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EXHIBIT 1.1
1,500,000 SHARES OF COMMON STOCK
SOUTHEAST COMMERCE HOLDING COMPANY
UNDERWRITING AGREEMENT
_____________, 1998
Banc Stock Financial Services, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxx, Xxxx 00000
Southeast Commerce Holding Company, a Georgia corporation (the
"Company"), on the basis of the representations, warranties, covenants and
conditions contained herein, hereby confirms the agreement made with respect to
the retention of Banc Stock Financial Services, Inc. (the "Underwriter") as the
exclusive agent of the Company to publicly offer and sell, pursuant to the terms
of this Underwriting Agreement (the "Agreement"), an aggregate of 1,500,000
Shares of Common Stock, $.01 par value per share (the "Shares") on a "550,000
Shares all or none minimum, 1,500,000 Shares maximum, best efforts" basis. If a
minimum of 550,000 Shares are sold during the offering period, the remaining
950,000 Shares will be offered on a "best efforts" basis until (1) all of the
Shares are sold; (2) the offering period expires (as defined below); or (3) the
offering is terminated by agreement between the Company and the Underwriter,
whichever first occurs.
The Company confirms the agreements made by it with respect to
the sale of the Shares by the Company as follows:
I. Representations and Warranties of the Company.
The Company represents and warrants to, and agrees with you,
the Underwriter as of the date hereof, the Effective Date (as hereafter defined)
and the Closing Date (as hereafter defined) that:
(a) A registration statement (File No. 33-41545) on Form SB-2
relating to the public offering of the Shares, including a preliminary form of
the prospectus, copies of which have heretofore been delivered to you, has been
prepared by the Company in conformity with the requirements of the Securities
Act of 1933, as amended (the "Act"), and the rules and regulations (the "Rules
and Regulations") of the Securities and Exchange Commission (the "Commission")
thereunder, and has been filed with the Commission under the Act. The Company
has prepared in the same manner and proposes to file, prior to the effective
date of such registration statement (the "Effective Date"), an additional
amendment or amendments to such registration statement, including a final form
of Prospectus, copies of which shall be delivered to you. "Preliminary
Prospectus" shall mean each prospectus filed pursuant to Rule 430 of the Rules
and Regulations. The registration statement (including all financial schedules
and exhibits) as amended at the time it becomes effective and the final
prospectus included therein are respectively referred to as the "Registration
Statement" and the "Prospectus," except that (i) if the prospectus first filed
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by the Company pursuant to Rule 424(b) of the Rules and Regulations shall differ
from said prospectus as then amended, the term "Prospectus" shall mean the
prospectus first filed pursuant to Rule 424(b), and (ii) if such registration
statement or prospectus is amended or such prospectus is supplemented, after the
effective date of such registration statement and prior to the Closing Date (as
hereinafter defined), the terms "Registration Statement" and "Prospectus" shall
include such registration statement and prospectus as so amended, and the term
"Prospectus" shall include the prospectus as so supplemented, or both, as the
case may be.
(b) At the time the Registration Statement becomes effective
and at all times subsequent thereto up to the Closing Date (i) the Registration
Statement and Prospectus will in all respects conform to the requirements of the
Act and the Rules and Regulations; and (ii) neither the Registration Statement
nor the Prospectus will include any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
statements therein not misleading; provided, however, that the Company makes no
representations, warranties or agreement as to information contained in or
omitted from the Registration Statement or Prospectus in reliance upon, and in
conformity with, written information furnished to the Company by or on behalf of
the Underwriter specifically for use in the preparation thereof. It is
understood that the statements set forth in the Prospectus under the heading
"Underwriting" and the identity of counsel to the Underwriter under the heading
"Legal Matters" constitute the only information furnished in writing by or on
behalf of the Underwriter for inclusion in the Registration Statement and
Prospectus, as the case may be.
(c) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation, with full power and authority (corporate and other) to own
its properties and conduct its business as described in the Prospectus and is
duly qualified to do business as a foreign corporation and is in good standing
in all other jurisdictions in which the nature of its business or the character
or location of its properties requires such qualifications, except where failure
to so qualify will not materially affect the Company's business, properties or
financial condition.
(d) The authorized, issued and outstanding capital stock of
the Company as of the date of the Prospectus is as set forth in the Prospectus
under "Capitalization"; the shares of issued and outstanding capital stock of
the Company set forth thereunder have been, or will be when issued as set forth
in the Prospectus, duly authorized, validly issued and fully paid and
non-assessable; except as set forth in the Prospectus, no options, warrants or
other rights to purchase, agreements or other obligations to issue, or
agreements or other rights to convert any obligation into, any shares of capital
stock of the Company have been granted or entered into by the Company; and the
Common Stock conforms to all statements relating thereto contained in the
Registration Statement and Prospectus.
(e) The Shares are duly authorized, and when issued and
delivered pursuant to this Agreement, will be duly authorized, validly issued,
fully paid and non-assessable and free of preemptive rights of any security
holder of the Company. Neither the filing of the Registration Statement nor the
offering or sale of the Shares as contemplated in this Agreement gives rise to
any rights, other than those which have been waived or satisfied, for or
relating to the registration of any shares of Common Stock, except as described
in the Registration Statement.
(f) This Agreement and the Escrow Agreement referred to in
Section 2(c) of this Agreement have been duly and validly authorized, executed
and delivered by the Company, and assuming due execution of this Agreement by
the Underwriter, constitute valid and binding obligations of the
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Company enforceable against the Company in accordance with their terms, except
as enforceability may be limited by bankruptcy, insolvency or other laws
affecting the rights of creditors generally. The Company has full power and
lawful authority to authorize, issue and sell the Shares to be sold by it
hereunder on the terms and conditions set forth herein, and no consent,
approval, authorization or other order of any governmental authority is required
in connection with such authorization, execution and delivery or with the
authorization, issue and sale of the Shares, except such as may be required
under the Act or state securities laws.
(g) Except as described in the Prospectus, the Company is not
in material violation, breach of or default under, and consummation of the
transactions herein contemplated and the fulfillment of the terms of this
Agreement will not conflict with, or result in a breach of, any of the terms or
provision of, or constitute a material default under, or result in the creation
or imposition of any lien, charge or encumbrance upon any of the property or
assets of the Company pursuant to the terms of any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company is a
party or by which the Company may be bound or to which any of the property or
assets of the Company is subject, nor will such action result in any material
violation of the provisions of the articles of incorporation or by-laws of the
Company, as amended, or any statute or any order, rule or regulation applicable
to the Company of any court or of any regulatory authority or other governmental
body having jurisdiction over the Company.
(h) Subject to the qualifications stated in the Prospectus,
the Company has good and marketable title to all properties and assets described
in the Prospectus as owned by it, free and clear of all liens, charges,
encumbrances or restrictions, except such as are not materially significant or
important in relation to its business; all of the material leases and subleases
under which the Company is the lessor or sublessor of properties or assets or
under which the Company holds properties or assets as lessee or sublessee as
described in the Prospectus are in full force and effect, and, except as
described in the Prospectus, the Company is not in default in any material
respect with respect to any of the terms or provisions of any of such leases or
subleases, and no claim has been asserted by anyone adverse to rights of the
Company as lessor, sublessor, lessee, or sublessee under any of the leases or
subleases mentioned above, or affecting or questioning the right of the Company
to continued possession of the leased or subleased premises or assets under any
such lease or sublease except as described or referred to in the Prospectus; and
the Company owns or leases all such properties described in the Prospectus as
are necessary to its operations as now conducted and, except as otherwise stated
in the Prospectus, as proposed to be conducted as set forth in the Prospectus.
(i) Xxxxxxx & Xxxxxx, P.A., who have given their reports on
certain financial statements filed and to be filed with the Commission as part
of the Registration Statement, and which are included in the Prospectus, are
with respect to the Company, independent public accountants as required by the
Act and the Rules and Regulations.
(j) The financial statements and schedules, together with
related notes, set forth in the Prospectus and the Registration Statement
present fairly the financial position and results of operations and changes in
financial position of the Company on the basis stated in the Registration
Statement, at the respective dates and for the respective periods to which they
apply. Said statements and related notes and schedules have been prepared in
compliance with Regulation S-X under the Securities Exchange Act of 1934, as
amended (the "1934 Act") and in accordance with generally accepted accounting
principles
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applied on a basis which is consistent during the periods involved.
(k) Subsequent to the respective dates as of which information
is set forth in the Registration Statement and the Prospectus and to and
including the Closing Date, except as set forth in or contemplated by the
Registration Statement and the Prospectus: (i) the Company has not incurred and
will not have incurred any material liabilities or obligations, direct or
contingent, and has not entered into and will not have entered into any material
transactions other than as contemplated in the Registration Statement and the
Prospectus; (ii) the Company has not and will not have paid or declared any
dividends or have made any other distribution on its capital stock; and (iii)
there has not been and will not have been any material adverse change in the
business, financial condition or results of operations of the Company, or in the
book value of the assets of the Company, arising for any reason whatsoever.
(l) Except as set forth in the Prospectus, there is not now
pending or, to the knowledge of the Company, threatened, any action, suit or
proceeding to which the Company is a party before or by any court or
governmental agency or body, which might result in any material adverse change
in the condition (financial or other), business prospects, net worth, or
properties of the Company, nor are there any actions, suits or proceedings
related to environmental matters or related to discrimination on the basis of
age, sex, religion, or race; and no labor disputes involving the employees of
the Company exist or are imminent which might be expected to adversely affect
the conduct of the business, property or operations or the financial condition
or earnings of the Company.
(m) Except as disclosed in the Prospectus, the Company has
filed all necessary federal, state and foreign income and franchise tax returns
and has paid all taxes shown as due thereon; and there is no tax deficiency
which has been or to the knowledge of the Company might be asserted against the
Company that has not been provided for in the financial statements.
(n) The Company has sufficient licenses, permits and other
governmental authorizations currently required for the conduct of its business
or the ownership of its property as described in the Prospectus and is in all
material respects complying therewith and owns or possesses adequate right to
use all material patents, patent applications trademarks, service marks,
trade-names, trademark registrations, service xxxx registrations, copyrights,
and licenses necessary for the conduct of such business and has not received any
notice of conflict with the asserted rights of others in respect thereof. To the
best knowledge of the Company, none of the activities of business of the Company
are in violation of, or cause the Company to violate, any law, rule, regulation
or order of the United States, any state, county or locality, or of any agency
or body of the United States or of any state, county or locality, the violation
of which would have a material adverse impact upon the condition (financial or
otherwise), business, property, prospective results of operations, or net worth
of the Company.
(o) The Company has not, directly or indirectly at any time
(i) made any contributions to any candidate for political office, or failed to
disclose fully any such contribution in violation of law or (ii) made any
payment to any state, federal or foreign governmental officer or official, or
other person charged with similar public or quasi-public duties, other than
payments or contributions required or allowed by applicable law. The Company's
internal accounting controls and procedures are sufficient to cause the Company
to comply in all material respects with the Foreign Corrupt Practices Act of
1977, as amended.
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(p) On the Closing Date (hereinafter defined) 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 will have been fully paid or
provided for by the Company and all laws imposing such taxes will have been
fully complied with.
(q) All contracts and other documents of the Company which
are, under the Rules and Regulations, required to be described in or filed as
exhibits to the Registration Statement have been so described and/or filed.
(r) Except as set forth in the Registration Statement and
Prospectus, no holders of Common Stock or of any securities of the Company
exercisable or convertible into the Company's Common Stock have the right to
include such Common Stock or securities in the Registration Statement and
Prospectus.
(s) Except as set forth in or contemplated by the Registration
Statement and the Prospectus, the Company does not have, and on the Closing Date
will not have, any material contingent liabilities.
(t) The Company has no subsidiary corporations except as
disclosed in the Registration Statement or Prospectus nor has it any equity
interest in any partnership, joint venture, association or other entity except
as disclosed in the Registration Statement or Prospectus.
(u) The Commission has not issued an order preventing or
suspending the use of any Preliminary Prospectus with respect to the Common
Stock and each Preliminary Prospectus has complied fully in all material
respects with the requirements of the Act and the Rules and Regulations and, as
of its date, did not include any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein not misleading.
(v) The Company has not taken and will not take, directly or
indirectly, any action designed to cause or result in, or which has constituted
or which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the Common Stock.
(w) Item 26 of Part II of the Registration Statement
accurately discloses all shares of the Company's Common Stock sold by the
Company within the three year period prior to the date as of which information
is presented in the Registration Statement. All of such Shares were issued in
transactions which were exempt from the registration provisions of the Act and
not in violation of Section 5 thereof.
(x) Other than as set forth in the Prospectus, no person is
entitled, either directly or indirectly, to compensation from the Company, from
the Underwriter, or from any other person for services as a finder in connection
with the proposed offering, and the Company agrees to indemnify and hold
harmless the Underwriter against any losses, claims, damages or liabilities,
joint or several which shall, for all purposes of this Agreement, include, but
not be limited to, all costs to defend against any such claim, so long as such
claim arises out of agreements made or allegedly made by the Company.
2. Appointment of Agent to Sell the Shares.
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(a) Subject to the terms and conditions of this Agreement and
upon the basis of the representations, warranties, agreements and conditions
herein contained, the Company hereby appoints the Underwriter as its exclusive
agent for a period of 90 days from the Effective Date, subject to an extension
at the discretion of the Underwriter for an additional period not to exceed 60
days, to sell the Shares, and the Underwriter, on the basis of the
representations, warranties, agreements and conditions of the Company herein,
accepts such appointment and agrees to use its best efforts on a "550,000 Shares
or none best efforts" basis to find purchasers for the Shares. If the minimum of
550,000 Shares are sold, the remaining Shares will be offered on a "best
efforts" basis until (i) all the Shares are sold; (ii) the offering period
expires; or (iii) the offering is terminated by agreement between the Company
and the Underwriter, whichever first occurs. The price at which the Underwriter
shall sell the Shares to the public, as agent for the Company, shall be $10.00
per Share, and the Company shall pay a commission of $.65 per Share in respect
of such Shares sold on behalf of the Company by the Underwriter, provided,
however, that no commission shall be payable by the Company to the Underwriter
on Shares sold to officers and directors of the Company, and a commission of
$.55 per Share shall be payable by the Company to the Underwriter on up to
250,000 Shares sold on behalf of the Company by the Underwriter to the persons
listed on attached Schedule 2(a).
(b) Provided that at least 550,000 of the Shares are sold and
paid for, the Company agrees to pay the Underwriter for its expenses an
accountable expense allowance equal to $65,000 subject to the provisions of
Section 10(b), herein, $10,000 of which has been paid to date.
(c) It is a condition of this Agreement that the Underwriter
shall use its best efforts to sell the Shares on behalf of the Company, that the
Underwriter will instruct investors to make all remittances payable to the
Escrow Agent (hereinafter defined) and that any and all funds received from such
sale, without any deduction therefrom whatsoever, including, but not limited to,
any underwriting commission or any dealer concession or otherwise shall be
forthwith deposited in an escrow account with the Escrow Agent, pursuant to the
terms of an Escrow Agreement entered into by and among the Company, the
Underwriter and the Escrow Agent (the "Escrow Agent"), no later than 12:00 noon
of the next business day after receipt. In the event 550,000 Shares are not sold
within one year from the Effective Date, all funds will be promptly refunded to
the subscribers in full, without deduction therefrom or interest thereon. During
the period of escrow, subscribers will not have the right to demand a refund of
their subscriptions. Certificates will be issued to purchasers only if the
proceeds from the sale of at least 550,000 Shares are released from escrow to
the Company. Until such time as the funds have been released, such purchasers,
if any, will be deemed subscribers and not stockholders. The funds in escrow
will be held for the benefit of those subscribers until released to the Company
and will not be subject to creditors of the Company or for the expenses of this
offering.
3. Delivery and Payment.
(a) Delivery of the Shares against payment therefor shall take
place at the office of Banc Stock Financial Services, Inc., 0000 Xxxxxxx Xxxx,
Xxxxxxxx, Xxxx 00000 (or at such other place as may be designated by you) at
10:00 a.m., Eastern time, on such date after the Registration Statement has
become effective as the Underwriter shall designate, such time and date of
payment and delivery for the Shares being herein called the "Closing Date."
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(b) The Company will make the certificates for the Shares to
be sold hereunder available to the Underwriter for inspection at least two (2)
full business days prior to the Closing Date at the offices of the Underwriter.
The certificates shall be in such names and denominations as you may request, at
least two (2) full business days prior to the Closing Date.
4. Offering the Shares on Behalf of the Company.
It is understood that you propose to offer the Shares to the
public, solely as agent for the Company, upon the terms and conditions set forth
in the Registration Statement. The Underwriter shall commence making such offer
as agent for the Company on the Effective Date or as soon thereafter as you deem
advisable.
5. Selected Dealers. The Underwriter may offer and sell the
Shares for the Company's account through selected dealers registered with the
NASD, as selected by the Underwriter pursuant to a form of Selected Dealers
Agreement to be filed as an exhibit to the Registration Statement, pursuant to
which the Underwriter may allow a concession (out of the underwriting commission
in the event of the sale of at least 550,000 Shares) within the limits to be set
forth in the Prospectus, but all such sales by Selected Dealers shall be made by
the Company, acting through the Underwriter as agent, and not for the account of
the Underwriter.
6. Covenants of the Company. The Company covenants and agrees
with the Underwriter that:
(a) The Company will use its best efforts to cause the
Registration Statement to become effective and upon notification from the
Commission that the Registration Statement has become effective, will so advise
you and will not at any time, whether before or after the effective date, file
any amendment to the Registration Statement or supplement to the Prospectus of
which you shall not previously had been advised and furnished with a copy or to
which you or your counsel shall have objected in writing or which is not in
compliance with the Act and the Rules and Regulations. At any time prior to the
later of (i) the completion by the Underwriter of the distribution of the Shares
contemplated hereby (but in no event more than nine months after the date on
which the Registration Statement shall have become or been declared effective)
and (ii) 90 days after the date on which the Registration Statement shall have
become or been declared effective, the Company will prepare and file with the
Commission, promptly upon your request, any amendments or supplements to the
Registration Statement or Prospectus which, in your opinion, may be necessary or
advisable in connection with the distribution of the Shares.
As soon as the Company is advised thereof, the Company will
advise you, and confirm the advice in writing, of the receipt of any comments of
the Commission, of the effectiveness of any post-effective amendment to the
Registration Statement, of the filing of any supplement to the Prospectus or any
amended Prospectus, of any request made by the Commission for amendment of the
Registration Statement or for supplementing of the Prospectus or for additional
information with respect thereto, of the issuance by the Commission or any state
or regulatory body of any stop order or other order suspending the effectiveness
of the Registration Statement or any order preventing or suspending the use of
any Preliminary Prospectus, or of the suspension of the qualification of the
Shares for offering in any jurisdiction, or of the institution of any proceeding
for any of such purposes, and will use its best efforts
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to prevent the issuance of any such order, and, if issued, to obtain as soon as
possible the lifting thereof.
The Company has caused to be delivered to you copies of each
Preliminary and Final Prospectus, and the Company has consented and hereby
consents to the use of such copies for the purposes permitted by the Act. The
Company authorizes the Underwriter and dealers to use the Prospectus in
connection with the sale of the Shares for such period as in the opinion of
counsel to the Underwriter the use thereof is required to comply with the
applicable provisions of the Act and the Rules and Regulations. If, at any time
within such period as a Prospectus is required under the Act to be delivered in
connection with sales by the Underwriter or dealer, any event occurs of which
the Company has knowledge and which materially affects the Company or the
securities of the Company, or which in the opinion of counsel for the Company or
counsel for the Underwriter should be set forth in an amendment to the
Registration Statement or a supplement to the Prospectus, in order to make the
statements therein not then misleading, in light of the circumstances existing
at the time the Prospectus is required to be delivered to a purchaser of the
Shares, or in case it shall be necessary to amend or supplement the Prospectus
to comply with law or with the Rules and Regulations, the Company will notify
you promptly and forthwith prepare and furnish to you copies of such amended
Prospectus or of such supplement to be attached to the Prospectus, in such
quantities as you may reasonably request, in order that the Prospectus, as so
amended or supplemented, will not contain any untrue statement of a material
fact or omit to state any material facts necessary in order to make the
statements in the Prospectus, in the light of the circumstances under which they
are made, not misleading. The preparation and furnishing of any such amendment
or supplement to the Registration Statement or amended Prospectus or supplement
to be attached to the Prospectus shall be without expense to the Underwriter,
except that in case the Underwriter is required, in connection with the sale of
the Shares, to deliver a Prospectus nine months or more after the Effective Date
of the Registration Statement, the Company will upon request of the Underwriter
but at the expense of the Company, amend or supplement the Registration
Statement and Prospectus and furnish the Underwriter with reasonable quantities
of Prospectus complying with Section 10(a)(3) of the Act.
The Company will comply with the Act, the Rules and
Regulations, and the 1934 Act and the rules and regulations thereunder in
connection with the offering and issuance of the Shares.
(b) The Company will use its best efforts to qualify to
register the Shares for sale under the securities or "blue sky" laws in up to
twelve (12) jurisdictions as the Underwriter may designate and will make such
applications and furnish such information as may be required for that purpose
and to comply with such laws, provided the Company shall not be required to
qualify as a foreign corporation or a dealer in securities or to execute a
general consent to service of process in any jurisdiction in any action other
than one arising out of the offering or sale of the Shares. 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
Underwriter may reasonably request.
(c) Pending completion of the public offering, the Company
will not negotiate with any other Underwriter or other person relating to a
possible public or private offering of its securities without the prior written
consent of the Underwriter. In the event the Company enters into a Letter of
Intent and/or effectuates a public or private offering of its securities with
another broker dealer or any other person without the written permission of the
Underwriter, prior to the completion of the financing contemplated herein, the
Company shall pay to the Underwriter the sum of $10,000. In the event the
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Company is sold, merged or otherwise disposed of before the completion of the
financing contemplated herein, the Company shall pay the Underwriter the sum of
$10,000 as a finder's fee.
(d) For so long as the Company is a reporting company under
either Section 12(g) or 15(d) of the 1934 Act, the Company, at its expense, will
furnish to its stockholders an annual report, in reasonable detail (including
financial statements audited by independent public accountants), and at its
expense, will furnish to you during the period ending five (5) years from the
Effective Date, (i) as soon as practicable after the end of each fiscal year, a
balance sheet of the Company and any of its subsidiaries as at the end of such
fiscal year, together with statements of income, surplus and cash flow of the
Company and any subsidiaries for such fiscal year, all in reasonable detail and
accompanied by a copy of the certificate or report thereon of independent
accountants; (ii) as soon as they are available, a copy of all reports
(financial or other) mailed to security holders; (iii) as soon as they are
available, a copy of all non-confidential reports and financial statements
furnished to or filed with the Commission; and (iv) such other information as
you may from time to time reasonably request.
(e) In the event the Company has an active subsidiary or
subsidiaries, such financial statements referred to in subsection (d) above will
be on a consolidated basis to the extent the accounts of the Company and its
subsidiary or subsidiaries are consolidated in reports furnished to its
stockholders generally.
(f) The Company will deliver to you at or before the Closing
Date two signed copies of the Registration Statement, including all financial
statements and exhibits filed therewith, and of all amendments thereto. The
Company will deliver to or upon the order of the Underwriter, from time to time
until the Effective Date of the Registration Statement, as many copies of any
Preliminary Prospectus filed with the Commission prior to the Effective Date of
the Registration Statement as the Underwriter may reasonably request. The
Company will deliver to the Underwriter on the Effective Date of the
Registration Statement and thereafter for so long as a Prospectus is required to
be delivered under the Act, from time to time, as many copies of the Prospectus,
in final form, or as thereafter amended or supplemented as the Underwriter may
from time to time reasonably request.
(g) The Company will make generally available to its
stockholders and deliver to you as soon as it is practicable to do so, but in no
event later than 90 days after the end of twelve months after its current fiscal
quarter, an earnings statement (which need not be audited) covering a period of
at least twelve consecutive months beginning with the Effective Date of the
Registration Statement, which shall satisfy the requirements of Section 11(a) of
the Act.
(h) The Company will apply the net proceeds from the sale of
the Shares for the purposes set forth under "Use of Proceeds" in the Prospectus,
and will file such reports with the Commission with respect to the sale of the
Shares and the application of the proceeds therefrom as may be required by
Sections 12, 13, and/or 15(d) of the 1934 Act and pursuant to Rule 463 under the
Act.
(i) The Company will, promptly upon your request, prepare and
file with the Commission any amendments or supplements to the Registration
Statement, Preliminary Prospectus or Prospectus and take any other action, which
in the reasonable opinion of counsel to the Underwriter may be reasonably
necessary or advisable in connection with the distribution of the Shares and
will use its best efforts to cause the same to become effective as promptly as
possible.
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(j) The Company will reserve and keep available that maximum
number of its authorized but unissued shares of Common Stock which are issuable
upon exercise of the Options outstanding from time to time.
(k) All officers, directors and holders of five percent (5%)
or more of the Common Stock of the Company as of the Effective Date, shall agree
in writing, in a form satisfactory to the Underwriter, not to publicly sell any
of such Common Stock for a period of six (6) months from the Effective Date or
any longer period required by any state, without the prior written consent of
the Underwriter. There shall be no restrictions on any warrants held by
officers, directors or five percent (5%) shareholders of the Company.
(l) The Company will use its best efforts to obtain, on or
before the Closing Date, key person life insurance on the life of Xx. Xxxxxxx
Xxxxxxxxxxx, in an amount of not less than $___________, and will use its best
efforts to maintain such insurance.
(m) On the Effective Date and for a period of five years
thereafter, the Company's Board of Directors shall consist of a minimum of five
(5) persons, two (2) of whom shall be independent and not otherwise affiliated
with the Company or associated with any of the Company's affiliates.
(n) On the Closing Date, the Company shall become a reporting
company under Section 12(g) of the 1934 Act and maintain such registration. The
Company shall also use its best efforts to procure the listing of the Shares
being offered on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ") and maintain such listing.
(o) Within a reasonable period after the Closing Date, the
Company shall, at its own expense, undertake the listing of the Company's
securities in the appropriate recognized securities manual or manuals published
by Xxxxx'x Investor Services, Inc. and/or Standard & Poor's Corporation and such
other manuals as the Underwriter may designate, such listings to contain the
information required by such manuals and the Uniform Securities Act. The Company
hereby agrees to maintain such listing for a period of not less than five years.
(p) The Company and each of its officers and directors
represent that it or he has not taken and agree that it or he will not take,
directly or indirectly, any action designed to or which has constituted or which
might reasonably be expected to cause or result in the stabilization or
manipulation of the price of the Shares, or to facilitate the sale or resale of
the Shares.
(q) Prior to the Effective Date, the Company will have entered
into three (3) year employment contracts with Xx. Xxxxxxx Xxxxxxxxxxx and Xx.
Xxxxx X. Xxxxxxxx, III.
(r) Prior to the Closing Date, the Company will not issue,
directly or indirectly, without your prior consent, any press release or other
communication or hold any press conference with respect to the Company or its
activities or the offering of the Shares.
(s) The Company shall continue to employ the services of a
firm of independent certified public accountants acceptable to the Underwriter
in connection with the preparation of the
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financial statements to be included in any registration statement or similar
disclosure document, to be filed by the Company hereunder, or any amendment or
supplement thereto.
(t) Within a reasonable period after the Closing Date, the
Underwriter shall prepare and publish, at the cost to the Company, two (2)
"tombstone" advertisements of at least 5 X 5 inches in publications to be
designated by the Underwriter.
(u) Following the Effective Date, the Company shall, at its
sole cost and expense, prepare and file such Blue Sky applications with such
jurisdictions as the Underwriter and the Company may reasonably agree.
(v) For a period of one year from the date of this Agreement,
the Company will provide the Underwriter with a right of first refusal to serve
as a managing underwriter on any public or private financing (debt or equity),
or act as an advisor on any merger, business combination, recapitalization or
sale of some or all of the equity or assets of the Company (collectively, the
"future services"). In the event the Underwriter is engaged by the Company to
provide such future services, the Underwriter will be compensated as is
reasonable and customary within the industry.
7. Conditions of Underwriter's Obligation. The obligations
of the Underwriter to act as agent for the Company are subject to the accuracy
(as of the date hereof, and as of the Closing Date) of and compliance with the
representations and warranties of the Company herein, to the accuracy of
statements of officers of the Company made pursuant to the provisions hereof, to
the performance by the Company of its obligations hereunder, and to the
following conditions:
(a) (i) The Registration Statement shall have become effective
not later than 5:00 p.m., Eastern time, on the date of this Agreement, or at
such later time or on such later date as you may agree to in writing; (ii) at or
prior to the Closing Date, no stop order suspending the effectiveness of the
Registration Statement shall have been issued by the Commission and no
proceeding for that purpose shall have been initiated or pending, or shall be
threatened, or to the knowledge of the Company, contemplated by the Commission;
(iii) no stop order suspending the effectiveness of the qualification or
registration of the shares under the securities or "blue sky" laws of any
jurisdiction (whether or not a jurisdiction which you shall have specified)
shall be threatened or to the knowledge of the Company contemplated by the
authorities of any such jurisdiction or shall have been issued and in effect;
(iv) any request for additional information on the part of the Commission or any
such authorities shall have been complied with to the satisfaction of the
Commission and any such authorities, and to the satisfaction of counsel to the
Underwriter; and (v) 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 the Underwriter and the Underwriter did not
object thereto.
(b) At the Closing Date, since the respective dates as of
which information is presented in the Registration Statement and the Prospectus,
(i) there shall not have been any change in the capital stock of the Company or
any material change in the long-term debt of the Company except as set forth in
or contemplated by the Registration Statement, (ii) there shall not have been
any material adverse change in the general affairs, management, financial
position 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 or contemplated by the Registration Statement or Prospectus and (iii)
the Company shall not have
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sustained any material interference with its business or properties from fire,
explosion, flood or other casualty, whether or not covered by insurance, or from
any labor dispute or any court or legislative or other governmental action,
order or decree, which is not set forth in the Registration Statement or
Prospectus, if in the judgment of the Underwriter any such development referred
to in clauses (i), (ii) or (iii) makes it impracticable or inadvisable to
consummate the sale and delivery of the Shares by the Underwriter at the public
offering price.
(c) Since the respective dates as of which information is
presented in the Registration Statement and the Prospectus, there shall have
been no litigation instituted against the Company or any of its officers or
directors, and since such dates there shall be no proceeding instituted or
threatened against the Company or any of its officers or directors, 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, material properties, financial condition or
results or operations of the Company.
(d) Each of the representations and warranties of the Company
contained herein shall be true and correct as of this date and at the Closing
Date as if made at the 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 shall have been duly performed, fulfilled or complied with.
(e) At the Closing Date, you shall have received the opinion,
dated as of the Closing Date, from Xxxxxx Xxxxxxx Xxxxx & Scarborough, L.L.P.,
counsel for the Company, in form and substance satisfactory to counsel for the
Underwriter, to the effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority
to own is properties and conduct its business as described in the
Registration Statement and Prospectus and is duly qualified or licensed
to do business as a foreign corporation and is in good standing in each
other jurisdiction in which the ownership or leasing of its properties
or conduct of its business requires such qualification;
(ii) to the best knowledge of such counsel; (a) the Company
has obtained, or is in the process of obtaining, all licenses, permits
and other governmental authorizations necessary to the conduct of its
business as described in the Prospectus; (b) such licenses, permits and
other governmental authorizations obtained are in full force and
effect; and (c) the Company is in all material respects complying
therewith;
(iii) the authorized capitalization of the Company as of
______________ is as set forth under "Capitalization" in the
Prospectus; all shares of the Company's outstanding stock requiring
authorization for issuance by the Company's Board of Directors have
been duly authorized, validly issued, are fully paid and non-assessable
and conform to the description thereof contained in the Prospectus; the
outstanding shares of Common Stock of the Company have not been issued
in violation of the preemptive rights of any shareholder and the
shareholders of the Company do not have any preemptive rights or other
rights to subscribe for or to purchase, nor are there any restrictions
upon the voting or transfer of any of the Common Stock except as
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disclosed in the Prospectus; the Common Stock conforms to the
description thereof contained in the Prospectus; the Shares have been
duly authorized and, when issued, delivered and paid for, will be duly
and validly issued, fully paid, non-assessable, free of preemptive
rights and no personal liability will attach to the ownership thereof;
all prior sales by the Company of the Company's securities have been
made in compliance with or under an exemption from registration under
the Act and applicable state securities laws; and to the best of such
counsel's knowledge, neither the filing of the Registration Statement
nor the offering or sale of the Shares as contemplated by this
Agreement gives rise to any registration rights or other rights, other
than those which have been waived or satisfied for or relating to the
registration of any shares of Common Stock;
(iv) this Agreement and the Escrow Agreement have been duly
and validly authorized, executed and delivered by the Company and,
assuming the due authorization, execution and delivery of this
Agreement by the Underwriter, are the valid and legally binding
obligations of the Company, except no opinion is expressed as to the
enforceability of the indemnity provisions or the contribution
provisions contained in this Agreement;
(v) the certificates evidencing the shares of Common Stock
are in valid and proper legal form;
(vi) such counsel knows of no pending or threatened legal or
governmental proceedings to which the Company is a party which could
materially adversely affect the business, property, financial condition
or operations of the Company; or which question the validity of the
Shares, this Agreement, or the Escrow Agreement or of any action taken
or to be taken by the Company pursuant to this Agreement or the Escrow
Agreement; and no such proceedings are known to such counsel to be
contemplated against the Company; there are no governmental proceedings
or regulations required to be described or referred to in the
Registration Statement which are not so described or referred to;
(vii) the Company is not in violation of or default under,
nor will the execution and delivery of this Agreement or the Escrow
Agreement, and the incurrence of the obligations herein and therein set
forth and the consummation of the transactions herein or therein
contemplated, result in a violation of, or constitute a default under
the certificate of incorporation or by-laws, in the performance or
observance of any material obligations, agreement, covenant or
condition contained in any bond, debenture, note or other evidence of
indebtedness or in any contract, indenture, mortgage, loan agreement,
lease, joint venture or other agreement or instrument to which the
Company is a party or by which it or any of its properties may be bound
or in violation of any material order, rule, regulation, writ,
injunction, or decree of any government, governmental instrumentality
or court, domestic or foreign;
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(viii) the Registration Statement has become effective under
the Act, and to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for that purpose have been instituted or are
pending before, or threatened by, the Commission; the Registration
Statement and the Prospectus (except for the financial statements and
other financial data contained therein, or omitted therefrom, as to
which such counsel need express no opinion) comply as to form in all
material respects with the applicable requirements of the Act and the
Rules and Regulations;
(ix) such counsel has participated in the preparation of the
Registration Statement and the Prospectus and nothing has come to the
attention of such counsel to cause such counsel to have reason to
believe that the Registration Statement or any amendment thereto at the
time it became effective contained any untrue statement of a material
fact required to be stated therein or omitted to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus or any supplement thereto
contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make statements therein, in light
of the circumstances under which they are made, not misleading (except,
in the case of both the Registration Statement and any amendment
thereto and the Prospectus and any supplement thereto, for the
financial statements, notes thereto and other financial information and
statistical data contained therein, as to which such counsel need
express no opinion);
(x) all descriptions in the Registration Statement and the
Prospectus, and any amendment or supplement thereto, of contracts and
other documents are accurate and fairly present the information
required to be shown, and such counsel is familiar with all contracts
and other documents referred to in the Registration Statement and the
Prospectus and any such amendment or supplement or filed as exhibits to
the Registration Statement, and such counsel does not know of any
contracts or documents of a character required to be summarized or
described therein or to be filed as exhibits thereto which are not so
summarized, described or filed;
(xi) no authorization, approval, consent, or license of any
governmental or regulatory authority or agency is necessary in
connection with the authorization, issuance, transfer, sale or delivery
of the Shares by the Company, in connection with the execution,
delivery and performance of this Agreement by the Company or in
connection with the taking of any action contemplated herein, other
than registrations or qualifications of the Shares under applicable
state or foreign securities or Blue Sky laws and registration under the
Act; and
(xii) the statements in the Registration Statement under the
captions "Proposed Business," "Use of Proceeds," "Management,"
"Supervision and Regulation," and "Description of Capital Stock of the
Company" have been reviewed by such counsel and insofar as they refer
to descriptions of agreements, statements of law, descriptions of
statutes, licenses, rules or regulations or legal conclusions, are
correct in all material respect.
Such opinion shall also cover such matters incident to the
transactions contemplated hereby as the Underwriter or counsel for the
Underwriter shall reasonably request. In rendering such opinion, such counsel
may rely upon certificates of any officer of the Company or public officials as
to matters of fact; and may rely as to all matters of law other than the law of
the United States or of the State
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of Georgia upon opinions of counsel satisfactory to you, in which case the
opinion shall state that they have no reason to believe that you and they are
not entitled to so rely.
(f) The Underwriter shall have received on each Closing Date,
a certificate dated as of each Closing Date, signed by the President, Treasurer,
Secretary and such other officers of the Company as the Underwriter may request,
certifying that:
(i) No Order suspending the effectiveness of the
Registration Statement or stop order regarding the sale of the Shares
in effect and no proceedings for such purpose are pending or are, to
their knowledge, threatened by the Commission;
(ii) They do not know of any litigation instituted or
threatened against the Company of a character required to be disclosed
in the Registration Statement which is not disclosed therein; they do
not know of any contracts which are required to be summarized; and they
do not know of any material contracts required to be filed as exhibits
to the Registration Statement which are not so filed;
(iii) They have each carefully examined the Registration
Statement and the Prospectus and, to the best of their knowledge,
neither the Registration Statement nor the Prospectus nor any amendment
or supplement to either of the foregoing contains an untrue statement
of any material fact or omits to state any material fact required to be
stated therein or necessary to make the statement therein not
misleading; and since the Effective Date, to the best of their
knowledge, there has occurred no event required to be set forth in an
amended or supplemented Prospectus which has not been so set forth;
(iv) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not
been any material adverse change in the condition of the Company,
financial or otherwise, or in the results of its operations, except as
reflected in or contemplated by the Registration Statement and the
Prospectus and except as so reflected or contemplated since such date,
there has not been any material transaction entered into by the
Company;
(v) The representations and warranties set forth in this
Agreement are true and correct and the Company has complied with all of
its agreements herein contained;
(vi) The Company is not delinquent in the filing of any
federal, state and municipal tax return or the payment of any federal,
state or municipal taxes; they know of no proposed redetermination or
re-assessment of taxes, adverse to the Company, and the Company has
paid or provided by adequate reserves for all known tax liabilities;
(vii) They know of no material obligation or liability of the
Company contingent or otherwise, not disclosed in the Registration
Statement and Prospectus;
(viii) This Agreement, the Escrow Agreement, the consummation
of the transactions therein contemplated, and the fulfillment of the
terms thereof, will not result in a breach by the Company of any terms
of, or constitute a default under, its Articles of
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Incorporation or By-Laws, any indenture, mortgage, lease, deed or
trust, bank loan or credit agreement or any other agreement or
undertaking of the Company including, by way of specification but not
by way of limitation, any agreement or instrument to which the Company
is now a party or pursuant to which the Company has acquired any right
and/or obligations by succession or otherwise;
(ix) The financial statements and schedules field with and
as part of the Registration Statement present fairly the financial
position of the Company as of the dates thereof all in conformity with
generally accepted principles of accounting applied on a consistent
basis throughout the periods involved. Since the respective dates of
such financial statements, there have been no material adverse change
in the condition or general affairs of the Company, financial or
otherwise, other than as referred to in the Prospectus; and
(x) Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus,
except as may otherwise be indicated therein, the Company has not prior
to the Closing Date, either (a) issued any securities or incurred any
material liability or obligation, direct or contingent, for borrowed
money, or (b) entered into any material transaction other than in the
ordinary course of business. The Company has not declared, paid or made
any dividend or distribution of any kind on its capital stock.
(xi) They have reviewed the sections in the Prospectus
relating to their biographical data and equity ownership position in
the Company, and all information contained therein is true and
accurate; and
(xii) During the past five years they have not been:
(a) Subject of a petition under the Federal
Bankruptcy Laws or any state insolvency law filed by or
against them, or by a receiver, fiscal agent or similar
officer appointed by a court for their business or property,
or any partnership in which any of them was a general partner
at or within two years before the time of such filing, or any
corporation or business association of which any of them was
an executive officer at or within two years before the time of
such filing;
(b) Convicted in a criminal proceeding or a named
subject of a pending criminal proceeding (excluding traffic
violations and other minor offenses);
(c) The subject of any order, judgment, or decree not
subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining
either of them from, or otherwise limiting, any of the
following activities:
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(1) acting as a futures commission merchant,
introducing broker, commodity trading advisor,
commodity pool operator, floor broker, leverage
transaction merchant, any other person regulated by
the Commodity Futures Trading Commission, or an
associated person of any of the foregoing, or as an
investment adviser, underwriter, broker or dealer in
securities, or as an affiliated person, director or
employee of any investment company, bank, savings and
loan association or insurance company, or engaging in
or continuing any conduct or practice in connection
with any such activity;
(2) engaging in any type of business
practice; or
(3) engaging in any activity in connection
with the purchase or sale of any security or
commodity or in connection with any violation of
Federal or State securities law or Federal Commodity
laws.
(d) The subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated of any Federal or
State authority barring, suspending or otherwise limiting for
more than sixty (60) days either of their right to engage in
any activity described in paragraph (3)(i) above, or be
associated with persons engaged in any such activity;
(e) Found by any court of competent jurisdiction in a
civil action or by the Securities and Exchange Commission to
have violated any Federal or State securities law, and the
judgment in such civil action or finding by the Commission has
not been subsequently reversed, suspended or vacated; or
(f) Found by a court of competent jurisdiction in a
civil action or by the Commodity Futures Trading Commission to
have violated any Federal Commodities Law, and the judgment in
such civil action or finding by the Commodity Futures Trading
Commission has not been subsequently reversed, suspended or
vacated.
(g) The Underwriter shall have received from Xxxxxxx & Xxxxxx,
P.A., independent auditors to the Company, two certificates or letters, one
dated and delivered on the Effective Date and one dated and delivered on the
Closing Date, in form and substance satisfactory to the Underwriter, stating
that:
(i) they are independent certified public accountants with
respect to the Company within the meaning of the Act and the applicable
Rules and Regulations;
(ii) the financial statements and the schedules included in
the Registration Statement and the Prospectus were examined by them
and, in their opinion, comply as to form in all material respects with
the applicable requirements of the Act, the Rules and Regulations and
instructions of the Commission with respect to registration statements
on Form SB-2;
(iii) on the basis of inquiries and procedures conducted by
them (not constituting an
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examination in accordance with generally accepted auditing standards),
including a reading of the latest available unaudited interim financial
statements or other financial information of the Company (with an
indication of the date of the latest available unaudited interim
financial statements), inquiries of officers of the Company who have
responsibility for financial and accounting matters, review of minutes
of all meetings of the shareholders and the Board of Directors of the
Company and other specified inquiries and procedures, nothing has come
to their attention as a result of the foregoing inquiries and
procedures that causes them to believe that:
(a) during the period from (and including) the date of the
financial statements in the Registration Statement and the Prospectus
to a specified date not more than five days prior to the date of such
letters, there has been any change in the Common Stock, long-term debt
or other securities of the Company (except as specifically contemplated
in the Registration Statement and Prospectus) or any material decreases
in net current assets, net assets, shareholder's equity, working
capital or in any other item appearing in the Company's financial
statements as to which the Underwriter may request advice, in each case
as compared with amounts shown in the balance sheets as of the date of
the financial statement in the Prospectus, except in each case for
changes, increases or decreases which the Prospectus discloses have
occurred or will occur;
(b) during the period from (and including) the date of the
financial statements in the Registration Statement and the Prospectus
to such specified date there was any material decrease in revenues or
in the total or per share amounts of income or loss before
extraordinary items or net income or loss, or any other material change
in such other items appearing in the Company's financial statements as
to which the Underwriter may request advice, in each case as compared
with the fiscal period ended as of the date of the financial statement
in the Prospectus, except in each case for increases, changes or
decreases which the Prospectus discloses have occurred or will occur;
(c) the unaudited interim financial statements of the Company
appearing in the Registration Statement and the Prospectus (if any) do
not comply as to form in all material respects with the applicable
accounting requirements of the Act and the Rules and regulations or are
not fairly presented in conformity with generally accepted accounting
principles and practices on a basis substantially consistent with the
audited financial statements included in the Registration Statements or
the Prospectus.
Such letters shall also set forth such other information as
may be requested by counsel for the Underwriter. Any changes, increases or
decreases in the items set forth in such letters which, in the judgment of the
Underwriter, are materially adverse with respect to the financial position or
results of operations of the Company shall be deemed to constitute a failure of
the Company to comply with the conditions of the obligations to the Underwriter
hereunder.
(h) If any of the conditions herein provided for in this
Section shall not have been fulfilled as of the date indicated, this Agreement
and all obligations of the Underwriter under this Agreement may be canceled at,
or at any time prior to, the Closing Date by the Underwriter notifying the
Company of such cancellation in writing or by telegram at or prior to the
Closing Date. Any such cancellation shall be without liability of the
Underwriter to the Company.
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8. Indemnification.
(a) The Company agrees to indemnify and hold harmless the Underwriter
and each person, if any, who controls the Underwriter within the meaning of the
Act against any losses, claims, damages or liabilities, joint or several (which
shall, for all purposes of this Agreement, include but not be limited to, all
reasonable costs of defense and investigation and all attorneys' fees), to which
the Underwriter or such controlling person may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in (i) the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, (ii) any blue sky application or other document executed by
the Company specifically for that purpose or based upon written information
furnished by the Company and filed in any state or other jurisdiction in order
to qualify any or all of the Shares under the securities laws thereof (any such
application, document or information being hereinafter called a "Blue Sky
Application"), or arise out of or are based upon the omission or alleged
omission to state in the Registration Statement, any Preliminary Prospectus,
Prospectus, or any amendment or supplement thereto, or in any Blue Sky
Application, a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that the Company will
not be liable in any such cases to the extent, but only to the extent, that any
such losses, claim, damages or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with written information furnished to
the Company by or on behalf of the Underwriter specifically for use in the
preparation of the Registration Statement or any such amendment or supplement
thereto or any such Blue Sky Application or any such Preliminary Prospectus or
the Prospectus or any such amendment or supplement thereto. Notwithstanding the
foregoing, the Company shall have no liability under this Section if such untrue
statement or omission made in a Preliminary Prospectus is cured in the
Prospectus and the Prospectus is not delivered to the person or persons alleging
the liability upon which indemnification is being sought. This indemnity will be
in addition to any liability which the Company may otherwise have.
(b) The Underwriter will indemnify and hold harmless the Company, each
of its directors, each nominee (if any) for director named in the Prospectus,
each of its officers who have signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of the Act, against
any losses, claims, damages or liabilities (which shall, for all purposes of
this Agreement, include, but not be limited to, all costs of defense and
investigation and all attorneys' fees) to which the Company or any such
director, nominee, officer or controlling person may become subject under the
Act or otherwise, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statements or alleged untrue
statement or omission or alleged omission was made in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, in reliance upon and in conformity with written information
furnished to the Company by the Underwriter specifically for use in the
preparation thereof. Notwithstanding the foregoing, the Underwriter shall have
no liability under this Section if such untrue statement or omission made in a
Preliminary Prospectus is cured in the Prospectus and the Prospectus is
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not delivered to the person or persons alleging the liability upon which
indemnification is being sought through no fault of the Underwriter. This
indemnity agreement will be in addition to any liability which the Underwriter
may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section, notify in writing the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under this Section. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, subject to the provisions herein stated, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party under this Section for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. The indemnified party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of such counsel
shall not be at the expense of the indemnifying party if the indemnifying party
has assumed the defense of the action with counsel reasonably satisfactory to
the indemnified party; provided that if the indemnified party is the Underwriter
or a person who controls such Underwriter within the meaning of the Act, the
fees and expenses of such counsel shall be at the expense of the indemnifying
party if (i) the employment of such counsel has been specifically authorized in
writing by the indemnifying party or (ii) the named parties to any such action
(including any impleaded parties) include both the Underwriter or such
controlling person and the indemnifying party and in the judgment of the
Underwriter, it is advisable for the Underwriter or controlling persons to be
represented by separate counsel (in which case the indemnifying party shall not
have the right to assume the defense of such action on behalf of the Underwriter
or such controlling person, it being understood, however, that the indemnifying
party shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys for such Underwriter
and controlling persons, which firm shall be designated in writing by you). No
settlement of any action against an indemnified party shall be made without the
consent of the indemnifying party, which shall not be unreasonably withheld in
light of all factors of importance to such indemnifying party.
9. Contribution. In order to provide for just and equitable
contribution under the Act in any case in which (i) the Underwriter makes claim
for indemnification pursuant to Section 8 hereof but it is judicially determined
(by the entry of a final judgment or decree by a court of competent jurisdiction
and the expiration of time to appeal or the denial of the last right of appeal)
that such indemnification may not be enforced in such case, notwithstanding the
fact that the express provisions of Section 8 provide for indemnification in
such case, or (ii) contribution under the Act may be required on the part of the
Underwriter, then the Company and each person who controls the Company, in the
aggregate, and any such Underwriter shall contribute to the aggregate losses,
claims, damage or liabilities to which they may be subject (which shall, for all
purposes of this Agreement, include, but not be limited to, all reasonable costs
of defense and investigation and all reasonable attorneys' fees) in either such
case (after contribution from others) in such proportions that the Underwriter
is responsible in the aggregate
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for that portion of such losses, claims, damages or liabilities represented by
the percentage that the underwriting commission per Share appearing on the cover
page of the Prospectus bears to the public offering price appearing thereon, and
the Company shall be responsible for the remaining portion, provided, however,
that if such allocation is not permitted by applicable law then the relative
fault of the Company and the Underwriter and controlling persons, in the
aggregate, in connection with the statements or omissions which resulted in such
damages and other relevant equitable considerations shall also be considered.
The relative fault shall be determined by reference to, among other things,
whether in the case of an untrue statement of a material fact or the omission to
state a material fact, such statement or omission relates to information
supplied by the Company, or the Underwriter and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company and the Underwriter agree that it
would not be just and equitable if the respective obligations of the Company and
the Underwriter to contribute pursuant to this Section were to be determined by
pro rata or per capita allocation of the aggregate damages (even if the
Underwriter and its controlling persons in the aggregate were treated as one
entity for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in the first sentence of
this Section. No person guilty of a fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who is not guilty of such fraudulent misrepresentation. As used in this
paragraph, the term "Underwriter" includes any officer, director, or other
person who controls the Underwriter within the meaning of Section 15 of the Act,
and the word "Company" includes any officer, director, or person who controls
the Company within the meaning of Section 15 of the Act. If the full amount of
the contribution specified in this paragraph is not permitted by law, then the
Underwriter and each person who controls the Underwriter shall be entitled to
contribution from the Company, its officers, directors and controlling persons
to the full extent permitted by law. This foregoing contribution agreement shall
in no way affect the contribution liabilities of any persons having liability
under Section 11 of the Act other than the Company and the Underwriter. No
contribution shall be requested with regard to the settlement of any matter from
any party who did not consent to the settlement; provided, however, that such
consent shall not be unreasonably withheld in light of all factors of importance
to such party.
10. Costs and Expenses.
(a) Whether or not this Agreement becomes effective or the
sale of the Shares by the Company is consummated, the Company will pay all costs
and expenses incident to the performance of this Agreement by the Company
including but not limited to the fees and expenses of counsel to the Company and
of the Company's accountants; the costs and expenses incident to the
preparation, printing, filing and distribution under the Act of the Registration
Statement (including the financial statements therein and all amendments and
exhibits thereto), Preliminary Prospectus and the Prospectus, as amended or
supplemented; the fee of the National Association of Securities Dealers, Inc.
("NASD") in connection with the filing required by the NASD relating to the
offering of the Shares contemplated hereby; all state filing fees, expenses and
disbursements and legal fees to counsel to the Company who shall serve as Blue
Sky counsel to the Company in connection with the qualification of the Shares
under the state securities or blue sky laws in up to twelve jurisdictions, which
the Underwriter shall designate; the cost of printing and furnishing to the
Underwriter copies of the Registration Statement, each Preliminary Prospectus,
the Prospectus, this Agreement, Selected Dealers Agreement and the Blue Sky
Memorandum; the cost of printing the certificates evidencing the Shares; the
cost of preparing and delivering to the Underwriter and its counsel bound
volumes containing copies of all documents and appropriate correspondence filed
with
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or received from the Securities and Exchange Commission and the National
Association of Securities Dealers, Inc., and all closing documents; and the fees
and disbursements of the transfer agent for the Company's securities. The
Company shall pay any and all taxes (including any transfer, franchise, capital
stock or other tax imposed by any jurisdiction) on sales hereunder. The Company
will also pay all costs and expenses incident to the furnishing of any amended
Prospectus or of any supplement to be attached to the Prospectus.
(b) In addition to the foregoing expenses, the Company shall,
at the Closing Date, if at least 550,000 Shares are sold, pay to the
Underwriter, an accountable expense allowance equal to $65,000 of which $10,000
has been paid to date, and which expense allowance the Company shall reimburse
the Underwriter upon receipt of reasonable documentation of such expense from
the Underwriter.
(c) No person is entitled either directly or indirectly to
compensation from the Company, from the Underwriter or from any other person for
services as a finder in connection with the proposed offering, and the Company
agrees to indemnify and hold harmless the Underwriter against any losses,
claims, damages or liabilities, joint or several which shall, for all purposes
of this Agreement, include, but not be limited to, all costs of defense and
investigation and all attorneys' fees, to which the Underwriter may become
subject insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon the claim of any person (other
than an employee of the party claiming indemnity) or entity that he or it is
entitled to a finder's fee in connection with the proposed offering by reason of
such person's or entity's influence or prior contact with the indemnifying
party.
11. Termination.
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(a) This Agreement, except for Sections 8, 9, 10, 12, 13, 14,
15, 16, hereof, may be terminated at any time prior to the Closing Date, by you
if in your judgment it is impracticable to offer for sale or to enforce
contracts made by the Underwriter for the sale of the Shares by reason of (i)
the Company having sustained a material loss, whether or not insured, by reason
of fire, earthquake, flood, accident or other a calamity, or from any labor
dispute or court or government action, order or decree, (ii) trading in
securities on the New York Stock Exchange or the American Stock Exchange having
been suspended or limited, (iii) material governmental restrictions having been
imposed on trading in securities generally (not in force and effect on the date
hereof), (iv) a banking moratorium having been declared by federal or Georgia
State authorities, (v) an outbreak of major international hostilities or other
national or international calamity having occurred, (vi) the passage by the
Congress of the United States or by any state legislative body of similar
impact, of any act or measure, or the adoption of any orders, rules or
regulations by any governmental body or any authoritative accounting institute
or board, or any governmental executive, which has a material impact on the
business, financial condition or financial statements of the Company or the
market for securities in general, (vii) conditions in the over-the-counter
market which cause the Underwriter to believe that no favorable public market
exists for the sale of the Shares, (viii) any material adverse change having
occurred, since the respective dates as of which information is given in the
Registration Statement and Prospectus, in the earnings, business prospects or
general condition of the Company, financial or otherwise, whether or not arising
in the ordinary course of business, or (ix) the Company shall not have complied
with any term, condition or provisions on their part to be performed, complied
with or fulfilled (including but not limited to those set forth in this
Agreement) within the respective times therein provided.
(b) If you elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section, the
Company shall be promptly notified by you, by telephone or telegram, confirmed
by letter.
12. Representations, Warranties and Agreements to Survive
Delivery. The respective indemnities, agreements, representations, warranties
and other statements of the Company or its Principal Stockholders, where
appropriate, and the Underwriter set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation made by or
on behalf of the Underwriter, the Company or any of its officers or directors or
any controlling person and will survive delivery of and payment for the Shares
and the termination of this Agreement.
13. Notice. All communications hereunder will be in writing
and, except as otherwise expressly provided herein, if sent to the Underwriter,
will be mailed, delivered or telegraphed and confirmed to them at Banc Stock
Financial Services, Inc., 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxx 00000, with a copy
sent to Xxxxxxx Xxxxxxx & Xxxxxx LLP, 000 Xxxx Xxxxx Xxxxxx, Xxxxxxxx, Xxxx
00000, or if sent to the Company, will be mailed, delivered or telegraphed and
confirmed to it at 000 Xxxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000, with
a copy sent to Xxxxxx Xxxxxxx Xxxxxx & Scarborough, L.L.P. at 000 Xxxxxxxxx
Xxxxxx, XX, Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000.
14. Parties in Interest. This Agreement herein set forth is
made solely for the benefit of the Underwriter, the Company and, to the extent
expressed, any person controlling the Company or the Underwriter, and directors
of the Company, nominees for directors (if any) named in the Prospectus, its
officers who have signed the Registration Statement, and their respective
executors, administrators, successors, assigns and no other person shall acquire
or have any right under or by virtue
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of this Agreement. The term "successors and assigns" shall not include any
purchaser, as such purchaser, from the Underwriter of the Shares.
15. Applicable Law. This Agreement will be governed by, and
construed in accordance with, the Laws of the State of Ohio applicable to
agreement made and to be entirely performed within Ohio.
16. Entire Agreement. This Agreement constitutes the entire
agreement of the parties, and supersedes all prior agreement, understanding,
negotiations and discussions, whether written or oral, of the parties hereto.
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return this Agreement, whereupon it will become a
binding Agreement between the Company and the Underwriter in accordance with its
terms.
Very truly yours,
SOUTHEAST COMMERCE HOLDING COMPANY
By:
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Xxxxxxx X. Xxxxxxxxxxx, Chairman
The foregoing Underwriting Agreement is hereby confirmed and
accepted as of the date first above written.
BANC STOCK FINANCIAL SERVICES, INC.
By:
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Xxxxxxx X. Xxxxxx, President
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