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EXHIBIT 1.1
XXXXXXX.XXX, INC.
COMMON STOCK
PLACEMENT AGREEMENT
December __, 0000
XXXXX & XXXXXXXXXXXX, INC.
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
SUNTRUST EQUITABLE SECURITIES CORPORATION
000 Xxxxxxxxx Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Dear Sirs:
xxxxxxx.xxx, inc., a Georgia corporation (the "Company"), proposes to
issue and sell a minimum of 80 and a maximum of 100 investment units (the
"Units"). Each Unit will consist of (i) an 8% Senior Promissory Note (a "Note,"
and collectively the "Notes"), which is convertible into 38,760 shares of the
Company's Common Stock, no par value per share ("Common Stock"), at a conversion
price per share of $1.29, subject to adjustment as provided in the Notes, and
(ii) a Stock Purchase Warrant (a "Warrant," and collectively the "Warrants"),
entitling the holder thereof to purchase 13,566 shares of Common Stock at an
exercise price per share of $.01, subject to adjustment as provided in the
Warrants. The Company will sell the Units pursuant to a form of Subscription
Agreement to be executed by each purchaser of Units and accepted by the Company
(a "Subscription Agreement," and collectively the "Subscription Agreements").
Subject to the terms and conditions herein, the Company hereby appoints you,
severally and not jointly, as its agents (collectively, the "Agents") to assist
the Company in the sale and placement of a minimum of 80 and a maximum of 100
Units.
In connection with the transactions contemplated by this Placement
Agreement (this "Agreement"), the Company has prepared and filed with the
Securities and Exchange Commission (the "Commission"), in accordance with the
provisions of the Securities Act of 1933, as amended, and the rules and
regulations of the Commission thereunder (collectively, the "Act"), a
registration statement on Form S-1 (File No. 333-92581), including a
prospectus, relating to the Units and the securities comprising the Units,
which include the Notes, the Warrants and the shares of Common Stock issuable
upon conversion or exercise thereof (collectively with the Units, the
"Securities"). Any preliminary prospectus included in such registration
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statement, as amended, or filed by the Company with the Commission pursuant to
Rule 424(a) under the Act in connection with the offering of the Securities is
referred to herein as a "Preliminary Prospectus." The registration statement,
as amended at the time it became effective, including the information (if any)
deemed to be part of the registration statement at the time of effectiveness
pursuant to Rule 430A under the Act, is referred to herein as the "Registration
Statement"; and the prospectus in the form first used to confirm sales of Units
is referred to herein as the "Prospectus." If the Company has filed or is
required pursuant to the terms hereof to file a registration statement pursuant
to Rule 462(b) under the Act registering additional Securities (a "Rule 462(b)
Registration Statement"), then, unless otherwise specified, any reference
herein to the term "Registration Statement" shall be deemed to include such
Rule 462(b) Registration Statement.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to and agrees with each Agent
that:
(a) The Registration Statement (other than any Rule 462(b)
Registration Statement to be filed by the Company after the effectiveness of
this Agreement) has been declared effective by the Commission, and any Rule
462(b) Registration Statement filed after the effectiveness of this Agreement
will become effective before any confirmations of sale are sent or given; and
the Company has not received and has no knowledge that any stop order
suspending the effectiveness of the Registration Statement has been issued or
that any proceeding for that purpose has been instituted or threatened by the
Commission.
(b) The Company has not received and has no knowledge that any
order preventing or suspending the use of any Preliminary Prospectus has been
issued by the Commission. Each Preliminary Prospectus, at the time of filing
thereof, complied in all material respects with the applicable requirements of
the Act, and did not contain any untrue statement of a material fact or omit to
state a 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, except that the representation and warranty set forth in
this Section 1(b) does not apply to statements or omissions in any such
Preliminary Prospectus made in reliance upon and in conformity with information
relating to any Agent furnished in writing to the Company by such Agent
expressly for use therein.
(c) (i) The Registration Statement (other than any Rule 462(b)
Registration Statement to be filed by the Company after the effectiveness of
this Agreement), when it became effective, did not contain and, as amended, if
applicable, will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) the Registration Statement (other than
any Rule 462(b) Registration Statement to be filed by the Company after the
effectiveness of this Agreement) and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the Act,
(iii) if the Company is required to file a Rule 462(b) Registration Statement
after the effectiveness of this Agreement, such Rule 462(b) Registration
Statement and any amendments thereto, when they become effective (A) will not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading and (B) will comply in all material respects with the Act and
(iv) the Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this Section 1(c) do not apply to
statements or omissions in the Registration Statement or the Prospectus made in
reliance upon and conformity with information relating to any Agent furnished
in writing to the Company by such Agent expressly for use therein. The
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statistical and market-related data included in the Prospectus are based on or
derived from independent sources which the Company believes to be reliable and
accurate in all material respects or represent the Company's good faith
estimates that are made on the basis of data derived from such sources.
(d) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, except as set forth therein,
(i) there has not been any change in the capital stock or long term debt of the
Company or Comstar Telecom & Wireless, Inc., a Georgia corporation (the
"Subsidiary"), or any issuance of options, warrants or rights to purchase
capital stock of the Company or the Subsidiary, (ii) there has not been any
material adverse change or any development involving a prospective material
adverse change in or affecting the business, general affairs, condition
(financial or otherwise) or results of operations of the Company and the
Subsidiary, taken as a whole, and (iii) neither the Company nor the Subsidiary
has entered into any material transaction or incurred any material liability or
obligation, direct or contingent.
(e) Each of the Company and the Subsidiary has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Georgia, with the requisite corporate power and authority
to conduct its business as described in the Registration Statement and the
Prospectus and to own, lease and operate its properties; each of the Company
and the Subsidiary is duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each other
jurisdiction in which it is required to be qualified, except where the failure
to be so qualified would not, singly or in the aggregate, have a material
adverse effect on the prospects, business, general affairs, condition
(financial or otherwise) or results of operations of the Company and the
Subsidiary, taken as a whole, or on the power or ability of the Company to
perform its obligations hereunder or under the Notes, the Warrants, the
Subscription Agreements or the Shareholders Agreement dated the date hereof
(the "Shareholders Agreement") among the Company, Xxxxx X. Xxxxx, Xx., Xxxxxx
X. Xxxxxx, X. Xxxx Xxxxxx, Xxxxxx X. Xxxxx and ________ as agent for the
holders of the Notes (collectively, a "Material Adverse Effect"); and each of
the Company and the Subsidiary holds all licenses, certificates, authorizations,
consents, exemptions, qualifications, franchises, permits and other approvals
(each, an "Authorization") necessary for the conduct of its business as
described in the Registration Statement and the Prospectus.
(f) The Company has no subsidiaries and owns no equity
interests in any other person, except that the Company owns (i) one hundred
percent (100%) of the issued and outstanding shares of capital stock of the
Subsidiary and (ii) twenty-five percent (25%) of the issued and outstanding
shares of capital stock of nschool Communication Systems, Inc., a Georgia
corporation ("nschool"). All of the issued and outstanding shares of capital
stock of nschool that are owned by the Company and all of the issued and
outstanding shares of capital stock of the Subsidiary are duly authorized and
validly issued, are fully paid and non-assessable and are owned by the Company
free and clear of all security interests, claims, liens, defects, adverse
interests and other encumbrances (collectively, "Liens"). The Company has no
significant subsidiaries (as defined in Rule 1-02 of the Commission's
Regulation S-X).
(g) The authorized capital stock of the Company conforms to the
description thereof contained in the Registration Statement and the Prospectus;
all of the issued and outstanding shares of capital stock of the Company have
been duly authorized and validly issued, are fully paid and nonassessable, and
conform to the description of the capital stock of the Company contained in the
Registration Statement and the Prospectus; none of the issued and outstanding
shares of the Company's capital stock were issued in violation of any
preemptive rights of any securityholder of the Company or similar rights;
except as disclosed in the Registration Statement and the Prospectus, there are
no preemptive rights of any securityholder of the Company or similar rights to
subscribe for or to purchase any securities of the
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Company; and except as disclosed in the Registration Statement and the
Prospectus, no options or warrants or other rights to purchase or otherwise
acquire from the Company or the Subsidiary, no agreements or other obligations
to issue and no other rights to convert any security or obligation into shares
of capital stock or other ownership interests in the Company or the Subsidiary
are outstanding.
(h) The Company has duly authorized the execution, delivery and
performance of this Agreement and has duly executed and delivered this
Agreement. The Company has duly authorized the execution, delivery and
performance of the Subscripton Agreements and the Shareholders Agreement and
the execution, delivery, issuance, sale and performance of the Warrants and the
Notes and, when duly executed and delivered by the Company, the Subscription
Agreements, the Shareholders Agreement, the Warrants and the Notes will be
enforceable against the Company, except to the extent that (i) enforceability
may be limited by applicable bankruptcy, insolvency, liquidation,
reorganization, moratorium and other laws relating to or affecting the rights
and remedies of creditors generally and (ii) the remedy of specific performance
and other forms of equitable relief may be subject to certain defenses and to
the discretion of the court before which a proceeding may be brought.
(i) The Units, Notes and Warrants to be issued and sold by the
Company conform to the description thereof contained in the Prospectus, and the
issuance thereof will not be subject to any preemptive rights of any
securityholder of the Company or similar rights. The Company has reserved for
issuance out of its authorized but unissued Common Stock, (i) solely for
issuance and delivery upon exercise or conversion of the Warrants, the full
number of shares of Common Stock issuable upon exercise or conversion of the
Warrants and (ii) solely for issuance and delivery upon conversion of the
Notes, the full number of shares of Common Stock issuable upon conversion of
the Notes. The shares of Common Stock to be issued upon exercise or conversion
of the Warrants (the "Warrant Shares") and the shares of Common Stock to be
issued upon conversion of the Notes (the "Note Shares") have been duly
authorized for issuance pursuant to the Warrants and the Notes, respectively,
and when issued and delivered by the Company against payment therefor as
provided in the Warrants and the Notes, respectively, will be validly issued,
fully paid and nonassessable and will conform to the description of the Common
Stock contained in the Prospectus, and the issuance thereof will not be subject
to any preemptive rights of any securityholder of the Company or similar
rights.
(j) None of the execution, delivery or performance of this
Agreement, the Subscription Agreements or the Shareholders Agreement, the
issuance, sale or delivery of the Warrants or the Notes, the compliance by the
Company with any provision hereof or thereof, the issuance or delivery of the
Warrant Shares or the Note Shares or the consummation of the other transactions
contemplated hereby or thereby (including, without limitation, the
recapitalization of the Company as described in the Registration Statement and
the Prospectus) (collectively, the "Transactions") will (with or without the
giving of notice or the passage of time or both) (i) result in any violation of
the Articles of Incorporation or Bylaws of the Company or the Subsidiary, (ii)
result in any breach of or default under, or the creation or imposition of any
Lien (other than any lien created pursuant to this Agreement) on or against the
Company, the Subsidiary or any of their respective properties or assets
pursuant to, any indenture, mortgage, deed of trust, loan agreement, lease or
other agreement or instrument to which the Company or the Subsidiary is a party
or by which the Company, the Subsidiary or any of their respective properties
or assets is bound, (iii) violate any constitution, statute, regulation, rule,
order or law or any judicial or administrative decree, writ, judgment or order
to which the Company, the Subsidiary or any of their respective properties or
assets is subject or (iv) result in the suspension, termination or revocation
of any Authorization of the Company or the Subsidiary or any other impairment
of the rights of the Company or the Subsidiary with respect thereto; except, in
the case of clauses (ii), (iii) and (iv), for any default which would not,
singly or in the aggregate, have a Material Adverse Effect.
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(k) No Authorization or other action by, or notice to or filing
with, any court, governmental authority or regulatory body is required for the
consummation of any of the Transactions, except such as have been obtained.
(l) Neither the Company nor the Subsidiary is (i) in violation
of its Articles of Incorporation or Bylaws or (ii) in default in the
performance of any obligation, agreement, covenant or condition contained in
any indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which the Company or the Subsidiary is a party or by
which the Company, the Subsidiary or their respective properties or assets is
bound, except, in the case of clause (ii), for any default which would not,
singly or in the aggregate, have a Material Adverse Effect.
(m) Each of the Company and the Subsidiary has good and
marketable title to all real and personal property reflected as owned by it in
the financial statements referred to in Section 1(s) below or which is
otherwise material to its business, in each case free and clear of all Liens,
except as disclosed in the Registration Statement and the Prospectus or such as
do not materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the Company or the
Subsidiary; and any real property and buildings held under lease by the Company
or the Subsidiary are held by it under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
or proposed to be made of such property and buildings by the Company or the
Subsidiary, except as disclosed in the Registration Statement and the
Prospectus.
(n) There are no (i) legal or governmental proceedings pending
or, to the knowledge of the Company or the Subsidiary, threatened to which the
Company or the Subsidiary is or, in the case of threatened proceedings, could
be a party or of which any of the properties or assets of the Company or the
Subsidiary is or, in the case of threatened proceedings, could be subject
(including, without limitation, any action, proceeding or investigation pending
or threatened by the Federal Communications Commission (the "FCC") or any state
or local public utility commission (each, a "PUC")) that are required to be
described in the Registration Statement or the Prospectus and are not so
described as required, (ii) constitutions, statutes, regulations, rules,
orders, laws, decrees, writs or judgments (including, without limitation, any
regulation, rule, order, law, decree, writ or judgment issued by the FCC or any
state or local PUC) that are required to be described in the Registration
Statement or the Prospectus and are not so described as required or (iii)
contracts, instruments or other documents or agreements which are required to
be described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement and are not so described or filed as
required. Without limiting the generality of the foregoing sentence, the
Company has no reason to believe that any legal or governmental proceedings
will be instituted against it or the Subsidiary and, to the best knowledge of
the Company, there exists no basis for any legal or governmental proceedings to
be instituted against it or the Subsidiary.
(o) Neither the Company nor the Subsidiary has violated any
federal, state, local or foreign constitution, statute, regulation, rule,
order, law, decree, writ or judgment (including, without limitation, any
constitution, statute, regulation, rule, order, law, decree, writ or judgment
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations thereunder ("ERISA"), or the Foreign
Corrupt Practices Act and the rules and regulations thereunder), except for
such violations which would not, singly or in the aggregate, have a Material
Adverse Effect. Neither the Company nor the Subsidiary has any material
liability (contingent or otherwise) in connection with any Environmental Law or
the release into the environment of any substance regulated by any
Environmental Law.
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(p) Each of the Company and the Subsidiary has such
Authorizations of, and has made all filings with and notices to, all
governmental or regulatory authorities and self-regulatory organizations and
all courts and other tribunals as are necessary to own, lease, license and
operate its assets and properties and to conduct its business (including,
without limitation, (i) all Authorizations under any applicable Environmental
Law, (ii) all Authorizations of, filings with and notices to, the FCC and all
applicable state and local PUCs, and (iii) all other Authorizations under the
Telecommunications Act of 1996 (the "1996 Act"), the Communications Act of
1934, as amended (the "Communications Act"), the rules and regulations
thereunder and similar applicable law), except where the failure to have any
such Authorization or make any such filing or notice would not, singly or in
the aggregate, have a Material Adverse Effect. Each such Authorization is valid
and in full force and effect and the Company and the Subsidiary are in
compliance, in all material respects, with all the terms and conditions thereof
and with the applicable rules and regulations of the authorities and governing
bodies having jurisdiction with respect thereto; and no event has occurred
(including, without limitation, the receipt of any notice from any authority or
governing body) which (with or without the giving of notice or the passage of
time or both) allows revocation, suspension or termination of any such
Authorization or results in any other impairment of the rights under any such
Authorization; and no such Authorization contains any restriction that is
materially burdensome to the Company or the Subsidiary.
(q) Xxxxxx Xxxxxxxx LLP, who have certified certain financial
statements of the Company and Athens' ISP, Inc., are independent public
accountants as required by the Act.
(r) The Company has previously disclosed and delivered or made
available to the Agents or their representatives copies of all pension,
retirement, profit-sharing, deferred compensation, stock option, employee stock
ownership, severance pay, vacation, bonus or other incentive plans, all other
written employee programs, arrangements or agreements, all medical, vision,
dental or other health plans, all life insurance plans and all other employee
benefit plans or fringe benefit plans, including, without limitation, "employee
benefit plans" as that term is defined in Section 3(3) of ERISA, adopted,
maintained, sponsored in whole or in part, or contributed to by the Company,
its predecessors or any subsidiary of the Company or its predecessors for the
benefit of employees, retirees, dependents, spouses, directors, independent
contractors or other beneficiaries and under which employees, retirees,
dependents, spouses, directors, independent contractors or other beneficiaries
are eligible to participate (collectively, the "Company Benefit Plans").
The Company and each predecessor of the Company or a subsidiary of the
Company that adopted or contributed to a Company Benefit Plan have maintained
all Company Benefit Plans (including, without limitation, filing all reports
and returns required to be filed with respect thereto) in accordance with their
terms and in compliance with the applicable terms of ERISA and the Internal
Revenue Code of 1986, as amended, and the rules and regulations thereunder (the
"Code"), except where the failure to do so would not, singly or in the
aggregate, have a Material Adverse Effect. Each Company Benefit Plan which is
intended to be qualified under Section 401(a) of the Code has either received a
favorable determination letter from the Internal Revenue Service or timely
requested such a letter and has at all times been maintained in accordance with
Section 401 of the Code, except where any failure to receive or seek such a
favorable determination letter or so maintain such Company Benefit Plan would
not, singly or in the aggregate, have a Material Adverse Effect. Neither the
Company nor the Subsidiary has engaged in any transaction with respect to any
Company Benefit Plan that would subject the Company or the Subsidiary to a tax
or penalty imposed by either Section 4975 of the Code or Section 502(i) of
ERISA, except for any such transaction, tax or penalty which would not, singly
or in the aggregate, have a Material Adverse Effect.
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Neither the Company nor the Subsidiary is obligated to provide
post-retirement medical benefits or any other unfunded post-retirement welfare
benefits, except for the provisions of any such benefits which would not,
singly or in the aggregate, have a Material Adverse Effect. None of the
Company, the Subsidiary or any member of a group of trades or businesses under
common control (as defined in ERISA Sections 4001(a)(14) and 4001(b)(1)) with
the Company or the Subsidiary has at any time within the last six years
sponsored, contributed to or been obligated under Title I or IV of ERISA to
contribute to a "defined benefit plan" (as defined in ERISA Section 3(35)).
Within the last six years, none of the Company, the Subsidiary or any member of
a group of trades or businesses under common control (as defined in ERISA
Sections 4001(a)(14) and 4001(b)(1)) with the Company or the Subsidiary has had
an "obligation to contribute" (as defined in ERISA Section 4212) to a
"multiemployer plan" (as defined in ERISA Sections 4001(a)(3) and 3(37)(A)).
(s) The financial statements of the Company and Athens' ISP,
Inc., together with related notes and schedules, as set forth in the
Registration Statement and Prospectus (and any amendment or supplement
thereto), present fairly the financial position, results of operations and
changes in financial position of the Company and Athens' ISP, Inc.,
respectively, on the bases stated therein and at the indicated dates and for
the indicated periods, all in accordance with generally accepted accounting
principles consistently applied throughout the periods presented, except as
noted therein; all adjustments necessary for a fair presentation of results for
such periods have been made; the selected financial information included in the
Registration Statement and the Prospectus (and any amendment or supplement
thereto) present fairly the information shown therein and have been compiled on
a basis consistent with the financial statements presented therein; the
supporting schedules, if any, included in the Registration Statement present
fairly in accordance with generally accepted accounting principles the
information required to be stated therein; and the other financial and
statistical information and data respecting the Company and Athens' ISP, Inc.
set forth in the Registration Statement and the Prospectus (and any amendment
or supplement thereto) are, in all material respects, accurately presented and
prepared on a basis consistent with such financial statements and the books and
records of the Company and Athens' ISP, Inc. No other financial statements,
supporting schedules or other financial information (whether pro forma
financial statements or otherwise) are required to be included in the
Registration Statement or the Prospectus. As of the date of the Prospectus, the
Company is not engaged in substantive discussions with any third party with
respect to, or obligated to complete, any acquisitions for which disclosure of
pro forma financial information in the Prospectus is required by the Act.
(t) The Company and the Subsidiary have (i) filed all federal,
state, local and foreign income, franchise tax and other tax returns which have
been required to be filed, other than those filings being contested in good
faith, and (ii) paid all taxes (including, without limitation, withholding
taxes), assessments, fees and other charges (including, without limitation, all
penalties and interest) due pursuant to such returns or pursuant to any other
assessment received by the Company or the Subsidiary, other than those being
contested in good faith and for which adequate reserves have been established.
All material consequences, if any, resulting from the Company's conversion from
a Subchapter S corporation to a Subchapter C corporation under the Code are
described in the Registration Statement and the Prospectus.
(u) The Company and the Subsidiary are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged. Neither the Company nor the Subsidiary has received notice from any
insurer or agent of such insurer that substantial capital improvements or other
material expenditures will have to be made in order to continue such insurance.
Neither the Company nor the Subsidiary has any reason to believe that it will
be unable to (i) renew its existing insurance coverage as and when such
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coverage expires or (ii) obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost which is not materially
different from its current cost.
(v) There is no (i) significant unfair labor practice
complaint, grievance or arbitration proceeding pending or threatened against
the Company or the Subsidiary before the National Labor Relations Board or any
state or local labor relations board, (ii) strike, labor dispute, slowdown or
stoppage pending or threatened against the Company or the Subsidiary or (iii)
union representation question existing with respect to the employees of the
Company or the Subsidiary, except for such actions specified in clause (i),
(ii) or (iii) above which would not, singly or in the aggregate, have a
Material Adverse Effect. To the best knowledge of the Company, no collective
bargaining organizing activities are taking place with respect to the Company
or the Subsidiary.
(w) The Company and the Subsidiary maintain a system of
internal accounting controls sufficient to provide reasonable assurance that:
(i) transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access
to assets is permitted only in accordance with management's general or specific
authorization; (iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences; and (v) such controls would prevent or detect
errors or irregularities in amounts that would be material to the Company and
the Subsidiary, taken as a whole.
(x) No relationship, direct or indirect, exists between or
among the Company and the Subsidiary, on the one hand, and the directors,
officers, securityholders, customers or suppliers of the Company or the
Subsidiary, on the other hand, which is required by the Act to be described in
the Registration Statement or the Prospectus and is not so described as
required.
(y) The Company and the Subsidiary own or possess all patents,
patent rights, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks and trade names
(collectively, "Intellectual Property") currently employed by the Company or
the Subsidiary in connection with the business now operated by them except (i)
as disclosed in the Registration Statement and the Prospectus or (ii) where the
failure to own or possess or otherwise be able to acquire such Intellectual
Property would not, singly or in the aggregate, have a Material Adverse Effect.
Except as disclosed in the Registration Statement and the Prospectus, (i)
neither the Company nor the Subsidiary has received any notice of infringement
of or conflict with asserted rights of others with respect to any Intellectual
Property, (ii) neither the Company nor the Subsidiary is infringing or
otherwise violating any Intellectual Property of others and (iii) there are no
legal or governmental proceedings pending or, to the knowledge of the Company
or the Subsidiary, threatened relating to any Intellectual Property to which
the Company or the Subsidiary is or, in the case of threatened proceedings,
could be a party, or of which any of the properties or assets of the Company or
the Subsidiary is or, in the case of threatened proceedings, could be subject.
There are no contracts or other documents relating to any Intellectual Property
required to be filed as an exhibit to the Registration Statement or required to
be described in the Registration Statement or the Prospectus that are not so
filed or described as required.
(z) The Company has reviewed its operations and made reasonable
investigations regarding the operations of any third parties with which the
Company or the Subsidiary has a material relationship to evaluate the extent to
which the business or operations of the Company and the Subsidiary will be
affected by the Year 2000 Problem (as defined below). As a result of such
review, except as disclosed in the
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Registration Statement and the Prospectus, the Company has no reason to
believe, and does not believe, that any Year 2000 Problem will have a Material
Adverse Effect. The "Year 2000 Problem" as used herein means any risk that the
computer hardware or software, the internal operating systems or the telephone
or network communications connections used in the receipt, transmission,
storage, retrieval, retransmission or other utilization of data or in the
operation of mechanical or electrical systems of any kind will not, in the case
of dates or time periods occurring after December 31, 1999, function at least
as effectively as in the case of dates or time periods occurring prior to
January 1, 2000.
(aa) The Company is not and, after giving effect to the offering
and sale of the Securities and the application of the proceeds thereof as
described in the Prospectus, will not be, and does not intend to conduct its
business in a manner that would cause it to become, an "investment company" or
a company controlled by an "investment company," as such terms are defined in
the Investment Company Act of 1940, as amended.
(bb) All sales of the Company's securities prior to the date
hereof were at all relevant times duly registered under the Act and applicable
state securities or Blue Sky laws or were exempt from the registration
requirements of the Act and applicable state securities laws, or if such
securities were not registered or exempt in compliance with the Act and
applicable state securities laws, any private rights of action for rescission
or damages arising from the failure to register any such securities are time
barred by applicable statutes of limitations or equitable principles, including
laches.
(cc) Except as disclosed in the Registration Statement and the
Prospectus, there are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the Company to
file a registration statement under the Act with respect to any securities of
the Company or to include any securities of the Company in any registration
statement of the Company. Neither the filing of the Registration Statement nor
the offering or sale of the Securities as contemplated by this Agreement gives
rise to any rights for or relating to the registration of any securities of the
Company.
(dd) Neither the Company nor the Subsidiary has taken, and
neither the Company nor the Subsidiary will take, directly or indirectly, any
action that is designed to or that has constituted or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of any Securities.
(ee) It is not necessary in connection with the offer, sale or
delivery of the Units, the Notes or the Warrants in the manner contemplated
hereby, and by the Registration Statement and the Prospectus, to execute and
deliver any indenture, use any trustee or warrant agent or qualify the Notes or
any indenture under the Trust Indenture Act of 1939, as amended.
(ff) Each certificate signed by any officer of the Company and
delivered to you or your counsel in connection herewith or with the sale of
Units shall be deemed to be a representation and warranty by the Company to you
as to the matters covered thereby.
2. PLACEMENT OF UNITS.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions and the terms and conditions
set forth in the Registration Statement and the Prospectus, the Company hereby
authorizes you to assist the Company, as agent for the Company, in selling a
minimum of 80 Units and a maximum of 100 Units. In such capacity, you agree,
severally and not jointly, to use commercially reasonable efforts to assist the
Company in making public offers to sell the
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10
Units to prospective purchasers and to take such other actions to effect sales
of the Units by the Company as you shall determine.
The Company agrees to pay you an aggregate commission equal to 6.0% of
the aggregate gross proceeds of the offering contemplated by the Registration
Statement and the Prospectus. Such commission shall be divided between you as
you shall determine.
3. DELIVERY OF DOCUMENTS.
The documents to be delivered on behalf of the parties hereto pursuant
to Section 5 shall be delivered at the offices of Xxxxxx & Bird LLP, 0000 Xxxx
Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000-0000, or at such other place or time
as you and the Company shall agree.
4. AGREEMENTS OF THE COMPANY.
The Company agrees with the Agents as follows:
(a) To advise you promptly and, if requested by you, to confirm
such advice in writing, (i) of any request by the Commission for amendments to
the Registration Statement or amendments or supplements to the Prospectus or
for additional information, (ii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of the
suspension of qualification of any Security for offering or sale in any
jurisdiction, or the initiation of any proceeding for such purposes, (iii) when
any amendment to the Registration Statement becomes effective, (iv) if the
Company is required to file a Rule 462(b) Registration Statement after the
effectiveness of this Agreement, when the Rule 462(b) Registration Statement
has become effective and (v) of the happening of any event which makes any
statement of a material fact made in the Registration Statement or the
Prospectus untrue or which requires any additions to or changes in the
Registration Statement or the Prospectus in order to make the statements
therein not misleading. If at any time any stop order suspending the
effectiveness of the Registration Statement or any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus or
suspending any such qualification shall have been issued, the Company will use
its best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time.
(b) To furnish to you three signed copies of the Registration
Statement as first filed with the Commission and of each amendment to it,
including all exhibits, and to furnish to you such number of conformed copies
of the Registration Statement as so filed and of each amendment to it, without
exhibits, as you may reasonably request.
(c) To prepare the Prospectus, the form and substance of which
shall be satisfactory to you, and to file the Prospectus in such form with the
Commission within the applicable period specified in Rule 424(b) under the Act;
not to file any further amendment to the Registration Statement and not to make
any amendment or supplement to the Prospectus of which you shall not previously
have been advised or to which you shall reasonably object after being so
advised; and, during such period, to prepare and file with the Commission,
promptly upon your request, any amendment to the Registration Statement or
amendment or supplement to the Prospectus which may be necessary or advisable
in connection with the distribution of the Securities, to use its best efforts
to cause any such amendment to the Registration Statement to become promptly
effective and to furnish to you as many copies thereof as you may reasonably
request.
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11
(d) Prior to 10:00 a.m., Richmond, Virginia time, on the first
business day after the date of this Agreement, to furnish in Richmond, Virginia
and Nashville, Tennessee to you as many copies of the Prospectus (and of any
amendment or supplement to the Prospectus) as you may reasonably request.
(e) Prior to the public offering of the Securities and promptly
from time to time thereafter, to take such actions as you or your counsel may
reasonably request to qualify, and otherwise to cooperate with you and your
counsel in connection with the qualification of, the Securities for offering
and sale under the securities laws of such jurisdictions as you may request,
and to comply with such laws so as to permit offers, sales and dealings with
respect to the Securities in such jurisdictions for as long as may be necessary
to complete the distribution of the Securities; provided, however, that the
Company shall not be required in connection therewith to qualify as a foreign
corporation in any jurisdiction in which it is not now so qualified or to take
any action that would subject it to general consent to service of process or
taxation other than as to matters and transactions relating to the Prospectus,
the Registration Statement, any Preliminary Prospectus or the offering or sale
of the Securities, in any jurisdiction in which it is not now so subject.
(f) To mail and make generally available to its shareholders as
soon as practicable an earnings statement covering the twelve-month period
ending December 31, 2000 that shall satisfy the provisions of Section 11(a) of
the Act, and to advise you in writing when such statement has been so made
available.
(g) During the period of three years after the date of this
Agreement, to furnish to you as soon as available copies of all reports or
other communications furnished (whether financial or other) to the
securityholders of the Company or furnished to or filed with the Commission and
such other information concerning the Company and its subsidiaries as you may
reasonably request from time to time, other than any report or other
communication which has been filed with the Commission under its XXXXX system
and is publicly available.
(h) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or cause to
be paid all expenses incident to the performance of the Company's obligations
under this Agreement, including the following: (i) the fees and expenses of the
Company's accountants and legal counsel and expenses incurred in connection
with the preparation, printing, filing and mailing of the Registration
Statement, any Preliminary Prospectus, the Prospectus, any other
offering-related documents and all amendments and supplements to any of the
foregoing, including the mailing and delivering of copies thereof to you in the
quantities specified herein; (ii) all costs and expenses related to the
issuance, transfer and delivery of the Securities to be issued and sold by the
Company, including, without limitation, any transfer or other taxes payable in
connection therewith; (iii) all expenses in connection with the registration or
qualification of the Securities for offer and sale under the securities or Blue
Sky laws of the several states and any other jurisdiction required under
Section 4(e), including all costs of printing or producing any Blue Sky
surveys, the filing fees and the fees and expenses of counsel for the Agents in
connection therewith; (iv) the filing fees and the fees and expenses of counsel
for the Agents in connection with obtaining the approval of the National
Association of Securities Dealers, Inc. of the distribution terms and
conditions and the reasonableness of the Agents' compensation; (v) the travel
expenses of the Company's officers in connection with informational meetings
for the brokerage community and institutional investors; and (vi) all other
costs and expenses incident to the performance of the obligations of the
Company hereunder for which provision is not otherwise made in this Section
4(h).
(i) [Intentionally omitted].
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12
(j) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by the
Company prior to the first Delivery Date (as defined below), and to satisfy all
conditions precedent to the delivery of the Units. Each date on which Units are
delivered to purchasers is referred to herein as a "Delivery Date."
(k) If the Registration Statement at the time of the
effectiveness of this Agreement does not cover all of the Securities, to file a
Rule 462(b) Registration Statement with the Commission registering the
Securities not so covered in compliance with Rule 462(b) before confirmations
of sale are sent or given and to pay to the Commission the filing fee for such
Rule 462(b) Registration Statement at the time of the filing thereof or to give
irrevocable instructions for the payment of such fee pursuant to Rule 111(b)
under the Act.
(l) If, during the time a prospectus relating to the Securities
is required to be delivered by any Agent or its affiliates under the Act, the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or other
applicable law, to (i) periodically amend the Registration Statement so that
the information contained in the Registration Statement complies with the
requirements of Section 10(a) of the Act, (ii) amend the Registration Statement
or amend or supplement the Prospectus when necessary to reflect any material
changes in the information provided therein and promptly file such amendment or
supplement with the Commission, (iii) provide such Agent with copies of each
amendment or supplement so filed and such other documents, including opinions
of counsel and "comfort" letters, as such Agent may reasonably request and (iv)
indemnify such Agent and, if applicable, contribute to any amount paid or
payable by such Agent in a manner substantially identical to that specified in
Section 9 (with appropriate modifications).
(m) To file with the Commission, from time to time after the
effective date of the Registration Statement, such reports as are required by
the Act and the Exchange Act and to also file with the securities commissions
in jurisdictions where any Security has been sold any such reports as are
required to be filed by the securities acts and the regulations of those
jurisdictions.
(n) If at any time during the 90-day period after the
Registration Statement is declared effective, any rumor, publication or event
relating to or affecting the Company shall occur as a result of which, in your
opinion, the value of any Security has been or is likely to be materially
affected (regardless of whether such rumor, publication or event necessitates a
supplement to or amendment of the Prospectus), to, after written notice from
you advising the Company do so, prepare, consult with you concerning the
substance of, and disseminate a press release or other public statement,
reasonably satisfactory to you, responding to or commenting on such rumor,
publication or event.
(o) To take no action directly or indirectly through any of its
subsidiaries, officers, directors or affiliates or otherwise, that is designed
to cause or result in, or which might constitute or be expected to constitute,
stabilization or manipulation of the price of any Security.
(p) To not invest or otherwise use the proceeds received by the
Company from its sale of Units in such a manner as would require the Company to
register as an investment company under the Investment Company Act of 1940, as
amended.
(q) During the periods within which the Warrants may be
exercised or converted or the Notes may be converted, to at all times have
reserved for issuance out of its authorized but unissued Common Stock, solely
for issuance and delivery upon exercise or conversion of the Warrants and
conversion of the Notes, the full number of shares of Common Stock issuable
upon exercise or conversion of the Warrants and conversion of the Notes.
- 12 -
13
(r) To file timely and accurate reports with the Commission
regarding the use of the offering proceeds in accordance with Rule 463 under
the Act or any successor provision.
5. CONDITIONS TO OBLIGATIONS OF THE AGENTS.
Your several obligations to act as Agents hereunder in the offer and
sale of Units is subject to the satisfaction of each of the following
conditions:
(a) All representations and warranties and other statements of
the Company herein shall be true and correct on the first Delivery Date with
the same force and effect as if made on and as of the such Delivery Date, and
the Company shall have complied with all of the agreements and satisfied all of
the conditions herein contained and required to be complied with or satisfied
by the Company on or prior to the first Delivery Date.
(b) All filings required by Rule 424, Rule 430A, Rule 434 or
Rule 462(b) under the Act, if applicable, shall have been duly made; if the
Company is required to file a Rule 462(b) Registration Statement after the
effectiveness of this Agreement, such Rule 462(b) Registration Statement shall
have become effective before confirmations of sale are sent or given; no stop
order suspending the effectiveness of the Registration Statement shall have
been issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction; and you shall not have advised the Company that the Registration
Statement or any amendment thereto contains an untrue statement of fact which,
in your good faith judgment, is material or omits to state a fact which, in
your good faith judgment, is material and is required to be stated therein or
necessary to make the statements therein not misleading, or that any
Preliminary Prospectus, the Prospectus or any supplement thereto contains an
untrue statement of fact which, in your good faith judgment, is material, or
omits to state a fact which, in your good faith judgment, is material and is
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.
(c) You shall receive on the first Delivery Date a certificate
dated such Delivery Date signed by X. Xxxx Xxxxxx, the Company's Chief
Executive Officer, and Xxxxxxxxxxx X. Xxxxxx, the Company's Chief Financial
Officer and Treasurer, confirming, among other things, the matters set forth in
Sections 1(d) and 5(b) and to the effect that (i) all representations and
warranties and other statements of the Company in this Agreement are true and
correct on such Delivery Date with the same force and effect as if made on and
as of such Delivery Date and (ii) the Company has complied with all of the
agreements and satisfied all of the conditions herein contained and required to
be complied with or satisfied by the Company on or prior to such Delivery Date.
(d) [Intentionally omitted]
(e) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus (exclusive of any amendment or
supplement thereto subsequent to the date of this Agreement), (i) there shall
not have been any change in the capital stock or long term debt of the Company
or the Subsidiary or any issuance of options, warrants or rights to purchase
capital stock of the Company or the Subsidiary, (ii) there shall not have been
any change or any development involving a prospective change in or affecting
the business, general affairs, condition (financial or otherwise) or results of
operations of the Company and the Subsidiary, taken as a whole, and (iii)
neither the Company nor the Subsidiary shall have entered into any transaction
or incurred any liability or obligation, direct or contingent, the effect of
which, in any such case described in clause (i), (ii) or (iii), in your
judgment is
- 13 -
14
material and adverse and, in your judgment, makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the Units on
the terms and in the manner contemplated by the Prospectus.
(f) [Intentionally omitted]
(g) [Intentionally omitted]
(h) [Intentionally omitted]
(i) You shall have received, on each of the date hereof and the
first Delivery Date (if different from the date hereof), a letter dated the
date hereof or such Delivery Date, as the case may be, in form and substance
satisfactory to you, from Xxxxxx Xxxxxxxx LLP, independent public accountants,
containing the information and statements of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain information contained in the Registration Statement and
the Prospectus.
(j) You shall have received on the first Delivery Date an
opinion (satisfactory to you and your counsel), dated such Delivery Date, of
Nelson, Mullins, Xxxxx & Scarborough, L.L.P., counsel for the Company, to the
effect set forth in Annex I.
(k) You shall have received on the first Delivery Date an
opinion (satisfactory to you and your counsel), dated such Delivery Date, of
Xxxxxx, Golden & Xxxxxxx LLP, special communications counsel for the Company,
to the effect set forth in Annex II.
(l) You shall have received on the first Delivery Date an
opinion (satisfactory to you and your counsel), dated such Delivery Date, of
Xxxxx & Xxxxx, L.L.P., special intellectual property counsel for the Company,
to the effect set forth in Annex III.
(m) You shall have received on the first Delivery Date an
opinion (satisfactory to you), dated such Delivery Date, of Xxxxxx & Bird LLP,
your counsel, with respect to the incorporation of the Company, the
Registration Statement, the Prospectus and such other related matters as you
may request, and such counsel shall have received such agreements, instruments,
documents and other information as they may request to enable them to pass upon
such matters.
(n) The Company shall not have failed on or prior to the first
Delivery Date to perform or comply with any of the agreements herein contained
and required to be performed or complied with by the Company on or prior to
such Delivery Date.
(o) You shall have received on the first Delivery Date such
additional documents (including, without limitation, opinions of counsel,
certificates and agreements) as you may reasonably request.
Your several obligations to assist the Company in selling Units on
Delivery Dates subsequent to the first Delivery Date are subject to (A) the
delivery to you on each such subsequent Delivery Date of such documents
(including, without limitation, opinions of counsel, certificates and
agreements) as you may reasonably request with respect to the Company and the
issuance and sale of Units and (B) the satisfaction of such conditions as you
shall reasonably determine in connection therewith.
- 14 -
15
6. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Agent, its directors, its officers and each person, if any, who controls any
Agent within the meaning of Section 15 of the Act or Section 20 of the Exchange
Act from and against any and all losses, claims, damages, liabilities and
judgments, whether joint, several or otherwise, and whether under the Act or
otherwise, caused by, arising out of or based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto) or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading or (ii) any untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus (or any amendment or supplement thereto) or the Prospectus (or any
amendment or supplement thereto) or any omission or alleged omission to state
therein a 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, and the Company agrees to reimburse each Agent, its
directors, its officers and each such control person for any legal or other
expenses (including, without limitation, the reasonable fees and expenses of
counsel) actually incurred in connection with investigating, preparing to
defend or defending, or appearing as a third party witness in connection with,
any such action, claim or other matter, promptly as such expenses are incurred;
provided, however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or judgment is caused by,
arises out of or is based upon any such untrue statement or omission or based
upon information relating to any Agent furnished in writing to the Company by
such Agent expressly for use therein; provided, further, that the foregoing
indemnity agreement with respect to any Preliminary Prospectus shall not inure
to the benefit of any Agent who failed to deliver the Prospectus, as then
amended or supplemented (so long as the Prospectus and any amendment or
supplement thereto was provided by the Company to the several Agents in the
requisite quantity and on a timely basis to permit proper delivery on or prior
to the first Delivery Date) to the person asserting any losses, claims,
damages, liabilities or judgments caused by any untrue statement or alleged
untrue statement of a material fact contained in such Preliminary Prospectus,
or caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, if such material misstatement or omission or alleged material
misstatement or omission was cured in the Prospectus, as so amended or
supplemented, and such Prospectus was required by law to be delivered at or
prior to the written confirmation of sale to such person by such Agent.
(b) Each Agent agrees, severally and not jointly, to indemnify,
hold harmless and reimburse the Company, each of its directors and officers who
signed the Registration Statement and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Company to
such Agent, but only with reference to information relating to such Agent
furnished in writing to the Company by such Agent expressly for use in the
Registration Statement (or any amendment thereto), any Preliminary Prospectus
(or any amendment or supplement thereto) or the Prospectus (or any amendment or
supplement thereto).
(c) Promptly after receipt by any person that may seek
indemnity under Section 6(a) or 6(b) (an "indemnified party") of notice of the
commencement of any action, such indemnified party shall, if a claim in respect
thereof is to be made against a person against whom such indemnity may be
sought under Section 6(a) or 6(b) (an "indemnifying party"), notify the
indemnifying party in writing of the commencement thereof; but the omission so
to notify the indemnifying party shall not relieve it from any liability which
it may have to any indemnified party. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall elect, jointly with any other
indemnifying party similarly notified, by written notice delivered to the
indemnified party promptly after
- 15 -
16
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified
party; provided, however, that any indemnified party shall have the right to
employ separate counsel in any such action and participate therein, but the
fees and expenses of such counsel shall be at the expense of the indemnified
party unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties in
any such action (including, without limitation, any impleaded parties) include
both the indemnified party and the indemnifying party, and the indemnified
party shall have been advised by counsel that representation of such
indemnified party and the indemnifying party would present such counsel with a
conflict of interest under applicable standards of professional conduct due to
actual or potential differing interests between them or that there may be legal
defenses available to it and/or other indemnified parties which are different
from or in addition to those available to the indemnifying party (in which case
the indemnifying party shall not have the right to assume the defense of such
action on behalf of the indemnified party). It is understood that the
indemnifying party shall not be liable, in connection with any such action or
separate but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, for (i) the fees
and expenses of more than one separate firm of attorneys (in addition to any
local counsel) for all Agents, their officers and directors and all persons, if
any, who control any Agent within the meaning of either Section 15 of the Act
or Section 20 of the Exchange Act and (ii) the fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel) for the
Company, its directors and officers who sign the Registration Statement and all
persons, if any, who control the Company within the meaning of either such
section. In the case of any such separate firm for the Agents, their officers
and directors and such control persons of any Agent, such firm shall be
designated in writing by Xxxxx & Xxxxxxxxxxxx, Inc. In the case of any such
separate firm for the Company, its directors or officers who sign the
Registration Statement or such control persons of the Company, such firm shall
be designated in writing by the Company. The indemnifying party shall indemnify
and hold harmless the indemnified party from and against any and all losses,
claims, damages, liabilities and judgments by reason of settlement of any
action (i) effected with its written consent or (ii) effected without its
written consent if (A) such settlement is entered into more than 30 days after
the indemnifying party shall have received a request from the indemnified party
for reimbursement for legal or other expenses (including, without limitation,
the fees and expenses of counsel), in any case where such fees and expenses are
at the expense of the indemnifying party, and (B) such indemnifying party shall
not have complied with such reimbursement request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement or compromise of, or consent to
the entry of judgment with respect to, any pending or threatened action in
respect of which the indemnified party is or could have been a party and
indemnity or contribution may be or could have been sought hereunder by the
indemnified party, unless such settlement, compromise or judgment (i) includes
an unconditional release of the indemnified party from all liability on claims
that are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
(d) To the extent the indemnification provided for in this
Section 6 is unavailable to or insufficient to hold harmless an indemnified
party under Section 6(a) or 6(b) in respect of any losses, claims, damages,
liabilities or judgments (or actions in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages, liabilities
or judgments (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Agents on the other hand from the offering of the Units. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only
- 16 -
17
such relative benefits but also the relative fault of the Company on the one
hand and the Agents on the other hand in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
judgments (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Agents on the other hand in connection with the offering of
the Units contemplated hereby shall be deemed to be in the same proportion as
the total net proceeds from the offering (after deducting the Agent's
commission provided for in Section 2, but before deducting expenses) received
by the Company, and the Agent's commission provided for in Section 2, bear to
the total price to the public of the Units, in each case as set forth on the
cover page of the Prospectus. The relative fault of the Company on the one hand
and the Agents on the other hand shall be determined by reference to, among
other things, whether any such untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or the Agents on the other
hand and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the Agents agree that it would not be just and
equitable if contributions pursuant to this Section 6(d) were determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to above in this Section 6(d).
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments (or actions in respect thereof)
referred to above in this Section 6(d) shall be deemed to include any legal or
other expenses incurred by such indemnified party in connection with
investigating, preparing to defend or defending, or appearing as a third party
witness in connection with, any such action, claim or other matter.
Notwithstanding the provisions of this Section 6(d), (i) the provisions of an
agreement entered into between the Agents in connection herewith, if any, shall
govern contribution between the Agents and (ii) no Agent (except as provided in
any such agreement between the Agents) shall be required to contribute any
amount in excess of the amount by which the total price at which the Units
actually distributed by it were offered to the public exceeds the amount of any
damages that such Agent has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 6(d), 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. Each Agent's obligations under this Section 6(d)
are several in proportion to the respective aggregate principal amount of the
Notes underlying Units that were actually distributed by such Agent in the
offering contemplated by the Registration Statement and the Prospectus and not
joint.
(e) The remedies provided for in this Section 6 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity. The Company agrees to
reimburse the several Agents, their directors and officers, and any persons
controlling any of the Agents for any and all fees and expenses (including,
without limitation, the fees disbursements of counsel) incurred by them in
connection with enforcing any of their rights hereunder (including, without
limitation, pursuant to this Section 6).
7. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Agents, as set forth in
this Agreement or made by them, respectively, pursuant to this Agreement, shall
remain in full force and effect regardless of any investigation (or any
statement as to the results thereof) made by or on behalf of any Agent, the
officers or directors of any Agent, any controlling
- 17 -
18
person of any Agent, the Company, the officers or directors of the Company or
any controlling person of the Company, and will survive delivery of and payment
for the Units. In addition, the agreements of the Company in Section 4(h) and
the agreements of the parties hereto in Section 6 and this Section 7 shall
survive any termination or cancellation of this Agreement.
8. EFFECTIVENESS; TERMINATION.
(a) This Agreement shall become effective upon the execution
and delivery hereof by the parties hereto.
(b) This Agreement may be terminated at any time by any party
hereto by giving the other parties hereto three days' prior written notice of
such termination. Any termination pursuant to this Section 8(b) shall not give
rise to any liability on the part of any party hereto, except as provided in
Sections 4(h), 6 and 7.
9. NOTICES.
All statements, requests, notices and agreements hereunder shall be in
writing or by facsimile if promptly confirmed in writing, and if to the Agents
shall be sufficient in all respects if delivered or sent by mail, hand
delivery, overnight courier or facsimile transmission to: Xxxxx & Xxxxxxxxxxxx,
Inc., 000 Xxxx Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000, Attention: Corporate
Finance Department, Facsimile: (000) 000-0000 and SunTrust Equitable Securities
Corporation, 000 Xxxxxxxxx Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000, Attention:
Corporate Finance Department, Facsimile: (000) 000-0000, with a copy (which
shall not constitute notice) to Xxxxxx & Bird LLP, 0000 Xxxx Xxxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxx 00000-0000, Attention: X. Xxxx Xxxxxxxx, Esq., Facsimile:
(000) 000-0000; and if to the Company shall be sufficient in all respects if
delivered or sent by mail, hand delivery, overnight courier or facsimile
transmission to the address of the Company set forth on the cover page of the
Registration Statement, Attention: X. Xxxx Xxxxxx, Chief Executive Officer,
with a copy (which shall not constitute notice) to Xxxxxx Xxxxxxx Xxxxx &
Scarborough, L.L.P., First Union Plaza, Suite 1400, 000 Xxxxxxxxx Xxxxxx, X.X.,
Xxxxxxx, Xxxxxxx 00000, Attention: Xxxxxxx X. Xxxxxx, Esq., Facsimile: (404)
817-6050. Any such statements, requests, notices or agreements shall take
effect upon receipt thereof.
10. SUCCESSORS.
This Agreement shall be binding upon, and inure solely to the benefit
of, the Agents, the Company and, to the extent expressly provided herein, the
officers and directors of the Company, the officers and directors of each Agent
and each person who controls the Company or any Agent, and their respective
heirs, executors, administrators, successors and assigns, and no other person
shall acquire or have any right under or by virtue of this Agreement. No
purchaser of any of the Units shall be deemed a successor or assign by reason
merely of such purchase.
11. YOUR STATUS AS AGENTS; TIME OF THE ESSENCE.
In assisting the Company with sales of Units as provided for herein,
you are acting solely as agents, severally and not jointly, for the Company,
and not as principals. You will make, severally and not jointly, commercially
reasonable efforts to assist the Company in obtaining performance by each
purchaser whose offer to purchase Units from the Company has been accepted by
or on behalf of the Company, but, except as provided in Section 6, you shall
not have any liability to the Company, whether joint, several or otherwise, in
the event any such purchase is not consummated for any reason. Time shall be of
the essence in the performance under this Agreement.
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12. BUSINESS DAY.
As used herein, the term "business day" shall mean any day when the
Commission's office in Washington, D.C. is open for business.
13. APPLICABLE LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
14. CAPTIONS.
The captions included in this Agreement are included solely for
convenience of reference and shall not be deemed to be a part of this
Agreement.
15. COUNTERPARTS; EXECUTION BY FACSIMILE.
This Agreement may be executed by any one or more of the parties in
any number of counterparts, each of which shall be deemed to be an original,
but all such counterparts shall together constitute one and the same agreement.
Delivery of an executed counterpart hereof by facsimile shall be effective as
manual delivery thereof.
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If the foregoing is in accordance with your understanding, please sign
and return to us two counterparts hereof, and upon the acceptance hereof by
you, this letter Agreement shall constitute a binding agreement between the
Agents, severally, and the Company.
Very truly yours,
XXXXXXX.XXX, INC.
By:
-----------------------------------------
Name: X. Xxxx Xxxxxx
Title: Chief Executive Officer
Accepted and agreed:
XXXXX & XXXXXXXXXXXX, INC.
By:
------------------------------------
Name:
Title:
SUNTRUST EQUITABLE SECURITIES
By:
------------------------------------
Name:
Title:
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