Exhibit 1.1
[Form of Underwriting Agreement - Subject to Additional Review]
$25,000,000
SUBORDINATED CONVERTIBLE DEBENTURES DUE 2004
2,000,000 SHARES OF COMMON STOCK AND
2,000,000 CLASS A REDEEMABLE COMMON STOCK PURCHASE WARRANTS
INTEGRATED PHYSICIAN SYSTEMS, INC.
UNDERWRITING AGREEMENT
----------------------
New York, New York
, 1997
XXXXX SECURITIES CORP.
SOUTHWALL CAPITAL CORP.
XXXXX & COMPANY, INC.
As Representatives of the
Several Underwriters listed on Schedule A hereto
c/x Xxxxx Securities Corp.
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx, 00000
Ladies and Gentlemen:
Integrated Physician Systems, Inc., a Delaware corporation (the
"Company"), confirms its agreement with each of Xxxxx Securities Corp.
("Xxxxx"), SouthWall Capital Corp. ("SouthWall") and Xxxxx & Company, Inc.
("Xxxxx") 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
Xxxxx, SouthWall and Xxxxx are acting as representatives (in such capacity,
Xxxxx, SouthWall and Xxxxx 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 the respective
numbers
of shares ("Shares") of the Company's common stock, $.01 par value per share
("Common Stock"), class A redeemable common stock purchase warrants (the
"Redeemable Warrants"), and an aggregate principal amount of $25,000,000
Convertible Subordinated Debentures due 2004 (the "Convertible Debentures").
The Shares, Redeemable Warrants and the Convertible Debentures are hereinafter
referred to as the "Firm Securities." Each Redeemable Warrant is exercisable
commencing on ___________, 1997 [date of the Prospectus] until ___________, 2002
[5 years after date of Prospectus], unless previously redeemed by the Company,
at an initial exercise price of $______ per share of Common Stock [140% of
initial public offering price per share of Common Stock]. The Redeemable
Warrants may be redeemed by the Company at a redemption price of $.10 per
Redeemable Warrant at any time after ___________, 1999 [18 months after date of
Prospectus] on thirty (30) days' prior written notice, provided that the average
closing sale price of the Common Stock equals or exceeds $_____ per share [210%
of initial public offering price of the Common Stock] (subject to adjustment
under certain circumstances) for any twenty (20) trading days within a period of
thirty (30) consecutive trading days ending on the fifth trading day prior to
the date of notice of redemption, all in accordance with the terms and
conditions of the Warrant Agreement (herein defined). Each Convertible
Debenture shall mature seven (7) years after issuance and shall be initially
convertible, unless previously redeemed, into shares of Common Stock at a price
equivalent to [120% to 130%] of the initial public offering price of the Shares.
The Convertible Debentures may be redeemed by the Company at face amount at any
time after __________, 2000 [36 months from the date of this Agreement] on
forty-five (45) days' prior written notice, provided that the average closing
sale price of the Common Stock equals or exceeds $________________ [150% of the
initial public offering price of the Common Stock] per share of Common Stock,
for the twenty (20) consecutive trading days prior to the date of notice of
redemption.
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 300,000 shares of Common Stock, 300,000 Redeemable
Warrants and/or $3,750,000 aggregate principal amount of Convertible Debentures
for the purpose of covering over-allotments, if any. Such 300,000 shares of
Common Stock, 300,000 Redeemable Warrants and $3,750,000 aggregate principal
amount of Convertible Debentures are hereinafter collectively referred to as the
"Option Securities." 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 200,000 shares of Common Stock, 200,000 Redeemable Warrants and/or
$2,500,000 aggregate principal amount of Convertible Debentures (excluding the
over-allotment option) being underwritten for the account of the Company. The
shares of Common Stock, Redeemable Warrants and Convertible Debentures issuable
upon exercise of the Representatives' Warrants are hereinafter referred to as
the "Representatives' Securities." The Firm Securities, the Option Securities,
the Representatives' Warrants and the Representatives' Securities (collectively,
hereinafter referred to as the "Securities") 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
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Closing Date (as hereinafter defined) and each Option Closing Date (as
hereinafter defined), 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. 333-33247), including any
related preliminary prospectus ("Preliminary Prospectus"), for the registration
of the Firm Securities, the Option Securities and the Representatives'
Securities 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 rules and
regulations (the "Rules and Regulations") of the Commission under the Act. The
Company will promptly file a further amendment to said registration statement in
the form heretofore delivered to the Underwriters and 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 (including, but not limited to those
documents or information incorporated by reference therein) and all information
deemed to be a part thereof as of such time pursuant to paragraph (b) of Rule
430(A) of the Rules and 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, "Rules and 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 Prospectus or any part of any thereof and no
proceedings for a stop order suspending the effectiveness of the Registration
Statement or any of the Company's securities have been instituted or are pending
or threatened. Each of the Preliminary Prospectus, the Registration Statement
and Prospectus at the time of filing thereof conformed with the requirements of
the Act and the Rules and Regulations, and none of the Preliminary Prospectus,
the Registration Statement or 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 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 or any amendment thereof or supplement thereto.
(c) When the Registration Statement becomes effective and at all
times subsequent thereto up to the Closing Date (as defined herein) and each
Option Closing Date (as defined herein), 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
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Prospectus will contain all statements which are required to be stated therein
in accordance with the Act and the Rules and Regulations, and will conform to
the requirements of the Act and the Rules and 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
strict conformity with information furnished to the Company in writing by or on
behalf of any Underwriter expressly for use in the Preliminary Prospectus,
Registration Statement or Prospectus or any amendment thereof or supplement
thereto.
(d) Simultaneously with the closing of the offering of the Firm
Securities, the Company will acquire (the "Acquisitions") substantially all of
the assets and assume certain liabilities of Xxxx Xxxxxxx, M.D., P.C. D/B/A
Amwell Health Center ("Xxxxxxx"); Bound Brook Pediatric Association, P.A.
("Bound Brook"); Branchburg Eye Physicians, P.A. ("Branchburg"); Xxxxxxxxx
Xxxxxx, M.D. ("Kudryk"); Xxxxxx Xxxxx-XxXxxxxx, M.D., P.A. ("Xxxxx-XxXxxxxx");
Hunterdon Opthamologists, P.A. ("Hunterdon"); Xxxxxxx X. Xxxxxx, M.D.
("Weeder"); Xxxxx Xxxxxxx, M.D. ("Xxxxxxx"); Xxxxxxx Xxxxx, M.D., P.A.
("Xxxxx"); Flemington Medical Group, P.A. ("Flemington"); Xxxx X. Xxxxx, M.D.
("Xxxxx"); Reliance Medical Group, P.C. and its affiliate Reliance Health Care
Group, Inc. (collectively, "Reliance"); and Medical Billing and Management
Services, Inc. and its subsidiary Radiology Billing and Management Services,
Inc. (collectively, "MBMS"). Xxxxxxx, Bound Brook, Branchburg, Xxxxx-XxXxxxxx,
Hunterdon, Xxxxx, Flemington, Reliance and MBMS are hereinafter referred to
collectively as the "Corporate Initial Affiliated Practices". Kudryk, Weeden,
Xxxxxxx and Xxxxx are hereinafter referred to collectively as the "Initial
Affiliated Practices." Prior to the consummation of the Acquisitions, each of
Xxxxxxx, Bound Brook, Branchburg, Kudryk, Xxxxx-XxXxxxxx, Hunterdon, Weeder,
Salerno, Stern, Flemington, Xxxxx, Reliance and MBMS will have formed a new
professional corporation (the "New PCs"). Immediately prior to the consummation
of the Acquisitions, each of the Company, the Corporate Initial Affiliated
Practices and the New PCs (hereinafter collectively referred to with the
Corporate Initial Affiliated Practices as the "Corporate Entities") are duly
organized and validly existing as a corporation in good standing under the laws
of the state of its incorporation. Except as set forth in the Prospectus, none
of the Company nor the Corporate Entities owns an interest in any corporation,
partnership, trust, joint venture or other business entity. Each of the Company
and the Corporate Entities 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. Each of the Company, the Corporate Entities and the Initial
Affiliated Practices 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;
each of the Company, the Corporate Entities and the Initial Affiliated Practices
is and has been doing business in compliance with all such authorizations,
approvals, orders, licenses, certificates, franchises and permits and all
applicable federal, state, local and foreign laws, rules
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and regulations; and none of the Company, the Corporate Entities or the Initial
Affiliated Practices 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 earnings,
position, prospects, value, operation, properties, business or results of
operations of the Company, the Corporate Entities or the Initial Affiliated
Practices. The disclosures in the Registration Statement concerning the effects
of federal, state, local, and foreign laws, rules and regulations on the
Company's, the Corporate Entities and the Initial Affiliated Practices'
businesses as currently conducted and as contemplated are correct in all
material respects and do not omit to state a material fact required to be stated
therein or necessary to make the statements contained therein not misleading in
light of the circumstances under which then were made.
(e) The Company has a duly authorized, issued and outstanding
capitalization as set forth in the Prospectus under "Capitalization" and
"Description of Securities" and will have the adjusted capitalization set forth
therein on the Closing Date and each 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 providing for it to issue any capital
stock, rights, warrants, options or other securities, except for this Agreement,
the Representatives' Warrant Agreement, the Acquisition Agreements (as defined
herein), and as described in the Prospectus. The Securities and all other
securities issued or issuable by the Company conform or, when issued and paid
for, will conform, in all respects to all statements with respect thereto
contained in the Registration Statement and the Prospectus. 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. The
Securities are not and will not be subject to any preemptive or other similar
rights of any stockholder, have been duly authorized and, when issued, paid for
and delivered in accordance with the terms hereof, will be validly issued, fully
paid and non-assessable and will conform to the description thereof contained in
the Prospectus; 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 has been duly and validly taken;
and the certificates representing the Securities will be in due and proper form.
Upon the issuance and delivery pursuant to the terms hereof of the Securities to
be sold by the Company hereunder, the Underwriters or the Representatives, as
the case may be, will acquire good and marketable title to such Securities free
and clear of any lien, charge, claim, encumbrance, pledge, security interest,
defect or other restriction or equity of any kind whatsoever.
(f) The financial statements of the Company, the Corporate Initial
Affiliated Practices and the Initial Affiliated Practices, together with the
related notes and schedules thereto, included in the Registration Statement,
each Preliminary Prospectus and the Prospectus fairly present the financial
position, income, changes in cash flow, changes in stockholders' equity and the
results of operations of the Company, the Corporate Initial Affiliated Practices
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and the Initial Affiliated Practices 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
Rules and Regulations, consistently applied throughout the periods involved and
such financial statements as are audited have been examined by Xxxxxxx Radin &
Co., P.C., who are independent certified public accountants within the meaning
of the Act and the Rules and Regulations, as indicated in their reports filed
therewith. There has been no adverse change or development involving a
prospective adverse change in the condition, financial or otherwise, or in the
earnings, position, prospects, value, operation, properties, business, or
results of operations of the Company and each of the Corporate Initial
Affiliated Practices and the Initial Affiliated Practices, 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, the Corporate Initial Affiliated Practices and the Initial
Affiliated Practices, conform in all material respects to the descriptions
thereof contained in the Registration Statement and the Prospectus. Financial
information set forth in the Prospectus under the headings "Summary Financial
Data," "Selected Financial Data," "Capitalization," and "Management's
Discussion and Analysis of Financial Conditions 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.
The pro forma financial statements of the Company, the Corporate
Initial Affiliated Practices and the Initial Affiliated Practices, and the
related notes thereto, set forth in the Registration Statement and the
Prospectus, have been prepared in conformity with the requirements of the Act
and the Rules and Regulations and present fairly the information shown therein;
and the pro forma adjustments on such pro forma financial statements have been
properly applied on the basis described in the related notes thereto. The pro
forma financial data set forth in the Prospectus have been prepared on a basis
consistent with the pro forma financial statements of the Company, the Corporate
Initial Affiliated Practices and the Initial Affiliated Practices. The amounts
shown as accrued for current and deferred income and other taxes in such
financial statements are sufficient for the payment of all accrued and unpaid
federal, state, local and foreign income taxes, interest, penalties, assessments
or deficiencies applicable to the Company, the Corporate Initial Affiliated
Practices and the Initial Affiliated Practices, whether disputed or not, for the
applicable period then ended and periods prior thereto; adequate allowance for
doubtful accounts has been provided for unindemnified losses due to the
operations of the Company, the Corporate Initial Affiliated Practices and the
Initial Affiliated Practices; and the statements of income do not contain any
items of special or nonrecurring income not earned in the ordinary course of
business, except as specified in the notes thereto.
(g) Each of the Company, the Corporate Initial Affiliated Practices
and the Initial Affiliated Practices (i) has paid all federal, state, local, 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 has furnished all information returns
it is required to furnish pursuant to the Code, (ii) has established adequate
6
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.
(h) No transfer tax, stamp duty or other similar tax is payable by or
on behalf of the Underwriters in connection with (i) the issuance by the Company
of the Securities, (ii) the purchase by the Underwriters of the Firm Securities
and the Option Securities from the Company and the purchase by the
Representatives of the Representatives' Warrants from the Company, (iii) the
consummation by the Company of any of its obligations under this Agreement, or
(iv) resales of the Firm Securities and the Option Securities in connection with
the distribution contemplated hereby.
(i) Each of the Company, the Corporate Initial Affiliated Practices
and the Initial Affiliated Practices maintains insurance policies, including,
but not limited to, general liability, malpractice (except with respect to the
Company) and property insurance, which insures each of the Company, the
Corporate Initial Affiliated Practices and the Initial Affiliated Practices and
their respective employees, against such losses and risks generally insured
against by comparable businesses. None of the Company, the Corporate Initial
Affiliated Practices nor the Initial Affiliated Practices (A) has failed to give
notice or present any insurance claim with respect to any matter, including but
not limited to the Company's business, property or employees, under any
insurance policy or surety bond in a due and timely manner, (B) has any disputes
or claims against any underwriter of such insurance policies or surety bonds or
has failed to pay any premiums due and payable thereunder, or (C) has 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 any of the Company, the Corporate Initial Affiliated
Practices and the Initial Affiliated Practices.
(j) There is no action, suit, proceeding, inquiry, arbitration,
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 man
give rise to the same), or involving the properties or business of, the Company,
the Corporate Initial Affiliated Practices or the Initial Affiliated Practices
which (i) questions the validity of the capital stock of the Company, this
Agreement, the Acquisition Agreements, the Warrant Agreement, the PMSA (as
defined herein) or the Representatives' Warrant Agreement, or of any action
taken or to be taken by the Company pursuant to or in connection with this
Agreement, the Acquisition Agreements, the Warrant Agreement, the PMSA 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 earnings, position, prospects,
stockholders' equity, value, operation, properties, business or results of
operations of the Company and each of the Corporate Initial Affiliated Practices
and the Initial Affiliated Practices.
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(k) The Company has full legal right, power and authority to
authorize, issue, deliver and sell the Securities, enter into this Agreement,
the Acquisition Agreements, the Warrant Agreement, the PMSA and the
Representatives' Warrant Agreement and to consummate the transactions provided
for in this Agreement, the Acquisition Agreements, the Warrant Agreement, the
PMSA and the Representatives' Warrant Agreement; and this Agreement, the
Acquisition Agreements, the Warrant Agreement, the PMSA and the Representatives'
Warrant Agreement have each been duly and properly authorized, executed and
delivered by the Company. Each of this Agreement, the Acquisition Agreements,
the Warrant Agreement, the PMSA and the Representatives' Warrant Agreement
constitutes a legal, valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, and none of the Company's
issue and sale of the Securities, execution or delivery of this Agreement, the
Acquisition Agreements, the Warrant Agreement, the PMSA or the Representatives'
Warrant Agreement, its performance hereunder and thereunder, its consummation of
the transactions contemplated herein and therein, or the conduct of its business
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 any of the Company, the Corporate Entities
or the Initial Affiliated Practices pursuant to the terms of (i) the certificate
of incorporation or by-laws of any of the Company, (ii) any license, contract,
collective bargaining agreement, indenture, mortgage, deed of trust, lease,
voting trust agreement, stockholders agreement, note, loan or credit agreement
or any other agreement or instrument to which any of the Company, the Corporate
Entities or the Initial Affiliated Practices is a party or by which any of the
Company, the Corporate Entities or the Initial Affiliated Practices is or may be
bound or to which either of its or their respective 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 any of the
Company, the Corporate Entities or the Initial Affiliated Practices 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 any of the Company, the Corporate Entities or the Initial
Affiliated Practices or any of its or their respective activities or properties.
(l) 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 Acquisition Agreements, the Warrant Agreement, the PMSA and 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 man have for the issue and/or
sale of any of the Securities, 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 Firm Securities and the
Option Securities, and the Representatives' Warrants to be sold by the Company
hereunder.
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(m) 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 any of the Company, the Corporate Initial
Affiliated Practices or the Initial Affiliated Practices is a party or by which
it or they may be bound or to which its or their respective assets, properties
or business may be subject have been duly and validly authorized, executed and
delivered by the Company, the Corporate Initial Affiliated Practices and the
Initial Affiliated Practices as the case may be, and constitute the legal, valid
and binding agreements of the Company, the Corporate Initial Affiliated
Practices or the Initial Affiliated Practices, as the case may be, enforceable
against each of them in accordance with their respective terms. The
descriptions in the Registration Statement of agreements, contracts and other
documents are accurate and fairly present the information required to 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.
(n) Subsequent to the respective dates as of which information is set
forth in the Registration Statement and Prospectus, and except as may otherwise
be indicated or contemplated herein or therein, none of the Company, the
Corporate Entities nor the Initial Affiliated Practices has (i) issued any
securities or incurred any liability or obligation, direct or contingent, for
borrowed money, (ii) entered into any transaction other than in the ordinary
course of business, or (iii) declared or paid any dividend or made any other
distribution on or in respect of its capital stock of any class, and there has
not been any change in the capital stock, or any change in the debt (long or
short term) or liabilities or material adverse change in or affecting the
general affairs, management, financial operations, stockholders' equity or
results of operations of any of the Company, the Corporate Entities or the
Initial Affiliated Practices.
(o) No default exists in the due performance and observance of any
term, covenant or condition of any license, contract, collective bargaining
agreement, indenture, mortgage, installment sale agreement, lease, deed of
trust, voting trust agreement, stockholders agreement, partnership agreement,
note, loan or credit agreement, purchase order, or any other agreement or
instrument evidencing an obligation for borrowed money, or any other material
agreement or instrument to which any of the Company, the Corporate Initial
Affiliated Practices or the Initial Affiliated Practices is a party or by which
any of the Company, the Corporate Initial Affiliated Practices or the Initial
Affiliated Practices may be bound or to which the property or assets (tangible
or intangible) of any of the Company, the Corporate Initial Affiliated Practices
or the Initial Affiliated Practices is subject or affected, except such as have
been cured or as to which written waivers have been obtained and remain in full
force and effect.
(p) Each of the Company, the Corporate Initial Affiliated Practices
and the Initial Affiliated Practices has generally enjoyed a satisfactory
employer-employee relationship with its employees and is in compliance with all
federal, state, local, and foreign laws and regulations respecting employment
and employment practices, terms and conditions of employment and wages and
hours. There are no pending investigations involving any of the Company, the
Corporate Initial Affiliated Practices and the Initial Affiliated Practices by
the U.S. Department
9
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 any of the Company, the Corporate
Initial Affiliated Practices and the Initial Affiliated Practices pending before
the National Labor Relations Board or any lockout, strike, picketing, boycott,
dispute, slowdown or stoppage pending or threatened against or involving any of
the Company, the Corporate Initial Affiliated Practices or the Initial
Affiliated Practices, or any predecessor entity, and none has ever occurred. No
representation question exists respecting the employees of any of the Company,
the Corporate Initial Affiliated Practices and the Initial Affiliated Practices
and no collective bargaining agreement or modification thereof is currently
being negotiated by any of the Company, the Corporate Initial Affiliated
Practices and the Initial Affiliated Practices. No grievance or arbitration
proceeding is pending under any expired or existing collective bargaining
agreements of any of the Company, the Corporate Initial Affiliated Practices and
the Initial Affiliated Practices. No labor dispute with the employees of any of
the Company, the Corporate Initial Affiliated Practices and the Initial
Affiliated Practices exists, or, is imminent.
(q) None of the Company, the Corporate Initial Affiliated Practices
nor the Initial Affiliated Practices maintains, sponsors or contributes to any
program or arrangement that is an "employee pension benefit plan," an "employee
welfare benefit plan," or a "multiemployer 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"). None of the
Company, the Corporate Initial Affiliated Practices nor the Initial Affiliated
Practices maintains or contributes, now or at any time previously, 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, the Corporate Initial Affiliated Practices and the Initial Affiliated
Practices to any tax penalty on prohibited transactions and which has not
adequately been corrected. Each ERISA Plan is in compliance with all reporting,
disclosure and other requirements of the Code and ERISA as then 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. None of the Company, the Corporate Initial Affiliated
Practices nor the Initial Affiliated Practices has ever completely or partially
withdrawn from a "multiemployer plan."
(r) None of the Company, the Corporate Entities nor the Initial
Affiliated Practices, nor any of its or their respective employees, directors,
stockholders, partners, or affiliates (within the meaning of the Rules and
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, under the Exchange Act, or otherwise,
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities or otherwise.
(s) Each of the Company, the Corporate Initial Affiliated Practices
and the Initial Affiliated Practices has good and marketable title to, or valid
and enforceable leasehold estates
10
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, defects, or other restrictions or equities of any
kind whatsoever, except such as do not materially and adversely affect the value
of such property taken as a whole and do not interfere with the use made or
proposed to be made of such property by the Company, the Corporate Initial
Affiliated Practices and the Initial Affiliated Practices other than those
referred to in the Prospectus and liens for taxes not net due and payable.
(t) Xxxxxxx Xxxxx & Co., P.C., 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 Rules and Regulations.
(u) The Company has caused to be duly executed legally binding and
enforceable agreements pursuant to which each of the Company's officers,
directors, stockholders and holders of securities exchangeable or exercisable
for or convertible into shares of Common Stock has agreed (i) not to, directly
or indirectly, issue, offer, offer to sell, sell, grant any option for the sale
or purchase of, assign, transfer, pledge, hypothecate or otherwise encumber or
dispose of any shares of Common Stock or securities convertible into,
exercisable or exchangeable for or evidencing any right to purchase or subscribe
for any shares of Common Stock (either pursuant to Rule 144 of the Rules and
Regulations or otherwise) or dispose of any beneficial interest therein for a
period of not less than twenty-four (24) months following the effective date of
the Registration Statement without the prior written consent of the
Representatives and the Company and (ii) to waive all rights to request or
demand the registration pursuant to the Act of any securities of the Company
which are registered in the name of or beneficially owned by any such holder.
During the 24 month period commencing on the effective date of the Registration
Statement, the Company shall not, without the prior written consent of the
Representatives, sell, contract or offer to sell, issue, transfer, assign,
pledge, distribute, or otherwise dispose of, directly or indirectly, any shares
of Common Stock or any options, rights or warrants with respect to any shares of
Common Stock except (i) pursuant to the Acquisition Agreements entered into by
the Company prior to the date of, and described in, the Prospectus, (ii)
pursuant to awards that may be made from time to time following the date of the
Prospectus under the 1996 Stock Option Plan, as such plan may be amended from
time to time by the stockholders of the Company and (iii) pursuant to
Acquisition Agreements to be entered into by the Company from time to time which
have been approved by the Board of Directors of the Company and are on a basis
consistent with the Acquisition Agreements entered into by the Company prior to
the date hereof and described in the Prospectus. The Company will cause the
Transfer Agent (as hereinafter defined) to xxxx an appropriate legend on the
face of stock certificates representing all of such securities and to place
"stop transfer" orders on the Company's stock ledgers.
(v) There are no claims, payments, issuances, 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, the Corporate Entities or the Initial Affiliated
Practices, or any of its or their respective officers, directors, stockholders,
partners, employees
11
or affiliates, that may affect the Underwriters' compensation, as determined by
the National Association of Securities Dealers, Inc. ("NASD"), except as
disclosed in the Prospectus.
(w) The Common Stock, Redeemable Warrants and the Convertible
Debentures have been approved for quotation on the American Stock Exchange
("Amex").
(x) None of the Company, the Corporate Initial Affiliated Practices
or the Initial Affiliated Practices, nor any of its or their respective
officers, employees, agents or any other person acting on behalf of any of the
Company, the Corporate Initial Affiliated Practices or the Initial Affiliated
Practices 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
any of the Company, the Corporate Initial Affiliated Practices or the Initial
Affiliated Practices (or assist any of the Company, the Corporate Initial
Affiliated Practices or the Initial Affiliated Practices in connection with any
actual or proposed transaction) which (a) might subject any of the Company, the
Corporate Initial Affiliated Practices or the Initial Affiliated Practices or
any other such person to any damage or penalty in any civil, criminal or
governmental litigation or proceeding (domestic or foreign), (b) if not given in
the past, might have had a material adverse effect on the assets, business or
operations of any of the Company, the Corporate Initial Affiliated Practices or
the Initial Affiliated Practices, or (c) if not continued in the future, might
adversely affect the assets, business, condition, financial or otherwise,
earnings, position, properties, value, operations or prospects of any of the
Company, the Corporate Initial Affiliated Practices or the Initial Affiliated
Practices. The Company's and each of the Corporate Initial Affiliated
Practices' and the Initial Affiliated Practices' internal accounting controls
are sufficient to cause each of the Company, the Corporate Initial Affiliated
Practices or the Initial Affiliated Practices to comply with the Foreign Corrupt
Practices Act of 1977, as amended.
(y) Except as set forth in the Prospectus, no officer, director,
stockholder or partner of the Company, the Corporate Initial Affiliated
Practices or the Initial Affiliated Practices, or any "affiliate" or "associate"
(as these terms are defined in Rule 405 promulgated under the Rules and
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 any of the Company, the Corporate Initial
Affiliated Practices or the Initial Affiliated Practices, or (B) purchases from
or sells or furnishes to any of the Company, the Corporate Initial Affiliated
Practices or the Initial Affiliated Practices any goods or services, or (ii) a
beneficiary interest in any contract or agreement to which the Company, the
Corporate Initial Affiliated Practices or the Initial Affiliated Practices is a
party or by which it may be bound or affected. Except as set forth in the
Prospectus under "Management" and "Certain Transactions," there are no existing
agreements, arrangements, understandings or transactions, or proposed
agreements, arrangements, understandings or transactions, between or among the
Company, the Corporate Entities or the Initial Affiliated Practices, and any
officer, director, or 5% or greater
12
securityholder of any of the Company, the Corporate Entities or the Initial
Affiliated Practices, or any partner, affiliate or associate of any of the
foregoing persons or entities.
(z) Any certificate signed by any officer of the Company or any of
the Corporate Entities and the Initial Affiliated Practices, and delivered to
the Underwriters or to Underwriters' Counsel (as defined herein) shall be deemed
a representation and warranty by the Company to the Underwriters as to the
matters covered thereby.
(aa) The minute books of each of the Company and the Corporate
Entities have been made available to the Underwriters and contain a complete
summary of all meetings and actions of the directors (including committees
thereof) and stockholders of each of the Company and the Corporate Entities,
since the time of its incorporation, and reflect all transactions referred to in
such minutes accurately in all material respects.
(ab) Except and to the extent described in the Prospectus, no holders
of any securities of the Company or of any options, warrants or other
convertible or exchangeable securities of the Company have the right to include
any securities issued by the Company in the Registration Statement or any
registration statement to be filed by the Company or to require the Company 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.
(ac) The Company has as of the effective date of the Registration
Statement (i) entered into an employment agreement with each of Xxxxx X.
Xxxxxxx, Xxxxxx X. Xxxxxx, M.D., Xxxxx Xxxxxx, M.D. and Xxxxxxx X. Xxxxx in the
form filed as Exhibit 10.__, Exhibit 10.__, 10.__ and Exhibit 10.__,
respectively, to the Registration Statement and (ii) purchased term key person
insurance on the life of each of Xx. Xxxxxxx, Xx. Xxxxxx and Xx. Xxxxxx in the
amount of $1 million which policy names the Company as the sole beneficiary
thereof.
(ad) The Company is not, and upon the issuance and sale of the
Securities as herein contemplated and the application of the net proceeds
therefrom as described in the Prospectus under the caption "Use of Proceeds"
will not be, an "investment company" or an entity "controlled" by an "investment
company" as such terms are defined in the Investment Company Act of 1940, as
amended (the "1940 Act").
(ae) Each of the Company, the Corporate Initial Affiliated Practices
or the Initial Affiliated Practices maintain a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorizations;
(ii) transactions are recorded as necessary to permit preparations 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 authorizations; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
13
(af) Prior to the date hereof, the Company has entered into (i)
Acquisition Agreements with each of the Corporate Initial Affiliated Practices
and the Initial Affiliated Practices in the form filed as Exhibits [2.__]
through [2.__], inclusive, to the Registration Statement (the "Acquisition
Agreements") and (ii) the Practice Management Services Agreements ("PMSA") with
____________ in the form filed as Exhibits [2.__] to the Registration Statement.
Each of the Acquisition Agreements and the PMSA has been duly and validly
authorized, executed and delivered by the Company and to the best of the
Company's knowledge, by each of the Corporate Entities and the Initial
Affiliated Practices, and constitutes valid and binding obligations of the
Company and to the knowledge of the Company, the Corporate Entities and the
Initial Affiliated Practices in accordance with the respective terms of the
Acquisition Agreements and the PMSA. In accordance with the Certificate of
Incorporation and By-Laws of the Company and applicable law, rules and
regulations, all consents, approvals, authorizations, permissions, waivers,
orders and permits required to authorize, approve and consummate the Acquisition
Agreements, the PMSA and the transactions contemplated thereby, on behalf of the
Company and to the Company's best knowledge, by each of the Corporate Entities
and the Initial Affiliated Practices, have been duly and validly obtained or
will be obtained prior to the consummation of such transaction and remain in
full force and effect.
(ag) The Company has entered into a warrant agreement, substantially
in the form filed as Exhibit ___ to the Registration Statement (the "Warrant
Agreement"), with Continental Stock Transfer & Trust Company, in form and
substance satisfactory to the Representatives, with respect to the Redeemable
Warrants which provides, among other things, for the payment of commissions
contemplated by SECTION 4(w) hereof. The Warrant Agreement has been duly and
validly authorized by the Company and, assuming due execution by the parties
thereto other than the Company, constitutes a valid and legally binding
agreement of the Company in accordance with its terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other laws of general application relating to or
affecting the enforcement of creditors' rights and the application of equitable
principles in any action, legal or equitable, and except as obligations to
indemnify or contribute to losses may be limited by applicable law).
2. PURCHASE, SALE AND DELIVERY OF THE SECURITIES.
(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 at a price of
$_______ [92.5% of the public offering price] per Share, $_______ [92.5% of the
public offering price] per Redeemable Warrant and $_______ [92.5% of the public
offering price] per Convertible Debenture, that number of Firm Securities set
forth in Schedule A opposite the name of such Underwriter, subject to such
adjustment as the Representatives in its sole discretion shall make to eliminate
any sales or purchases of fractional shares, plus any additional number of Firm
Securities which such Underwriter may become obligated to purchase pursuant to
the provisions of SECTION 11 hereof.
14
(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 300,000 shares of Common Stock at a price of $______ [92.5% of the
public offering price] per share of Common Stock, 300,000 Redeemable Warrants at
a price of $______ [92.5% of the public offering price] per Redeemable Warrant
and/or $3,750,000 aggregate principal amount of Convertible Debentures at a
price of $______ [92.5% of the public offering price] per Convertible Debenture.
The option granted hereby will expire forty-five (45) days after (i) the date
the Registration Statement becomes effective, if the Company has elected not to
rely on Rule 430A under the Rules and Regulations, or (ii) the date of this
Agreement if the Company has elected to rely upon Rule 430A under the Rules and
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 number 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 three (3) 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 Underwriters to make any
over-allotments. 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, and delivery of certificates
for, the Firm Securities shall be made at the offices of Xxxxx at 000 Xxxxxxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx, 00000, or at such other place as shall
be agreed upon by the Representatives and the Company. Such delivery and
payment shall be made at 10:00 a.m. (New York City time) on ,
1997 or at such other time and date as shall be agreed upon by the
Representatives and the Company, but not less than three (3) nor more than five
(5) full business days after the effective date of the Registration Statement
(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 the Representatives 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, severally and not
jointly, of the purchase price for the Firm Securities and the Option
Securities, if any, to the order of the Company for the Firm Securities and the
Option Securities, if any, by New York Clearing House funds. 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
its discretion shall make to eliminate any sales or purchases of fractional
shares. Certificates for the Firm Securities and the Option
15
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 two (2) business days
prior to the 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 xxx prior to the 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
Representative Representatives' Warrants at a purchase price of $.0001 per
warrant, which Representatives' Warrants shall entitle the holders thereof to
purchase an aggregate of 200,000 shares of Common Stock, 200,000 Redeemable
Warrants and/or $2,500,000 aggregate principal amount of Convertible Debentures
(excluding the Option Securities) being underwritten for the account of the
Company. The Representatives' Warrants shall be exercisable for a period of
four (4) years commencing one (1) year from the effective date of the
Registration Statement at a price equaling one hundred twenty percent (120%) of
the respective initial public offering price of the Shares, Redeemable Warrants
and the Convertible Debentures. The Representatives' Warrant Agreement and form
of Warrant Certificate shall be substantially in the form filed as Exhibit [4.5]
to the Registration Statement. Payment for the Representatives' Warrants shall
be made on the Closing Date.
3. PUBLIC OFFERING OF THE SHARES AND CONVERTIBLE DEBENTURES. As soon
after the Registration Statement becomes effective as the Representatives deems
advisable, the Underwriters shall make a public offering of the Shares,
Redeemable Warrants and Convertible Debentures (other than to residents of or in
any jurisdiction in which qualification of the Shares, Redeemable Warrants and
Convertible Debentures 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 respective public offering price
after distribution of the Shares, Redeemable Warrants and Convertible Debentures
has been completed to such extent as the Representatives, in its sole discretion
deems advisable. The Underwriters may enter into one of 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 AND AGREEMENTS 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 Shares, Redeemable Warrants and
Convertible Debentures 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 Rules and Regulations.
16
(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
shall enter a stop order or suspend such qualification at any time, the Company
will make every effort to obtain promptly the lifting of such order.
(c) The Company shall file the Prospectus (in form and substance
satisfactory to the Representatives) or transmit the Prospectus by a means
reasonably calculated to result in filing with the Commission pursuant to Rule
424(b)(1) (or, if applicable and if consented to by the Representatives,
pursuant to Rule 424(b)(4)) not later than the Commission's close of business on
the earlier of (i) the second business day following the execution and delivery
of this Agreement and (ii) the fifth business day after the effective date of
the Registration Statement.
(d) The Company will give the Representatives notice of its intention
to file or prepare any amendment to the Registration Statement (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 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 Rules and 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, except as may reasonably be required by law, will not file
any such prospectus to which the Representatives or Xxxxxx, Xxxxxxxxxx &
Xxxxxxxxx LLP ("Underwriters' Counsel") shall 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 Securities for offering and sale under the securities
laws of such jurisdictions as the Representatives may 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 file a general or limited consent to service of process in any such
jurisdiction. In each jurisdiction where such
17
qualification shall be effected, the Company will, unless the Representatives
agrees 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 and the Exchange Act, as now and
hereafter amended and by the Rules and Regulations, as from time to time in
force, so far as necessary to permit the continuance of sales of or dealings in
the 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 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 light of the circumstances under which they were made,
not misleading, or if it is necessary at any time to amend 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
forty-five (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 Registration Statement occurs (ninety (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 security holders, in the manner
specified in Rule 158(b) of the Rules and 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 Rules and Regulations, which statement need not be audited
unless required by the Act, covering a period of at least twelve (12)
consecutive months after the effective date of the Registration Statement.
(h) During a period of seven (7) years after the date hereof, the
Company will furnish to its stockholders, as soon as practicable, annual reports
(including financial statements audited by independent public accountants) and
unaudited quarterly reports of earnings, and will deliver to the
Representatives:
i.concurrently with furnishing such quarterly reports to its
stockholders, statements of income of the Company for each quarter in the
form furnished to the Company's stockholders and certified by the Company's
principal financial or accounting officer;
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
18
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;
xxx.xx soon as they are available, copies of all reports (financial or
other) mailed to stockholders;
xx.xx soon as they are available, copies of all reports and financial
statements furnished to or filed with the Commission, the NASD 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 its
affairs, which was released or prepared by or on behalf of the Company; and
vi.any additional information of a public nature concerning the
Company (and any future subsidiary) or its businesses which the
Representatives may request.
During such seven-year period, if the Company has an active subsidiary, the
foregoing financial statements will be on a consolidated basis to the extent
that the accounts of the Company and its subsidiary(ies) are consolidated, and
will be accompanied by similar financial statements for any significant
subsidiary which is not so consolidated.
(i) The Company will maintain a transfer agent ("Transfer Agent")
and, if necessary under the jurisdiction of incorporation of the Company, a
Registrar (which may be the same entity as the Transfer Agent) for its Common
Stock and a trustee ("Trustee") for the Convertible Debentures.
(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), 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 request.
(k) On or before the effective date of the Registration Statement,
the Company shall provide the Representatives with true original copies of duly
executed, legally binding and enforceable agreements pursuant to which, for a
period of eighteen (18) months from the effective date of the Registration
Statement, each of the Company's stockholders and holders of securities
exchangeable or exercisable for or convertible into shares of Common Stock
agrees that it or he or she (i) will not, directly or indirectly, issue, offer
to sell, sell, grant an option for the sale or purchase of, assign, transfer,
pledge, hypothecate or otherwise encumber or dispose of any shares of Common
Stock or securities convertible into, exercisable or exchangeable for or
evidencing any right to purchase or subscribe for any shares of Common Stock
(either pursuant to Rule 144 of the Rules and Regulations or otherwise) or
dispose of any
19
beneficial interest therein without the prior consent of the Representatives
(collectively, the "Lock-up Agreements") and (ii) waives, during such 18 month
period, any and all rights to request or demand the registration pursuant to the
Act, of any securities of the Company which are registered in the name of or
beneficially owned by it or he or she, respectively. Except (i) pursuant to the
Acquisition Agreements entered into by the Company prior to the date of, and
described in, the Prospectus, (ii) pursuant to awards that may be made from time
to time following the date of the Prospectus under the 1996 Stock Option Plan,
as such plan may be amended from time to time by the stockholders of the Company
and (iii) pursuant to Acquisition Agreements to be entered into by the Company
from time to time which have been approved by the Board of Directors of the
Company and are on a basis consistent with the Acquisition Agreements entered
into by the Company prior to the date hereof and described in the Prospectus,
during the 18 month period commencing on the effective date of the Registration
Statement, the Company shall not, without the prior written consent of the
Representatives, sell, contract or offer to sell, issue, transfer, assign,
pledge, distribute, or otherwise dispose of, directly or indirectly, any shares
of Common Stock or any options, rights or warrants with respect to any shares of
Common Stock. On or before the Closing Date, the Company shall deliver
instructions to the Transfer Agent authorizing it to place appropriate legends
on the certificates representing the securities subject to the Lock-up
Agreements and to place appropriate stop transfer orders on the Company's
ledgers.
(l) None of the Company, the Corporate Entities or the Initial
Affiliated Practices, nor any of its or their respective officers, directors,
stockholders, nor any of its or their respective affiliates (within the meaning
of the Rules and Regulations) will 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.
(m) The Company shall apply the net proceeds from the sale of the
Securities in the manner, and subject to the conditions, set forth under "Use of
Proceeds" in the Prospectus. No portion of the net proceeds will be used,
directly or indirectly, to acquire any securities issued by the Company.
(n) 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, and the Rules and 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 Rules and Regulations.
(o) The Company shall furnish to the Representatives as early as
practicable prior to each of the date hereof, the Closing Date and each Option
Closing Date, if any, but no later than two (2) full business days prior
thereto, a copy of the latest available unaudited interim financial statements
of the Company (which in no event shall be as of a date more than thirty (30)
days prior to the date of the Registration Statement) which have been read by
the Company's independent public accountants, as stated in their letters to be
furnished pursuant to SECTIONS 6(k) and 6(l) hereof.
20
(p) The Company shall cause the Common Stock and Convertible
Debentures to be quoted on Amex and, for a period of seven (7) years from the
date hereof, use its best efforts to maintain the Amex quotation of the Common
Stock and the Convertible Debentures to the extent outstanding.
(q) For a period of five (5) years from the Closing Date, the Company
shall furnish to the Representatives at the Company's sole expense, (i) daily
consolidated transfer sheets relating to the Common Stock and Convertible
Debentures (ii) the list of holders of all of the Company's securities and (iii)
a Blue Sky "Trading Survey" for secondary sales of the Company's securities
prepared by counsel to the Company.
(r) As soon as practicable, (i) but in no event more than five (5)
business days before the effective date of the Registration Statement, file a
Form 8-A with the Commission providing for the registration under the Exchange
Act of the Securities and (ii) but in no event more than thirty (30) days after
the effective date of the Registration Statement, 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 seven (7) years.
(s) The Company hereby agrees that it will not, for a period of
twelve (12) months from the effective date of the Registration Statement, adopt,
propose to adopt or otherwise permit to exist any employee, officer, director,
consultant or compensation plan or similar arrangement permitting (i) the grant,
issue, sale or entry into any agreement to grant, issue or sell any option,
warrant or other contract right (x) at an exercise price that is less than the
greater of the public offering price of the Shares set forth herein and the fair
market value on the date of grant or sale or (y) to any of its executive
officers or directors or to any holder of 5% or more of the Common Stock, except
as provided in subsection (ii) of this subparagraph; (ii) the maximum number of
shares of Common Stock or other securities of the Company purchasable at any
time pursuant to options or warrants issued by the Company to exceed the
aggregate 300,000 shares reserved for future issuance under the Company's Stock
Option Plan; (iii) the payment for such securities with any form of
consideration other than cash; or (iv) the existence of stock appreciation
rights, phantom options or similar arrangements.
(t) Until the completion of the distribution of the Securities, the
Company shall not, without the prior written consent of the Representatives and
Underwriters' Counsel or as required under the Exchange Act, issue, directly or
indirectly, any press release or other communication or hold any press
conference with respect to the Company or its 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.
(u) For a period equal to the lesser of (i) seven (7) years from the
date hereof, and (ii) the sale to the public of the Representatives' 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. The Company further agrees to
use its best efforts to file such post-effective amendments to the Registration
Statement,
21
as may be necessary, in order to maintain its effectiveness and to keep such
Registration Statement effective while any of the Convertible Debentures or
Representatives' Warrants remain outstanding.
(v) For a period of five (5) years after the effective date of the
Registration Statement, the Company shall cause one (1) individual selected by
the Representatives to be elected to the board of directors of the Company, if
requested by the Representatives. In the event that the Representatives shall
not have designated such individual at the time of any meeting of the Company's
board of directors or in the event that such individual has not been elected or
is unavailable to serve, the Company shall notify the Representatives of each
meeting of its board of directors and, in such event, an individual selected by
the Representatives shall be permitted to attend all meetings of the Company's
board of directors as a non-voting advisor and to receive all notices and other
correspondence and communications sent by the Company to the members of its
board of directors. Such board member or non-voting advisor shall receive no
more or less director compensation than is paid to other non-officer directors
of the Company for attendance at meetings of the Company's board of directors
and such board member or non-voting advisor shall be entitled to receive
reimbursement for all reasonable costs incurred in attending such meetings,
including, but not limited to, food, lodging and transportation. The Company
hereby agrees to indemnify and hold such director or non-voting advisor
harmless, to the maximum extent permitted by law, against any and all actions,
suits, proceedings, inquiries, arbitrations, investigations, litigation,
governmental or other proceedings, domestic or foreign, and awards and judgments
arising out of such individual's service as a director or non-voting advisor
and, in the event that the Company maintains a liability insurance policy
affording coverage for the acts of its officers and directors, and/or in the
event that the Company has entered into an indemnification agreement with any of
its officers or directors, the Company agrees to include such director or
non-voting advisor as an insured under such insurance policy and/or to enter
into an indemnification agreement with such director or non-voting advisor which
is at least as favorable to such individual as any indemnification agreement
that the Company has entered into with any of its officers or directors. The
rights and benefits of such indemnification and the benefits of such insurance
shall, to the maximum extent possible, extend to the Representatives insofar as
it may be or may be alleged to be responsible for such director or non-voting
advisor. The Company agrees to provide its outside directors with compensation
as deemed appropriate and customary for similar companies.
(w) Commencing one year from the date hereof, the Company shall pay the
Representatives a commission equal to five percent (5%) of the exercise price of
the Redeemable Warrants, payable upon exercise thereof on the terms set forth in
the Warrant Agreement. The Company will not solicit the exercise of the
Redeemable Warrants other than through the Representatives.
5. PAYMENT OF EXPENSES.
(a) The Company hereby agrees to pay on each of the Closing Date and
the Option Closing Date (to the extent not paid at the Closing Date) all
expenses and fees (other than fees of Underwriters' Counsel, except as provided
in (iv) below) incident to the performance of the
22
obligations of the Company under this Agreement, the Warrant 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
(including mailing and handling charges), 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
printing, mailing (including the payment of postage with respect thereto) and
delivery of this Agreement, the Warrant Agreement, the Representatives' Warrant
Agreement, the Agreement Among Underwriters, the Selected Dealer Agreements, and
related documents, including the cost of all copies thereof and of the
Preliminary Prospectuses and of 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 Securities including, but not
limited to, (x) the purchase by the Underwriters of the Firm Securities and the
Option Securities and the purchase by the Representatives of the
Representatives' Warrants from the Company, (y) the consummation by the Company
of any of its obligations under this Agreement and the Representatives' Warrant
Agreement, and (z) resale of the Firm Securities and the Option Securities by
the Underwriters in connection with the distribution contemplated hereby,
(iv) the qualification of the Securities 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 disbursements and fees of counsel in connection
therewith, (v) advertising costs and expenses, including but not limited to
costs and expenses in connection with the "road show", information meetings and
presentations, bound volumes and prospectus memorabilia and "tomb-stone"
advertisement expenses, (vi) costs and expenses in connection with due diligence
investigations, including but not limited to the fees of any independent
counsel, expert or consultant retained, (vii) fees and expenses of the Transfer
Agent, Trustee and registrar and all issue and transfer taxes, if any,
(viii) applications for assignment of a rating of the Securities by qualified
rating agencies, (ix) the fees payable to the Commission and the NASD, and (x)
the fees and expenses incurred in connection with the quotation of the
Securities on Amex and any other exchange.
(b) If this Agreement is terminated by the Underwriters in accordance
with the provisions of SECTION 6 or SECTION 12, the Company shall reimburse and
indemnify the Underwriters for all of their actual out-of-pocket expenses,
including the fees and disbursements of Underwriters' Counsel, 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 sale of the Firm
Securities, $25,000 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 agrees to pay to the Representatives on the Option
Closing Date (by certified or bank cashier's check or, at
23
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 the 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 shall have become effective not later
than 12:00 P.M., New York time, on the date of this Agreement or such later date
and time as shall be consented to in writing by the Representatives, and, at the
Closing Date and each Option Closing Date, if any, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or shall be pending or
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 Rules and Regulations, the price of the Shares, Redeemable
Warrants and Convertible Debentures 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 Rules and Regulations within the prescribed time period and, prior to the
Closing Date, the Company shall have provided evidence satisfactory to the
Representatives of such timely filing, 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 Rules and 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' 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, in light of the
circumstances under which they were made, not misleading.
(c) On or prior to each of the Closing Date and each Option Closing
Date, if any, the Representatives shall have received from Underwriters'
Counsel, such opinion or opinions with respect to the organization of the
Company, the validity of the Securities, the Registration Statement, the
Prospectus and other related matters as the Representatives may request and
24
Underwriters' Counsel shall have received such papers and information as they
request to enable them to pass upon such matters.
(d) At the Closing Date, the Underwriters shall have received the
favorable opinion of Xxxxx Xxxxxxxxxxxx Silver Xxxxx XxXxxxxxx & Xxxx LLC,
counsel to the Company, dated the Closing Date, addressed to the Underwriters
and in form and substance satisfactory to Underwriters' Counsel, and in
substantially the form of Schedule C hereto.
(e) At the Closing Date, the Underwriters shall have received the
favorable opinion of Kalogredis, Tsoules and Xxxxxxx Ltd., regulatory counsel to
the Company, dated the Closing Date, addressed to the Underwriters, in form and
substance satisfactory to Underwriters' Counsel and in substantially the form of
Schedule B hereto.
(f) At each Option Closing Date, if any, the Underwriters shall have
received the favorable opinions of each of Xxxxx Xxxxxxxxxxxx Silver Xxxxx
XxXxxxxxx & Xxxx LLC, counsel to the Company, and Kalogredis, Tsoules and
Xxxxxxx Ltd., regulatory counsel to the Company, dated such Option Closing Date,
addressed to the Underwriters and in form and substance satisfactory to
Underwriters' Counsel confirming as of such Option Closing Date the statements
made by each of Xxxxx Xxxxxxxxxxxx Silver Xxxxx XxXxxxxxx & Xxxx LLC, and
Kalogredis, Tsoules and Xxxxxxx Ltd., in their respective opinions delivered on
the Closing Date.
(g) On or prior to each of the Closing Date and each 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, or herein contained.
(h) 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,
earnings, position, value, properties, results of operations, prospects,
stockholders' equity or the business activities of any of the Company, the
Corporate Entities or the Initial Affiliated Practices, 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 any
of the Company, the Corporate Entities or the Initial Affiliated Practices, from
the latest date as of which the financial condition of the Company, the
Corporate Initial Affiliated Practices or the Initial Affiliated Practices is
set forth in the Registration Statement and Prospectus which is adverse to the
Company, the Corporate Entities or the Initial Affiliated Practices, (iii) none
of the Company, the Corporate Entities or the Initial Affiliated Practices shall
be in default under any provision of any instrument relating to any outstanding
indebtedness; (iv) none of the Company or the Corporate Entities shall have
issued any securities (other than the Securities) 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
25
material change in the debt (long or short term) or liabilities or obligations
of any of the Company, the Corporate Entities or the Initial Affiliated
Practices (contingent or otherwise), except as described in the Prospectus; (v)
no material amount of the assets of any of the Company, the Corporate Entities
or the Initial Affiliated Practices 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 giving rise to same) against any of the Company, the Corporate
Entities or the Initial Affiliated Practices, or affecting any of its or 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 man adversely affect the business, operations,
earnings, position, value, properties, results of operations, prospects or
financial condition or income of the Company, the Corporate Entities or the
Initial Affiliated Practices; 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.
(i) At each of the Closing Date and each Option Closing Date, if any,
the Underwriters shall have received a certificate of the Company signed by the
principal executive officer and by the chief financial or chief accounting
officer of the Company, dated the Closing Date or Option Closing Date, as the
case may be, to the effect that each of such persons has carefully examined the
Registration Statement, the Prospectus and this Agreement, and that:
i.The representations and warranties of the Company in this 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 on its part to be performed or satisfied at or prior to such
Closing Date or Option Closing Date, as the case may be;
xx.Xx stop order suspending the effectiveness of the Registration
Statement or any part thereof 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, are contemplated or threatened under the Act;
iii.The Registration Statement and the Prospectus and, if any, each
amendment and each supplement thereto, contain all statements and
information required to be included therein, 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
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) none of the Company,
the Corporate Entities or the Initial Affiliated Practices has incurred up
to and including the Closing Date
26
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) none of the Company or the Corporate Entities has paid or
declared any dividends or other distributions on its capital stock; (c)
none of the Company, the Corporate Entities or the Initial Affiliated
Practices has entered into any transactions not in the ordinary course of
business; (d) there has not been any change in the capital stock or
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 any of the Company, the Corporate Entities or the Initial Affiliated
Practices (e) none of the Company, the Corporate Entities or the Initial
Affiliated Practices has sustained any loss or damage to its or their
respective properties or assets, whether or not insured; (f) there is no
litigation which is pending or threatened (or circumstances giving rise to
same) against any of the Company, the Corporate Entities or the Initial
Affiliated Practices or any affiliated party of any 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
(i) are to such documents as amended and supplemented at the date of such
certificate.
(j) 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, as described in the Registration Statement.
(k) 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 (including the non-material nature of the changes or
decreases, if any, referred to in clause (iii) below) in all respects to the
Underwriters and Underwriters' Counsel, from Xxxxxxx Xxxxx & Co., P.C.:
i.confirming that they are independent certified public accountants
with respect to the Company, the Corporate Initial Affiliated Practices and
the Initial Affiliated Practices within the meaning of the Act and the
applicable Rules and Regulations;
ii.stating that it is their opinion that the financial statements and
supporting schedules of the Company, the Corporate Initial Affiliated
Practices and the Initial Affiliated Practices included in the Registration
Statement comply as to form in all material respects with the applicable
accounting requirements of the Act and the Rules and Regulations thereunder
and that the Representatives may rely upon the opinion of Xxxxxxx Radin &
Co., P.C. with respect to the consolidated 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
each of the Company, the Corporate Initial Affiliated Practices and the
Initial Affiliated Practices, a reading of the latest
27
available minutes of the stockholders and board of directors and the
various committees of the boards of directors of each of the Company, the
Corporate Initial Affiliated Practices and the Initial Affiliated
Practices, consultations with officers and other employees of each of the
Company, the Corporate Initial Affiliated Practices and the Initial
Affiliated Practices, 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 pro forma financial
information contained in the Registration Statement and Prospectus does not
comply as to form in all material respects with the applicable accounting
requirements of the Act and the Rules and Regulations or is not fairly
presented in conformity with generally accepted accounting principles
applied on a basis consistent with that of the audited financial statements
of the Company, the Corporate Initial Affiliated Practices and the Initial
Affiliated Practices, or the unaudited pro forma financial information
included in the Registration Statement, (B) the unaudited financial
statements and supporting schedules of the Company, the Corporate Initial
Affiliated Practices and the Initial Affiliated Practices 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 Rules and
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, the Corporate
Initial Affiliated Practices and the Initial Affiliated Practices included
in the Registration Statement, or (C) 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 long-term debt of any of
the Company, the Corporate Initial Affiliated Practices and the Initial
Affiliated Practices, or any decrease in the stockholders' equity or net
current assets or net assets of any of the Company, the Corporate Initial
Affiliated Practices and the Initial Affiliated Practices as compared with
amounts shown in the June 30, 1997 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, and (D) during the period from
June 30, 1997 to a specified date not more than five (5) days prior to the
effective date of the Registration Statement, there was any decrease in net
revenues, net earnings or increase in net earnings per common share of any
of the Company, the Corporate Initial Affiliated Practices and the Initial
Affiliated Practices, in each case as compared with the corresponding
period beginning June 30, 1996, other than as set forth in or contemplated
by the Registration Statement, or, if there was any such decrease, setting
forth the amount of such decrease;
iv.setting forth, at a date not later than five (5) days prior to the
date of the Registration Statement, the amount of liabilities of the
Company, the Corporate Initial Affiliated Practices and the Initial
Affiliated Practices taken as a whole (including a break-down of commercial
paper and notes payable to banks);
v.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, the Corporate Initial
Affiliated Practices and the Initial Affiliated Practices set forth in the
Prospectus in each case to the extent that such amounts, numbers,
28
percentages, statements and information may be derived from the general
accounting records, including work sheets, of the Company, the Corporate
Initial Affiliated Practices and the Initial Affiliated Practices 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 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;
vi.statements as to such other matters incident to the transaction
contemplated hereby as the Representatives may request.
(l) At the Closing Date and each Option Closing Date, if any, the
Underwriters shall have received from Xxxxxxx Xxxxx & Co., P.C. 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 (k) of this SECTION, except that the specified date referred to
shall be a date not more than five (5) days prior to the 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 (k) of this
Section 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).
(m) On each of the Closing Date and each Option Closing Date, if any,
there shall have been duly tendered to the Representatives for the several
Underwriters' accounts the appropriate number of Securities.
(n) 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.
(o) 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 ___ 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.
(p) On or before the Closing Date, the Firm Securities and Option
Securities shall have been duly approved for quotation on Amex, subject to
official notice of issuance.
(q) On or before the Closing Date, there shall have been delivered to
the Representatives all of the Lock-up Agreements, in form and substance
satisfactory to Underwriters' Counsel.
29
(r) On or before the Closing Date, the Company and Continental Stock
Transfer & Trust Company shall have executed and delivered to the
Representatives the Warrant Agreement, substantially in the form filed as
Exhibit ___ to the Registration Statement.
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.
7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each of the
Underwriters (for purposes of this SECTION 7 "Underwriter" shall include the
officers, directors, partners, employees, agents and counsel of the Underwriter,
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 losses,
claims, damages, expenses or liabilities, joint or several (and actions,
proceedings, investigations, inquiries, suits and litigation in respect
thereof), whatsoever (including but not limited to any and all expenses
whatsoever reasonably incurred in investigating, preparing or defending against
any such claim, action, proceeding, investigation, inquiry, suit or litigation,
commenced or threatened, or any claim whatsoever), as such are incurred, to
which the Underwriter or such controlling person may become subject under the
Act, the Exchange Act or any other statute or at common law or otherwise or
under the laws of foreign countries, arising out of or based upon (A) any untrue
statement or alleged untrue statement of a material fact contained (i) in any
Preliminary Prospectus, the Registration Statement or the Prospectus (as from
time to time amended and supplemented); (ii) in any post-effective amendment or
amendments or any new registration statement and prospectus in which is included
securities of the Company issued or issuable upon exercise of the Securities; or
(iii) in any application or other document or written communication (in this
SECTION 7 collectively called "application") executed by the Company or based
upon written information furnished by the Company in any jurisdiction in order
to qualify the Securities under the securities laws thereof or filed with the
Commission, any state securities commission or agency, Nasdaq or any other
securities exchange; (B) the omission or alleged omission therefrom of 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), or (C) any breach of any
representation, warranty, covenant or agreement of the Company contained herein
or in any certificate by or on behalf of the Company or any of its officers
delivered pursuant hereto, unless, in the case of clause (A) or (B) above, such
statement or omission was made in reliance upon and in strict 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.
30
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 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 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 Firm Securities and the Option 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 for
inclusion in the Prospectus.
(c) Promptly after receipt by an indemnified party under this SECTION
7 of notice of the commencement of any claim, action, suit, investigation,
inquiry, proceeding or litigation, 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
under this SECTION 7 except to the extent that it has been prejudiced in any
material respect by such failure or from any liability which it may have
otherwise). In case any such claim, action, suit, investigation, inquiry,
proceeding or litigation 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 thereof 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 thereof within a reasonable
time after notice of commencement thereof, 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 thereof on behalf of the indemnified
party or parties), in any of which events such fees and
31
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 claim, action,
suit, investigation, inquiry, proceeding or litigation or separate but similar
or related claims, actions, suits, investigations, inquiries, proceedings or
litigation 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,
action, suit, investigation, inquiry, proceeding or litigation effected without
its written consent; PROVIDED, HOWEVER, that such consent was not unreasonably
withheld. An indemnifying party will not, without the prior written consent of
the indemnified parties, settle, compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit,
investigation, inquiry, proceeding or litigation in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim, action, suit,
investigation, inquiry, proceeding or litigation), unless such settlement,
compromise or consent (i) includes an unconditional release of each indemnified
party from all liability arising out of such claim, action, suit, investigation,
inquiry, proceeding or litigation and (ii) does not include a statement as to or
an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(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 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 Firm Securities and the Option 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 the 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 Firm Securities
and the Option Securities (before deducting expenses) 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
32
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 SUBSECTION (d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this SUBSECTION (d), the Underwriters shall
not be required to contribute any amount in excess of the underwriting discount
applicable to the Firm Securities and the Option Securities purchased by the
Underwriters hereunder. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this SECTION 7, each person, if any, who
controls the Company or the Underwriter 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 or the Underwriter, as the case may be, subject in each case to this
SUBSECTION (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 SUBSECTION (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
SUBSECTION (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
contained in certificates of officers of the Company submitted pursuant hereto,
shall be deemed to be representations, warranties and agreements 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 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 any 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. This Agreement shall become effective at 10:00 a.m.,
New York City time, on the next full business day following the date hereof, or
at such earlier time after the Registration Statement becomes effective as the
Representatives, in its discretion, shall release the Securities for sale to the
public; PROVIDED, HOWEVER, that the provisions of SECTIONS 5, 7 and 10 of this
Agreement shall at all times be effective. 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.
33
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 materially adversely disrupted, or
in the Representatives' opinion will in the immediate future materially
adversely disrupt, the financial markets; or (ii) if any material adverse change
in the financial markets shall have occurred; or (iii) if trading generally
shall have been suspended or materially limited on or by, as the case may be,
any of the New York Stock Exchange, the American Stock Exchange, Nasdaq, the
NASD, the Boston Stock Exchange, the Commission or any governmental authority
having jurisdiction over such matters; or (iv) if trading of any of the
securities of the Company shall have been suspended, or any of the securities of
the Company shall have been delisted, on any exchange or in any over-the-counter
market; (v) 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 (vi) if a banking moratorium has been declared by a state or federal
authority; or (vii) if a moratorium in foreign exchange trading has been
declared; or (viii) if the Company or any of the Corporate Initial Affiliated
Practices or the Initial Affiliated Practices shall have sustained a loss
material or substantial to the Company or any of the Corporate Initial
Affiliated Practices or the Initial Affiliated Practices 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 offering, sale
and/or delivery of the Securities; or (ix) if there shall have been such a
material adverse change in the conditions or prospects of the Company or any of
the Corporate Initial Affiliated Practices or the Initial Affiliated Practices,
or such material adverse change in the general market, political or economic
conditions, in the United States or elsewhere, that, in each case, in the
Representatives' judgment, would make it inadvisable to proceed with the
offering, sale and/or delivery of the Securities or (x) if Xxxxx X. Xxxxxxx
shall no longer serve the Company in his present capacity.
(b) If this Agreement is terminated by the Representatives in
accordance with the provisions of SECTION 10(a) the Company shall promptly
reimburse and indemnify the Representatives for all of its actual out-of-pocket
expenses, including the fees and disbursements of counsel for the Underwriters
(less amounts previously paid pursuant to SECTION 5(c) above). Notwithstanding
any contrary provision contained in this Agreement, if this Agreement shall not
be carried out within the time specified herein, or any extension thereof
granted to the Representatives, by reason of any failure on the part of the
Company to perform any undertaking or satisfy any condition of this Agreement by
it to be performed or satisfied (including, without limitation, pursuant to
SECTION 6 or SECTION 12) then, the Company shall promptly reimburse and
indemnify the Representatives for all of its actual out-of-pocket expenses,
including the fees and disbursements of counsel for the Underwriters (less
amounts previously paid pursuant to SECTION 5(c) above). In addition, the
Company shall remain liable for all Blue Sky counsel fees and disbursements,
expenses and filing fees. 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
34
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 (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).
No action taken pursuant to this SECTION 11 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 (7) 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 at 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 12 shall relieve the Company
from liability, if any, in respect of such default.
35
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/x Xxxxx Securities Corp., 000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx Xxxxx, with a copy to Xxxxxx,
Xxxxxxxxxx & Xxxxxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxxxx X. Xxxxxx, Esq. Notices to the Company shall be directed
to the Company at 0000 Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000, Attention:
Xxxxx Xxxxxxx, Chief Executive Officer, with a copy to: Xxxxx Xxxxxxxxxxxx
Silver Xxxxx XxXxxxxxx & Xxxx LLC, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xxxxxx Xxxxx, 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.
36
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,
INTEGRATED PHYSICIAN SYSTEMS, INC.
By:
-------------------------------
Xxxxx X. Xxxxxxx
Chief Executive Officer
Confirmed and accepted as of
the date first above written.
XXXXX SECURITIES CORP.
SOUTHWALL CAPITAL CORP.
XXXXX & COMPANY, INC.
For themselves and as Representatives
of the several Underwriters named
in Schedule A hereto.
By: XXXXX SECURITIES CORP.
By:
-------------------------------
Name:
Title:
As Attorney-in-Fact for
each of the Representatives
SCHEDULE A
Number of Amount of
Number of Redeemable Convertible
Shares to Warrants to Debentures to
Name of Underwriters be Purchased be Purchased be Purchased
-------------------- ------------ ------------ ------------
Xxxxx Securities Corp
SouthWall Capital Corp.
Xxxxx & Company, Inc.
Total......................... 2,000,000 2,000,000 $25,000,000
========= ========= ===========
SCHEDULE B
----------
At the Closing Date, the Underwriters shall have received the favorable
opinion of Kalogredis, Tsoules and Xxxxxxx, Ltd., special health care regulatory
counsel to the Company and the Subsidiaries, dated the Closing Date, addressed
to the Underwriters, in form and substance satisfactory to Underwriters' Counsel
to the effect that:
i. to the best of such counsel's knowledge, the statements in the
Prospectus under "RISK FACTORS--State Laws Prohibiting the Corporate
Practice of Medicine,""RISK FACTORS--Government Regulation," "RISK
FACTORS--Dependence on Third Party Reimbursement," "BUSINESS--Government
Regulation" and "BUSINESS--Third Party Reimbursement" are accurate in all
material respects, fairly represent the information disclosed therein, do
not contain any untrue statement of a material fact and do not omit to
state a fact required to be stated therein or necessary to make the
statements contained therein not misleading;
ii. to the best of such counsel's knowledge, the Company, the
Corporate Initial Affiliated Practices and the Initial Affiliated Practices
are in compliance in all material respects with all federal, state, local
and foreign rules, orders, regulations with respect to the Company's
business as currently conducted and as contemplated;
iii.each of the Company, the Corporate Initial Affiliated Practices
and the Initial Affiliated Practices has obtained all necessary and
required approvals, authorizations, licenses, orders, permits, certificates
and franchises of and from all governmental or regulatory officials and
bodies, domestic and foreign, to conduct its respective business as
described in the Prospectus; and none of such approvals, authorizations,
licenses, orders, permits, certificates and franchises have been revoked,
restricted or limited in any matter and all of such approvals,
authorizations, licenses, orders, permits, certificates and franchises are
in full force and effect;
iv. to the best of such counsel's knowledge, there is no action, suit,
proceeding, inquiry, investigation, litigation or governmental proceeding,
domestic or foreign, pending or threatened (or circumstances that may give
rise to the same) against or affecting any of the Company, the Corporate
Initial Affiliated Practices and the Initial Affiliated Practices before
any court or arbitrator or governmental body, agency or official in which
there is a reasonable possibility of a decision which may result in a
material adverse change in the condition, financial or otherwise, or the
earnings, position, prospects, stockholders' equity, value, operation,
properties, business or results of operations of any of the Company, the
Corporate Initial Affiliated Practices and the Initial Affiliated
Practices.
v. to the best of such counsel's knowledge, the statements in the
Registration Statement and Prospectus do not contain any untrue statement
of material fact with respect to government regulation of the Company's
proposed business, or omit to state
any material fact relating to government regulation of the Company's
proposed business which is necessary to make the statements therein not
misleading.
2
