costs and expenses incurred by the Representatives in
connection with the "road show"), information meetings and presentations, bound
volumes and prospectus memorabilia and "tombstone" advertisement expenses, (vi)
fees and expenses of the transfer agent and registrar, (vii) the fees payable to
the Commission, the NASD and the American Stock Exchange, (viii) experts and
(ix) the fees and expenses incurred in connection with the listing of the
Securities, the Representatives' Securities and the Underlying Stock on the
American Stock Exchange and any other market or exchange.
-19-
(b) If this Agreement is terminated by the Underwriters
in accordance with the provisions of Section 6, Section 10(a) or Section 12, the
Company shall reimburse and indemnify the Representatives for all of its actual
out-of-pocket expenses in an amount not to exceed $50,000, including the fees
and disbursements of Underwriters' Counsel and all Blue Sky counsel fees and
Blue Sky filing fees, less any amounts already paid pursuant to Section 5(c)
hereof.
(c) The Company further agrees that, in addition to the
expenses payable pursuant to subsection (a) of this Section 5, it will pay to
the Representatives on the Closing Date by certified or bank cashier's check or,
at the election of the Representatives, by deduction from the proceeds of the
offering contemplated herein a non-accountable expense allowance equal to two
percent (2%) of the gross proceeds received by the Company from the sale of the
Firm Securities, $35,000 of which has been paid to date. In the event the
Representatives elect to exercise the over-allotment option described in Section
2(b) hereof, the Company further agrees to pay to the Representatives on the
Option Closing Date (by certified or bank cashier's check or, at the
Representatives' election, by deduction from the proceeds of the offering) a
non-accountable expense allowance equal to two percent (2%) of the gross
proceeds received by the Company from the sale of the Option Securities.
6. Conditions of the Underwriters' Obligations. The
obligations of the Underwriters hereunder shall be subject to the continuing
accuracy of the representations and warranties of the Company herein as of the
date hereof and as of the Closing Date and each Option Closing Date, if any, as
if they had been made on and as of the Closing Date or each Option Closing Date,
as the case may be; the accuracy on and as of the Closing Date or Option Closing
Date, if any, of the statements of officers of the Company made pursuant to the
provisions hereof; and the performance by the Company on and as of the Closing
Date and each Option Closing Date, if any, of its covenants and obligations
hereunder and to the following further conditions:
(a) The Registration Statement (including the Statement
of Eligibility and Qualification of the Trustee on Form T-1 (the "Form T-1"))
shall have become effective not later than 5:00 p.m., New York City time, on the
date prior to the date of this Agreement or such later date and time as shall be
consented to in writing by the Representatives, and, at Closing Date and each
Option Closing Date, if any, no stop order suspending the effectiveness of the
Registration Statement (including the Form T-1) shall have been issued and no
proceedings for that purpose shall have been instituted or shall be pending or
contemplated by the Commission and any request on the part of the Commission for
additional information shall have been complied with to the reasonable
satisfaction of Underwriters' Counsel. If the Company has elected to rely upon
Rule 430A of the Regulations, the price of the Firm Securities and any
price-related information previously omitted from the effective Registration
Statement pursuant to such Rule 430A shall have been transmitted to the
Commission for filing pursuant to Rule 424(b) of the Regulations within the
prescribed time period, and prior to Closing Date the Company shall have
provided evidence satisfactory to the Representatives of such timely filing,
-20-
or a post-effective amendment providing such information shall have been
promptly filed and declared effective in accordance with the requirements of
Rule 430A of the Regulations.
(b) The Representatives shall not have advised the
Company that the Registration Statement, or any amendment thereto, contains an
untrue statement of fact which, in the Representatives' opinion, is material,
or omits to state a fact which, in the Representatives' opinion, is material
and is required to be stated therein or is necessary to make the statements
therein not misleading, or that the Prospectus, or any supplement thereto,
contains an untrue statement of fact which, in the Representatives' reasonable
opinion, is material, or omits to state a fact which, in the Representatives'
reasonable opinion, is material and is required to be stated therein or is
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(c) On or prior to the Closing Date, the Underwriters
shall have received from Underwriters' Counsel such opinion or opinions with
respect to the organization of the Company, the validity of the Securities, the
Representatives' Warrants, the Registration Statement, the Prospectus and other
related matters as the Representatives may request and Underwriters' Counsel
shall have received from the Company such papers and information as they request
to enable them to pass upon such matters.
(d) At Closing Date, the Underwriters shall have
received the favorable opinion of Zelnick, Morse, Rose & Lander, LLP, counsel to
the Company, dated the Closing Date or the Option Closing Date, as the case may
be, addressed to the Underwriters and in form and substance satisfactory to
Underwriters' Counsel, to the effect that:
(i) each of the Company and MMI (A) has been
duly organized and is validly existing as a corporation
in good standing under the laws of its jurisdiction of
incorporation, (B) is duly qualified and licensed and
in good standing as a foreign corporation in each
jurisdiction in which its ownership or leasing of any
properties or the character of its operations requires
such qualification or licensing, and (C) to the best of
such counsel's knowledge after due inquiry, has all
requisite corporate power and authority and has
obtained any and all necessary authorizations,
approvals, orders, licenses, certificates, franchises
and permits of and from all governmental or regulatory
officials and bodies (including, without limitation,
those having jurisdiction over environmental or similar
matters), to own or lease its properties and conduct
its business as described in the Prospectus;
(ii) the Company owns one hundred percent (100%)
of the outstanding capital stock of MMI free and clear
of any liens, charges, claims, encumbrances, pledges,
security interests, defects or other restrictions or
equities of any kind whatsoever;
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(iii) except as described in the Prospectus, and
to the best of such counsel's knowledge after due
inquiry, neither the Company nor MMI owns an interest
in any corporation, limited liability company,
partnership, joint venture, trust or other business
entity;
(iv) the Company has a duly authorized, issued
and outstanding capitalization as set forth in the
Prospectus, and any amendment or supplement thereto,
under "Capitalization" and "Description of Debentures,"
and to the best of such counsel's knowledge after due
inquiry, neither the Company nor MMI is a party to or
bound by any instrument, agreement or other arrangement
providing for it to issue any capital stock, rights,
warrants, options or other securities, except for this
Agreement, the Representatives' Warrant Agreement, and
as described in the Prospectus; the Securities, the
Indenture, the Representatives' Warrants, the
Representatives' Securities, the Underlying Stock, and
all other securities issued or issuable by the Company
or MMI conform in all material respects to the
statements with respect thereto contained in the
Registration Statement and the Prospectus; all issued
and outstanding securities of the Company or MMI have
been duly authorized and validly issued and are fully
paid and non-assessable; the holders thereof are not
subject to personal liability by reason of being such
holders; and none of such securities were issued in
violation of the preemptive rights of any holders of
any security of the Company or MMI, to the best of such
counsel's knowledge after due inquiry, similar
contractual rights granted by the Company or MMI or
applicable securities laws; the Debentures have been
duly authorized and, when validly authenticated,
issued, delivered and paid for in the manner
contemplated by the Indenture, will be duly authorized,
validly issued and outstanding obligations of the
Company entitled to the benefits of the Indenture; the
shares of Common Stock issuable upon conversion of the
Debentures will, upon such issuance, be duly
authorized, validly issued, fully paid and
non-assessable; the Company has duly authorized and
reserved for issuance upon conversion of the Debentures
the shares of Common Stock issuable upon such
conversion; the Securities, the Representatives'
Warrants, the Representatives' Securities and the
Underlying Stock to be sold by the Company hereunder,
under the Indenture and under the Representatives'
Warrant Agreement are not and will not be subject to
any preemptive or other similar rights of any
securityholder of the Company or MMI; the holders
thereof will not be subject to any liability solely as
such holders; all corporate action required to be taken
for the authorization, issue and sale of the
Securities, the Representatives' Warrants, the
Representatives' Securities and the Underlying Stock
has been duly and validly taken; the certificates
representing the Securities and the Representatives'
Warrants are in due and proper form; the
Representatives' Warrants constitute valid and binding
-22-
obligations of the Company to issue and sell, upon
exercise thereof and payment therefor, the number and
type of securities of the Company called for thereby
(except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application
relating to or affecting enforcement of creditors'
rights and the application of equitable principles in
any action, legal or equitable, and except as rights to
indemnity or contribution may be limited by applicable
law); upon the issuance and delivery pursuant to this
Agreement, the Indenture and the Representatives'
Warrant Agreement of the Securities, the
Representatives' Warrants and the Representatives'
Securities to be sold by the Company hereunder and
thereunder, the Company will convey against payment
therefore as provided herein, to the Underwriters or
the Representatives, as the case may be, good and
marketable title thereto free and clear of all liens
and other encumbrances;
(v) the Registration Statement (including the
Form T-1) is effective under the Act and the Indenture
has been duly qualified under the Trust Indenture Act;
if applicable, filing of all pricing information has
been timely made in the appropriate form under Rule
430A, and no stop order suspending the use of the
Preliminary Prospectus, the Registration Statement or
Prospectus or any part of any thereof or suspending the
effectiveness of the Registration Statement or the
qualification of the Trustee has been issued and no
proceedings for that purpose have been instituted or
are pending or, to the best of such counsel's
knowledge, threatened or contemplated under the Act or
the Trust Indenture Act;
(vi) each of the Preliminary Prospectus, the
Registration Statement, and the Prospectus and the
Indenture and any amendments or supplements thereto
(other than the financial statements and other
financial and statistical data included therein as to
which no opinion need be rendered) comply as to form in
all material respects with the requirements of the Act,
the Trust Indenture Act and the Regulations;
(vii) to the best of such counsel's knowledge
after due inquiry, (A) there are no agreements,
contracts or other documents required by the Act or the
Trust Indenture Act to be described in the Registration
Statement and the Prospectus and filed as exhibits to
the Registration Statement other than those described
in the Registration Statement and the Prospectus and
filed as exhibits thereto; (B) the descriptions in the
Registration Statement and the Prospectus and any
supplement or amendment thereto of contracts and other
documents to which the Company or MMI is a party or by
which either or them is bound are accurate in all
material respects and fairly represent the information
required to be shown by Form S-1; (C) there is not
pending or threatened against the Company or MMI any
-23-
action, arbitration, suit, proceeding, litigation,
governmental or other proceeding (including, without
limitation, those having jurisdiction over
environmental or similar matters), domestic or foreign,
against the Company or MMI which (x) is required to be
disclosed in the Registration Statement which is not so
disclosed (and such proceedings as are summarized in
the Registration Statement are accurately summarized in
all material respects), (y) questions the validity of
the capital stock of the Company or MMI or this
Agreement, the Indenture or the Representatives'
Warrant Agreement, or of any action taken or to be
taken by the Company or MMI pursuant to or in
connection with any of the foregoing; and (D) there is
no action, suit or proceeding pending or threatened
against the Company or MMI before any court or
arbitrator or governmental body, agency or official in
which there is a reasonable possibility of an adverse
decision which may result in a material adverse change
in the financial condition, business, affairs,
stockholders' equity, operations, properties, business
or results of operations of the Company or MMI, which
could adversely affect the present or prospective
ability of the Company to perform its obligations under
this Agreement, the Indenture or the Representatives'
Warrant Agreement or which in any manner draws into
question the validity or enforceability of this
Agreement, the Indenture or the Representatives'
Warrant Agreement;
(viii) the Company has the corporate power and
authority to enter into each of this Agreement, the
Indenture and the Representatives' Warrant Agreement
and to consummate the transactions provided for herein
and therein; and each of this Agreement, the Indenture
and the Representatives' Warrant Agreement has been
duly authorized, executed and delivered by the Company;
each of this Agreement, the Indenture and the
Representatives' Warrant Agreement, assuming due
authorization, execution and delivery by each other
party thereto, 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
enforcement of creditors' rights and the application of
equitable principles in any action, legal or equitable,
and except as rights to indemnity or contribution may
be limited by applicable law), and none of the
Company's execution, delivery or performance of this
Agreement, the Indenture and the Representatives'
Warrant Agreement, its consummation of the transactions
contemplated herein or therein, or the conduct of its
business as described in the Registration Statement,
the Prospectus, and any amendments or supplements
thereto conflicts with or result in any breach or
violation of any of the terms or provisions of, or
constitutes a default under, or will result in the
creation or imposition of any lien, charge, claim,
encumbrance, pledge, security interest, defect or other
restriction or equity of any kind whatsoever upon, any
-24-
property or assets (tangible or intangible) of the
Company or MMI pursuant to the terms of (A) the
articles of incorporation or by-laws of the Company or
MMI, as amended, (B) any license, contract, indenture,
mortgage, deed of trust, voting trust agreement,
stockholders' agreement, note, loan or credit agreement
or any other agreement or instrument known to such
counsel to which the Company or MMI is a party or by
which either of them is bound, or (C) any federal,
state or local statute, rule or regulation applicable
to the Company or MMI or any judgment, decree or order
known to such counsel of any arbitrator, court,
regulatory body or administrative agency or other
governmental agency or body (including, without
limitation, those having jurisdiction over
environmental or similar matters), domestic or foreign,
having jurisdiction over the Company or MMI or any of
their activities or properties;
(ix) no consent, approval, authorization or
order, and no filing with, any court, regulatory body,
government agency or other body (other than such as may
be required under federal securities or Blue Sky laws,
as to which no opinion need be rendered) is required in
connection with the issuance of the Securities,
Representatives' Warrants, the Representatives'
Securities or the Underlying Stock as contemplated by
the Prospectus and the Registration Statement, the
performance of the Agreement, the Indenture and the
Representatives' Warrant Agreement and the
transactions contemplated hereby and thereby;
(x) to the best of such counsel's knowledge
after due inquiry, the properties and businesses of the
Company and MMI conform in all material respects to the
description thereof contained in the Registration
Statement and the Prospectus;
(xi) to the best knowledge of such counsel, and
except as disclosed in the Registration Statement and
the Prospectus, neither the Company nor MMI is in
breach of, or in default under, any term or provision
of any license, contract, indenture, mortgage,
installment sale agreement, deed of trust, lease,
voting trust agreement, stockholders' agreement, note,
loan or credit agreement or any other agreement or
instrument evidencing an obligation for borrowed money,
or any other agreement or instrument to which the
Company or MMI is a party or by which the Company or
MMI is bound or to which the property or assets
(tangible or intangible) of the Company or MMI is
subject; and neither the Company nor MMI is in
violation of any term or provision of its articles of
incorporation or by-laws, as amended, and to the best
of such counsel's knowledge after due inquiry, in
violation of any franchise, license, permit, judgment,
decree, order, statute, rule or regulation;
-25-
(xii) the statements in the Prospectus under
"Dividend Policy" and "Description of Debentures," have
been reviewed by such counsel, and insofar as they
refer to statements of law, descriptions of statutes,
licenses, rules or regulations or legal conclusions,
are correct in all material respects;
(xiii) the Securities and the Common Stock have
been approved for listing on the American Stock
Exchange, subject only to official notice of issuance;
(xiv) to the best of such counsel's knowledge
and based upon a review of the outstanding securities
and the contracts furnished to such counsel by the
Company, no person, corporation, trust, partnership,
association or other entity has the right to include
and/or register any securities of the Company in the
Registration Statement, require the Company to file any
registration statement or, if filed, to include any
security in such registration statement; and
(xv) the Company is not an "investment company"
or "promoter" or "principal underwriter" for or, to
such counsel's knowledge, an "affiliated person" of, an
"investment company" as such terms are defined in the
1940 Act.
(e) The Representatives shall have received on the
Closing Date or the Option Closing Date, as the case may be, the opinion of
Xxxxxxx, Xxxxxx & Green P.C., special counsel for the Company, dated the Closing
Date or the Option Closing Date, as the case may be, addressed to the
Underwriters (and stating that it may be relied upon by counsel to the
Underwriters) to the effect that:
(i) The business and professional activities
described in the Prospectus as being engaged in, or as
proposed to be engaged in by the Company, MMI and GMMS
(the "Regulated Business") can be undertaken in
compliance in all material respects with all laws,
rules and regulations applicable to healthcare
providers, as such, or to practice support activities
undertaken on behalf of healthcare providers
(collectively, the "Healthcare Rules").
(ii) Except as disclosed in the Prospectus, such
counsel is not aware that any legislative or
administrative body has under consideration any
proposed Healthcare Rule the enactment of which, as
currently proposed, would require the Company to make a
material change in its operations or business strategy,
each as described in the Prospectus.
(iii) The statements under the captions "Risk
Factors -- Government Regulation" and "Business --
Government Regulation" in the Prospectus, insofar as
-26-
such statements constitute a summary of documents
referred to therein or matters or law, fairly summarize
in all material respects the information called for
with respect to such documents or matters.
In rendering such opinion, each such counsel may rely as to
matters governed by the laws of states other than New York or Federal laws on
local counsel in such jurisdictions, provided that in each case such counsel
shall state that they believe that they and the Underwriters are justified in
relying on such other counsel. In addition to the matters set forth above, (x)
the opinion of Morse, Zelnick, Rose & Lander shall also include a statement to
the effect that nothing has come to the attention of such counsel which leads
them to believe that (i) the Registration Statement, at the time it became
effective under the Act (but after giving effect to any modifications
incorporated therein pursuant to Rule 430A under the Act) and as of the Closing
Date or the Option Closing Date, as the case may be, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
(ii) the Prospectus, or any supplement thereto, on the date it was filed
pursuant to the Rules and Regulations and as of the Closing Date or the Option
Closing Date, as the case may be, contained an untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements, in the light of the circumstances under which they are made, not
misleading (except that such counsel need express no view as to financial
statements, schedules and statistical information therein); and (y) the opinion
of Ruskin, Moscou, Xxxxx & Faltishek, P.C. shall also include a statement to the
effect that nothing has come to the attention of such counsel which leads them
to believe that the Company, MMI or GMMS is not operating in compliance in all
material respects with all applicable Healthcare Rules. With respect to such
statements, Morse, Zelnick, Rose & Lander and Messrs. Ruskin, Moscou, Xxxxx &
Faltishek, P.C. as the case may be, may state that their belief is based upon
the procedures set forth therein (which procedures shall be reasonably
acceptable to the Representatives and counsel for the Underwriters) but is
otherwise without independent check and verification.
(f) On or prior to each of the Closing Date and the
Option Closing Date, if any, Underwriters' Counsel shall have been furnished
such documents, certificates and opinions as they may reasonably require for the
purpose of enabling them to review or pass upon the matters referred to in
subsection (c) of this Section 6, or in order to evidence the accuracy,
completeness or satisfaction of any of the representations, warranties or
conditions of the Company herein contained.
(g) Prior to each of the Closing Date and each Option
Closing Date, if any, (i) there shall have been no material adverse change nor
development involving a prospective change in the condition, financial or
otherwise, prospects, stockholders' equity or the business activities of the
Company or MMI, whether or not in the ordinary course of business, from the
latest dates as of which such condition is set forth in the Registration
Statement and Prospectus; (ii) there shall have been no transaction, not in the
ordinary course of business, entered into by the Company or MMI, from the latest
date as of which the financial condition of the Company and MMI is set forth in
-27-
the Registration Statement and Prospectus which is adverse to the Company and
MMI taken as a whole; (iii) neither the Company nor MMI shall be in default
under any provision of any instrument relating to any outstanding indebtedness
which default has not been waived; (iv) neither the Company nor MMI shall have
issued any securities (other than the Securities and the Representatives'
Warrants) or declared or paid any dividend or made any distribution in respect
of its capital stock of any class and there has not been any change in the
capital stock, or any material increase in the debt (long or short term) or
liabilities or obligations of the Company or MMI (contingent or otherwise); (v)
no material amount of the assets of the Company or MMI shall have been pledged
or mortgaged, except as set forth in the Registration Statement and Prospectus;
(vi) no action, suit or proceeding, at law or in equity, shall have been pending
or threatened (or circumstances developed giving rise to same) against the
Company or MMI, or affecting any of their respective properties or businesses
before or by any court or federal, state or foreign commission, board or other
administrative agency wherein an unfavorable decision, ruling or finding may
materially adversely affect the business, operations, prospects or financial
condition or income of the Company or MMI, except as set forth in the
Registration Statement and Prospectus; and (vii) no stop order shall have been
issued under the Act and no proceedings therefor shall have been initiated,
threatened or contemplated by the Commission.
(h) At each of the Closing Date and each Option Closing
Date, if any, the Underwriters shall have received a certificate of the Company
signed on behalf of the Company by the principal executive officer of the
Company, dated the Closing Date or Option Closing Date, as the case may be, to
the effect that such executive has carefully examined the Registration
Statement, the Prospectus, this Agreement, the Indenture and the
Representatives' Warrant Agreement, and that:
(i) The representations and warranties of the
Company in this Agreement, the Indenture and the
Representatives' Warrant Agreement are true and
correct, as if made on and as of the Closing Date or
the Option Closing Date, as the case may be, and the
Company has complied with all agreements and covenants
and satisfied all conditions contained in this
Agreement, the Indenture and the Representatives'
Warrant Agreement on its part to be performed or
satisfied at or prior to such Closing Date or Option
Closing Date, as the case may be;
(ii) No stop order suspending the effectiveness
of the Registration Statement or any part thereof or
the qualification of the Trustee has been issued, and
no proceedings for that purpose have been instituted or
are pending or, to the best of each of such person's
knowledge after due inquiry, are contemplated or
threatened under the Act or the Trust Indenture Act;
(iii) The Registration Statement and the
Prospectus and, if any, each amendment and each
supplement thereto, contain all statements and
information required by the Act to be included therein,
-28-
and none of the Registration Statement, the Prospectus
nor any amendment or supplement thereto includes any
untrue statement of a material fact or omits to state
any material fact required to be stated therein or
necessary to make the statements therein not misleading
and neither the Preliminary Prospectus or any
supplement, as of their respective dates, thereto
included 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, in light of the circumstances under which they
were made, not misleading; and
(iv) Subsequent to the respective dates as of
which information is given in the Registration
Statement and the Prospectus, (a) neither the Company
nor MMI has incurred up to and including the Closing
Date or the Option Closing Date, as the case may be,
other than in the ordinary course of its business, any
material liabilities or obligations, direct or
contingent; (b) neither the Company nor MMI has paid or
declared any dividends or other distributions on its
capital stock; (c) neither the Company nor MMI has
entered into any transactions not in the ordinary
course of business; (d) there has not been any change
in the capital stock or material increase in long-term
debt or any increase in the short-term borrowings
(other than any increase in the short-term borrowings
in the ordinary course of business) of the Company or
MMI, (e) neither the Company nor MMI has sustained any
loss or damage to its property or assets, whether or
not insured, (f) there is no litigation which is
pending or threatened (or circumstances giving rise to
same) against the Company or MMI or any affiliated
party of either of the foregoing which is required to
be set forth in an amended or supplemented Prospectus
which has not been set forth, and (g) there has
occurred no event required to be set forth in an
amended or supplemented Prospectus which has not been
set forth.
References to the Registration Statement and the Prospectus in this subsection
(g) are to such documents as amended and supplemented at the date of such
certificate.
(i) By the Closing Date, the Underwriters will have
received clearance from the NASD as to the amount of compensation allowable or
payable to the Underwriters.
(j) At the time this Agreement is executed, the
Underwriters shall have received a letter, dated such date, addressed to the
Underwriters in form and substance satisfactory in all respects (including the
non-material nature of the changes or decreases, if any, referred to in clause
(iii) below) to the Underwriters and Underwriters' Counsel, from Xxxxxx
Xxxxxxxx:
(i) confirming that they are independent
certified public accountants with respect to the
Company within the meaning of the Act and the Exchange
Act and the applicable Regulations;
-29-
(ii) stating that it is their opinion that the
financial statements and supporting schedules of the
Company and MMI included in the Registration Statement
comply as to form in all material respects with the
applicable accounting requirements of the Act and the
Regulations thereunder and that the Representatives may
rely upon the opinion of Xxxxxx Xxxxxxxx with respect
to the financial statements and supporting schedules
included in the Registration Statement;
(iii) stating that, on the basis of a limited
review which included a reading of the latest available
unaudited interim financial statements of the Company
and MMI (with an indication of the date of the latest
available unaudited interim financial statements), a
reading of the latest available minutes of the
stockholders and board of directors and the various
committees of the board of directors of the Company and
MMI, consultations with officers and other employees of
the Company and MMI responsible for financial and
accounting matters and other specified procedures and
inquiries, nothing has come to their attention which
would lead them to believe that (A) the unaudited
financial statements and supporting schedules of the
Company and MMI, if any, included in the Registration
Statement, do not comply as to form in all material
respects with the applicable accounting requirements of
the Act and the Regulations or are not fairly presented
in conformity with generally accepted accounting
principles applied on a basis substantially consistent
with that of the audited financial statements of the
Company and MMI included in the Registration Statement,
or (B) at a specified date not more than five (5) days
prior to the effective date of the Registration
Statement, there has been any change in the capital
stock or material increase in long-term debt of the
Company or MMI, or any material decrease in the
stockholders' equity or net current assets or net
assets of the Company as compared with amounts shown in
the [ , 1996], balance sheet included in the
Registration Statement, other than as set forth in or
contemplated by the Registration Statement, or, if
there was any change or decrease, setting forth the
amount of such change or decrease;
(iv) stating that they have compared specific
dollar amounts, numbers of shares, percentages of
revenues and earnings, statements and other financial
information pertaining to the Company and MMI set forth
in the Prospectus in each case to the extent that such
amounts, numbers, percentages, statements and
information may be derived from the general accounting
records, including work sheets, of the Company and/or
MMI and excluding any questions requiring an
interpretation by legal counsel, with the results
obtained from the application of specified readings,
inquiries and other appropriate procedures (which
-30-
procedures do not constitute an examination in
accordance with generally accepted auditing standards)
set forth in the letter and found them to be in
agreement; and
(v) statements as to such other material matters
incident to the transaction contemplated hereby as the
Representatives may reasonably request.
(k) At the Closing Date and each Option Closing Date,
if any, the Underwriters shall have received from Xxxxxx Xxxxxxxx a letter,
dated as of the Closing Date or the Option Closing Date, as the case may be, to
the effect that they reaffirm that statements made in the letter furnished
pursuant to Subsection (i) of this Section 6, except that the specified date
referred to shall be a date not more than five (5) days prior to Closing Date or
the Option Closing Date, as the case may be, and, if the Company has elected to
rely on Rule 430A of the Rules and Regulations, to the further effect that they
have carried out procedures as specified in clause (v) of Subsection (i) of this
Section 6 with respect to certain amounts, percentages and financial information
as specified by the Representatives and deemed to be a part of the Registration
Statement pursuant to Rule 430A(b) and have found such amounts, percentages and
financial information to be in agreement with the records specified in such
clause (v).
(l) On each of Closing Date and Option Closing Date, if
any, there shall have been duly tendered to the Representatives for the several
Underwriters' accounts the appropriate number of Securities.
(m) No order suspending the sale of the Securities in
any jurisdiction designated by the Representatives pursuant to subsection (e) of
Section 4 hereof shall have been issued on either the Closing Date or the Option
Closing Date, if any, and no proceedings for that purpose shall have been
instituted or shall be contemplated.
(n) On or before the Closing Date, the Company shall
have executed and delivered to the Representatives, (i) the Representatives'
Warrant Agreement, substantially in the form filed as Exhibit 4.2, to the
Registration Statement, in final form and substance satisfactory to the
Representatives, and (ii) the Representatives' Warrants in such denominations
and to such designees as shall have been provided to the Company.
(o) On or before Closing Date, the Securities and the
shares of Common Stock shall have been duly approved for quotation on the
American Stock Exchange.
If any condition to the Underwriters' obligations hereunder to
be fulfilled prior to or at the Closing Date or the relevant Option Closing
Date, as the case may be, is not so fulfilled, the Representatives may terminate
this Agreement or, if the Representatives so elects, it may waive any such
conditions which have not been fulfilled or extend the time for their
fulfillment.
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7. Indemnification.
(a) The Company agrees to indemnify and hold harmless
each of the Underwriters (for purposes of this Section 7, "Underwriters" shall
include the officers, directors, partners, employees, agents and counsel of the
Underwriters, including specifically each person who may be substituted for an
Underwriter as provided in Section 11 hereof), and each person, if any, who
controls the Underwriter ("controlling person") within the meaning of Section 15
of the Act or Section 20(a) of the Exchange Act, from and against any and all
loss, liability, claim, damage, and expense whatsoever (including, but not
limited to, reasonable attorneys' fees and any and all reasonable expense
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever and any and all
amounts paid in settlement of any claim or litigation provided that the
indemnified persons may not agree to any such settlement without the prior
written consent of the Company), as and when incurred, arising out of, based
upon or in connection with (i) any untrue statement or alleged untrue statement
of a material fact contained (A) in any Preliminary Prospectus, the Registration
Statement or the Prospectus (as from time to time amended and supplemented); or
(B) in any application or other document or communication (in this Section 7
collectively called "application") executed by or on behalf of the Company or
based upon written information furnished by or on behalf of the Company in any
jurisdiction in order to qualify the Registered Securities under the securities
laws thereof or filed with the Commission, any state securities commission or
agency, The American Stock Exchange or any securities exchange; or any omission
or alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading (in the case of the
Prospectus, in the light of the circumstances under which they were made),
unless such statement or omission was made in reliance upon and in conformity
with written information furnished to the Company with respect to any
Underwriter by or on behalf of such Underwriter expressly for use in any
Preliminary Prospectus, the Registration Statement or Prospectus, or any
amendment thereof or supplement thereto, or in any application, as the case may
be; or (ii) any breach of any representation, warranty, covenant or agreement of
the Company contained in this Agreement. The indemnity agreement in this
subsection (a) shall be in addition to any liability which the Company may have
at common law or otherwise.
(b) Each of the Underwriters agrees severally, but not
jointly, to indemnify and hold harmless the Company, each of its directors, each
of its officers who has signed the Registration Statement, and each other
person, if any, who controls the Company, within the meaning of the Act, to the
same extent as the foregoing indemnity from the Company to the Underwriters but
only with respect to statements or omissions, if any, made in any Preliminary
Prospectus, the Registration Statement or Prospectus or any amendment thereof or
supplement thereto or in any application made in reliance upon, and in strict
conformity with, written information furnished to the Company with respect to
any Underwriter by such Underwriter or the Representatives expressly for use in
such Preliminary Prospectus, the Registration Statement or Prospectus or any
amendment thereof or supplement thereto or in any such application, provided
that such written information or omissions only pertain to disclosures in the
Preliminary Prospectus, the Registration Statement or Prospectus directly
-32-
relating to the transactions effected by the Underwriters in connection with
this Offering. The Company acknowledges that the statements with respect to the
public offering of the Securities set forth under the heading "Underwriting" and
the stabilization legend in the Prospectus have been furnished by the
Underwriters expressly for use therein and constitute the only information
furnished in writing by or on behalf of the Underwriters or the Representatives
for inclusion in the Prospectus.
(c) Promptly after receipt by an indemnified party
under this Section 7 of notice of the commencement of any action, suit or
proceeding, such indemnified party shall, if a claim in respect thereof is to be
made against one or more indemnifying parties under this Section 7, notify each
party against whom indemnification is to be sought in writing of the
commencement thereof (but the failure to so notify an indemnifying party shall
not relieve it from any liability which it may have otherwise or which it may
have under this Section 7, except to the extent that it has been prejudiced in
any material respect by such failure). In case any such action is brought
against any indemnified party, and it notifies an indemnifying party or parties
of the commencement thereof, the indemnifying party or parties will be entitled
to participate therein, and to the extent it may elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid notice
from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party. Notwithstanding the
foregoing, the indemnified party or parties shall have the right to employ its
or their own counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of such indemnified party or parties unless (i) the
employment of such counsel shall have been authorized in writing by the
indemnifying parties in connection with the defense of such action at the
expense of the indemnifying party, (ii) the indemnifying parties shall not have
employed counsel reasonably satisfactory to such indemnified party to have
charge of the defense of such action within a reasonable time after notice of
commencement of the action, or (iii) such indemnified party or parties shall
have reasonably concluded that there may be defenses available to it or them
which are different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties), in any of which events the reasonable fees and expenses of one
additional counsel shall be borne by the indemnifying parties. In no event shall
the indemnifying parties be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances. Anything in this Section 7 to the contrary
notwithstanding, an indemnifying party shall not be liable for any settlement of
any claim or action effected without its written consent; provided, however,
that such consent was not unreasonably withheld.
(d) In order to provide for just and equitable
contribution in any case in which (i) an indemnified party makes claim for
indemnification pursuant to this Section 7, but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that the express provisions of this Section 7 provide for indemnification in
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such case, or (ii) contribution under the Act may be required on the part of any
indemnified party, then each indemnifying party shall contribute to the amount
paid as a result of such losses, claims, damages, expenses or liabilities (or
actions in respect thereof) (A) in such proportion as is appropriate to reflect
the relative benefits received by each of the contributing parties, on the one
hand, and the party to be indemnified on the other hand, from the offering of
the Securities, or (B) if the allocation provided by clause (A) 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, expenses or liabilities, as well
as any other relevant equitable considerations. In any case where the Company is
a contributing party and the Underwriters are the indemnified party, 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 of the Registered Securities (before deducting
expenses other than underwriting discounts and commissions) bear to the total
underwriting discounts received by the Underwriters hereunder, in each case as
set forth in the table on the Cover Page of the Prospectus. Relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the
Underwriters, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, expenses or liabilities (or actions in respect thereof)
referred to above in this subdivision (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 subdivision (d) the Underwriters shall not be required to
contribute any amount in excess of the underwriting discount applicable to the
Securities purchased by the Underwriters hereunder. No person guilty of
fraudulent misrepresentation (within the meaning of Section 12(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7, each person, if
any, who controls the Company within the meaning of the Act, each officer of the
Company who has signed the Registration Statement, and each director of the
Company shall have the same rights to contribution as the Company, subject in
each case to this subparagraph (d). Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect to which a claim for contribution may
be made against another party or parties under this subparagraph (d), 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 obligation it or they may have hereunder or
otherwise than under this subparagraph (d), or to the extent that such party or
parties were not adversely affected by such omission. The contribution agreement
set forth above shall be in addition to any liabilities which any indemnifying
party may have at common law or otherwise.
8. Representations and Agreements to Survive Delivery. All
representations, warranties and agreements contained in this Agreement or
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contained in certificates of officers of the Company submitted pursuant hereto,
shall be deemed to be representations, warranties and agreements of the Company
at the Closing Date and the Option Closing Date, as the case may be, and such
representations, warranties and agreements of the Company and the respective
indemnity and contribution agreements contained in Section 7 hereof shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any Underwriter, the Company, any controlling person of either
the Underwriter or the Company, and shall survive termination of this Agreement
or the issuance and delivery of the Securities to the Underwriters and the
Representatives, as the case may be.
9. Effective Date.
(a) This Agreement shall become effective at 10:00
a.m., New York City time, on the date hereof. For purposes of this Section 9,
the Securities to be purchased hereunder shall be deemed to have been so
released upon the earlier of dispatch by the Representatives of telegrams to
securities dealers releasing such Securities for offering or the release by the
Representatives for publication of the first newspaper advertisement which is
subsequently published relating to the Securities.
10. Termination.
(a) Subject to subsection (b) of this Section 10, the
Representatives shall have the right to terminate this Agreement, (i) if any
domestic or international event or act or occurrence has disrupted, or in the
Representatives' reasonable opinion will in the immediate future disrupt the
financial markets; or (ii) any material adverse change in the financial markets
shall have occurred; or (iii) if trading on the New York Stock Exchange, the
American Stock Exchange, or in the over-the-counter market shall have been
suspended, or minimum or maximum prices for trading shall have been fixed, or
maximum ranges for prices for securities shall have been required on the
over-the-counter market by the NASD or by order of the Commission or any other
government authority having jurisdiction; or (iv) if the United States shall
have become involved in a war or major hostilities, or if there shall have been
an escalation in an existing war or major hostilities or a national emergency
shall have been declared in the United States; or (v) if a banking moratorium
has been declared by a state or federal authority; or (vi) if the Company shall
have sustained a loss material or substantial to the Company by fire, flood,
accident, hurricane, earthquake, theft, sabotage or other calamity or malicious
act which, whether or not such loss shall have been insured, will, in the
Representatives' opinion, make it inadvisable to proceed with the delivery of
the Securities; or (viii) if there shall have been such a material adverse
change in the prospects or conditions of the Company or MMI, or such material
adverse change in the general market, political or economic conditions, in the
United States or elsewhere as in the Representatives' judgment would make it
inadvisable to proceed with the offering, sale and/or delivery of the Registered
Securities.
(b) If this Agreement is terminated by the
Representatives in accordance with any of the provisions of Section 6, Section
10(a) or Section 12, the Company shall promptly reimburse and indemnify the
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Underwriters pursuant to Section 5(b) hereof. Notwithstanding any contrary
provision contained in this Agreement, any election hereunder or any termination
of this Agreement (including, without limitation, pursuant to Sections 6, 10, 11
and 12 hereof), and whether or not this Agreement is otherwise carried out, the
provisions of Section 5 and Section 7 shall not be in any way affected by such
election or termination or failure to carry out the terms of this Agreement or
any part hereof.
11. Substitution of the Underwriters. If one or more of the
Underwriters shall fail (otherwise than for a reason sufficient to justify the
termination of this Agreement under the provisions of Section 6, Section 10 or
Section 12 hereof) to purchase the Securities which it or they are obligated to
purchase on such date under this Agreement (the "Defaulted Securities"), the
Representatives shall have the right, within 24 hours thereafter, to make
arrangement for one or more of the non-defaulting Underwriters, or any other
underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as may be agreed upon and upon the terms herein set
forth. If, however, the Representatives shall not have completed such
arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not
exceed 10% of the total number of Firm Securities to be purchased on such date,
the non-defaulting Underwriters shall be obligated to purchase the full amount
thereof in the proportions that their respective underwriting obligations
hereunder bear to the underwriting obligations of all non-defaulting
Underwriters, or
(b) if the number of Defaulted Securities exceeds 10%
of the total number of Firm Securities, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriters.
No action taken pursuant to this Section shall relieve any
defaulting Underwriter from liability in respect of any default by such
Underwriter under this Agreement.
In the event of any such default which does not result in a
termination of this Agreement, the Representatives shall have the right to
postpone the Closing Date for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements.
12. Default by the Company. If the Company shall fail at the
Closing Date or any Option Closing Date, as applicable, to sell and deliver the
number of Securities which it is obligated to sell hereunder on such date, then
this Agreement shall terminate (or, if such default shall occur with respect to
any Option Securities to be purchased on an Option Closing Date, the
Underwriters may at the Representatives' option, by notice from the
Representatives to the Company, terminate the Underwriters' obligation to
purchase Option Securities from the Company on such date) without any liability
on the part of any non-defaulting party other than pursuant to Section 5,
Section 7 and Section 10 hereof. No action taken pursuant to this Section shall
relieve the Company from liability, if any, in respect of such default.
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13. Notices. All notices and communications hereunder, except
as herein otherwise specifically provided, shall be in writing and shall be
deemed to have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be directed to the
Representatives, c/o National Securities Corporation, 0000 Xxxxxx Xxxxxx, Xxxxx
0000, Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxx Xxxxxxxxx, with a copy, which
shall not constitute notice, to Camhy Xxxxxxxxx & Xxxxx LLP, 0000 Xxxxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx X. Annex, Esq. Notices to the
Company shall be directed to the Company at Complete Management, Inc., 000 Xxxx
00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X. Xxxxxxxxxx, with a
copy, which shall not constitute notice, to Morse, Zelnick, Rose & Lander, LLP,
000 Xxxx Xxxxxx, Xxxxx 000, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx X.
Xxxxxxx, Esq.
14. Parties. This Agreement shall inure solely to the benefit
of and shall be binding upon the Underwriters, the Company and the controlling
persons, directors and officers referred to in Section 7 hereof and their
respective successors, legal representatives and assigns, and no other person
shall have or be construed to have any legal or equitable right, remedy or claim
under or in respect of or by virtue of this Agreement or any provisions herein
contained. No purchaser of Securities from any Underwriter shall be deemed to be
a successor by reason merely of such purchase.
15. Construction. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
without giving effect to the choice of law or conflict of laws principles.
16. 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 taken together shall be deemed to be one and the same instrument.
17. Entire Agreement; Amendments. This Agreement and the
Representatives' Warrant Agreement constitute the entire agreement of the
parties hereto and supersede all prior written or oral agreements,
understandings and negotiations with respect to the subject matter hereof. This
Agreement may not be amended except in a writing, signed by the Representatives
and the Company.
If the foregoing correctly sets forth the understanding
between the Underwriters and the Company, please so indicate in the space
provided below for that purpose, whereupon this letter shall constitute a
binding agreement among us.
Very truly yours,
COMPLETE MANAGEMENT, INC.
By:_____________________________________
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Name:
Title:
CONFIRMED AND ACCEPTED AS OF
THE DATE FIRST ABOVE WRITTEN:
NATIONAL SECURITIES CORPORATION
By:__________________________________
Name:
Title:
COMMONWEALTH ASSOCIATES
By:__________________________________
Name:
Title:
For themselves and as Representatives of the Underwriters named in Schedule A
hereto.
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SCHEDULE A
Number of
Firm Securities to be
Name of Underwriters Purchased
-------------------- ---------
National Securities Corporation
Commonwealth Associates
TOTAL.......................................................
XXX. X-0
