1
EXHIBIT 1.1
THE PLASTIC SURGERY COMPANY
2,760,000 SHARES OF COMMON STOCK
FORM OF UNDERWRITING AGREEMENT
________________, 1999
Cruttenden Xxxx Incorporated
X.X. Xxxxxxxxxx & Co., Inc.
c/o Cruttenden Xxxx Incorporated
00 Xxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Ladies and Gentlemen:
The Plastic Surgery Company, a Georgia corporation (the "Company"),
proposes to sell to the several underwriters named in Schedule I hereto (the
"Underwriters") 2,400,000 shares (the "Firm Shares") of the Company's common
stock, no par value per share (the "Common Stock"). The Company and the
shareholders of the Company named in Schedule II hereto (the "Selling
Shareholders") have also agreed to grant to you an option (the "Option") to
purchase up to _________ (the "Company Option Shares") and ________ (the
"Selling Shareholder Option Shares") additional shares of Common Stock,
respectively, on the terms and for the purposes set forth in Section 1(b)
hereof. The Company Option Shares and the Selling Shareholder Option Shares are
hereinafter referred to collectively as the "Option Shares." The Firm Shares
and the Option Shares are hereinafter collectively referred to as the "Shares."
The Company and the Selling Shareholders confirm as follows their
agreements with you.
1. AGREEMENT TO SELL AND PURCHASE; PUBLIC OFFERING;
UNDERWRITER'S WARRANTS.
(a) On the basis of the representations, warranties and covenants
herein contained, and subject to all the terms and conditions of this
Agreement, the Company agrees to sell to the Underwriters the Firm Shares, and
each of the Underwriters, severally and not jointly, agrees to purchase at the
purchase price of $________ per share the number of Firm Shares set forth
opposite such Underwriter's name in Schedule I hereto.
(b) Subject to all the terms and conditions of this Agreement, the
Company and the Selling Shareholders set forth in Schedule II hereto also grant
the Underwriters the Option to purchase, severally and not jointly, up to
___________ Company Option Shares and ___________ Selling Shareholder Option
Shares in the amounts set forth opposite each Selling Shareholder's name in
Schedule II hereto, each at the same price per share as you shall pay for the
Firm Shares. The Option may be exercised only to cover over-allotments in the
sale of the Firm Shares and may be exercised in whole or in part at any time or
from time to time on or
2
before the 45th day after the date of the Prospectus (as defined below) upon
written or telegraphic notice (the "Option Shares Notice") by you to the
Company and the Attorney-in-Fact (as defined herein) for the Selling
Shareholders no later than 12:00 noon, Atlanta, Georgia time, at least two and
no more than ten business days before the date and time specified for closing
in the Option Shares Notice (the "Option Closing Date") setting forth the
aggregate number of Option Shares to be purchased. In the event the
Underwriters elect to purchase less than all of the Option Shares, the Selling
Shareholder Option Shares shall be purchased first, pro rata, in the amounts up
to those set forth on Schedule II hereto prior to purchasing any Company Option
Shares. On the Option Closing Date, the Company will issue and sell and the
Selling Shareholders will sell to the Underwriters the number of Option Shares
set forth in the Option Shares Notice, and unless otherwise adjusted by the
Underwriters, each of the Underwriters will purchase such percentage of the
Option Shares as is equal to the percentage of Firm Shares that such
Underwriter is purchasing.
(c) After the Registration Statement becomes effective, upon the
authorization by you of the release of the Shares, the several Underwriters
propose to offer the Firm Shares and the Option Shares purchased by the
Underwriters for sale initially at the price per share set forth in the
Prospectus (the initial offering price) and upon the terms set forth therein.
(d) On the Closing Date, the Company will further issue and sell to
you for a total purchase price of $250.00, warrants entitling the holders
thereof to purchase an aggregate of 240,000 shares of Common Stock, at an
initial exercise price of $_____ per share [120% OF THE PUBLIC OFFERING PRICE
FOR THE SHARES] (the "Underwriter's Warrants") for a period of three (3) years,
such period to commence twenty-four (24) months after the Effective Date. Such
Underwriter's Warrants shall contain such other terms and provisions as may be
set forth in an agreement with respect thereto (the "Warrant Agreement")
executed and delivered by the Company and you simultaneously with the execution
and delivery of this Agreement. As provided in the Warrant Agreement, you may
designate that the Underwriter's Warrants be issued in varying amounts directly
to your respective bona fide officers and not to you. Such designation will be
made by you only if you determine that such issuances would not violate the
Rules of Conduct of the National Association of Securities Dealers, Inc.
relating to the review of corporate financing arrangements. The holders of the
Underwriter's Warrants will be entitled to the registration rights set forth in
the Warrant Agreement.
2. DELIVERY AND PAYMENT.
Delivery of the Firm Shares shall be made to you by or on behalf of
the Company against payment of the purchase price by federal funds wire
transfer payable in same day funds to the order of the Company at the offices
of Xxxxxx Xxxxxxx Xxxxx & Xxxxxxxxxxx, L.L.P., 000 Xxxxxxxxx Xxxxxx, X.X.,
Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000, or at such other place as may be agreed
upon by the Underwriters and the Company, at 10:00 a.m., Atlanta, Georgia time,
on the third full business day following the date of this Agreement (the
"Closing Date"), or at such other time on such date, or at such other place, as
may be agreed upon by the Company and the Underwriters.
2
3
To the extent the Option is exercised, delivery of the Option Shares
against payment therefor (in the manner specified above) will take place at the
offices specified above on the Option Closing Date (which, subject to the
requirements set forth above for the Option Shares Notice, may be the Closing
Date).
Certificates evidencing the Shares shall be in definitive form and
shall be registered in such names and in such denominations as you shall
request not less than 48 hours prior to the Closing Date or the Option Closing
Date, as the case may be, by written notice to the Company. For the purpose of
expediting the checking and packaging of certificates for the Shares, the
Company agrees to make such certificates available for inspection at least 24
hours prior to the Closing Date or the Option Closing Date, as the case may be,
at a location to be designated by you. If the Underwriters so elect, delivery
of the Shares may be made by credit through full fast transfer to the accounts
designated by the Underwriters at The Depository Trust Company.
The cost of original issue tax stamps, if any, in connection with the
issuance and delivery of the Shares by the Company to the Underwriters shall be
borne by the Company. The Company will pay and save each of the Underwriters
and any subsequent holder of the Shares harmless from any and all liabilities
with respect to or resulting from any failure or delay in paying federal and
state stamp and other transfer taxes, if any, which may be payable or
determined to be payable in connection with the original issuance or sale to
such Underwriter of the Firm Shares and Option Shares.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents, warrants and covenants to each of the
Underwriters that:
(a) The Company has prepared and has filed with the Securities and
Exchange Commission (the "Commission") a registration statement (Registration
No. 333-78565) on Form S-1 relating to the Shares, including a preliminary
prospectus and such amendments to such registration statement as may have been
required to the date of this Agreement, under the provisions of the Securities
Act of 1933, as amended (the "Act"), and the rules and regulations
(collectively referred to as the "Rules and Regulations") of the Commission
thereunder. The registration statement and all amendments thereto have been
duly authorized and executed by the Company in accordance with the Rules and
Regulations. The term "preliminary prospectus" as used herein means a
preliminary prospectus as contemplated by Rule 430 or Rule 430A of the Rules
and Regulations included at any time as part of the registration statement.
Copies of such registration statement and amendments and of each related
preliminary prospectus have been delivered to you. If such registration
statement has not become effective, a further amendment to such registration
statement, including a form of final prospectus, necessary to permit such
registration statement to become effective, will be filed promptly by the
Company with the Commission. If such registration statement has become
effective, a final prospectus containing information permitted to be omitted at
the time of effectiveness by Rule 430A of the Rules and Regulations will be
filed promptly by the Company with the Commission in accordance with Rule
424(b) of the Rules and Regulations,
3
4
if required. The term "Registration Statement" as used herein means the
registration statement as amended at the time it becomes or became effective
(the "Effective Date"), including financial statements and all exhibits and any
information deemed to be included by Rule 430A. The term "Prospectus" means the
prospectus as first filed with the Commission pursuant to Rule 424(b) of the
Rules and Regulations or, if no such filing is required, the form of final
prospectus included in the Registration Statement at the Effective Date.
(b) On the Effective Date, the date the Prospectus is first filed
with the Commission pursuant to Rule 424(b) (if required), at all times
subsequent thereto through and including the Closing Date and, if later, the
Option Closing Date and when any post-effective amendment to the Registration
Statement becomes effective or any amendment or supplement to the Prospectus is
filed with the Commission, the Registration Statement and the Prospectus (as
amended or as supplemented if the Company shall have filed with the Commission
any amendment or supplement thereto), including the financial statements
included in the Prospectus, did or will comply with all applicable provisions
of the Act and the Rules and Regulations and did or will contain all statements
required to be stated therein in accordance with the Act and the Rules and
Regulations. On the Effective Date and when any post-effective amendment to the
Registration Statement becomes effective, no part of the Registration Statement
or any such amendment or supplement did or will contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein not misleading. On the
date any amendment or supplement to the Prospectus is filed with the Commission
and at the Closing Date and, if later, the Option Closing Date, the Prospectus
did not or will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The foregoing
representations and warranties in this Section 3(b) do not apply to any
statements or omissions made in reliance on and in conformity with information
relating to the Underwriters furnished in writing to the Company by the
Underwriters specifically for inclusion in the Registration Statement or
Prospectus or any amendment or supplement thereto. The Company acknowledges
that the only information relating to the Underwriters furnished in writing to
the Company by the Underwriters specifically for inclusion in the Registration
Statement, any preliminary prospectus and the Prospectus is the information in
the last paragraph on the cover page and the statements set forth under the
heading "Underwriting" in any preliminary prospectus or the Prospectus.
(c) The Company has no subsidiaries (as defined in the Rules and
Regulations). The Company is, and at the Closing Date and, if later, the Option
Closing Date will be, a corporation duly organized, validly existing and in
good standing under the laws of the State of Georgia. The Company has, and at
the Closing Date and, if later, the Option Closing Date will have, full power
and authority to conduct all the activities conducted by it, to own or lease
all the assets owned or leased by it and to conduct its business as described
in the Registration Statement and the Prospectus. The Company is, and at the
Closing Date and, if later, the Option Closing Date will be, duly licensed or
qualified to do business and in good standing as a foreign corporation in all
jurisdictions in which the nature of the activities conducted by it or the
character of the assets owned or leased by it makes such licensing or
qualification
4
5
necessary, and no proceeding has been instituted in any jurisdiction revoking,
limiting or curtailing, or seeking to revoke, limit or curtail, the Company's
power, authority, licensing or qualification. The Company does not own, and at
the Closing Date and, if later, the Option Closing Date will not own, directly
or indirectly, any shares of stock or any other equity or long-term debt
securities of any corporation or have any equity interest in any firm,
partnership, joint venture, association or other entity. Complete and correct
copies of the Amended and Restated Articles of Incorporation (the "Restated
Articles") and the Amended and Restated Bylaws (the "Bylaws") of the Company
and all amendments thereto have been delivered to you, and no changes therein
will be made subsequent to the date hereof and prior to the Closing Date or, if
later, the Option Closing Date.
(d) The outstanding shares of the Company's Common Stock have been,
and the Shares when issued and delivered pursuant to this Agreement and the
shares of Common Stock to be issued upon exercise of the Underwriter's Warrants
will be, duly authorized, validly issued, fully paid and nonassessable and will
not be subject to any preemptive or similar right. The Underwriter's Warrants,
when issued, paid for and delivered in accordance with the terms of the Warrant
Agreement, will be duly authorized, validly issued, fully paid and
nonassessable and will not be subject to any preemptive or similar right. The
description of the Common Stock in the Registration Statement and the
Prospectus is, and at the Closing Date and, if later, the Option Closing Date
will be, complete and accurate in all material respects. All offers and sales
of securities of the Company have been at all relevant times duly registered
under or exempt from the registration requirements of the Act and were duly
registered under or exempt from the registration requirements of all applicable
state securities or Blue Sky laws. Except as set forth in the Prospectus and
except for options issued under the Company's stock option plans, the Company
does not have outstanding, and at the Closing Date and, if later, the Option
Closing Date will not have outstanding, any options to purchase, or any rights
or warrants to subscribe for, or any securities or obligations convertible
into, or any contracts or commitments to issue or sell any shares of Common
Stock or any such warrants, convertible securities or obligations. The
description of the Company's stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted and exercised thereunder,
set forth in the Prospectus accurately and fairly presents in all material
respects the information required to be shown with respect to such plans,
arrangements, options and rights.
(e) The financial statements together with the related notes and
schedules included in the Registration Statement or the Prospectus are accurate
in all material respects and present fairly the financial condition of the
Company as of the respective dates thereof and the results of operations and
cash flows of the Company for the respective periods covered thereby, all in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the entire period involved, except as otherwise
disclosed in the Prospectus. The financial and statistical data set forth in
the Prospectus under the captions "Prospectus Summary," "Summary Financial
Data," "Use of Proceeds," "Dilution," "Capitalization," "Selected Financial
Data," "Management's Discussion and Analysis of Financial Condition and Results
of Operations," "Business" and "Principal and Selling Shareholders" have been
compiled on a basis consistent with that of the audited financial statements
contained in the Registration Statement and Prospectus and fairly present in
all material respects the
5
6
information set forth therein. No other financial statements or schedules of
the Company are required by the Act, the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or the Rules and Regulations to be included in
the Registration Statement or the Prospectus. Xxxxxx Xxxxxxxx LLP (the
"Accountants"), who have reported on certain of such financial statements and
schedules, are independent auditors with respect to the Company as required by
the Act and the Rules and Regulations.
(f) The Company maintains a system of internal accounting controls
sufficient to assure that: (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company's system of internal accounting controls is sufficient to meet the
broad objectives of internal accounting control insofar as those objectives
pertain to the prevention or detection of errors or irregularities in amounts
that would be material in relation to the Company's financial statements; and,
except as disclosed in the Prospectus, neither the Company nor, to the
Company's knowledge, any employee or agent of the Company has made any payment
of funds of the Company or received or retained any funds in violation of any
law, rule or regulation, the receipt or payment of which could have a material
adverse effect on the Company.
(g) There are no outstanding loans, advances (except normal advances
for business expenses in the ordinary course of business) or guarantees of
indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any of the members of the families of any of them,
nor has there been any transaction between or among the Company or any of its
affiliates, officers or directors or any affiliate or affiliates of any such
officer or directors, except as disclosed in the Registration Statement and the
Prospectus.
(h) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus and prior to the Closing
Date and, if later, the Option Closing Date, except as set forth in the
Registration Statement and the Prospectus, (i) there has not been and will not
have been any material adverse change in the business, properties, business
prospects, condition (financial or otherwise) or results of operations of the
Company, arising for any reason whatsoever, (ii) the Company has not incurred
nor will it incur any material liabilities or obligations, direct or
contingent, except in the ordinary course of business, (iii) the Company has
not entered into any material transaction not in the ordinary course of
business, (iv) the Company has not and will not have paid or declared any
dividends or other distributions of any kind on any class of its capital stock,
(v) there has not been and will not have been any change in the capitalization
of the Company other than pursuant to the exercise of employee stock options or
the issuance of shares under the Company's stock option plans and (vi) there
has not been any loss or damage (whether or not insured) to the property of the
Company which has been sustained or will have been sustained which has a
material
6
7
adverse effect on the business, business prospects, condition (financial or
otherwise) or results of operations of the Company.
(i) The Company has timely filed all necessary federal, state and
foreign income and franchise tax returns and has paid all taxes shown thereon
to the extent such taxes have become due and are not being contested in good
faith, and there is no tax deficiency that has been or, to the best of the
Company's knowledge, might be asserted against the Company that might have a
material adverse effect on the business, properties, business prospects,
condition (financial or otherwise) or results of operations of the Company, and
all tax liabilities are adequately provided for on the books of the Company.
(j) The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended.
(k) Except as set forth in the Registration Statement and the
Prospectus, there are no actions, suits or proceedings pending or, to the
knowledge of the Company, threatened against or affecting the Company or, to
the knowledge of the Company, any of its respective officers in their capacity
as such, before or by any federal or state court, commission, regulatory body,
administrative agency or other governmental body, domestic or foreign, wherein
an unfavorable ruling, decision or finding would materially and adversely
affect the business, properties, business prospects, condition (financial or
otherwise) or results of operations of the Company or prevent or materially
hinder the consummation of this Agreement or the Warrant Agreement.
(l) The Company has not at any time during the past five years: (i)
made any unlawful contributions to any candidate for any political office, or
failed fully to disclose any contribution in violation of law; or (ii) made any
payment to any state, federal or foreign government official, or other person
charged with similar public or quasi-public duty (other than payment required
or permitted by applicable law).
(m) The Company has, and at the Closing Date and, if later, the
Option Closing Date will have: (i) all material governmental licenses,
certificates, permits, consents, orders, approvals and other authorizations
necessary to carry on its business as contemplated in the Prospectus; (ii)
complied in all material respects with all laws, regulations and orders
applicable to it or its business or properties; and (iii) performed all
obligations required to be performed by it and is not, and at the Closing Date
and, if later, the Option Closing Date will not be, in default, under any
contract or other instrument material to it to which it is a party or by which
its property is bound or affected where such default would materially and
adversely affect the business, properties, business prospects, condition
(financial or otherwise) or results of operations of the Company or prevent or
materially hinder the consummation of this Agreement or the Warrant Agreement.
To the best knowledge of the Company, as of the date of this Agreement, the
Closing Date and, if later, the Option Closing Date no other party under any
contract or other instrument to which it is a party is in default thereunder.
The Company
7
8
is not, and at the Closing Date and, if later, the Option Closing Date will not
be, in violation of any provision of the Restated Articles or Bylaws.
(n) No consent, approval, authorization or order of, or any filing
or declaration with, any court or governmental agency or body is required for
the consummation by the Company of the transactions on its part contemplated by
this Agreement and the Warrant Agreement, except such as have been obtained
under the Act or the Rules and Regulations and such as may be required under
state securities or Blue Sky laws or the bylaws and rules of the National
Association of Securities Dealers, Inc. (the "NASD") in connection with the
purchase and distribution by the Underwriters of the Shares and the
Underwriter's Warrants to be sold by the Company.
(o) The filing of the Registration Statement and the execution and
delivery of this Agreement and the Warrant Agreement have been duly authorized
by the Board of Directors of the Company, and the Company has full corporate
power and authority to enter into this Agreement and the Warrant Agreement and
to perform its obligations hereunder and thereunder. This Agreement and the
Warrant Agreement have been duly executed and delivered by the Company and
constitute valid and binding agreements of the Company enforceable against the
Company in accordance with the terms hereof and thereof, except as
enforceability may be limited by applicable equitable principles, or by
bankruptcy, insolvency, reorganization, moratorium or similar laws from time to
time in effect affecting the enforcement of creditors' rights. The performance
of this Agreement and the Warrant Agreement and the consummation of the
transactions contemplated hereby and thereby will not result in the creation or
imposition of any material lien, charge or encumbrance upon any of the assets
of the Company pursuant to the terms or provisions of, or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
or give any other party a right to terminate any of its obligations under, or
result in the acceleration of any obligation under, the articles of
incorporation or bylaws of the Company, any indenture, mortgage, deed of trust,
voting trust agreement, loan agreement, bond, debenture, note agreement or
other evidence of indebtedness, lease, contract or other agreement or
instrument to which the Company is a party or by which the Company or any of
its properties are bound or affected, or violate or conflict with any judgment,
ruling, decree, order, statute, rule or regulation of any court or other
governmental agency or body applicable to the business or properties of the
Company, the occurrence of which would materially and adversely affect the
business, properties, business prospects, condition (financial or otherwise) or
results of operations of the Company or prevent or materially hinder the
consummation of this Agreement or the Warrant Agreement.
(p) The Company has good and marketable title to all properties and
assets described in the Registration Statement and Prospectus as owned by it,
free and clear of all liens, charges, encumbrances or restrictions, except such
as are described in the Prospectus or are not material to the business of the
Company. The Company has valid, subsisting and enforceable leases for the
properties described in the Prospectus as leased by it, except as
enforceability may be limited by applicable equitable principles, or by
bankruptcy, insolvency, reorganization, moratorium or similar laws from time to
time in effect affecting the
8
9
enforcement of creditors' rights, and with such exceptions as are not material
and do not materially interfere with the use made and proposed to be made of
such properties by the Company, and the Company has no notice or knowledge of
any material claim of any sort which has been, or may be, asserted by anyone
adverse to the Company's rights as lessee or sublessee under any lease or
sublease described above, or affecting or questioning the Company's rights to
the continued possession of the leased or subleased premises under any such
lease or sublease in conflict with the terms thereof. The Company owns or
leases all such properties as are necessary to its operations as now conducted.
(q) The Company owns or possesses adequate rights to use all
patents, patent rights, inventions, trade secrets, know-how, trademarks,
service marks, trade names and copyrights which are necessary to conduct its
business as described in the Registration Statement and Prospectus; except as
set forth in the Registration Statement and the Prospectus, the Company has not
received any notice of, and has no knowledge of, any infringement of or
conflict with asserted rights of the Company by others with respect to any
patent, patent rights, inventions, trade secrets, know-how, trademarks, service
marks, trade names or copyrights, and the Company has not received any notice
of, and has no knowledge of, any infringement of or conflict with asserted
rights of others with respect to any patent, patent rights, inventions, trade
secrets, know-how, trademarks, service marks, trade names or copyrights owned
or used by the Company.
(r) To the best of the Company's knowledge, no labor disturbance by
the employees of the Company exists or is imminent; and the Company is not
aware of any existing or imminent labor disturbance by the employees of any of
its principal suppliers that could be expected to result in a material adverse
change in the business, properties, business prospects, condition (financial or
otherwise) or results of operations of the Company.
(s) The Company maintains insurance with insurers of recognized
financial responsibility of the types and in the amounts generally deemed
adequate for their respective business and consistent with insurance coverage
maintained by similar companies in similar businesses, including, but not
limited to, insurance covering real and personal property owned or leased by
the Company against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against, all of which insurance is in full force and
effect; the Company has not been refused any insurance coverage sought or
applied for; and the Company has no reason to believe that it will not be able
to renew its existing insurance coverage as and when such coverage expires or
to obtain similar coverage from similar insurers.
(t) Except as described in the Registration Statement and the
Prospectus, to the best of the Company's knowledge, there is no factual basis
for any action, suit or other proceeding involving the Company or any of its
material assets for any failure of the Company, or any predecessor thereof, to
comply with any requirements of federal, state, local or foreign regulation
relating to air, water, solid waste management, hazardous or toxic substances,
or the protection of health or the environment. Except as described in the
Registration Statement and the Prospectus, none of the property owned or leased
by the Company is, to the best knowledge of the Company, contaminated with any
waste or hazardous substances, and the
9
10
Company may not be deemed an "owner or operator" of a "facility" or "vessel"
which owns, possesses, transports, generates or disposes of a "hazardous
substance" as those terms are defined in Section 9601 of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
ss.9601, et seq.
(u) All documents or contracts required to be filed as an exhibit to
the Registration Statement to which the Company is a party have been filed as
exhibits to the Registration Statement and have been duly authorized, executed
and delivered by the Company, constitute valid and binding agreements of the
Company and are enforceable against the Company in accordance with the terms
thereof.
(v) The Company has not taken and will not take, directly or
indirectly, any action designed to or which might reasonably be expected to
cause or result in stabilization or manipulation of the price of any security
of the Company to facilitate the sale or resale of the Shares or the Common
Stock, and the Company is not aware of any such action taken or to be taken by
affiliates of the Company. To assure compliance with Regulation M under the
Exchange Act, the Company will not make bids for or purchases of or induce bids
for or purchases of, directly or indirectly, any shares of Common Stock or
securities convertible into Common Stock of the Company until the distribution
of all shares of Common Stock being sold in the public offering has been
completed.
(w) No holder of securities of the Company has rights which have not
been waived to require the registration of any securities of the Company
because of the filing of the Registration Statement. There are no contracts,
agreements or understandings between the Company and any person granting such
person the right to require the Company to file a registration statement under
the Act with respect to any securities of the Company owned or to be owned by
such person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration statement filed
by the Company under the Act.
(x) The Company has taken such action as necessary to have the
Shares authorized for trading, and all of the Shares have been approved for
listing, on the American Stock Exchange ("AMEX") upon notice of issuance.
(y) Other than as contemplated by this Agreement, there is no
broker, finder or other party that is entitled to receive from the Company any
brokerage or finder's fee or other fee or commission as a result of any of the
transactions contemplated by this Agreement.
(z) On the Closing Date all transfer or other taxes (including
franchise, capital stock or other tax, other than income taxes, imposed by any
jurisdiction), if any, which are required to be paid in connection with the
sale and transfer of the Shares and the to the Underwriters hereunder will have
been fully paid or provided for by the Company and all laws imposing such taxes
will have been fully complied with in all material respects.
10
11
(aa) No statement, representation, warranty or covenant made by the
Company in this Agreement or made in any certificate or document required by
this Agreement to be delivered to the Underwriters is or will be, when made,
inaccurate, untrue or incorrect in any material respect, unless such statement,
representation, warranty or covenant is qualified as to materiality, in which
case it is not or will not be, when made, inaccurate, untrue or incorrect.
(bb) To the best of the Company's knowledge, none of the Selling
Shareholders listed under the caption "Principal and Selling Shareholders"
section of the Prospectus is a member of the NASD that is participating in the
distribution of the Shares or a "person associated with a member," as that term
is defined in the NASD's Review of Corporate Financing Interpretation.
(cc) Any certificate signed by any officer of the Company and
delivered to you or to counsel for the Underwriters pursuant to the provisions
of this Agreement shall be deemed a representation and warranty to each
Underwriter as to the matters covered thereby.
(dd) The Company has not distributed and will not distribute prior to
the later of (i) the Closing Date or the Option Closing Date, as the case may
be, or (ii) completion of the distribution of the Shares, any offering material
in connection with the offering and sale of the Shares other than any
preliminary prospectuses, the Prospectus, the Registration Statement and other
materials, if any, permitted by the Act.
4. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS.
Each of the Selling Shareholders, severally and not jointly,
represents, warrants and covenants to each Underwriter as of the Option Closing
Date (if any) that:
(a) Such Selling Shareholder at the Option Closing Date will have
good and marketable title to the Shares set forth in Schedule II to be sold by
such Selling Shareholder, free and clear of any liens, encumbrances, equities
and claims (other than as imposed by the Act or this Agreement), and full
right, power and authority to effect the sale and delivery of such Shares; and
upon the delivery of and payment for the Shares to be sold by such Selling
Shareholder pursuant to this Agreement, good and marketable title thereto, free
and clear of any liens, encumbrances, equities and claims, will be transferred
to the Underwriters.
(b) Such Selling Shareholder has duly executed and delivered the
Custody Agreement and Power of Attorney (the "Custody Agreement") in the form
previously delivered to the Underwriters, appointing Xxxxxxxx X. Xxxxxxx and
Xxxxxx X. Xxxxxx, and each of them, as such Selling Shareholder's
attorney-in-fact (the "Attorney-in-Fact") and the Company, as custodian (the
"Custodian"). The Attorney-in-Fact is authorized to execute, deliver and
perform this Agreement on behalf of such Selling Shareholder, to deliver the
Shares to be sold by such Selling Shareholder hereunder, to accept payment
therefor and otherwise to act on behalf of such Selling Shareholder in
connection with this Agreement. Certificates, in suitable form for transfer by
delivery or accompanied by duly executed instruments of transfer or assignment
in blank, representing the Shares to be sold by such
11
12
Selling Shareholder hereunder have been deposited with the Custodian pursuant
to the Custody Agreement for the purpose of delivery pursuant to this
Agreement. Such Selling Shareholder agrees that the shares of Common Stock
represented by the certificates on deposit with the Custodian are subject to
the interests of the Company, the Underwriters and the other Selling
Shareholders hereunder, that the arrangements made for such custody and the
appointment of the Attorney-in-Fact are to that extent irrevocable, and that
the obligations of such Selling Shareholder hereunder shall not be terminated
except as provided in this Agreement and the Custody Agreement. If such Selling
Shareholder should die, become disabled or be declared incompetent, dissolve or
become insolvent, or if any other event should occur before the delivery of the
Shares of such Selling Shareholder hereunder, the certificates for such Shares
deposited with the Custodian shall be delivered by the Custodian in accordance
with the terms and conditions of this Agreement as if such death, disability,
incompetency, dissolution, insolvency or other event had not occurred,
regardless of whether or not the Custodian or the Attorney-in-Fact shall have
received notice thereof.
(c) Such Selling Shareholder, acting through its duly authorized
Attorney-in-Fact, has duly executed and delivered this Agreement; this
Agreement constitutes a legal, valid and binding obligation of such Selling
Shareholder; all authorizations and consents necessary for the execution and
delivery of this Agreement and the Custody Agreement on behalf of such Selling
Shareholder and for the sale and delivery of the Shares to be sold by such
Selling Shareholder hereunder have been given, except as may be required by the
Act or state securities laws or the NASD; and such Selling Shareholder has the
legal capacity and full right, power and authority to execute this Agreement
and the Custody Agreement.
(d) The performance of this Agreement and the Custody Agreement and
the consummation of the transactions contemplated hereby and thereby by each of
the Selling Shareholders will not result in a material breach or violation of,
or material conflict with, any of the terms or provisions of, or constitute a
material default by such Selling Shareholder under, any indenture, mortgage,
deed of trust (constructive or other), loan agreement, lease, franchise,
license or other agreement or instrument to which such Selling Shareholder or
any of its properties is bound, any statute, or any judgment, decree, order,
rule or regulation or any court or governmental agency or body applicable to
such Selling Shareholder or any of its properties.
(e) Such Selling Shareholder has not distributed and will not
distribute any prospectus or other offering material in connection with the
offer and sale of the Shares other than any preliminary prospectus prepared and
filed by the Company with the Commission or the Prospectus or other material
permitted by the Act.
(f) Such Selling Shareholder has reviewed and is familiar with the
Registration Statement as originally filed with the Commission and the
preliminary prospectus contained therein. To the knowledge of such Selling
Shareholder, the preliminary prospectus does not include an untrue statement of
a material fact, or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; other than as disclosed to the Underwriters, such Selling
Shareholder is
12
13
not prompted to sell the Shares to be sold by such Selling Shareholder by any
material, non-public information concerning the Company that is not set forth
in the preliminary prospectus or the Prospectus.
(g) To the extent that any statements or omissions made in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendment or supplement thereto are made in reliance upon and in conformity
with written information furnished to the Company by such Selling Shareholder
expressly for use therein, such Registration Statement, preliminary prospectus
and Prospectus and any amendments or supplements thereto did not and will not
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
not misleading.
(h) No approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory body, administrative or other
governmental body is necessary in connection with the execution and delivery of
this Agreement by such Selling Shareholder, and the consummation by it of the
transactions herein contemplated (other than as required by the Act, state
securities laws and the NASD).
(i) Any certificates signed by or on behalf of such Selling
Shareholder as such and delivered to the Underwriters or to counsel for the
Underwriters pursuant to the terms of this Agreement shall be deemed a
representation and warranty by such Selling Shareholder to each Underwriter as
to the matters covered thereby.
(j) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein contemplated
such Selling Shareholder agrees to deliver to you prior to or at the Option
Closing Date a properly completed and executed United States Treasury
Department Form W-9 (or other applicable form or statement specified by
Treasury Department regulations in lieu thereof).
(k) Such Selling Shareholder has not taken and will not take,
directly or indirectly, any action intended to constitute or which has
constituted, or which might reasonably be expected to cause or result in,
stabilization or manipulation of the price of the Common Stock. To assure
compliance with Regulation M under the Exchange Act, such Selling Shareholder
will not make bids for or purchases of or induce bids for or purchases of,
directly or indirectly, any shares of Common Stock or securities convertible
into Common Stock of the Company until the distribution of all shares of Common
Stock being sold in the public offering has been completed.
5. COVENANTS OF THE COMPANY.
The Company covenants and agrees with each of the Underwriters as
follows:
(a) The Company will not, either prior to the Effective Date or
thereafter during such period as the Prospectus is required by law to be
delivered in connection with sales of the
13
14
Shares by an underwriter or dealer, file any amendment or supplement to the
Registration Statement or the Prospectus, unless a copy thereof shall first
have been submitted to you within a reasonable period of time prior to the
filing thereof and you shall not have objected thereto in good faith.
(b) The Company will use its reasonable best efforts to cause the
Registration Statement and any amendment thereto, if not effective at the time
and date that this Agreement is executed by the parties hereto, to become
effective as promptly as possible and will notify you promptly and confirm such
advice in writing: (i) when the Registration Statement has become effective and
when any post-effective amendment thereto becomes effective; (ii) of any
request by the Commission for amendments or supplements to the Registration
Statement or the Prospectus or for additional information; (iii) of the
issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings for that
purpose or the threat thereof; (iv) of the happening of any event during the
period mentioned in the second sentence of Section 5(e) that in the judgment of
the Company makes any statement made in the Registration Statement or the
Prospectus untrue or that requires the making of any changes in the
Registration Statement or the Prospectus in order to make the statements
therein, in light of the circumstances in which they are made, not misleading;
and (v) of receipt by the Company or any representatives or attorney of the
Company of any other communication from the Commission relating to the Company,
the Registration Statement, any preliminary prospectus or the Prospectus. If at
any time the Commission shall issue any order suspending the effectiveness of
the Registration Statement, the Company will make every reasonable effort to
obtain the withdrawal of such order at the earliest possible moment. If the
Company has omitted any information from the Registration Statement pursuant to
Rule 430A of the Rules and Regulations, the Company will use its best efforts
to comply with the provisions of and make all requisite filings with the
Commission pursuant to said Rule 430A and to notify the Underwriters promptly
of all such filings.
(c) The Company will furnish to you at or before the Closing Date,
without charge, four signed copies of the Registration Statement and of any
post-effective amendment thereto, including financial statements and schedules,
and all exhibits thereto, and will furnish you with such number of copies of
the Registration Statement, without exhibits, and all amendments thereto as you
may reasonably request.
(d) The Company will comply with all the provisions of any
undertakings contained in the Registration Statement. The Company will, from
time to time, after the effective date of the Registration Statement file with
the Commission such reports as are required by the Act, the Exchange Act, the
Rules and Regulations and the Exchange Act Rules and Regulations.
(e) On the Effective Date, and thereafter from time to time until
expiration of the period mentioned in the second sentence of this Section 5(e),
the Company will deliver to each of you, without charge, as many copies of the
Prospectus or any amendment or supplement thereto as you may reasonably
request. The Company consents to the use of the Prospectus or any amendment or
supplement thereto by you and by all dealers to whom the Shares may be sold,
both in connection with the offering or sale of the Shares and for any period
of time
14
15
thereafter during which the Prospectus is required by law to be delivered in
connection therewith. If during such period of time any event shall occur which
in the judgment of the Company or your counsel should be set forth in the
Prospectus in order to make any statement therein, in light of the
circumstances under which it was made, not misleading, or if it is necessary to
supplement or amend the Prospectus to comply with law, the Company will
forthwith prepare and duly file with the Commission an appropriate supplement
or amendment thereto, and will deliver to each of you, without charge, such
number of copies thereof as you may reasonably request.
(f) The Company will use its reasonable best efforts to qualify to
register the Shares for sale under the securities or Blue Sky laws of such
jurisdictions as the Underwriters may reasonably designate and will make such
application and furnish such information as may be required for that purpose
and to comply with such laws; provided, that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is not now so
qualified or to take any action which would subject it to general service of
process in any jurisdiction where it is not now so subject. The Company will,
from time to time, prepare and file such statements and reports as are or may
be required to continue such qualification in effect for so long a period as
the Underwriters may reasonably request.
(g) During a period of five years after the date hereof, the Company
will furnish to its shareholders as soon as practicable after the end of each
respective period annual reports (including financial statements audited by
independent certified public accountants) and unaudited quarterly reports of
operations for each of the first three quarters of the fiscal year, and will
furnish to you and the other several Underwriters hereunder, upon request (i)
concurrently with furnishing such reports to its shareholders, statements of
operations of the Company for each of the first three quarters in the form
furnished to the Company's shareholders, (ii) concurrently with furnishing to
its shareholders, a balance sheet of the Company as of the end of such fiscal
year, together with statements of operations, shareholders' equity and cash
flows of the Company for such fiscal year, accompanied by a copy of the
certificate or report thereon of independent certified public accountants,
(iii) as soon as they are available, copies of all reports (financial or other)
mailed to shareholders, (iv) as soon as they are available, copies of all
reports and financial statements furnished to or filed with the Commission, any
securities exchange or the NASD, (v) every material press release and every
material news item or article in respect of the Company or its affairs which
was generally released to shareholders or prepared by the Company and (vi) any
additional information of a public nature concerning the Company, or the
Subsidiaries, or its business which you may reasonably request. During such
five year period, in the event the Company has an active subsidiary or
subsidiaries, the foregoing financial statements shall be on a consolidated
basis to the extent that the accounts of the Company and such subsidiary or
subsidiaries are consolidated in reports furnished to its shareholders
generally.
(h) The Company will make generally available to holders of its
securities as soon as may be practicable but in no event later than the last
day of the 15th full calendar month following the calendar quarter in which the
Effective Date falls, an earnings statement (which need not be audited but
shall be in reasonable detail) for a period of 12 months ended
15
16
commencing after the Effective Date, and satisfying the provisions of Section
11(a) of the Act (including Rule 158 of the Rules and Regulations).
(i) Whether or not the transactions contemplated by this Agreement
are consummated or this Agreement is terminated, the Company will pay, or
reimburse if paid by the Underwriters, all costs and expenses incident to the
performance of the obligations of the Company under this Agreement, including
but not limited to costs and expenses of or relating to: (i) the preparation,
printing, and filing of the Registration Statement and exhibits to it, each
preliminary prospectus; the Prospectus and any amendment or supplement to the
Registration Statement or the Prospectus; (ii) the preparation and delivery of
certificates representing the Shares; (iii) the printing of this Agreement and
other underwriting documents, including Underwriter's Questionnaires,
Underwriter's Powers of Attorney, Blue Sky Memorandum, Master Agreement Among
Underwriters and Master Selected Dealer Agreements, if any; (iv) furnishing
(including costs of shipping and mailing) such copies of the Registration
Statement, the Prospectus and any preliminary prospectus, and all amendments
and supplements thereto, as may be requested for use in connection with the
offering and sale of the Shares by the Underwriters or by dealers to whom
Shares may be sold; (v) the listing of the Shares on the American Stock
Exchange; (vi) any filings required to be made by you with the NASD (but not
the fees and disbursements of your counsel in connection therewith); (vii) the
exemption of the Shares for offer and sale under the securities or Blue Sky
laws of such jurisdictions designated pursuant to Section 5(f), including the
fees, disbursements and other charges of your counsel in connection therewith,
and the preparation and printing of preliminary, supplemental and final Blue
Sky memoranda; (viii) the transfer agent for the Shares; (ix) the fees and
expenses of counsel to the Company and of the Company's accountants; and (x)
any and all taxes (including any transfer, franchise, capital stock or other
tax imposed on any jurisdiction) on sales by the Company to the Underwriters
hereunder.
(j) In addition to the foregoing expenses, the Company shall pay to
Cruttenden Xxxx Incorporated on the Closing Date a non-accountable expense
allowance equal to 1% of the gross proceeds of the sale of the Shares. In the
event the transactions contemplated hereby are not consummated by reason of any
action by the Underwriters (except if such prevention is based upon a breach by
the Company of any covenant, representation or warranty contained herein or
because any other condition to the Underwriters' obligations hereunder required
to be fulfilled by the Company is not fulfilled), the Company shall not be
liable to the Underwriters for any out-of-pocket accountable expenses except
that the Underwriters may retain all monies paid to them prior to the
termination of this Agreement, but only to the extent of out-of-pocket
accountable expenses incurred by the Underwriters, and the Underwriters shall
return to the Company all monies received in excess of their out-of-pocket
accountable expenses. In the event the transactions contemplated hereby are not
consummated by reason of any action of the Company or because of a breach by
the Company of any covenant, representation or warranty contained herein, the
Company shall be liable for the out-of-pocket accountable expenses incurred by
the Underwriters, including attorneys' fees, less a credit of any amounts
previously paid by the Company to the Underwriters, and the Underwriters shall
return to the Company all monies received in excess of their out-of-pocket
accountable expenses.
16
17
(k) The Company will not at any time, directly or indirectly, take
any action designed, or which might reasonably be expected, to cause or result
in, or which will constitute, stabilization of the price of the shares of
Common Stock to facilitate the sale or resale of any of the Shares. The Company
will not make bids for or purchases of or induce bids for or purchases of,
directly or indirectly, any shares of Common Stock or securities convertible
into Common Stock of the Company until the distribution of all shares of Common
Stock being sold in the public offering has been completed.
(l) The Company will apply the net proceeds from the offering and
sale of the Shares to be sold by the Company in the manner set forth in the
Prospectus under "Use of Proceeds." The Company will not distribute any
offering material in connection with the offering and sale of the Shares other
than any preliminary prospectus, the Prospectus, the Registration Statement or
other material permitted or required by the Act.
(m) During the period of 360 days commencing on the Closing Date,
the Company will not, without your prior written consent, grant options to
purchase shares of Common Stock, except in accordance with the provisions of
the Company's stock option plans as previously approved by the Company's
shareholders and as in effect on the date hereof.
(n) Except pursuant to this Agreement or with the prior written
consent of Cruttenden Xxxx, the Company will not, and the Company has provided
agreements executed by each of the Company's officers and directors and each
shareholder owning 1% or more of the Common Stock of the Company prior to the
Closing Date providing that none of them will, for a period of 180 days from
the date of the Prospectus (the "Lock-up Period"), offer, pledge, sell,
transfer, contract to sell, grant any option for the sale of, or otherwise
dispose of, directly or indirectly, any shares of Common Stock or any security
or other instrument which by its terms is convertible into, exercisable for, or
exchangeable for shares of Common Stock otherwise than with the prior written
consent of Cruttenden Xxxx; provided, however, that the exercise of stock
options or other purchases of Common Stock under stock option plans or other
incentive compensation arrangements for employees or directors as previously
approved by the Company's Board of Directors and as in effect on the date
hereof shall not be prohibited. The Company will not, and each of the foregoing
persons will not, for a period commencing on the last day of the Lock-up Period
and ending 180 days thereafter sell any Common Stock or otherwise engage in a
transaction which is designed to or could reasonably be expected to lead to or
result in a disposition of Common Stock or securities convertible into or
exchangeable for Common Stock, unless such sale or other transaction is
effected through Cruttenden Xxxx (which shall be entitled to charge usual and
customary fees and commissions).
(o) The Company will maintain and keep accurate books and records
reflecting its assets and maintain internal accounting controls which provide
reasonable assurance that: (i) transactions are executed in accordance with
management's authorization; (ii) transactions are recorded as necessary to
permit the preparation of the Company's financial statements and to maintain
accountability for the assets of the Company; (iii) access to the assets of the
Company is permitted only in accordance with management's authorization; and
(iv) the
17
18
recorded accounts of the assets of the Company are compared with existing
assets at reasonable intervals.
(p) If at any time during the 90-day period after the Registration
Statement is declared effective, any rumor, publication or event relating to or
affecting the Company shall occur as a result of which, in your opinion, the
market price for the Shares has been or is likely to be materially affected
(regardless of whether such rumor, publication or event necessitates a
supplement to or amendment of the Prospectus), the Company will, after written
notice from you advising it as to the effect set forth above, consult with you
concerning the necessity of the Company issuing a press release or other public
statement responding to or commenting on such rumor, publication or event.
(q) The Company will supply you with copies of all correspondence to
and from, and all documents issued to and by, the Commission in connection with
the registration of the Shares under the Act.
(r) Prior to the Closing Date (and, if applicable, the Option
Closing Date), and for a period of ninety (90) days thereafter, the Company
will furnish to you, as soon as they have been prepared, copies of any
unaudited interim financial statements of the Company for any periods
subsequent to the periods covered by the financial statements appearing in the
Registration Statement and the Prospectus.
(s) Prior to the Closing Date (and, if applicable, the Option
Closing Date), the Company will not issue any press releases or other
communications directly or indirectly and will hold no press conferences with
respect to the Company, the business, properties, assets, liabilities,
financial condition or results of operations of the Company, or the offering of
the Shares, without your prior consent which shall not be unreasonably
withheld.
(t) The Company will use its best efforts to maintain the listing of
the Shares on the American Stock Exchange.
(u) The Company will maintain a transfer agent and, if necessary
under the jurisdiction of incorporation of the Company, a registrar (which may
be the same entity as the transfer agent) for its Common Stock.
(v) During a period of 180 days from the effective date of the
Registration Statement, the Company will not file a registration statement
registering any shares under any stock option plan or other employee benefit
plan.
(w) The Company will reserve and keep available that maximum number
of its authorized but unissued Common Stock which are issuable upon exercise of
the Underwriter's Warrants outstanding from time to time.
(x) For a period of two (2) years from the date of the Prospectus,
the Company, at its expense, shall cause its regularly engaged independent
certified public accountants to review
18
19
in accordance with SAS 71 (but not audit) the Company's financial statements
for each of the first three (3) fiscal quarters prior to the announcement of
quarterly financial information, the filing of the Company's quarterly report
on Form 10-Q and the mailing of quarterly financial information to its
shareholders.
6. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS.
The respective obligations of the Underwriters to purchase and pay for
the Shares shall be subject to the following conditions:
(a) Notification that the Registration Statement has become
effective shall be received by you not later than 5:30 p.m., Atlanta, Georgia
time, on the date of this Agreement or at such later date and time as shall be
consented to in writing by you and all filings required by Rule 424, Rule 430A,
Rule 434 and Rule 462(b), if applicable, of the Rules and Regulations shall
have been made.
(b) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall be pending or, to the knowledge of the Company, threatened by the
Commission, (ii) no order suspending the effectiveness of the Registration
Statement or the exemption of the Shares under the securities or Blue Sky laws
of any jurisdiction shall be in effect, and no proceeding for such purpose
shall be pending before or threatened or contemplated by the Commission or the
authorities of any such jurisdiction, (iii) any request for additional
information on the part of the staff of the Commission or any such authorities
shall have been complied with to the satisfaction of the staff of the
Commission or such authorities and to the satisfaction of the Underwriters,
(iv) after the date hereof no amendment or supplement to the Registration
Statement or the Prospectus shall have been filed unless a copy thereof was
first submitted to you and you did not object thereto in good faith, (v) the
NASD, upon review of the terms of the public offering of the Shares, shall not
have objected to such offering, such terms or the Underwriters' participation
in the same, and (vi) and you shall have received certificates, dated the
Closing Date and the Option Closing Date, as the case may be, and signed by the
Chief Executive Officer and the Chief Financial Officer of the Company (who
may, as to proceedings threatened, rely upon the best of their information and
belief), to the effect of clauses (i), (ii) and (iii).
(c) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, (i) there shall not have been a
material adverse change, or any development involving a prospective material
adverse change, in the general affairs, business, business prospects,
properties, management, key personnel, condition (financial or otherwise) or
results of operations of the Company, whether or not arising from transactions
in the ordinary course of business, in each case other than as set forth in the
Registration Statement and the Prospectus (or, in the case of a prospective
change, other than as contemplated by the Registration Statement and the
Prospectus) and (ii) the Company shall not have sustained any material loss or
interference with its business or properties from fire, explosion, flood,
hurricane or other casualty or calamity, whether or not covered by insurance,
or from any labor dispute or any court or legislative or other governmental
action, order or decree, which
19
20
is not set forth in the Registration Statement and the Prospectus, if in your
reasonable judgment any such development makes it inadvisable to consummate the
sale and delivery of the Shares by you at the public offering price. Since the
respective dates as of which information is given in the Registration Statement
and the Prospectus, there shall have been no litigation or other proceeding
instituted against the Company or any of its officers or directors in their
capacities as such, before or by any federal, state or local court, commission,
regulatory body, administrative agency or other governmental body, domestic or
foreign, in which litigation or proceeding an unfavorable ruling, decision or
finding would materially and adversely affect the business, properties,
business prospects, condition (financial or otherwise) or results of operations
of the Company.
(d) All corporate proceedings and other legal matters in connection
with this Agreement, the Registration Statement and the Prospectus, and the
registration, authorization, issue, sale and delivery of the Shares, shall have
been reasonably satisfactory to counsel to the Underwriters, and such counsel
shall have been furnished with such papers and information as they may
reasonably have requested to enable them to pass upon the matters referred to
in this Section 6(d).
(e) Each of the representations and warranties of the Company
contained herein shall be true, accurate and correct in all material respects
at the Closing Date and, with respect to the Option Shares, at the Option
Closing Date, as if made at the Closing Date and, with respect to the Option
Shares, at the Option Closing Date, and all covenants and agreements herein
contained to be performed on the part of the Company and all conditions herein
contained to be fulfilled or complied with by the Company at or prior to the
Closing Date and, with respect to the Option Shares, at or prior to the Option
Closing Date, shall have been duly performed, fulfilled or complied with.
(f) The Underwriters shall have received an opinion, dated the
Closing Date and, with respect to the Option Shares, the Option Closing Date,
satisfactory in form and substance to your counsel, from King & Spalding,
counsel to the Company, to the effect that:
(i) The Company has been duly incorporated and is validly
existing under the laws of the State of Georgia. The Company has the
corporate power and corporate authority under such laws to own its
properties and conduct its business as described in the Prospectus.
The Company is qualified to do business as a foreign corporation in
good standing in all other jurisdictions, except where the failure to
so qualify would not have a material adverse effect upon the Company.
(ii) As of the dates specified therein, the Company had
authorized and issued capital stock as set forth under the caption
"Capitalization" in the Prospectus.
(iii) The certificates evidencing the Shares are in due and
proper form. The Shares delivered on such Closing Date have been duly
authorized, validly issued and are fully paid and nonassessable and
conform to the description thereof contained in the Prospectus.
20
21
(iv) The outstanding shares of Common Stock have been duly
authorized and validly issued, are fully paid and nonassessable and
conform to the description thereof contained in the Prospectus; and
the shareholders of the Company have no preemptive or similar rights
with respect to the Shares or the Common Stock. All offers and sales
of the Company's securities since incorporation were at all relevant
times duly registered or exempt from the registration requirements of
the Act and were duly registered or the subject of an exemption from
the registration requirements of applicable state securities or Blue
Sky laws.
(v) The shares of Common Stock of the Company issuable
upon exercise of the Underwriter's Warrants in accordance with the
terms of the Warrant Agreement and at the prices therein provided for,
have been duly authorized and reserved for issuance upon such
exercise, and such shares, when issued upon exercise in accordance
with the terms of the Warrant Agreement and at the price provided for,
will be duly and validly issued, fully paid and nonassessable.
(vi) Other than the Warrant Agreement, there are no
contracts, agreements or understandings known to such counsel between
the Company and any person granting such person the right to require
the Company to file a registration statement under the Act with
respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration
statement filed by the Company under the Act.
(vii) No consent, approval, authorization or order of, or
filing with, any governmental agency or body or any court is required
for the issuance or sale of the Shares or the issuance of the
Underwriter's Warrants or the Common Stock issuable upon exercise of
the Underwriter's Warrants or the consummation of the other
transactions contemplated by this Agreement and the Warrant Agreement,
except such as have been obtained and made under the Act, the Exchange
Act and such as may be required under state securities or Blue Sky
laws.
(viii) The filing of the Registration Statement has been duly
authorized by the Board of Directors of the Company. The execution,
delivery and performance of this Agreement and the Warrant Agreement
and the consummation of the transactions herein and therein
contemplated, including the issuance and sale of the Shares and
compliance with the provisions thereof, will not result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, (A) applicable provisions of federal or state law or
regulation or, to the knowledge of such counsel, order of any federal
or state governmental agency or body or any court having jurisdiction
over the Company or any of its properties, (B) any material
obligation, agreement, covenant or condition contained in any
agreement or instrument to the knowledge of such counsel to which the
Company is a party or by which the Company is bound or to which any of
the properties of the Company is subject, or (C) the Restated Articles
or the Bylaws of
21
22
the Company, and the Company has full power and authority to
authorize, issue and sell the Firm Shares and the Company Option
Shares as contemplated by this Agreement.
(ix) The Registration Statement was declared effective
under the Act as of the date and time specified in such opinion, the
Prospectus either was filed with the Commission pursuant to the
subparagraph of Rule 424(b) specified in such opinion on the date
specified therein or was included in the Registration Statement (as
the case may be), and, to the best of the knowledge of such counsel,
no 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 contemplated under
the Act; the Registration Statement and the Prospectus, and each
amendment or supplement thereto, as of their respective effective or
issue dates, complied as to form in all material respects with the
requirements of the Act and the Rules and Regulations (except that
such counsel need express no opinion as to financial statements,
schedules and other financial or statistical information included
therein); the descriptions in the Registration Statement and
Prospectus of the Restated Articles and Bylaws of the Company and of
federal or Georgia statutes, legal and governmental proceedings and
contracts and other documents are accurate in all material respects
and fairly present in all material respects the information required
to be shown; and such counsel does not know of any statutes or
regulations or any pending or threatened legal or governmental
proceedings, required to be described in the Prospectus which are not
described as required nor of any contracts or documents of a character
required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
which are not described and filed as required; it being understood
that such counsel need express no opinion as to the financial
statements, schedules or other financial or statistical data contained
in the Registration Statement or the Prospectus or as to the section
of the Prospectus entitled "Underwriting."
(x) This Agreement and the Warrant Agreement have been
duly authorized, executed and delivered by the Company and constitute
valid and legally binding obligations of the Company enforceable in
accordance with their terms, except (A) as such enforceability may be
limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance or similar laws now or hereafter in effect relating to
creditors' rights or debtors' obligations generally; (B) that the
remedies of specific performance and injunctive and other forms of
relief are subject to general equitable principles, whether
enforcement is sought at law or in equity, and that such enforcement
may be subject to the discretion of the court before which any
proceedings therefor may be brought; and (C) as rights to indemnity
and contribution may be limited by state or federal laws relating to
securities or the policies underlying such laws.
(xi) To the knowledge of such counsel, the Company holds
all licenses, certificates, permits and approvals from all state,
federal and other regulatory authorities, and has satisfied in all
material respects the requirements imposed by regulatory bodies,
administrative agencies or other governmental bodies, agencies or
22
23
officials, that are required for the Company lawfully to own, lease
and operate its properties and conduct its business as described in
the Prospectus, and, to the knowledge of such counsel, the Company is
conducting its business in compliance in all material respects with
all of the laws, rules and regulations of each jurisdiction in which
it conducts its business.
(xii) The statements made in the Registration Statement
under the captions "Business," "Dividend Policy," "Management,"
"Principal and Selling Shareholders," "Certain Transactions,"
"Capitalization," "Description of Capital Stock," and "Shares Eligible
for Future Sale," to the extent that they constitute summaries of
documents referred to therein or matters of law or legal conclusions,
have been reviewed by such counsel and are accurate summaries and
fairly present the information disclosed therein.
(xiii) The Company is not an "investment company" or a
company "controlled" by an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
Such opinion shall also contain a statement by counsel to the effect
that such counsel has no reason to believe that the Registration Statement, or
any amendment thereto, as of its effective date and at all times subsequent
thereto up to and on the Closing Date and the Option Closing Date (if
applicable), contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading (other than the financial statements,
schedules and other financial or statistical data included in, or required to
be included in the Registration Statement or the Prospectus, as to which such
counsel need express no opinion), or that the Prospectus, or any Amendment or
supplement thereto, as of its issue date and at all times subsequent thereto up
to and on the Closing Date and the Option Closing Date (if applicable),
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (other than the financial statements, schedules and other financial
or statistical data included in, or required to be included in the Registration
Statement or the Prospectus, as to which such counsel need express no opinion).
Counsel rendering the foregoing opinion may rely as to questions of
law not involving the laws of the United States or the State of Georgia upon
opinions of local counsel, and as to questions of fact upon representations or
certificates of officers of the Company or the Selling Shareholders and of
government officials, in which case their opinion is to state that they are so
relying and that they have no knowledge of any material misstatement or
inaccuracy in any such opinion.
(g) The Underwriters shall have received an opinion, dated the
Option Closing Date satisfactory in form and substance to your counsel, from
_________________________, counsel to the Selling Shareholders, to the effect
that:
23
24
(i) This Agreement and the Custody Agreement have been
duly executed and delivered by or on behalf of each of the Selling
Shareholders and constitute valid and binding agreements of such
Selling Shareholders in accordance with their terms, except as
enforceability may be limited by applicable equitable principles or by
bankruptcy, insolvency, moratorium, reorganization or similar laws
from time to time in effect affecting the enforcement of creditors'
rights and except that the enforceability of the rights to indemnity
and contribution contained herein and therein may be limited by
federal or state laws and public policy underlying such laws.
(ii) To the knowledge of such counsel, the sale of the
Shares to be sold by each Selling Shareholder hereunder and the
compliance by such Selling Shareholder with all of the provisions of
this Agreement and the Custody Agreement and the consummation of the
transactions herein and therein contemplated will not conflict with or
result in a material breach or violation of any terms or provisions
of, or constitute a material default under any material indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which such Selling Shareholder is
a party or by which such Selling Shareholder is bound or to which any
of the property or assets of such Selling Shareholder is subject, or
applicable provisions of federal or statutory law or regulation or
order or any federal or state court or governmental agency or body
known to such counsel to be applicable to such Selling Shareholder or
the property of such Selling Shareholder.
(iii) To the knowledge of such counsel, no consent, approval,
authorization or order of any federal or state court or governmental
agency or body is required for the consummation of the transactions
contemplated by this Agreement in connection with the Shares to be
sold by each Selling Shareholder hereunder, except such as have been
obtained under the Act and such as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of such Shares by the Underwriters, as to which such
counsel need express no opinion.
(iv) Assuming that the Underwriters will take delivery of
the Shares for value in good faith and without notice of any adverse
claim and that the Underwriters are not parties themselves to any
fraud or illegality affecting the Shares, and by delivery of a
certificate or certificates therefor, the Selling Shareholders will
transfer to the Underwriters good and marketable title to such shares,
free and clear of any pledge, lien, security interest, charge, claim,
equity or encumbrance of any kind.
In rendering such opinion, such counsel may rely as to matters of
fact, to the extent counsel deems proper, on certificates of the Selling
Shareholders and the representations and warranties contained herein and in the
Custody Agreement executed by such Selling Shareholder. Such counsel also may
rely as to matters of fact, to the extent deemed proper, on certificates of
responsible officers of the Company and public officials.
(h) You shall have received an opinion, dated the Closing Date
and, if applicable, the Option Closing Date, from Xxxxxx Xxxxxxx Xxxxx &
Xxxxxxxxxxx, L.L.P., as your counsel,
24
25
with respect to the Registration Statement, the Prospectus and this Agreement,
which opinion shall be satisfactory in all respects to you, and the Company
shall have furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
(i) You shall have received at or prior to the Closing Date from
Xxxxxx Xxxxxxx Xxxxx & Scarborough, L.L.P. a memorandum or memoranda, in form
and substance satisfactory to you, with respect to the exemption for offering
and sale by the Underwriters of the Shares under state securities or Blue Sky
laws of such jurisdictions as the Underwriters may have designated to the
Company.
(j) The Underwriters shall have received from the Accountants a
letter dated the date hereof, and at the Closing Date a second letter dated the
Closing Date (and, if applicable, the Option Closing Date), in form and
substance satisfactory to the Underwriters stating that they are independent
auditors with respect to the Company within the meaning of the Act and the
applicable Rules and Regulations, and the answer to Item 509 of Regulation S-K
set forth in the Registration Statement is correct insofar as it relates to
them, and stating that:
(i) In their opinion, the financial statements and
schedules examined by them and included in the Registration Statement
or Prospectus comply as to form in all material respects with the
applicable accounting requirements of the Act and the Rules and
Regulations and are presented in accordance with generally accepted
accounting principles; and they have made a review in accordance with
standards established by the American Institute of Certified Public
Accountants of the interim financial statements, selected financial
and operating data, and/or condensed financial statements derived from
audited financial statements of the Company.
(ii) The financial information included in the Preliminary
Prospectus and the Prospectus under the captions "Prospectus Summary,"
"Summary Financial and Operating Data" and "Selected Financial Data"
for each of the periods reflected therein agrees with the
corresponding amounts in the audited financial statements included in
the Prospectus or previously reported on by them.
(iii) On the basis of a reading of the latest available
interim financial statements (unaudited) of the Company, a reading of
the minute books of the Company, inquiries of officials of the Company
responsible for financial and accounting matters and other specified
procedures, all of which have been agreed to by the Underwriters,
nothing came to their attention that caused them to believe that:
a. the unaudited financial statements included in
the Registration Statement do not comply as to form in all
material respects with the accounting requirements of the
federal securities laws and the related published rules and
regulations thereunder or are not in conformity with
generally accepted accounting principles applied on a basis
consistent with the basis for the audited financial
statements contained in the Registration Statement;
25
26
b. any other unaudited financial statement data
included in the Prospectus do not agree with the
corresponding items in the unaudited financial statements
from which data was derived and any such unaudited data were
not determined on a basis consistent with the basis for the
corresponding amounts in the audited financial statements
included in the Prospectus;
c. at a specified date not more than five days prior
to the date of delivery of such respective letter, there was
any change in the capital stock, decline in shareholders'
equity or increase in long-term debt of the Company, or any
decreases in working capital, net current assets or net
assets or other items specified by the Underwriters, in each
case as compared with amounts shown in the latest balance
sheets included in the Prospectus, except in each case for
changes, decreases or increases which the Prospectus
discloses have occurred or may occur or which are described
in such letters; and
d. for the period from the closing date of the
latest statements of operations included in the Prospectus to
a specified date not more than five days prior to the date of
delivery of such respective letter, there were any decreases
in net revenues or net income of the Company, or other items
appearing on the face of the statement of operations
specified by the Underwriters, or any increases in any items
appearing on the face of the statement of operations
specified by the Underwriters, in each case as compared with
the corresponding period of the preceding year, except in
each case for decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter.
(iv) They have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages
and financial information specified by you which are derived from the
general accounting records of the Company, which appear in the
Prospectus and have compared such amounts, percentages and financial
information with the accounting records of the Company and have found
them to be in agreement.
In the event that the letters to be delivered referred to above set
forth any such changes, decreases or increases, it shall be a further condition
to the obligations of the Underwriters that the Underwriters shall have
reasonably determined, after discussions with officers of the Company
responsible for financial and accounting matters and with the Accountants, that
such changes, decreases or increases as are set forth in such letters do not
reflect a material adverse change in the shareholders' equity or long-term debt
of the Company as compared with the amounts shown in the latest balance sheet
of the Company included in the Prospectus, or a material adverse change in
total net revenues or net income of the Company, in each case as compared with
the corresponding period of the prior year.
26
27
(k) At the Closing Date and, as to the Option Shares, the Option
Closing Date, there shall be furnished to you a certificate, dated the date of
its delivery, signed by each of the Chief Executive Officer and Chief Financial
Officer of the Company, in form and substance satisfactory to you, to the
effect that:
(i) Each of the representations and warranties of the
Company contained in Section 3 of this Agreement were, when originally
made, and are, at the time such certificate is delivered, true and
correct in all material respects;
(ii) Each of the covenants required herein to be performed
by the Company on or prior to the delivery of such certificate has
been duly, timely and fully performed, and each condition herein
required to be complied with by the Company on or prior to the date of
such certificate has been duly, timely and fully complied with in all
material respects.
(l) On or prior to the Closing Date, you shall have received the
executed agreements referred to in Section 5(n).
(m) The Shares shall be exempt for offer and sale in such states as
you may reasonably request, each such exemption shall be in effect and not
subject to any stop order or other proceeding on the Closing Date or the Option
Closing Date.
(n) The Shares shall be listed on the American Stock Exchange, upon
official notice of issuance with respect to the Firm Shares and the Company
Option Shares.
(o) No Underwriter shall have advised the Company that the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendment or any supplement thereto, contains an untrue statement of fact
which, in your reasonable judgment, is material, or omits to state a fact
which, in your reasonable judgment, is material and is 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 the Company shall
not have cured such untrue statement of fact or stated a statement of fact
required to be stated therein.
(p) The Company shall have furnished to you such certificates, in
addition to those specifically mentioned herein, as you may have reasonably
requested as to the accuracy and completeness at the Closing Date and the
Option Closing Date of any statement in the Registration Statement or the
Prospectus, as to the accuracy at the Closing Date and the Option Closing Date
of the representations and warranties of the Company herein, as to the
performance by the Company of its obligations hereunder, or as to the
fulfillment of the conditions concurrent and precedent to your obligations
hereunder.
(q) The Selling Shareholders or the Attorney-in-Fact shall deliver
to the Underwriters a certificate dated the Option Closing Date, if any, and
executed by each Selling Shareholder or the Attorney-in-Fact to the effect that
the representations and warranties of the
27
28
Selling Shareholders shall be true and correct in all material respects as of
the Option Closing Date.
(r) The Company shall execute and deliver to Cruttenden Xxxx
Incorporated and its designees the Underwriter's Warrants for an initial
exercise price of $_____ per share. The Underwriter's Warrants will be
substantially in the form as filed as an exhibit to the Registration Statement.
All such opinions, certificates, letters and documents will be in
compliance with the provisions of this Agreement only if they are reasonably
satisfactory to you and counsel for the Underwriters. The Company will furnish
you with such conformed copies of such opinions, certificates, letters and
documents as you may request.
If any of the conditions specified in this Section 6 shall not have
been satisfied at or prior to the Closing Date (and, if applicable, the Option
Closing Date) or waived by you in writing, this Agreement may be terminated by
you pursuant to Section 8 hereof.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company will indemnify and hold harmless each Underwriter
(including, without limitation, in its capacity as an Underwriter or as a
"qualified independent underwriter" within the meaning of Rule 2700 of the
NASD), the directors, officers, employees and agents of each Underwriter and
each person, if any, who controls each Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, from and against any
and all losses, claims, liabilities, expenses and damages (including any and
all investigative, legal and other expenses reasonably incurred in connection
with, and any amount paid in settlement of, any action, suit or proceeding or
any claim asserted), to which they, or any of them, may become subject under
the Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims,
liabilities, expenses or damages arise out of or are based in whole or in part
upon (i) any inaccuracy in the representations and warranties of the Company
contained herein, (ii) any failure of the Company to perform its obligations
hereunder or under law or (iii) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus, the
Registration Statement or the Prospectus or any amendment or supplement to the
Registration Statement or the Prospectus or in any documents filed under the
Exchange Act, or the omission or alleged omission to state in such document a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the foregoing indemnity
agreement with respect to any preliminary prospectus or the Prospectus shall
not inure to the benefit of any Underwriter from whom the person asserting any
such losses, claims, damages or liabilities purchased Shares, or any person
controlling such Underwriter, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Underwriter to such
person, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the Shares to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to
28
29
such loss, claim, damage or liability; and further provided, that the Company
will not be liable to the extent that such loss, claim, liability, expense or
damage arises from the sale of the Shares in the public offering to any person
by an Underwriter and is based on an untrue statement or omission or alleged
untrue statement or omission made in reliance on and in conformity with
information relating to an Underwriter furnished in writing to the Company by
an Underwriter expressly for inclusion in the Registration Statement, any
preliminary prospectus or the Prospectus. The Company acknowledges that the
information in the last paragraph on the cover page, the paragraphs relating to
stabilization and passive market making practices on the inside front cover and
the statements set forth under the heading "Underwriting" in any preliminary
prospectus and the Prospectus constitute the only information relating to any
Underwriter furnished in writing to the Company by you expressly for inclusion
in the Registration Statement, any preliminary prospectus or the Prospectus.
This indemnity agreement will be in addition to any liability that the Company
might otherwise have.
(b) Each Selling Shareholder agrees, severally and not jointly, to
indemnify and hold harmless each Underwriter (including, without limitation, in
its capacity as an Underwriter or as a "qualified independent underwriter"
within the meaning of Rule 2700 of the NASD), and each person, if any, who
controls any Underwriter within the meaning of either Section 15 of the Act or
Section 20 of the Exchange Act, and the Company, its directors, its officers
who sign the Registration Statement and each person, if any who controls the
Company within the meaning of either such Section, provided, however, that the
indemnification obligation of each Selling Shareholder shall be limited to the
net proceeds received by such Selling Shareholder with respect to the Shares
sold, from and against any and all losses, claims, damages and liabilities
caused by any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendment or supplement
thereto) or any preliminary prospectus, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only with
reference to information relating to such Selling Shareholder furnished in
writing by or on behalf of such Selling Shareholder expressly for use in the
Registration Statement or the Prospectus or in any preliminary prospectus;
provided, however, that the foregoing indemnity agreement shall be effective
only if Selling Shareholder Option Shares are sold pursuant to this Agreement;
further provided, that the foregoing indemnity agreement with respect to any
preliminary prospectus or the Prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages or
liabilities purchased Shares, or any person controlling such Underwriter, if a
copy of the Prospectus (as then amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) was not sent or given by
or on behalf of such Underwriter to such person, if required by law so to have
been delivered, at or prior to the written confirmation of the sale of the
Shares to such person, and if the Prospectus (as so amended or supplemented)
would have cured the defect giving rise to such loss, claim, damage or
liability; and further provided, that the Selling Shareholders will not be
liable to the extent that such loss, claim, liability, expense or damage arises
from the sale of the Shares in the public offering to any person by an
Underwriter and is based on an untrue statement or omission or
29
30
alleged untrue statement or omission made in reliance on and in conformity with
information relating to an Underwriter furnished in writing to the Company by
an Underwriter expressly for inclusion in the Registration Statement, any
preliminary prospectus or the Prospectus. The Selling Shareholders acknowledge
that the information in the last paragraph on the cover page, the paragraphs
relating to stabilization and passive market making practices on the inside
front cover and the statements set forth under the heading "Underwriting" in
any preliminary prospectus and the Prospectus constitute the only information
relating to any Underwriter furnished in writing to the Company by you
expressly for inclusion in the Registration Statement, any preliminary
prospectus or the Prospectus. This indemnity agreement will be in addition to
any liability that each Selling Shareholder might otherwise have.
(c) Each Underwriter will indemnify and hold harmless the Company,
each Selling Shareholder, each person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act, each
director of the Company and each officer of the Company who signs the
Registration Statement to the same extent as the foregoing indemnity from the
Company to the Underwriters, but only insofar as losses, claims, liabilities,
expenses or damages arise out of or are based on any untrue statement or
omission or alleged untrue statement or omission made in reliance on and in
conformity with information relating to you furnished in writing to the Company
by you expressly for use in the Registration Statement, any preliminary
prospectus or the Prospectus; provided, however, that such indemnity shall not
be applicable to any Selling Shareholder if no Selling Shareholder Option
Shares are sold pursuant to this Agreement. The Company acknowledges that the
information set forth in the last paragraph on the cover page, the paragraphs
relating to stabilization and passive market making practices on the inside
front cover and the statements set forth under the heading "Underwriting" in
any preliminary prospectus and the Prospectus constitute the only information
relating to the Underwriters furnished in writing to the Company by the
Underwriters expressly for inclusion in the Registration Statement, any
preliminary prospectus or the Prospectus. This indemnity will be in addition to
any liability that the Underwriters might otherwise have.
(d) Any party that proposes to assert the right to be indemnified
under this Section 7 will, promptly after receipt of notice of commencement of
any action against such party in respect of which a claim is to be made against
an indemnifying party or parties under this Section 7, notify each such
indemnifying party of the commencement of such action, enclosing a copy of all
papers served, but the omission so to notify such indemnifying party will not
relieve it from any liability that it may have to any indemnified party under
the foregoing provisions of this Section 7 unless, and only to the extent that,
such omission results in the forfeiture of substantive rights or defenses by
the indemnifying party. If any such action is brought against any indemnified
party and it notifies the indemnifying party of its commencement, the
indemnifying party will be entitled to participate in and, to the extent that
it elects by delivering written notice to the indemnified party promptly after
receiving notice of the commencement of the action from the indemnified party,
jointly with any other indemnifying party similarly notified, to assume the
defense of the action, with counsel reasonably satisfactory to the indemnified
party, and after notice from the indemnifying party to the indemnified party of
its election to assume the defense, the indemnifying party will not be liable
to the indemnified party for any legal or other expenses except as provided
below and
30
31
except for the reasonable costs of investigation subsequently incurred by the
indemnified party in connection with the defense. The indemnified party will
have the right to employ its own counsel in any such action, but the fees,
expenses and other charges of such counsel will be at the expense of such
indemnified party unless (i) the employment of counsel by the indemnified party
has been authorized in writing by the indemnifying party, (ii) the named
parties to any such action (including any impleaded parties) include both the
indemnified party and the indemnifying party, and the indemnified party shall
have been advised by such counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to
the indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party),
or (iii) the indemnifying party has not in fact employed counsel to assume the
defense of such action within a reasonable time after receiving notice of the
commencement of the action, in each of which cases the reasonable fees,
disbursements and other charges of counsel will be at the expense of the
indemnifying party or parties. It is understood that the indemnifying party or
parties shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonable fees, disbursements and
other charges of more than one separate firm admitted to practice in such
jurisdiction at any one time for all such indemnified party or parties. All
such fees, disbursements and other charges will be reimbursed by the
indemnifying party promptly as they are incurred. An indemnifying party will
not be liable for any settlement of any action or claim effected without its
written consent (which consent will not be unreasonably withheld).
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 7 is applicable in accordance with its terms but for
any reason is held to be unavailable from the Company, the Underwriters or the
Selling Shareholders, then the Company, the Underwriters and the Selling
Shareholders will contribute to the total losses, claims, liabilities, expenses
and damages (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted, but after deducting any contribution
received by the Company from persons other than the Underwriters and the
Selling Shareholders, such as persons who control the Company within the
meaning of the Act, officers of the Company who signed the Registration
Statement and directors of the Company, who may be liable for contribution) to
which the Company, the Underwriters and the Selling Shareholders may be subject
in such proportion as shall be appropriate to reflect the relative benefits
received by the Company, the Underwriters and the Selling Shareholders. The
relative benefits received by the Company on the one hand and the Underwriters
on the other hand shall be deemed to be in the same respective proportions as
the total net proceeds from the offering (before deducting expenses) received
by the Company bears to the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover page of the Prospectus. The relative benefits received by the Selling
Shareholders shall be deemed to be in proportion to the net proceeds to be
received by them in the offering, as set forth in the table on the cover page
of the Prospectus. If, but only if, the allocation provided by the foregoing
sentences is not permitted by applicable law, the allocation of contribution
shall be made in such proportion as is appropriate to reflect not only the
relative benefits referred to in the foregoing sentences but
31
32
also the relative fault of the Company, the Underwriters and the Selling
Shareholders with respect to the statements or omissions which resulted in such
loss, claim, liability, expense or damage, or action in respect thereof, as
well as any other relevant equitable considerations with respect to such
offering. Such relative fault shall be determined by reference to whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the
Company, the Underwriters or the Selling Shareholders, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company, the Underwriters
and the Selling Shareholders agree that it would not be just and equitable if
contributions pursuant to this Section 7(d) were to be determined by pro rata
or per capita allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation which does not take into
account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, liability,
expense or damage, or action in respect thereof, referred to above in this
Section 7(d) shall be deemed to include, for purpose of this Section 7(d), 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 Section 7(d), an Underwriter shall not
be required to contribute any amount in excess of the underwriting discounts
received by it (less the aggregate amount of any damages which such Underwriter
and its controlling persons have otherwise been required to pay in respect of
the same or any similar claim), no Selling Shareholder shall be required to
contribute any amount in excess of the net proceeds received by such Selling
Shareholder (less the amount such Selling Shareholder has otherwise been
required to pay in respect of the same or any similar claim) and no person
found guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) will be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute as provided in this Section 7(d) are several in proportion to their
respective underwriting obligations and not joint. For purposes of this Section
7(d), any person who controls a party to this Agreement within the meaning of
the Act will have the same rights to contribution as that party, and each
officer and director of the Company who signed the Registration Statement will
have the same rights to contribution as the Company, subject in each case to
the provisions hereof. Any party entitled to contribution, promptly after
receipt of notice of commencement of any action against such party in respect
of which a claim for contribution maybe made under this Section 7(d), will
notify any such party or parties from whom contribution may be sought, but the
omission to notify will not relieve the party or parties from whom contribution
may be sought from any other obligation it or they may have under this Section
7(d). No party will be liable for contribution with respect to any action or
claim settled without its written consent (which consent will not be
unreasonably withheld).
(f) The indemnity and contribution agreements contained in this
Section 7 and the representations and warranties of the Company and the Selling
Shareholders contained in this Agreement shall remain operative and in full
force and effect regardless of (i) any investigation made by the Underwriters
or on their behalf, (ii) acceptance of any of the Shares and payment therefor
or (iii) any termination of this Agreement.
32
33
(g) The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof including, without limitation, the
provisions of this Section 7, and are fully informed regarding said provisions.
They further acknowledge that the provisions of this Section 7 fairly allocate
the risks in light of the ability of the parties to investigate the Company and
its business in order to assure that adequate disclosure is made in the
Registration Statement and Prospectus as required by the Act and the Exchange
Act.
8. TERMINATION.
The Underwriters' obligations under this Agreement may be terminated
at any time on or prior to the Closing Date (or, with respect to the Option
Shares, on or prior to the Option Closing Date), by notice to the Company from
the Underwriters, without liability on the part of any of the Underwriters to
the Company (provided, however, that this Section 8 and Sections 5(i), 5(j) and
7 shall be and always remain effective), if, prior to delivery and payment for
the Shares (or the Option Shares, as the case may be), in your reasonable
judgment, (i) the Company shall have failed, refused or been unable to perform
any agreement on its part to be performed, or because of such condition the
Underwriters' obligations hereunder required to be fulfilled are not fulfilled,
including, but not limited to, any change in the business, properties, business
prospects, condition (financial or otherwise) or results of operations of the
Company from that set forth in the Registration Statement or Prospectus which,
in your reasonable judgment, is material and adverse; (ii) any condition
specified in Section 6 of this Agreement shall not have been satisfied; (iii)
trading in any of the equity securities of the Company shall have been
suspended by the Commission, by an exchange that lists the Shares or by the
Nasdaq National Market; (iv) trading in securities generally on the New York
Stock Exchange, the American Stock Exchange or the Nasdaq National Market shall
have been suspended or limited or minimum or maximum prices shall have been
generally established on such exchange, or additional material governmental
restrictions, not in force on the date of this Agreement, shall have been
imposed upon trading in securities generally by such exchange or by order of
the Commission or any court of other governmental authority; (v) a general
banking moratorium shall have been declared by either federal or state
authorities; or (vi) any material adverse change in the financial or securities
markets in the United States or in political, financial or economic conditions
in the United States or any outbreak or material escalation of hostilities or
declaration by the United States of a national emergency or war or other
calamity, crisis, act of God or hostile act against the United States shall
have occurred the effect of any of which is such as to make it, in your
reasonable judgment, impracticable or inadvisable to market the Shares on the
terms and in the manner contemplated by the Prospectus.
9. SUBSTITUTION OF UNDERWRITERS.
If any Underwriter shall fail or refuse to purchase any of the Shares
which it has agreed to purchase hereunder, and the aggregate number of Shares
which such defaulting Underwriter agreed but failed or refused to purchase is
not more than one-tenth of the aggregate number of Shares, the other
Underwriters shall be obligated, severally, to purchase the Shares that such
33
34
defaulting Underwriter agreed but failed or refused to purchase, in the
proportions which the number of Shares which they have respectively agreed to
purchase pursuant to Section 1 bears to the aggregate number of Shares which
all such non-defaulting Underwriters have so agreed to purchase, or in such
other proportions as you may specify; provided, that in no event shall the
maximum number of Shares which an Underwriter has been obligated to purchase
pursuant to Section 1 be increased pursuant to this Section 9 by more than
one-ninth of such number of Shares without the prior written consent of such
Underwriter. If an Underwriter shall fail or refuse to purchase any Shares and
the aggregate number of Shares which such defaulting Underwriter agreed but
failed or refused to purchase exceeds one-tenth of the aggregate number of the
Shares and arrangements satisfactory to the non-defaulting Underwriters or the
Company for the purchase of such Shares are not made within 48 hours after such
default, this Agreement will terminate without liability on the part of any
non-defaulting Underwriter or the Company for the purchase or sale of any
Shares under this Agreement. In any such case the Underwriters, the Company or
the Selling Shareholders shall have the right to postpone the Closing Date or
Option Closing Date, but in no event for longer than seven days, in order that
the required changes, if any, in the Registration Statement and in the
Prospectus or in any other documents or arrangements may be effected. Any
action taken pursuant to this Section 9 shall not relieve any defaulting
Underwriter from liability in respect to any default of such Underwriter under
this Agreement.
10. DEFAULT BY A SELLING SHAREHOLDER.
If any of the Selling Shareholders shall fail to sell and deliver the
number of Selling Shareholder Option Shares that such Selling Shareholder is
obligated to sell, the Underwriters may, at their option, by notice to the
Company, either (a) require the Company to sell and deliver such number of
shares of Common Stock as to which the Selling Shareholders have defaulted, (b)
elect to purchase the Firm Shares and the Option Shares that the Company and
the non-defaulting Selling Shareholders have agreed to sell pursuant to this
Agreement or (c) terminate this Agreement if the Company shall have refused to
sell and deliver to the Underwriters the shares of Common Stock referred to in
clause (a) of this Section 10.
In the event of a default under this Section 10 that does not result
in the termination of this Agreement, either the Underwriters or the Company
shall have the right to postpone the Closing Date for a period not exceeding
seven days in order to effect any required changes in the Registration
Statement or Prospectus or in any other documents or arrangements. No action
taken pursuant to this Section 10 shall relieve the Company or the Selling
Shareholder so defaulting from liability, if any, in respect of such default.
11. MISCELLANEOUS.
All communications hereunder shall be in writing and, if sent to any
of the Underwriters, shall be mailed, first class postage prepaid, sent via
reliable overnight delivery service, sent by facsimile (and by one of the two
preceding methods), delivered by hand or telegraphed and confirmed in writing
to the Underwriters in care of Cruttenden Xxxx Incorporated, 00 Xxxxxxxxx
Xxxxx, Xxxxxxx Xxxxx, XX 00000 Attention: Xxxxxx Xxxxxxx, or if
34
35
sent to the Company shall be sent by one of the foregoing methods to the
Company at The Plastic Surgery Company, 000 Xxxx Xxxxxxx Xxxxxx, Xxxxx X, Xxxxx
Xxxxxxx, XX 00000, Attention: Xxxxxx X. Xxxxxx.
This Agreement has been and is made solely for the several
Underwriters' and the Company's and the Selling Shareholders' benefits and of
the controlling persons, directors and officers referred to in Section 7, and
their respective heirs, executors, administrators, successors and assigns, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" as used in this Agreement shall
not include a purchaser, as such purchaser, of Shares from an Underwriter.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Georgia.
This Agreement may be signed in two or more counterparts with the same
effect as if the signatures thereto and hereto were upon the same instrument.
In case any provision in this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
THE COMPANY, EACH SELLING SHAREHOLDER AND YOU EACH HEREBY IRREVOCABLY
WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED
UPON OR ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
You hereby represent and warrant to the Company and each Selling
Shareholder that you have authority to act hereunder on behalf of the several
Underwriters, and any action hereunder taken by you will be binding upon all
the Underwriters.
35
36
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Selling Shareholders and you.
Very truly yours,
THE PLASTIC SURGERY COMPANY
By:
Name:
Title:
SELLING SHAREHOLDERS:
By:
_____________________________________________
________________________, as Attorney-in-Fact
for each of the Selling Shareholders
identified on Schedule II
Confirmed and accepted as of the
date first above written.
CRUTTENDEN XXXX INCORPORATED
By:
---------------------------
Name:
Title:
36
37
SCHEDULE I
UNDERWRITERS
NUMBER OF
NAME OF UNDERWRITER FIRM SHARES
------------------- -----------
TOTAL
37
38
SCHEDULE II
SELLING SHAREHOLDERS
FOR OPTION SHARES
Number of
Option
Name of Selling Shareholder Shares
--------------------------- ------
TOTAL
38
