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EXHIBIT 1.1
2,200,000 Shares of Common Stock
PHYSICIANS' SPECIALTY CORP.
UNDERWRITING AGREEMENT
March __, 1997
SOUTHCOAST CAPITAL CORPORATION
BARINGTON CAPITAL GROUP, L.P.
c/o Southcoast Capital Corporation
000 Xxxx Xxxxxx
Xxx Xxxx, X.X. 00000
Ladies and Gentlemen:
Physicians' Specialty Corp., a Delaware corporation ("PSC"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
underwriters named in Schedule I hereto (the "Underwriters") for whom Southcoast
Capital Corporation and Barington Capital Group, L.P. are the representatives
(the "Representatives"), an aggregate of 2,200,000 shares (the "Firm Shares") of
its common stock, par value $0.001 per share (the "Common Stock"). In addition,
for the sole purpose of covering over-allotments in connection with the sale of
the Firm Shares, PSC proposes to sell to the Underwriters, at the option of the
Underwriters, up to an additional 330,000 shares (the "Additional Shares") of
Common Stock. The Firm Shares and any Additional Shares purchased by the
Underwriters are referred to herein as the "Shares." The Shares are more fully
described in the Registration Statement referred to below.
1. Representations and Warranties of PSC. PSC represents and warrants to,
as of the date hereof, the Closing Date and the Additional Closing Date (as
defined below in Section 2(b) and 2(c), respectively), and agrees with, the
Underwriters that:
(a) PSC has filed with the Securities and Exchange Commission (the
"Commission") a registration statement, and may have filed one or more
amendments thereto, on Form S-1 (File No. 333-17091), for the registration under
the Securities Act of 1933, as amended (the "Act") of (i) the Firm Shares, (ii)
the Additional Shares, (iii) the Underwriters' options to purchase an aggregate
of 220,000 shares of Common Stock (the "Underwriters' Options"), and (iv) the
shares of Common Stock issuable upon exercise of the Underwriters' Options (the
"Underwriters' Stock"). Such registration statement, including the prospectus,
financial statements and schedules, exhibits and all other documents filed as a
part thereof, as amended at the time of effectiveness of the registration
statement, including any information deemed to be a part thereof as of the time
of effectiveness pursuant to
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paragraph (b) of Rule 430A or pursuant to Rule 434 of the Rules and Regulations
of the Commission under the Act (the "Regulations"), is herein called the
"Registration Statement" and the prospectus, in the form first filed with the
Commission pursuant to Rule 424(b) of the Regulations or filed as part of the
Registration Statement at the time of effectiveness if no Rule 424(b) or Rule
434 filing is required, is herein called the "Prospectus." The term "preliminary
prospectus" as used herein means a preliminary prospectus as described in Rule
430 of the Regulations.
(b) At the time of the effectiveness of the Registration Statement and
the effectiveness of any post-effective amendment to the Registration Statement,
when the Prospectus is first filed with the Commission pursuant to Rule 424(b)
or Rule 434 of the Regulations, when any supplement to or amendment of the
Prospectus is filed with the Commission and at the Closing Date and the
Additional Closing Date, if any, each of the Registration Statement and the
Prospectus and any amendments thereof and supplements thereto complied and will
comply in all material respects with the applicable provisions of the Act and
the Regulations and does not and will not contain an untrue statement of a
material fact and does not and will not omit to state any material fact required
to be stated therein or necessary in order to make the statements therein not
misleading. No stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereof, preventing or suspending the
use of any preliminary prospectus, the Prospectus, the Registration Statement,
or any amendment or supplement thereto, refusing to permit the effectiveness of
the Registration Statement, or suspending the registration or qualification of
any of the securities, has been issued by the Commission or the "blue sky" or
securities authority of any jurisdiction and to the knowledge of PSC, no
proceedings therefor have been initiated or threatened by the Commission and all
filings required by Rule 424(b) of the Regulations have been made. When any
related preliminary prospectus was first filed with the Commission (whether
filed as part of the registration statement for the registration of the Shares
or any amendment thereto or pursuant to Rule 424(a) of the Regulations), and
when any amendment thereof or supplement thereto was first filed with the
Commission, such preliminary prospectus and any amendments thereof and
supplements thereto when filed with the Commission complied in all material
respects with the applicable provisions of the Act and the Regulations and did
not contain an untrue statement of a material fact and did not omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein in light of the circumstances under which they were made not
misleading. No representation and warranty is made in this subsection (b),
however, with respect to any information contained in or omitted from the
Registration Statement or the Prospectus or any related preliminary prospectus
or any amendment thereof or supplement thereto in reliance upon and in
conformity with information furnished in writing to PSC by or on behalf of any
Underwriter through the Representatives expressly for use therein. If Rule 434
of the Regulations is used, PSC will comply with the requirements of Rule 434.
(c) Xxxxxx Xxxxxxxx LLP, who have certified the financial statements
included in the Registration Statement, are independent certified public
accountants as required by the Act and the Regulations.
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(d) The financial statements, including the notes thereto, included in
the Registration Statement and the Prospectus present fairly the financial
position of the entities purported to be represented thereby as of the dates
indicated and the results of operations for the periods specified. Except as
otherwise stated in the Registration Statement, such financial statements have
been prepared in conformity with generally accepted accounting principles
applied on a consistent basis, are correct and complete, and are in accordance
with the books and records of the Company Entities (as defined below). The "pro
forma" and "as adjusted" financial information included in the Prospectus,
fairly present the information purported to be shown therein at the dates
thereof and for the respective periods covered thereby and, in the opinion of
PSC, all adjustments have been properly applied. No other financial statements
are required by Form S-1, or otherwise, to be included in the Registration
Statement or the Prospectus other than those included therein.
(e) Subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, except as set forth in the
Registration Statement and the Prospectus, there has been no material adverse
change or any development involving a prospective material adverse change in the
business, prospects, properties, operations, condition (financial or other) or
results of operations of the Company Entities (as defined herein), taken as a
whole, whether or not arising from transactions in the ordinary course of
business. Since the date of the latest balance sheet presented in the
Registration Statement and the Prospectus, and except as described in the
Registration Statement and the Prospectus, PSC has not (i) issued any securities
or incurred or undertaken any liabilities or obligations, direct or contingent,
that are, individually or in the aggregate, material to the Company Entities
taken as a whole or (ii) entered into any transaction or transactions not in the
ordinary course of business that are, individually or in the aggregate, material
to the Company Entities taken as a whole; (iii) declared or paid any dividend on
or made any distribution of or with respect to any shares of capital stock or
redeemed, purchased or otherwise acquired or agreed to redeem, purchase or
otherwise acquire any shares of capital stock.
(f) PSC has no subsidiaries, as defined in Rule 1-02(x) of Regulation
S-X promulgated under the Act, other than PSC Management Corp., PSC Acquisition
Corp., PSC Alabama, Inc. as of the date hereof (each individually, a
"Subsidiary", collectively, the "Subsidiaries") , and additionally, as of the
Closing Date, ENT Center of Atlanta, Inc., Atlanta ENT Center for Physicians,
Inc. and Atlanta-AHP, Inc., (collectively, the "ENT Networks" and together with
PSC and the Subsidiaries, a "Company Entity"). All of the capital stock of the
Subsidiaries is owned by a Company Entity free and clear of all liens, security
interests, pledges, charges, encumbrances, stockholders' agreements, voting
trusts or other defects of title whatsoever. Each Company Entity has been duly
organized and is validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation. Each Company Entity is duly qualified
and in good standing as a foreign corporation in each jurisdiction in which the
character or location of its properties (owned, leased or licensed) or the
nature or conduct of its business makes such qualification necessary, except for
those failures to be so qualified or in good standing which would not,
individually or in the aggregate, have a material adverse effect on the
business, prospects,
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properties, assets, liabilities, operations, condition (financial or other) or,
results of operations of the Company Entities, taken as a whole (a "Material
Adverse Effect").
(g) As of the Closing Date, the authorized capital stock of PSC
consists of 50,000,000 shares of Common Stock, of which, as of the date of the
Prospectus, 599,893 were outstanding, and 10,000 shares of Preferred Stock, none
of which were outstanding. All of the outstanding securities of PSC and all of
the outstanding securities of the Subsidiaries have been duly and validly
authorized and issued, are fully paid and nonassessable without any personal
liability attaching to the ownership thereof and were not issued and are not now
in violation of or subject to any preemptive rights. Each of the Shares to be
delivered on the Closing Date or any Additional Closing Date have been duly and
validly authorized and, when delivered and sold by PSC in accordance with the
terms of this Agreement, will be duly and validly issued and outstanding, fully
paid and nonassessable, without any personal liability attaching to the
ownership thereof, and will not have been issued and will not be owned or held
in violation of or be subject to any preemptive rights. The Underwriters will
receive good title to the Shares purchased by them, respectively, free and clear
of all liens, security interests, pledges, charges, encumbrances, stockholders'
agreements, voting trusts or other defects of title whatsoever.
(h) The Common Stock, the preferred stock, par value $1.00 per share
(the "Preferred Stock"), the Firm Shares, the Additional Shares, the
Underwriters' Options and the Underwriters' Stock conform in all material
respects to the descriptions thereof contained in the Registration Statement and
the Prospectus.
(i) There is no commitment, plan or arrangement to issue, and no
outstanding option, warrant or other right calling for the issuance of, any
shares of capital stock (or similar interests) of any Company Entity or any
security or other instrument that by its terms is convertible into, exchangeable
for or evidencing the right to purchase capital stock (or similar interests) of
any Company Entity, except as described in or contemplated by the Registration
Statement and the Prospectus. There is outstanding no material indebtedness,
individually or in the aggregate, of the Company Entities taken as a whole,
except as described in the Registration Statement and the Prospectus.
(j) PSC has all requisite corporate power and authority to execute,
deliver and perform its obligations under each of (i) this Agreement and (ii)
the certificates evidencing the Underwriters' Options (the "Underwriters' Option
Agreement" and, together with this Agreement, the "Company Documents"). Each
Company Entity has all requisite corporate power and authority to execute,
deliver and perform its respective obligations under each of the Physician
Agreements (as defined below), to which it is a party. PSC has all requisite
corporate power and authority to issue, sell and deliver the Shares in
accordance with the terms and conditions hereof. All necessary corporate
proceedings of each Company Entity have been duly taken to authorize the
execution, delivery, and performance by each Company Entity, respectively, of
each of the Company Documents and Physician Agreements, to which it is or is to
be a party. Each of the Company Documents has been duly and validly executed and
delivered by PSC and is a legal and binding obligation of PSC, enforceable
against PSC in accordance with its terms. Each of the Physician Agreements has
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been and the transactions contemplated thereby have been duly and validly
authorized by each Company Entity party thereto and is or, when executed and
delivered by each such Company Entity, will be the legal, valid, and binding
obligation of each such Company Entity, enforceable against each such Company
Entity in accordance with its terms, subject to applicable bankruptcy,
insolvency, and other laws affecting the enforceability of creditors' rights
generally and subject to general principles of equity. The "Physician
Agreements" shall include all agreements filed as exhibits 10.1 through 10.8 and
10.23 through 10.28 to the Registration Statement.
(k) The execution, delivery, and performance of the Company Documents
or any of the Physician Agreements and the consummation of the transactions
contemplated thereby do not and will not (i) conflict with or result in a
material breach of any of the terms and provisions of, or constitute a default
(or an event which with notice or lapse of time, or both, would constitute a
default) under, or result in the creation or imposition of any material lien,
charge or encumbrance upon the property or assets of the Company Entities taken
as a whole pursuant to, any agreement, instrument, franchise, license or permit
to which any Company Entity is a party, or which has been assumed by any Company
Entity or by which their properties or assets may be bound or (ii) violate or
conflict with any provision of the certificate of incorporation or by-laws of
any Company Entity or any law, statute, rule or regulation or any judgment,
decree, or order of any court or any public, governmental or regulatory agency
or body having jurisdiction over any Company Entity or any of their respective
properties or assets.
(l) No Company Entity is in violation or breach of, or in default with
respect to, any term of its certificate of incorporation (or other charter
document) or by-laws.
(m) Each Company Entity has all requisite power and authority and all
necessary consents, approvals, authorizations, orders, registrations, filings,
qualifications, licenses and permits of and from all public, governmental or
regulatory agencies and bodies, to own, lease and operate its properties and
conduct its business as now being conducted and as described in the Registration
Statement and the Prospectus and to execute and deliver and to perform, upon
entry into such agreements, its obligations under the Company Documents and the
Physician Agreements to which it is a party, or to consummate the transactions
contemplated thereby, except for the registration of the Shares under the Act
and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
authorization of the Shares for quotation in the Nasdaq National Market, by the
National Association of Securities Dealers, Inc. (the "NASD") and such filings
and registrations as may be required under state securities or "Blue Sky" laws
in connection with the purchase and distribution of the Shares by the
Underwriters, all of which will be completed or obtained prior to the Closing.
No consent of any party to any contract, agreement, instrument, lease, license,
arrangement, or understanding to which any Company Entity is a party, or to
which any of their respective properties or assets are subject, is required for
the execution, delivery, or performance of the Company Documents or any of the
Physician Agreements, except such consents as have been obtained.
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(n) No Company Entity has received any notification from any regulatory
authority, including, without limitation, any health care regulatory authority,
to the effect that any additional approval is required to be obtained by any
Company Entity for the conduct of its business as contemplated by the
Registration Statement and the Prospectus and no such consent, approval,
authorization, order, registration, qualification, license or permit contains a
materially burdensome restriction not adequately disclosed in the Registration
Statement and the Prospectus. No Company Entity has received any notice of
proceedings relating to revocation or modification of any such consents,
approvals, authorizations, orders, registrations, filings, qualifications,
licenses or permits.
(o) The Underwriters' Stock is duly authorized and reserved for
issuance and, when issued and delivered upon exercise of the Underwriters'
Options in accordance with the Underwriters' Option Agreement, will be duly
authorized, validly issued and outstanding, fully paid and nonassessable,
without any personal liability attaching to the ownership thereof, and will not
be issued in violation of any preemptive rights of stockholders; and the holders
of the Underwriters' Options will received good title to the securities
purchased by them, respectively, free and clear of all liens, security
interests, pledges, charges, encumbrances, stockholders' agreements, voting
trusts or other defects of title whatsoever.
(p) No Company Entity is, in violation or breach of, or in default
under (nor has an event occurred that with notice, lapse of time or both, would
constitute a default under), any contract which is material to the business of
the Company Entities taken as a whole (a "Material Contract"). Each Material
Contract is in full force and effect and is the legal, valid, and binding
obligation of any Company Entity party thereto and is enforceable as to such
Company Entity in accordance with its terms, subject to applicable bankruptcy,
insolvency and other laws affecting the enforceability of creditors' rights
generally and subject to general principles of equity.
(q) Except as set forth in the Registration Statement and the
Prospectus, there is no litigation, arbitration, claim or governmental or other
action, suit, proceeding or investigation before any court or before or by any
public, regulatory or governmental agency or body pending with respect to any
Company Entity or, to the knowledge of PSC, threatened against, or involving the
properties or business of, any Company Entity which individually or in the
aggregate might result in a Material Adverse Effect or which is of a character
required to be disclosed in the Registration Statement and the Prospectus which
has not been properly disclosed therein.
(r) Except as contemplated herein or as may have been waived or as
disclosed in the Prospectus, PSC has not granted any person or entity any right
of first refusal, preemptive right, right to any compensation, or other similar
right or option, in connection with the proposed offering of the Shares for sale
to the public as set forth in the Prospectus (the "Offering"), this Agreement,
the Underwriters' Options or any of the transactions contemplated hereby or
thereby.
(s) Except for such violations or failures of compliance that,
individually or in the aggregate, would not have a Material Adverse Effect, no
Company Entity is, nor, to the best
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knowledge of PSC, with the giving of notice or lapse of time or both will any
Company Entity be, in violation of or non-compliance with the requirements of
any permit material to the operation of the business of the Company Entities
taken as a whole or the provisions of any law, rule, regulation, order, judgment
or decree, including, but not limited to, all applicable federal, state and
local laws and regulations.
(t) Except as described in the Registration Statement and the
Prospectus, each Company Entity has, (i) good and marketable title to all real
and personal properties owned by such Company Entity, free and clear of all
liens, security interests, pledges, charges, encumbrances, and mortgages, and
(ii) valid and enforceable leases for all real and personal properties leased by
them, respectively, in each case, subject to such exceptions as, individually or
in the aggregate, would not have a Material Adverse Effect. No real property
owned, leased, licensed or used by any Company Entity is located in an area that
is, or to the best knowledge of PSC will be, subject to zoning, use, or building
code restrictions that would prohibit, and no state of facts relating to the
actions or inaction of another person or entity or his, her or its ownership,
leasing, licensing, or use of any real or personal property exists that would
prevent, the continued effective ownership, leasing, licensing, or use of such
real property in the business of the Company Entities as presently conducted or
as the Prospectus indicates is contemplated to be conducted, subject to such
exceptions as, individually or in the aggregate, would not have a Material
Adverse Effect.
(u) Each Company Entity owns or possesses, all patents, patent rights,
licenses, inventions, copyrights, trademarks, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), service marks and trade names
(collectively, "Intellectual Property") necessary to conduct its business as now
conducted and proposed to be conducted as disclosed in the Registration
Statement and as shall be disclosed in the Prospectus, except where the failure
to own or possess such Intellectual Property, individually or in the aggregate,
would not have a Material Adverse Effect. PSC is not aware of any infringement
of, or conflict with, the asserted rights of others with respect to any
Intellectual Property. To the best knowledge of PSC, there is no infringement by
others of any Intellectual Property of any Company Entity that, individually or
in the aggregate, would have a Material Adverse Effect. Except as described in
the Registration Statement and the Prospectus, each Company Entity has
registered the rights to each trademark, trade name and related logo disclosed
in the Registration Statement and the Prospectus as possessed by it, in all
jurisdictions in which such trademarks and logos are currently being or are
contemplated to be used and in which such registration is currently permitted.
(v) Each contract, agreement, instrument, lease, license or other item
required to be described in the Registration Statement or the Prospectus or
filed as an exhibit to the Registration Statement has been so described or
filed, as the case may be and each such description is complete and accurate in
all material respects.
(w) Except as described in the Registration Statement and the
Prospectus, no person or entity has the right, by contract or otherwise, to
require registration under the Act
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of shares of capital stock or other securities of any Company Entity because of
the filing or effectiveness of the Registration Statement or otherwise in
connection with the sale of the Shares contemplated hereby, except for such
rights as have been legally and effectively waived.
(x) No Company Entity is, and upon consummation of the transactions
contemplated hereby, none of them will be, subject to registration as an
"investment company" as defined pursuant to the Investment Company Act of 1940.
(y) The Shares have been duly authorized for quotation on the Nasdaq
National Market, subject to notice of issuance.
(z) Each Company Entity maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles ("GAAP")
and to maintain accountability for assets; (iii) the access to the assets of
each Company Entity 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.
(aa) Each Company Entity has filed all necessary Federal, state and
foreign income and franchise tax returns and has paid all taxes shown as due
thereon. PSC does not have knowledge of any tax deficiency which has been or
could be asserted against any Company Entity which, individually or in the
aggregate, would have a Material Adverse Effect.
(ab) Other than as disclosed in the Registration Statement and the
Prospectus, no labor dispute with the employees of any Company Entity exists or,
to the best knowledge of PSC, is threatened that, individually or in the
aggregate, would have a Material Adverse Effect.
(ac) Each Company Entity is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the business in which the Company Entities are engaged. PSC has
no reason to believe that any Company Entity will not be able to renew existing
insurance coverage from similar insurers, except as disclosed in the
Registration Statement and the Prospectus.
(ad) Except as disclosed in the Registration Statement and in the
Prospectus, there are no business relationships or related party transactions of
the nature described in Item 404 of Regulation S-K of the Commission involving
any Company Entity or any other persons referred to in such Item 404, except for
such transactions that would be considered immaterial under such Item 404.
(ae) No Company Entity has, nor, to the best knowledge of PSC, has any
director, officer or employee of any Company Entity, directly or indirectly,
used any corporate funds
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for unlawful contributions, gifts, entertainment, or other unlawful expenses
relating to political activity; made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns from corporate funds; violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended; or made any bribe, rebate, payoff, influence
payment, kickback, or other unlawful payment.
(af) No Company Entity nor any officer, director, or affiliate (as
defined in the Regulations) of any Company Entity has taken, directly or
indirectly, any action designed to cause or result in, or which constitutes or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Common Stock to facilitate the sale
or resale of the Shares.
(ag) No Company Entity nor any affiliate of any Company Entity does
business with the government of Cuba or with any person or affiliate located in
Cuba within the meaning of Section 517.075 Florida Statutes and PSC agrees to
comply, and shall cause each Subsidiary to comply, with such Section if prior to
the completion of the distribution of the Shares any Company Entity commences
doing such business.
(ah) PSC has obtained from each director, officer and affiliate (as
defined in the Regulations) of PSC, and from each other person or entity who
beneficially owned as of the effective date of the Registration Statement shares
of Common Stock of PSC or any security or other instrument which by its terms is
convertible into, exercisable for, or exchangeable for shares of Common Stock or
other securities of PSC (each an "Original Stockholder"), enforceable written
agreements, in form and substance satisfactory to counsel for the Underwriters,
that for a period of 12 months from the effective date of the Registration
Statement he will not, without the prior written consent of Southcoast Capital
Corporation, on behalf of the Underwriters, offer, issue, sell, contract to
sell, grant any option for the sale of, or otherwise dispose of, directly or
indirectly, any shares of Common Stock or other securities of PSC or any shares
of capital stock or other securities of any Subsidiary (or securities or other
instruments convertible into, exchangeable for, or evidencing the right to
purchase shares of Common Stock or such capital stock or other securities of any
Company Entity, including, without limitation, any shares of Common Stock or
securities issuable under any outstanding stock options).
(ai) The businesses of the Company Entities, assuming the consummation
of the Reorganization pursuant to the terms of the Entities' Agreements (as
defined below) and the entry into such Entities' Agreements by each Company
Entity party thereto and each of the other parties thereto, and the conduct of
such businesses as contemplated therein, do not violate, and no Company Entity
is otherwise in violation of, any health care statute, law, ordinance, decree,
administrative or governmental rule or regulation applicable to it, including,
without limitation, 42 U.S.C. Section 1395nn; 42 U.S.C. Section 1320a-7b(b), and
those relating to reimbursement by government agencies and fraudulent or
wrongful xxxxxxxx or any health care judgment, injunction, order or decree of
any court or government entity or instrumentality of the United States of
America having jurisdiction over any Company Entity, except for violations that,
individually or in the aggregate, would not have a Material Adverse Effect. The
"Entities Agreements" shall include the Management
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Services Agreement, the Asset Acquisition Agreement, the Network Acquisition
Agreement, each of the physician participation agreements and each other
agreement between any Company Entity and any physician, physician practice,
health maintenance organization, provider network, managed care payor or any
other health care provider, physician practice management company, managed care
organization or payor (government or private), including those agreements
entered into in connection with the Reorganization.
(aj) Except as disclosed in the Prospectus, no Company Entity nor, to
the knowledge of PSC, any employee or agent of any Company Entity has made any
payment of funds or received or retained any funds in violation of any law, rule
or regulation, including, without limitation, any law, rule or regulation
prohibiting fee-splitting or fees for the referral of patients.
(ak) The businesses of the Company Entities as currently conducted and
as proposed to be conducted pursuant to the description thereof in the
Prospectus (i) do not involve the offer, payment, solicitation or receipt of
remuneration in exchange for the referral or arranging for the referral of
patients, or the referral of patients by physicians to entities in which such
physicians have an ownership interest or compensation arrangement ("self-
referral") in violation of the federal law, the laws of the State of Georgia or
the laws of the State of Alabama, as such laws are presently in effect and
interpreted by regulatory authorities in such jurisdictions, (b) do not
constitute an arrangement subject to regulation under the insurance laws of the
State of Georgia, as such laws are presently interpreted by regulatory
authorities in such jurisdictions and (c) do not constitute the unauthorized
practice of medicine under the laws of the State of Georgia, as such laws are
presently interpreted by regulatory authorities in such jurisdictions. No
individual with an ownership or control interest, as defined in 42 U.S.C.
Section 1320a-3(a)(3), in any of the Company Entities or who is an officer,
director or managing employee as defined in 42 U.S.C. Section 1320a-5(b), of
any Company Entity is a person described in 42 U.S.C. Section 1320a-7(b)(8)(B).
(al) The businesses of the Company Entities as presently conducted and
as contemplated by the Registration Statement and the Prospectus do not violate
any statute, administrative or governmental rule or regulation applicable to
such Company Entities or laws prohibiting the corporate practice of medicine,
fee-splitting or fees for the referral of patients, or any ruling, judgment,
injunction, order or decree of any court or government entity or instrumentality
having jurisdiction over such Company Entities.
2. Purchase, Sale and Delivery of the Shares.
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, PSC agrees to issue and sell to the Underwriters an aggregate of
2,200,000 shares of Common Stock and each Underwriter agrees, severally and not
jointly, to purchase from PSC, the number of Firm Shares set forth opposite the
name of such Underwriter in Schedule I hereto, all at a purchase price per share
of $_________ (the "Purchase Price").
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(b) Payment of the purchase price for, and delivery of certificates
for, the Shares shall be made at the office of Kramer, Levin, Naftalis &
Xxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place as
shall be agreed upon by the Underwriters and PSC, at 10:00 A.M. on the third or
fourth business day (as permitted under Rule 15c6-1 under the Exchange Act)
following the date of the effectiveness of the Registration Statement (or, if
PSC has elected to rely upon Rule 430A of the Regulations, the third or fourth
business day (as permitted under Rule 15c6-1 under the Exchange Act) after the
determination of the initial public offering price of the Shares), or such other
time as shall be agreed upon by the Underwriters and PSC (such time and date of
payment and delivery being herein called the "Closing Date"). Payment shall be
made to PSC by certified or official bank check or checks drawn in New York
Clearing House funds or similar next day funds payable to the order of PSC, as
the case may be, against delivery to the Underwriters for the respective
accounts of the Underwriters of certificates for the Shares to be purchased by
them. Certificates for the Shares shall be registered in such name or names and
in such authorized denominations as the Underwriters may request in writing at
least two full business days prior to the Closing Date. PSC will permit the
Underwriters to examine and package such certificates for delivery at least one
full business day prior to the Closing Date.
(c) In addition, PSC hereby grants to the Underwriters the option to
purchase up to 330,000 Additional Shares at the same purchase price per share to
be paid by the Underwriters to PSC for the Firm Shares as set forth in this
Section 2, for the sole purpose of covering over-allotments in the sale of Firm
Shares by the Underwriters. This option may be exercised at any time, in whole
or in part, on or before the forty-fifth day following the date of the
Prospectus, by written notice by the Underwriters to PSC. Such notice shall set
forth the aggregate number of Additional Shares as to which the option is being
exercised and the date and time, as reasonably determined by the Underwriters,
when the Additional Shares are to be delivered (such date and time being herein
sometimes referred to as the "Additional Closing Date"); provided, however, that
the Additional Closing Date shall not be earlier than the Closing Date or
earlier than the second full business day after the date on which the option
shall have been exercised nor later than the eighth full business day after the
date on which the option shall have been exercised (unless such time and date
are postponed in accordance with the provisions of Section 9 hereof).
Certificates for the Additional Shares shall be registered in such name or names
and in such authorized denominations as the Underwriters may request in writing
at least two full business days prior to the Additional Closing Date. PSC will
permit the Underwriters to examine and package such certificates for delivery at
least one full business day prior to the Additional Closing Date.
(d) The number of Additional Shares to be purchased by each Underwriter
shall be the number which bears the same ratio to the aggregate number of
Additional Shares being purchased as the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto (or such number
increased as set forth in Section 9 hereof) bears to the total number of Firm
Shares, subject, however, to such adjustments to eliminate any fractional shares
as the Underwriters in their sole discretion shall make.
(e) Payment of the purchase price for, and delivery of certificates for
the Additional Shares shall be made at the location for the Closing specified
above or at such
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other location as may be agreed upon by the Underwriters and PSC. Payment shall
be made to PSC by certified or official bank check or checks, in New York
Clearing House or similar next day funds, payable to the order of PSC against
delivery to the Underwriters for the respective accounts of the Underwriters of
certificates for the Additional Shares to be purchased by them. Certificates for
the Additional Shares shall be registered in such name or names and in such
authorized denominations as the Underwriters may request in writing at least two
full business days prior to the Additional Closing Date.
3. Offering. It is understood by the parties hereto that after the
Registration Statement becomes effective, the Underwriters propose to offer the
Shares for sale to the public as set forth in the Prospectus.
4. Covenants of PSC. PSC covenants and agrees with the Underwriters that:
(a) If the Registration Statement has not yet been declared effective
PSC will use its best efforts to cause the Registration Statement and any
amendments thereto to become effective as promptly as possible and to maintain
its effectiveness. If Rule 430A is used or the filing of the Prospectus is
otherwise required under Rule 424(b) or Rule 434, PSC will file the Prospectus
(properly completed if Rule 430A has been used) pursuant to Rule 424(b) or Rule
434 within the prescribed time period and will provide evidence satisfactory to
the Underwriters of such timely filing. If PSC elects to rely on Rule 434, it
will prepare and file a term sheet that complies with the requirements of Rule
434.
PSC will promptly notify the Underwriters of any proposal to amend or
supplement the registration statement as filed or the related prospectus or the
Registration Statement or the Prospectus and will not effect such amendment or
supplementation without the Representatives' consent, which will not be
unreasonably withheld.
PSC will promptly notify the Underwriters (and, if requested by the
Underwriters, will confirm such notice in writing) (i) when the Registration
Statement and any amendments thereto become effective, (ii) of any request by
the Commission for any amendment of or supplement to the Registration Statement
or the Prospectus or for any additional information, (iii) of the mailing or the
delivery to the Commission for filing of any amendment of or supplement to the
Registration Statement or the Prospectus, (iv) of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration Statement or
any post-effective amendment thereto or of the initiation, or the threatening,
of any proceedings therefor, (v) of the receipt of any comments from the
Commission, and (vi) of the receipt by PSC of any notification with respect to
the suspension of the qualification of the Shares for sale in any jurisdiction
or the initiation or threatening of any proceeding for that purpose. If the
Commission shall propose to enter, or enter, a stop order at any time, PSC will
make every reasonable effort to prevent the issuance of any such stop order and,
if issued, to obtain the lifting of such order as soon as possible.
(b) If at any time when a prospectus relating to the Shares is required
to be delivered under the Act any event shall have occurred as a result of which
the Prospectus as then amended or supplemented would, in the judgment of the
Underwriters or PSC include
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an untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, or if
it shall be necessary at any time to amend or supplement the Prospectus or
Registration Statement to comply with the Act or the Regulations, PSC will
promptly notify the Underwriters and prepare and file with the Commission an
appropriate amendment or supplement (in form and substance satisfactory to the
Underwriters) which will correct such statement or omission and will use its
best efforts to have any amendment to the Registration Statement declared
effective as soon as possible.
(c) PSC has delivered or will promptly deliver to the Underwriters
three copies of the Registration Statement, including exhibits and all
amendments thereto, and PSC has delivered or will promptly deliver to each of
the Underwriters such number of copies of any preliminary prospectus, the
Prospectus, the Registration Statement, and all amendments of and supplements to
such documents, if any, as the Underwriters may reasonably request.
(d) PSC will endeavor in good faith, in cooperation with the
Underwriters and Underwriters' Counsel (as defined in Section 6), at or prior to
the time of effectiveness of the Registration Statement, to qualify the Shares
for offering and sale under the securities laws relating to the offering or sale
of the Shares in such jurisdictions as the Underwriters may designate and to
maintain such qualification in effect for so long as required for the
distribution thereof; except that in no event shall PSC be obligated in
connection therewith to qualify as a foreign corporation or a dealer in
securities or to execute a general consent to service of process.
(e) PSC will make generally available (within the meaning of Section
11(a) of the Act) to its security holders and to the Underwriters as soon as
practicable, but not later than 45 days after the end of its fiscal quarter in
which the first anniversary date of the effective date of the Registration
Statement occurs, an earnings statement (in form complying with the provisions
of Rule 158 of the Regulations) covering a period of at least twelve consecutive
months beginning after the effective date of the Registration Statement.
(f) PSC has not, and for a period of 12 months from the effective date
of the Registration Statement no Company Entity shall without the prior written
consent of Southcoast Capital Corporation on behalf of the Underwriters, offer,
issue, sell, contract to sell, grant any option for the sale of, or otherwise
dispose of, directly or indirectly, any shares of Common Stock or other
securities of any Company Entity (or any securities or other instruments
convertible into, exchangeable for or evidencing the right to purchase shares of
Common Stock or such capital stock or other securities) other than (A) PSC's
issuance and sale of Shares in accordance with this Agreement, (B) the grant of
options under PSC's 1996 Stock Option Plan, (C) the grant of options under PSC's
1996 Health Care Professionals Plan, (D) the issuance of Common Stock issuable
upon the exercise of stock options and pursuant to the plans described in
clauses (B) and (C) hereof, (D) the issuance of the Underwriters' Options, (E)
the issuance of the Underwriters' Stock and (F) the issuance of shares in
connection with any acquisition, to the extent that any such acquisition has
been approved by PSC's Board of Directors.
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(g) During a period of five years from the effective date of the
Registration Statement, PSC will furnish to the Underwriters copies of (i) all
reports to its stockholders and (ii) all reports, financial statements and proxy
or information statements filed by PSC with the Commission or any national
securities exchange.
(h) PSC will apply the proceeds from the sale of the Shares
substantially as set forth under "Use of Proceeds" in the Prospectus, subject to
the qualifications contained therein.
(i) PSC will use its best efforts to cause the Shares to be included
for quotation on the Nasdaq National Market.
(j) PSC shall comply with all registration, filing and reporting
requirements of the Exchange Act and the rules and regulations thereunder, which
may from time to time be applicable to PSC. PSC will file with the Commission
such reports on Form SR as may be required pursuant to Rule 463 of the
Regulations.
(k) PSC shall comply with all applicable provisions of all undertakings
contained in the Registration Statement.
(l) PSC will not take, and will not allow any Subsidiary to take,
directly or indirectly, prior to the termination of the offering of the Shares
contemplated by this Agreement, any action designed to stabilize or manipulate
the price of the Common Stock, or that might reasonably be expected to cause or
result in stabilization or manipulation of the price of the Common Stock.
(m) On the Closing Date, PSC shall sell to the Representatives (or
their designees) the Underwriters' Options to purchase an aggregate of 220,000
shares of Common Stock, which Underwriters' Options shall be evidenced by the
Underwriters' Option Agreement in the form set forth as an exhibit to the
Registration Statement.
(n) Until expiration or exercise of all of the Underwriters' Options,
PSC shall keep reserved sufficient shares of Common Stock for issuance upon
exercise of the Underwriters' Options.
5. Payment of Expenses. Whether or not the transactions contemplated in
this Agreement are consummated or this Agreement is terminated, PSC hereby
agrees to pay all costs and expenses incident to the performance of the
obligations of PSC hereunder, including those in connection with (i) preparing,
printing, duplicating, filing and distributing the Registration Statement, as
originally filed and all amendments thereof (including all exhibits thereto),
any preliminary prospectus, the Prospectus and any amendments or supplements
thereto, the underwriting documents (including this Agreement and the
Underwriters' Option Agreement) and all other documents related to the public
offering of the Shares (including those supplied to the Underwriters in
quantities as hereinabove stated), (ii) the issuance, sale, transfer and
delivery of the Shares to the Underwriters, including any transfer or other
taxes payable thereon, (iii) the registration and qualification of the Shares
under state
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or foreign securities or Blue Sky laws, including the costs of printing and
mailing a preliminary and final "Blue Sky Survey" and the reasonable fees of
counsel for the Underwriters and such counsel's disbursements in relation
thereto (up to a maximum of $30,000), (iv) quotation of the Shares on the Nasdaq
National Market, (v) the reasonable filing fees and disbursements of the
Underwriters relating to all filings with the NASD, (vi) the cost of printing
certificates representing the Shares; (vii) the cost and charges of any transfer
agent or registrar; (viii) the fees and expenses of PSC's legal counsel and
accountants; (ix) the fees of an investigative search firm designated by the
Underwriters to conduct a background check of the principals of PSC; (x) the
costs (up to a maximum of $15,000) of placing "tombstone" advertisements in the
national edition of The Wall Street Journal and other publications; and (xi) the
costs of preparing a reasonable number of transaction "bibles" or "mementos."
6. Conditions of Underwriters' Obligations. The obligations of the
Underwriters to purchase and pay for the Firm Shares and the Additional Shares,
as provided herein, shall be subject, in their discretion, to the accuracy of
the representations and warranties of PSC herein contained, as of the date
hereof and as of the Closing Date (for purposes of this Section 6 "Closing Date"
shall refer to the Closing Date for the Firm Shares and any Additional Closing
Date, if different, for the Additional Shares), the certificates, opinions,
written statements or letters furnished to the Underwriters or to Kramer, Levin,
Naftalis & Xxxxxxx ("Underwriters' Counsel") pursuant to this Section 6 are
reasonably satisfactory to the Underwriters or Underwriters' Counsel, to the
performance by PSC of its obligations hereunder, and to the following additional
conditions:
(a) The Registration Statement shall have become effective not later
than 5:00 P.M., New York City time, on the date of this Agreement or at such
later time and date as shall have been consented to in writing by the
Underwriters. All post-effective amendments to the Registration Statement shall
have become effective. If PSC shall have relied upon Rule 430A of the
Regulations, the Prospectus shall have been filed with the Commission in a
timely fashion in accordance with Section 4(a) hereof. All filings required by
Rule 424 of the Regulations shall have been made. No stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereof shall have been issued by the Commission and no proceedings therefor
shall have been initiated or threatened by the Commission.
(b) At the Closing Date and any Additional Closing Date, the
Underwriters shall have received the opinion of Bachner, Tally, Xxxxxxx &
Xxxxxx, LLP, counsel for PSC, dated the date of delivery, addressed to the
Underwriters and in form and substance satisfactory to Underwriters' Counsel, to
the effect that:
(i) at the time of the effectiveness of the Registration Statement
and the effectiveness of any post-effective amendment to the
Registration Statement, when the Prospectus is first filed with the
Commission pursuant to Rule 424(b) or Rule 434 of the Regulations and
when any supplement to the Prospectus is filed with the Commission and
at the date hereof, each of the Registration Statement and the
Prospectus (except for the financial statements and schedules and other
financial data
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included therein, or omitted therefrom, as to which no opinion need be
rendered) complied and comply as to form in all material respects with
the applicable requirements of the Act and the Regulations;
(ii) the Registration Statement is effective under the Act, and to
such counsel's knowledge, no stop order suspending the effectiveness of
the Registration Statement or preventing or suspending the use of the
Prospectus or the Registration Statement has been issued by the
Commission and, to such counsel's knowledge, no proceedings therefor
have been initiated or threatened by, the Commission and all filings
required by Rule 424(b) of the Regulations have been met;
(iii) except as described in the Prospectus, to such counsel's
knowledge, all of the capital stock of the Subsidiaries is owned by PSC
free and clear of all liens, security interests, pledges, charges,
encumbrances, stockholders' agreements, voting trusts or other defects
of title. Each Company Entity has been duly organized and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation. Each Company Entity is duly qualified
and in good standing as a foreign corporation in each jurisdiction in
which the character or location of its properties (owned or leased) or
the nature or conduct of its business makes such qualification
necessary, except where the failure to be so qualified or in good
standing will not have a Material Adverse Effect;
(iv) as of the Closing Date, the authorized capital stock of PSC
consists of 50,000,000 shares of Common Stock, of which, as of the date
of the Prospectus, 599,893 were outstanding, and 10,000 shares of
Preferred Stock, none of which were outstanding. All of the outstanding
securities of PSC, and all of the outstanding securities of the
Subsidiaries, have been duly authorized, validly issued, are fully paid
and non-assessable without any personal liability attaching to the
ownership thereof and, to such counsel's knowledge, are not owned in
violation of or subject to any preemptive rights. The Shares have been
duly authorized and, when delivered in accordance with this Agreement,
will be duly and validly issued, fully paid and non-assessable, without
any personal liability attaching to the ownership thereof and, to such
counsel's knowledge, will not have been issued and will not be owned or
held in violation of or subject to any preemptive rights. Upon delivery
of and payment for the Shares by the Underwriters in accordance with
this Agreement, each Underwriter will receive good title to the Shares
purchased by it, free and clear of all liens, security interests,
pledges, charges, encumbrances, stockholders' agreements, voting trusts
or other defects of title whatsoever. The Common Stock, the Preferred
Stock, the Shares, and the Underwriters' Stock conform as to legal
matters in all material respects to the descriptions thereof contained
in the Registration Statement and the Prospectus;
(v) PSC has all requisite corporate power and authority to
execute, deliver and perform its obligations under each of the Company
Documents and to issue, sell and deliver the Shares in accordance with
the terms and conditions hereof. All necessary corporate proceedings of
PSC have been duly taken to authorize the
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execution, delivery and performance by PSC of each of the Company
Documents. The Company Documents have been duly and validly executed
and delivered by PSC and, assuming due execution by each other party
thereto, is a legal and binding obligation of PSC enforceable against
PSC in accordance with its terms (except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application relating to or
affecting enforcement of creditors' rights and the application of
equitable principles in any action, legal or equitable, and except as
rights to indemnity or contribution may be limited by applicable law);
(vi) to such counsel's knowledge, except for such violations,
defaults or failure of compliance which would not have a Material
Adverse Effect, and except as disclosed in the Prospectus, PSC is not
in violation or breach of or default under (nor has an event occurred
that with notice, lapse of time or both would constitute a default
under), nor will the execution and delivery of the Company Documents
and the consummation of the transactions contemplated thereby conflict
with or result in a breach of, or constitute a default (or an event
which with notice or lapse of time, or both, would constitute a
default) under or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company
pursuant to (a) PSC's certificate of incorporation or by-laws, (b) any
agreement, instrument, franchise, license or permit known to such
counsel and to which PSC is a party or by which PSC's properties or
assets may be bound, or (c) any law, statute, rule or regulation, or
judgment, decree or order of any court or any government or regulatory
agency, provided, however, that such counsel expresses no opinion as to
laws, licenses or related regulatory and other matters referred to
under the sections "Risk Factors -- Government Regulations" and "Risk
Factors - Health Care Reform" and "Business -- Government Regulation"
in the Prospectus;
(vii) each Company Entity all requisite corporate power and
authority and, to such counsel's knowledge, all necessary consents,
approvals, authorizations, orders, registrations, filings,
qualifications, licenses and permits of and from all public,
governmental or regulatory agencies and bodies to own, lease and
operate its properties and conduct its business as now being conducted
and as described in the Registration Statement and Prospectus, other
than registrations or qualifications of the Shares under applicable
state or foreign securities or Blue Sky laws and registration under the
Act; provided, however, that such counsel expresses no opinion as to
laws, licenses or related regulatory matters included under the
sections "Risk Factors Government Regulations", "Risk Factors - Health
Care Reform" and "Business -- Government Regulation" in the Prospectus.
To such counsel's knowledge, no consent of any party to any agreement,
instrument, franchise or license filed as an Exhibit to the
Registration Statement is required for the execution, delivery and
performance of any of the Company Documents except such consents as
have been obtained;
(viii) the Underwriters' Stock has been duly authorized and
reserved for issuance and, when issued and delivered upon exercise of
the Underwriters' Option Agreement in accordance with the Underwriters'
Option Agreement, will be duly and
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validly issued and outstanding, fully paid and non-assessable, without
any personal liability attaching to the ownership thereof and, to such
counsel's knowledge, will not be issued in violation of any preemptive
rights of stockholders; and the holders of the Underwriters' Options
will receive good title to the securities purchased by them,
respectively, free and clear of all liens, security interests, pledges,
charges, encumbrances, stockholders' agreements, voting trusts or other
defects of title whatsoever.
(ix) to such counsel's knowledge, there is no litigation,
arbitration or governmental or other action, suit, proceeding or
investigation before any court or before or by any public, regulatory
or governmental agency or body pending or threatened against PSC which
could result in a Material Adverse Effect or which are required to be
disclosed in the Registration Statement and the Prospectus and which
are not so disclosed, provided, however, that such counsel expresses no
opinion as to laws, licenses or related regulatory and other matters
referred to under the section "Business - Government Regulation" in the
Prospectus;
(x) except as described in the Registration Statement and the
Prospectus, PSC has (i) good and marketable title to all real and
personal properties owned by PSC, free and clear of all liens, security
interests, pledges, charges, encumbrances and mortgages and (ii) valid
leases which are in full force and effect for all real and personal
properties leased by it, in each case subject to such exceptions as
would not have a Material Adverse Effect;
(xi) to such counsel's knowledge, each contract, agreement,
instrument, lease, license or other document required to be described
in the Registration Statement and the Prospectus, or filed as an
exhibit to the Registration Statement, has been so described or filed,
as the case may be, and such description is accurate in all material
respects and fairly presents the information required to be shown;
(xii) to such counsel's knowledge, except as described in the
Registration Statement and Prospectus, no person or entity has the
right by contract or otherwise, to require registration under the Act
of shares of capital stock or other securities of PSC because of the
filing or effectiveness of the Registration Statement or otherwise in
connection with the sale of the Shares contemplated hereby, other than
those which have been waived or satisfied;
(xiii) no Company Entity is, and upon the consummation of the
transactions contemplated by this Agreement none of them will be, an
"investment company" as defined pursuant to the Investment Company Act
of 1940.
(xiv) based solely on advice of representatives of Nasdaq, the
Shares are duly authorized for quotation on the Nasdaq National Market,
subject to notice of issuance;
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(xv) the form of certificates evidencing the Shares conforms to
the requirements of the applicable laws of the State of Delaware;
(xvi) insofar as the statements in the Registration Statement
purport to summarize the nature and status of litigation or provisions
of law, rules, regulations, orders, judgments or decrees or legal
proceedings, such statements are correct in all material respects and
are fair summaries of the matters referred to therein, provided,
however, that such counsel expresses no opinion as to laws, licenses or
related regulatory and other matters referred to under the section
"Business -- Government Regulation" in the Prospectus.
In addition, such counsel shall state that they have
participated in conferences with officers and representatives of PSC,
representatives of the independent public accountants of PSC and of the
Underwriters at which the contents of the Registration Statement and
the Prospectus were discussed and no facts have come to the attention
of such counsel which lead such counsel to believe that the
Registration Statement at the time it became effective or as of the
Closing Date or the Additional Closing date as the case may be,
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 were 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 schedules
contained therein or omitted therefrom, as to which such counsel need
express no opinion and provided, however, that such counsel expresses
no opinion as to laws, licenses or related regulatory and other matters
referred to under the sections "Risk Factors - Business Regulation",
"Risk Factors - Health Care Reform" and "Business -- Government
Regulation" in the Prospectus;
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States, laws
of the State of Delaware, laws of the State of New York and jurisdictions in
which they are admitted, to the extent such counsel deems proper and to the
extent specified in such opinion, if at all, upon an opinion or opinions (in
form and substance reasonably satisfactory to Underwriters' Counsel) of other
counsel acceptable to Underwriters' Counsel, familiar with the applicable laws,
which opinion or opinions shall be addressed to or submitted to the
Underwriters; (B) as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company Entities and certificates or
other written statements of officers of departments of various jurisdictions
having custody of documents respecting the corporate existence or good standing
of the Company Entities, provided that copies of any such statements or
certificates shall be delivered upon request to Underwriters' Counsel. The
opinion of such counsel for the Company Entities shall state that the opinion of
any such other counsel is in scope, form and substance satisfactory to such
counsel and, in their opinion, the Underwriters and they are justified in
relying thereon.
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(c) At the Closing Date and any Additional Closing Date, the
Underwriters shall have received the opinion of Xxxx Xxxxx Xxxx & XxXxxx,
regulatory counsel for the Company Entities, dated the date of delivery,
addressed to the Underwriters and in form and substance satisfactory to
Underwriters' Counsel, to the effect that:
(i) assuming the due execution and delivery of the Atlanta ENT
Asset Acquisition Agreement (as defined in the Registration Statement),
each of the Additional Atlanta Acquisition Agreements (as defined in
the Registration Statement), the Birmingham Acquisition Agreement (as
defined in the Registration Statement) and the Stock Acquisition
Agreement (as defined in the Registration Statement), and if the
agreements in the form of the Draft Documents (as defined below) are
duly executed and delivered by the parties thereto, and if the question
were properly presented to a court having jurisdiction, in our
considered judgment it is more likely than not that such agreements,
the Company's performance of its obligations thereunder and the conduct
of the Company's business as described in the Registration Statement,
would be held not to violate any Health Care Law (as defined below).
The "Draft Documents" shall mean the Atlanta ENT Asset Acquisition
Agreement, the Additional Atlanta Acquisition Agreements, the
Birmingham Asset Acquisition Agreement, the Stock Acquisition
Agreement, the draft Management Services Agreement by and among PSC,
PSC Management Corp. and New Atlanta ENT, the Management Services
Agreement by and among PSC, PSC Management Corp. and PSC Alabama, Inc.,
and the Form Standard Physician Employment Agreements attached to each
of such Management Services Agreements as Exhibit A. The "Health Care
Laws" shall mean the statutes, judicial rulings and decrees, and
administrative or governmental regulations referred to in the
Referenced Sections (as defined below), including the federal physician
self-referral statute, 42 U.S.C. Section 1395nn, the federal
anti-kickback statute, 42 U.S.C. Section 1320a-b(b), anti-kickback and
physician self-referral laws under the states of Alabama and Georgia
(Ala. Code Section 22-1-11; Ga Code Xxx. Section 43-1B-2 et seq.;), and
Alabama and Georgia state law governing the corporate practice of
medicine and fee-splitting as more specifically described in the
Referenced Sections. The "Referenced Sections" shall mean portions of
the Registration Statement entitled "Risk Factors -- Potential
Reductions in Reimbursement by Third-Party Payors," Risk Factors --
Government Regulations," "Risk Factors -- Health Care Reform" and
"Business -- Government Regulation.
(ii) the descriptions of the Health Care Laws in the Referenced
Sections accurately summarize and present fairly the Health Care Laws.
All material federal health care laws applicable to the Company and the
conduct of the Company as described in the Registration Statement are
accurately summarized in the Referenced Sections.
(iii) to such counsel's knowledge, the Referenced Sections do not
contain any untrue statement of a material fact concerning the Health
Care Laws, or omit to state any material fact concerning the Health
Care Laws required to be stated therein or necessary to make the
statements therein concerning the Health Care Laws, in the light of the
circumstances under which they were made, not misleading.
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(iv) to such counsel's knowledge, no Company Entity has received
any notification from any regulatory authority, including, without
limitation, any health care regulatory authority, to the effect that
any additional approval is required to be obtained by any Company
Entity, and no such consent, approval, authorization, order,
registration, qualification, license or permit contains a materially
burdensome restriction not adequately disclosed in the Registration
Statement and the Prospectus. To such counsel's knowledge, no Company
Entity has received any notice of proceedings relating to revocation or
modification of any such consents, approvals, authorizations, orders,
registrations, filings, qualifications, licenses or permits.
In addition, such opinion shall also contain a statement that such
counsel has participated in conferences with officers and representatives of the
Company Entities, representatives of the independent public accountants for the
Company Entities and the Underwriters at which the contents of the Registration
Statement and the Prospectus and related matters were discussed and, no facts
have come to the attention of such counsel which would lead such counsel to
believe that either the Registration Statement at the time it became effective
(including the information deemed to be part of the Registration Statement at
the time of effectiveness pursuant to Rule 430A(b) or Rule 434, if applicable),
or any amendment thereof or supplement thereto, made prior to the Closing Date
(or the Additional Closing Date, as the case may be) as of the date of such
amendment or supplement, contained an 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 or that the Prospectus as of its date
(or any amendment thereof or supplement thereto made prior to the Closing Date
(or the Additional Closing Date, as the case may be) as of the date of such
amendment or supplement) and as of the Closing Date (or the Additional Closing
Date, as the case may be) contained or contains an untrue statement of a
material fact or omitted or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (it being understood
that such counsel need express no belief or opinion with respect to the
financial statements and schedules and other financial data included or
incorporated by reference therein).
(d) All proceedings taken in connection with the sale of the Shares as
herein contemplated shall be reasonably satisfactory in form and substance to
the Underwriters and to Underwriters' Counsel, and the Underwriters shall have
received from said Underwriters' Counsel a favorable opinion, dated as of the
Closing Date, with respect to the issuance and sale of the Shares, the
Registration Statement and the Prospectus and such other related matters as the
Underwriters may reasonably require, and PSC shall have furnished to
Underwriters' Counsel such documents as they reasonably request for the purpose
of enabling them to pass upon such matters.
(e) At the Closing Date, and any Additional Closing Date, the
Underwriters shall have received a certificate of the Chief Executive Officer
and Chief Financial Officer of PSC dated the Closing Date to the effect that (i)
the condition set forth in subsection (a) of this Section 6 has been satisfied,
(ii) as of the date hereof and as of the Closing Date the representations and
warranties of PSC set forth in Section 1 hereof are accurate, (iii) as of
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the Closing Date the obligations of PSC to be performed hereunder on or prior
thereto have been duly performed and (iv) subsequent to the respective dates as
of which information is given in the Registration Statement and the Prospectus,
the Company Entities taken as a whole have not sustained any material loss or
interference with their business or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by insurance, or from any
labor dispute or any legal or governmental proceeding, and there has not been
any material adverse change, or any development involving a material adverse
change, in the business prospects, properties, operations, condition (financial
or otherwise), or results of operations of the Company Entities taken as a
whole, except in each case as described in or contemplated by the Registration
Statement and the Prospectus.
(f) At the time this Agreement is executed, at the Closing Date and as
of any Additional Closing Date, the Underwriters shall have received a letter,
from Xxxxxx Xxxxxxxx LLP, independent public accountants for the Company
Entities, dated, respectively, as of the date of this Agreement, as of the
Closing Date and as of any Additional Closing Date addressed to the Underwriters
and in form and substance reasonably satisfactory to the Underwriters.
(g) Prior to the Closing Date or any Additional Closing Date, PSC shall
have furnished to the Underwriters such further information, certificates,
opinions, and documents as the Underwriters may reasonably request.
(h) At or prior to the Closing Date or any Additional Closing Date, PSC
shall have furnished to the Underwriters (i) the opinions of counsel to each of
the Sellers and the Company Entities rendered with respect to each of the
Acquisition Agreements referenced under the heading "Certain Transactions" in
the Registration Statement and the Prospectus, and (ii) the opinions of counsel
to each of Atlanta ENT Center for Physicians, Inc., ENT Center of Atlanta, Inc.
and Atlanta AHP, Inc., reasonably satisfactory to Underwriters' counsel upon
which opinions it shall be entitled to rely.
(i) The Underwriters shall have received from each person who is a
director, officer or affiliate (as defined in the Regulations) of any PSC, and
from each Original Stockholder, enforceable written agreements, in form and
substance satisfactory to counsel for the Underwriters, to the effect that for a
period of 12 months from the effective date of the Registration Statement, such
person will not, without the prior written consent of Southcoast Capital
Corporation, on behalf of the Underwriters, offer, issue, sell, contract to
sell, grant any option for the sale of or otherwise dispose of (or announce any
offer, sale, grant of an option to purchase or other disposition), directly or
indirectly, any shares of Common Stock or other securities of any Company Entity
(or securities or other instruments convertible into, exchangeable for, or
evidencing the right to purchase shares of Common Stock or such capital stock or
other securities of any Company Entity, including without limitation, any shares
of Common Stock or securities issuable under any outstanding stock option).
(j) At the Closing Date, the Shares shall have been approved for
quotation on the Nasdaq National Market.
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(k) All proceedings taken in connection with the issuance, sale,
transfer, and delivery of the Firm Shares and the Additional Shares shall be
satisfactory in form and substance to you and to counsel for the Underwriters,
and the Underwriters shall have received from such counsel for the Underwriters
a favorable opinion, dated as of the Closing Date and the Additional Closing
Date, as the case may be, with respect to such of the matters set forth under
Sections 6(b) and 6(c), respectively, and with respect to such other related
matters, as you may reasonably request.
(l) The NASD, upon review of the terms of the public offering of the
Firm Shares and the Additional Shares, shall not have objected to the
Underwriters' participation in such offering.
(m) Prior to or on the Closing Date, the PSC shall have entered into
the Underwriters' Option Agreement with the Underwriters.
(n) Prior to or on the Closing Date, PSC shall have provided to you
executed copies of the agreements referred to in Section 1(j).
(o) Each condition to the closing contemplated by each acquisition
agreement filed as Exhibits 10.1, 10.2, 10.7, 10.25, 10.26, 10.27, and 10.28
shall have been satisfied or waived. There shall exist at and as of the Closing
Date no conditions that would constitute a default (or an event that with notice
or the lapse of time, or both, would constitute a default) under each such
acquisition agreement.
If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to the
Underwriters or to Underwriters' Counsel pursuant to this Section 6 shall not be
reasonably satisfactory in form and substance to the Underwriters and to
Underwriters' Counsel, all obligations of the Underwriters hereunder may be
cancelled by the Underwriters at, or at any time prior to, the Closing Date and
the obligations of the Underwriters to purchase the Additional Shares may be
cancelled by the Underwriters at, or at any time prior to, the Additional
Closing Date. Notice of such cancellation shall be given to PSC in writing, or
by telephone, telex or telegraph, confirmed in writing and shall specify the
reason for such cancellation.
7. Indemnification.
(a) PSC agrees to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act, against any and all losses,
liabilities, claims, damages and expenses whatsoever as incurred (including but
not limited to reasonable attorneys' fees and any and all expenses whatsoever
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, and any and all amounts paid
in settlement of any claim or litigation), joint or several, to which they or
any of them may become subject under the Act, the Exchange Act or otherwise,
insofar as such losses, liabilities, claims, damages or expenses (or actions in
respect thereof) arise out of or are based
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upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the Prospectus, or in any supplement
thereto or amendment thereof, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading; provided, however,
that PSC will not be liable in any such case to the extent but only to the
extent that any such loss, liability, claim, damage or expense arises out of or
is based upon any such untrue statement or alleged untrue statement or omission
or alleged omission made therein in reliance upon and in conformity with written
information furnished to PSC by or on behalf of any Underwriter expressly for
use therein. This indemnity agreement will be in addition to any liability which
PSC may otherwise have including under this Agreement.
(b) Each Underwriter severally, and not jointly, agrees to indemnify
and hold harmless PSC, each of the directors of PSC, each nominee for director
named in the Prospectus, each of the officers of PSC who shall have signed the
Registration Statement, and each other person, if any, who controls PSC within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act,
against any losses, liabilities, claims, damages and expenses whatsoever as
incurred (including but not limited to reasonable attorneys' fees and any and
all expenses whatsoever incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever, and
any and all amounts paid in settlement of any claim or litigation), jointly or
severally, to which they or any of them may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus, or in any supplement thereto or
amendment thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that any such loss, liability, claim, damage or
expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to PSC by or on behalf of
any Underwriter expressly for use therein; provided, however, that in no case
shall any Underwriter be liable or responsible for any amount in excess of the
underwriting discount applicable to the Shares purchased by such Underwriter
hereunder. This indemnity will be in addition to any liability which any
Underwriter may otherwise have including under this Agreement. PSC acknowledges
that for all purposes of this Agreement, the statements set forth in the last
paragraph of the cover page, stabilization language on page 2 and in the first,
second, sixth and ninth paragraphs under the caption "Underwriting" in the
Prospectus constitute the only information furnished in writing to PSC by or on
behalf of any Underwriter expressly for use in the Registration Statement or the
Prospectus or in any amendment thereof or supplement thereto, as the case may
be.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify each party against whom indemnification is
to be sought in writing of the commencement
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thereof (but the failure so to notify an indemnifying party shall not relieve it
from any liability which it may have under this Section 7 or otherwise). In case
any such action is brought against any indemnified party, and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein, and to the extent it may elect by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party. Notwithstanding the
foregoing, the indemnified party or parties shall have the right to employ its
or their own counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of such indemnified party or parties unless (i) the
employment of such counsel shall have been authorized in writing by one of the
indemnifying parties in connection with the defense of such action, (ii) the
indemnifying parties shall not have employed counsel to have charge of the
defense of such action within a reasonable time after notice of commencement of
the action, or (iii) such indemnified party or parties shall have reasonably
concluded that there may be defenses available to it or them which are different
from or additional to those available to one or all of the indemnifying parties
(in which case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any of
which events such fees and expenses shall be borne by the indemnifying parties.
Anything in this subsection to the contrary notwithstanding, an indemnifying
party shall not be liable for any settlement of any claim or action effected
without its written consent; provided, however, that such consent was not
unreasonably withheld.
8. Contribution. In order to provide for contribution in circumstances in
which the indemnification provided for in Section 7 hereof is for any reason
held to be unavailable from any indemnifying party or is insufficient to hold
harmless a party indemnified thereunder, PSC, on the one hand, and the
Underwriters, on the other hand, shall contribute to the aggregate losses,
claims, damages, liabilities and expenses of the nature contemplated by such
indemnification provision (including any investigation, reasonable legal and
other expenses incurred in connection with, and any amount paid in settlement
of, any action, suit or proceeding or any claims asserted, but after deducting
in the case of losses, claims, damages, liabilities and expenses suffered by PSC
any contribution received by PSC from persons, other than the Underwriters, who
may also be liable for contribution, including persons who control PSC within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act,
officers of PSC who signed the Registration Statement, directors of PSC and each
nominee for director named in the Prospectus) as incurred to which PSC and one
or more of the Underwriters may be subject, in such proportions as are
appropriate to reflect the relative benefits received by PSC and the
Underwriters from the offering of the Shares or, if such allocation is not
permitted by applicable law or indemnification is not available as a result of
the indemnifying party not having received notice as provided in Section 7
hereof, in such proportion as is appropriate to reflect not only the relative
benefits referred to above but also the relative fault of PSC, on the one hand,
and the Underwriters, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by PSC, on the one hand, and the Underwriters, on the other
hand, shall be deemed to be in the same proportion as (x) the total proceeds
from the offering (net of underwriting discounts and commissions but before
deducting expenses) received in the
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case of PSC and (y) the underwriting discounts and commissions received in the
case of the Underwriters, respectively, in each case as set forth in the table
on the cover page of the Prospectus. The relative fault of PSC, on the one hand,
and of the Underwriters, on the other hand, shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by PSC, on the one hand, or the Underwriters, on the other
hand, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. PSC and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 8 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this Section 8 and the
preceding sentence, (i) in no case shall any Underwriter be liable or
responsible for any amount in excess of the underwriting discount applicable to
the Shares purchased by such Underwriter hereunder, and (ii) no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. Notwithstanding the provisions of this Section 8,
no Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Shares underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages that such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. For
purposes of this Section 8, each person, if any, who controls an Underwriter
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act
shall have the same rights to contribution as such Underwriter, and each person,
if any, who controls PSC within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, each officer of PSC who shall have signed the
Registration Statement, each director of PSC and each nominee for director named
in the Prospectus shall have the same rights to contribution as PSC, as the case
may be, subject in each case to clauses (i) and (ii) of this Section 8. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties,
notify each party or parties from whom contribution may be sought, but the
omission to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any obligation it or they may
have under this Section 8 or otherwise. No party shall be liable for
contribution with respect to any action or claim settled without its consent;
provided, however, that such consent was not unreasonably withheld.
9. Default by an Underwriter.
(a) If any Underwriter or Underwriters shall default in its or their
obligation to purchase Firm Shares or Additional Shares hereunder, and if the
Shares with respect to which such default relates do not (after giving effect to
arrangements, if any, made by the Underwriters pursuant to subsection (c) below)
exceed, in the aggregate, 10% of the number of Firm Shares or Additional Shares,
as the case may be, such Firm Shares or Additional Shares to which the default
relates shall be purchased by the non-defaulting Underwriter in proportion to
the respective proportion which the numbers of Firm Shares set forth opposite
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its name in Schedule I hereto bears to the aggregate number of Firm Shares set
forth opposite the names of the non-defaulting Underwriter.
(b) If a default by any Underwriter or Underwriters relates to more
than 10% of the Firm Shares or Additional Shares, as the case may be, the
Underwriters may in their discretion arrange for the Underwriters or for another
party or parties to purchase such Firm Shares or Additional Shares, as the case
may be, to which such default relates on the terms contained herein. In the
event that within five calendar days after such a default the Underwriters do
not arrange for the purchase of the Firm Shares or Additional Shares, as the
case may be, to which such default relates as provided in this Section 9, this
Agreement or, in the case of a default with respect to the Additional Shares,
the obligations of the Underwriters to purchase and of PSC to sell the
Additional Shares shall thereupon terminate, without liability on the part of
PSC with respect thereto (except in each case as provided in Section 5, 7(a) and
8 hereof) or the Underwriters, but nothing in this Agreement shall relieve a
defaulting Underwriter of its liability, if any, to the other Underwriter and
PSC for damages occasioned by its or their default hereunder.
(c) In the event that the Firm Shares or Additional Shares to which the
default relates are to be purchased by the non-defaulting Underwriter, or are to
be purchased by another party or parties as aforesaid, the Underwriters or PSC
shall have the right to postpone the Closing Date or Additional Closing Date, as
the case may be for a period, not exceeding five business days, in order to
effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus or in any other documents and arrangements, and PSC
agrees to file promptly any amendment or supplement to the Registration
Statement or the Prospectus which, in the reasonable opinion of Underwriters'
Counsel, may thereby be made necessary or advisable. The term "Underwriter" as
used in this Agreement shall include any party substituted under this Section 9
with like effect as if it had originally been a party to this Agreement with
respect to such Firm Shares and Additional Shares.
10. Survival of Representations and Agreements. All representations and
warranties, covenants and agreements of the Underwriters and PSC contained in
this Agreement, including the agreements contained in Section 5, the indemnity
agreements contained in Section 7 and the contribution agreements contained in
Section 8, shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Underwriter or any controlling person
thereof or by or on behalf of PSC, and any of its officers and directors,
including each nominee for director named in the Prospectus, or any controlling
person thereof, and shall survive delivery of and payment for the Shares to and
by the Underwriters. The representations contained in Section 1 and the
agreements contained in Sections 5, 7, 8 and 11(d) hereof shall survive the
termination of this Agreement, including termination pursuant to Section 9 or 11
hereof.
11. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective, upon the later of when (i)
the Underwriters and PSC shall have received notification of the effectiveness
of the Registration
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Statement or (ii) the execution of this Agreement. If either the initial public
offering price or the purchase price per Share has not been agreed upon prior to
5:00 P.M., New York time, on the fifth full business day after the Registration
Statement shall have become effective, this Agreement shall thereupon terminate
without liability to PSC or the Underwriters except as herein expressly
provided. Until this Agreement becomes effective as aforesaid, it may be
terminated by PSC by notifying the Underwriters or by the Underwriters notifying
PSC. Notwithstanding the foregoing, the provisions of this Section 11 and of
Sections 1, 5, 7 and 8 hereof shall at all times be in full force and effect.
(b) The Underwriters shall have the right to terminate this Agreement
at any time prior to the Closing Date or the obligations of the Underwriters to
purchase the Additional Shares at any time prior to the Additional Closing Date,
as the case may be, if (i) any domestic or international event or act or
occurrence has materially disrupted, or in the Underwriters opinion will in the
immediate future materially disrupt, the market for PSC's securities or
securities in general; or (ii) if trading on the New York or American Stock
Exchanges or in the Nasdaq National Market or in the over-the-counter market
shall have been suspended, or minimum or maximum prices for trading shall have
been fixed, or maximum ranges for prices for securities shall have been
required, on the New York or American Stock Exchanges by the New York or
American Stock Exchanges, or on the Nasdaq National Market by the Nasdaq
National Market or by order of the Commission or any other governmental
authority having jurisdiction; (iii) trading in the Shares shall have been
suspended by the Commission, by any exchange that lists the Shares or by the
Nasdaq National Market; (iv) if a banking moratorium has been declared by a
state or federal authority or if any new restriction materially adversely
affecting the distribution of the Firm Shares or the Additional Shares, as the
case may be, shall have become effective; or (v) (A) if the United States
becomes engaged in hostilities or there is an escalation of hostilities
involving the United States or there is a declaration of a national emergency or
war by the United States or (B) if there shall have been such change in
political, financial or economic conditions and if the effect of any such event
in (A) or (B) in the Underwriters' judgment makes it impracticable or
inadvisable to proceed with the offering, sale and delivery of the Firm Shares
or the Additional Shares, as the case may be, on the terms contemplated by the
Prospectus.
(c) Any notice of termination pursuant to this Section 11 shall be by
telephone or telecopy, confirmed in writing by letter.
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than pursuant to (i) notification by the
Underwriters as provided in Section 11(a) hereof or (ii) Section 9 or 11(b)
hereof), or if the sale of the Shares provided for herein is not consummated
because any condition to the obligations of the Underwriters set forth herein is
not satisfied or because of any refusal, inability or failure on the part of PSC
to perform any agreement herein or comply with any provision hereof, PSC will,
subject to demand by the Underwriters, reimburse the Underwriters for all
out-of-pocket expenses (including the reasonable fees and expenses of their
counsel), incurred by the Underwriters in connection herewith, up to an
aggregate of $125,000, and, for a period of one year subsequent to such
termination, if PSC or any affiliate or successor to PSC is involved in any
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private placement, merger, acquisition or sale of any securities (other than
pursuant to a public offering), acquisition or sale of assets not in the
ordinary course of business, joint venture or other similar transaction (any of
the foregoing, a "Transaction"), PSC shall pay Barington Capital Group, L.P.,
(x) accountable out of pocket expenses, as referenced and limited to the amount
set forth above, incurred in connection with services provided for the proposed
initial public offering, and (y) as compensation for corporate finance and other
financial services performed by Barington Capital Group, L.P. in connection with
the Transaction, a fee equal to the sum of (i) 5% of the first five million
dollars of consideration paid in any Transaction, (ii) 4% of the next two
million dollars of consideration paid in any Transaction, (iii) 3% of the next
two million dollars of consideration paid in any Transaction, (iv) 2% of the
next two million dollars of consideration paid in any Transaction, and (v) 1% of
any consideration paid in any Transaction in excess of eleven million dollars,
such fee to be paid at the closing of the Transaction to which it relates. The
amount of consideration paid in a Transaction shall include, for purposes of
calculating such fee, all forms of consideration received by PSC, any of the
Subsidiaries, or their affiliates or stockholders, including, but not limited
to, cash, stock or evidences of indebtedness, or any combination thereof.
12. Notice. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to any
Underwriter, shall be mailed, delivered, or telexed or telegraphed and confirmed
in writing, to such Underwriter c/o Southcoast Capital Corporation, 000 Xxxx
Xxxxxx, Xxx Xxxx, XX 00000, attention: Xxxxxx X. Xxxxxxxx; if sent to PSC, shall
be mailed, delivered, or telegraphed and confirmed in writing to Physicians
Specialty Corp., 0000 Xxxxxxxxx Xxxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx
00000, attention: Xxxxxxx X. Xxxxxxx, with a copy to Bachner, Tally, Xxxxxxx &
Xxxxxx LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, attention: Xxxx X.
Xxxxx.
13. Parties. This Agreement shall insure solely to the benefit of, and
shall be binding upon, the Underwriters, PSC and the controlling persons,
directors, officers, employees and agents referred to in Section 7 and 8, and
their respective successors and assigns, and no other person shall have or be
construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provision herein contained. The
term "successors and assigns" shall not include a purchaser, in its capacity as
such, of Shares from any of the Underwriters.
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, but without regard to
principles of conflicts of law.
If the foregoing correctly sets forth the understanding among the
Underwriters and PSC please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement among us.
Very truly yours,
PHYSICIANS' SPECIALTY CORP.
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By:____________________________
Name:
Title:
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Accepted as of the date first above written.
New York, New York
SOUTHCOAST CAPITAL CORPORATION
By:_____________________________
Xxxxxx X. Xxxxxxxx, Managing
Director
BARINGTON CAPITAL GROUP, L.P.
By: LNA CAPITAL CORP.,
General Partner
By:_____________________________
Xxxx Xxxxxx, Executive Vice-
President
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SCHEDULE I
Number of
Shares to be
Name of Underwriter Purchased
------------------- ---------
Southcoast Capital Corporation....................................
Barington Capital Group, L.P...................................... _________
Total........................................... 2,200,000
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